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The word ‘entrepreneur’ conjures a very specific image. Picture a white male from Stanford, or Harvard, who is bold, brash, and ready to change the world – and you're halfway there.
From the icons of the 1980s like Larry Ellison, Bill Gates and Steve Jobs, to today’s Elon Musk, Mark Zuckerberg and Jeff Bezos, to name a few, the legend of the entrepreneur has outgrown its former confines.
But are they reflective of the true face of entrepreneurship? Do they capture the wide variety of lifestyles and philosophies that lead people to start their own businesses?
Canadian journalist David Sax doesn’t think so.
In this episode, Sax shares the thesis of his latest book, The Soul of an Entrepreneur, which dissects the myth of the modern entrepreneur, and its impact on the accessibility of entrepreneurship.
Sax is the author of the best-seller, The Revenge of Analog, which was on Michiko Kakutani's Best Books of 2016 in the New York Times. His work has also appeared in New York Magazine, Vanity Fair, Bloomberg Business Week, The New York Times, Saveur, NPR, GQ and Toronto Life.
The Ivey Entrepreneur Podcast is sponsored by Connie Clerici, QS ’08, and Closing the Gap Healthcare Group, Inc.
Transcript
On this new series of the Ivey entrepreneur podcast, you're invited to listen in on the guest visits my Hustle and Grit class taking place virtually at the Ivey Business School. Hustle and Grit is a course that we created to teach you everything that you didn't learn in Business School, in Business School. In it, we invite road class innovators and entrepreneurs to talk about topics like motivation, how to learn what to prioritize, and even how to be happier. In these episodes, you'll hear live audio from my classes, because honestly, there's just something different about the energy, excitement and honesty taking place in a live classroom environment. So get comfortable. Grab a seat, and don't worry, unlike my real class, I won't cold call you enjoy. David is a Canadian journalist. He was born in Toronto. He's written for publications like New York Magazine, Vanity Fair Bloomberg, The New York Times, GQ and Toronto life. He's authored several books, including The Revenge of Analog, The Tastemakers and Save the Deli which won a James Beard award. His new book was the one that really caught my attention. The Soul of the Entrepreneur. Typically when you think about startups, you think of people dropping out of college, raising venture capital, but really, entrepreneurs come in all shapes, colors, backgrounds and sizes. In David's new book he spoke with entrepreneurs all over the country big and small, these side hustles and full time gigs and he dug into how entrepreneurship really changes lives. So please, if you don't mind, give a nice warm welcome to Mr. David Sax.
David Sax
Hi. Nice to meet you guys. Eric, it's good to see you. I didn't know I had to wear a suit but this is the most I've been dressed up in like four months.
Eric Janssen
You don't, and I appreciate that you got a shirt on today.
David Sax
You're welcome and hi, there Westerners hope you're not the ones who are going out to the bars and parties. So yeah, it's a pleasure to talk to you. I'm glad you started off where you started off, Eric and it's interesting to hear what what everybody thinks. I'm interested to sort of get into it.
Eric Janssen
I want to start with I know your family has an interesting entrepreneurial backstory. If you don't mind, maybe we'll start there before we jump into your book, and what you learn. Where did your family's experience with entrepreneurship start?
David Sax
It comes down from every sort of generation in my family the oldest generation, my family I know, that's in Canada, like came in the 1850s and they were tobacco merchants and then in the clothing business, like many Jewish immigrants to Montreal, and in the tool business, and there's very few members of my family that I can point to that have jobs and careers in employment working for other people. My father, since he graduated law school, basically just went and worked for himself, and has always done that my mother had a clothing wholesale business, my mother in law, same thing, she sold wholesale clothes like and card tables, even though she was one of the first females in Canada to get an MBA. I've always worked for myself, I think, since the day I graduated from McGill, I went out and decided I wanted to be a journalist I tried to apply for some places, I couldn't find a job so it's like, well, I guess I'll just freelance and write articles and write books. I think that's typical of a lot of people who can look at their families, and see this sort of through line of entrepreneurship and yet, even though there are people who've had great success within the family, or within friends of mine, and have done very well for themselves in building businesses, or careers, where they are entrepreneurs or on their own, there's no grand titan, there's no names that you would know about, there's no Ellon Musk, in my family, or anyone sort of that equivalent. Nobody's named a business school after them and I think that's true for most entrepreneurs, you may know people who are successful, you sure all know are related to someone who has their own business, it works for themselves. When you go and learn about entrepreneurship at a business school, or you read a book about it, it doesn't tend to focus on the 99% of entrepreneurs out there who are people like myself, or my wife, or my father, or maybe, some of your family, relatives and friends who go work themselves and may have a business may not even have a formal business, but might just be self employed like I am, and do it for all sorts of different reasons that are probably not something that you discuss in a class like this.
Eric Janssen
So when we opened the class, we had a chance to get to know everybody and wanted to learn what people want to learn about entrepreneurship and why they took the class. A handful of people mentioned sort of this sensationalized version of entrepreneurship that I think your book sort of tackles and that what that article tackles, the you dropped out of college, you start a mobile app and you raise a bunch of venture capital money. Where did that start? I know, it wasn't that way forever, where did that get started?
David Sax
I think it's it's always been there. The popular vision of entrepreneurship is kind of something that comes out of the Industrial Revolution, right? Prior to that you had wealthy people who were merchants or wealthy individuals but you're in a system in Europe, it all depended on whether you're a king or not. The Industrial Revolution happens in the middle of the 19th century and suddenly you have these technological innovations that open up all sorts of businesses, and you have these business people who become these global names Rockefeller, Carnegie, JP Morgan Thompson, here, Canada, Renovado, who was the king of Canadian furs, and of course, that grows with with different areas, but it becomes like that individual becomes sort of a hero in their own story, they write books, they themselves become the sort of popular celebrities, you really see it growing in culture, starting with the computer edge. In the 1980s, you have Bill Gates, you have Steve Jobs, you have others like Larry Ellison, who because of the nature of the technology, and the sort of exponential growth that it affords, are able to build these tremendously successful, powerful and influential businesses seemingly overnight. They're not the sort of business heroes that you would read about that we're sort of known, people like Lee Iacocca, the great auto magnate from Chrysler, let's say, or Warren Buffett or something like that, is, there's almost like a pop culture element to them. Steve Jobs has had more movies made about his life, then Martin Luther King, I was at a retreat, like a corporate retreat center outside Toronto, a couple summers ago and it's like a real like, conference center, they have a lot of conferences and then a wall of heroes. It was literally like, a picture of Mahatma Gandhi and a quote, Mother Teresa and a quote Martin Luther King, Jr, and a quote, Barack Obama, and then it was like Steve Jobs, Mark Zuckerberg, Peter Thiel. Suddenly, the idea of an entrepreneur was more than just this person is successful and built a business, they were a moral force, a force of leadership, a character that was worthy of a cultural interest that was far more than just the business and the invention they made and that over the past 20, something years has really accelerated tremendously with the internet revolution, the mobile revolution and the revolution, and various other digital technologies that we've seen, so much so that it's become this sort of package thing. Now, when you talk about that myth of the startup entrepreneur, we have an idea in our head of what that means, oh, it's a young individual, they're probably male, they're probably white and they probably went to Stanford or Harvard, right? One of those two schools, sorry, Ivey, nobody's, you don't have your hero yet. And they're really bold, and they're brash, and they say cool things and they probably dropped out and they say, to hell with authority, and they're going to change the world. We've all watched Silicon Valley on HBO. It's this trope, but it's become that narrative that we've come to expect. We've been fed it and so often, what you see is people playing into it. The best example of that is Elizabeth Holmes, everyone know who Elizabeth Holmes is. No? Elizabeth Holmes was a 19-year-old Stanford University student about, I guess, a decade ago, who decided she wanted to reinvent the way blood testing was done and you would do it by pricking your finger and putting a drop instead of taking a needle out of your arm. She managed to build a company called Theranos, by dropping out of Stanford and raising, like $70 million, with the venture capital money, maybe more, maybe it was a couple 100 million dollars worth of venture capital money, massive investors, huge people on her board, it was like, basically, every former chief of staff of various presidents are on her board. The whole thing was a sham. There was never any machine, the technology never worked. Now she's being tried in court, and actually, I think just claimed insanity the other day as part of her defense, but what she sold the world was her self as a vision of an entrepreneur. Her dream was to become the next Steve Jobs, so much of that she dressed in black turtlenecks that she ate the same diet as Jobs that she treated people like crap in the same way that Steve Jobs said, like you could read the Steve Jobs biography by Walter Isaacson and you could follow her career and it was this parallel thing and the staff said they did the same thing. She was so successful in raising all this money because she knew that was what people expected of an entrepreneur, they didn't expect a middle aged African American woman, for example, that wouldn't have been, but she fit into that type. What you've seen is that entrepreneurship has become, well, it's still this broad thing like we said, anyone who goes out and works for themselves in the culture, it became so lionize and yet in that very narrow way that it excluded the vast majority of entrepreneurs by who they are, by what their background is, by the industry and most importantly, I think, by their motivation for being an entrepreneur, because no two entrepreneurs want to do the same thing, even if they're doing the same business. We'll go back to that original metaphor. You talked about Eric, the pizza business, right? There are 100 places to get a pizza, I'm sure in London, definitely here in Toronto, a place like New York, whatever, and yet, each one of them has their own thing. This one's going to be the high end Neapolitan place with the 500 degree oven, this place is the chain that's going to be the next Pizza Pizza or the next Domino's this is just the greasy, 3am, late night slice place that you're going to go after the bars let out and every owner behind them, they're not all trying to become that next Domino's or Pizza Pizza, they want to do something, someone's might just be happy making the perfect pizza, someone might just do it because it's a way for them to have a business that they work five days a week, and it'll put their kids to college. Maybe they're a recently arrived Canadian, and they wanted something that they could get into in order to make sure their kid can go to Ivey and get a business degree, go on and get a good job and banking or consulting, whatever. All of those motivations are genuine. They're all entrepreneurs but we only really talk about and teach that one example, which is like, oh, you want to start a pizza business, what's the most disruptive pizza business you can do? Here's how you can get all sorts of venture private equity financing in order to leverage that the most and then innovate so you can be the biggest piece of chain in the shortest amount of time but that model of pizzeria to use the original Italian term might not be the one that you actually want, might not be the one that speaks to you, maybe you just want to sling the perfect pie and that's okay. I used to be a food writer back in the early part of this career. I interviewed tons of people who owned cupcake, bakery, sandwich shops, restaurants, pizza places that used to be management consultants, lawyers, they had MBAs and I was doing that and I got fed up with it. I really just wanted to make the perfect pizza or open this type of pizza, or whatever and I did this because this is what appealed to me. That's the thing that I think we tend to forget about entrepreneurship. When we talk about an academic context, we see it as an economic activity, but fundamentally, it is an emotional personal activity. If you're going to go and leave the certainty of a job, and the salary and benefits that come with it, and the check that comes every two weeks, it's not a rational economic decision. Most businesses fail, we know that most people who go to be entrepreneurs are not successful in the way that they imagined and yet they're driven to do it by something that is inherently true to that, which is this personal, emotional motivation and that differs for each entrepreneur. It is as diverse as the faces in this class and the colors of the rainbow so to speak. That was a very, very, very roundabout answer.
Eric Janssen
You covered a lot of ground. It sounds like you could take it to mean that it's sensationalizing it as a bad thing but I'd say when I was in the shoes of the students in this class, I took this class when it first started at Ivey, I had those same ambitions, I think I was drawn in by the sensationalized version of entrepreneurship. I think part of that is what drew me to it and and maybe I would not have been drawn to it if I wasn't thinking that I could be the next maybe not Steve Jobs, but whomever, the Canadian version and the life that all of that affords. Is it a bad thing? For entrepreneurship? Or Even if people don't ultimately achieve it, or is it a positive thing and that is getting more people interested in entrepreneurship to begin with?
David Sax
It's a good question. I think it's a little bit of both. The positive is entrepreneurship is cool, entrepreneurship is interesting as maybe Kyle said, you know, Gen Z is the most interested in entrepreneurship of any generated. Kyle I don't know what that was or one of the heads you write. The linearisation of Ellon Musk or the wonderful puff pieces about the brilliance of Tobias, Luke or, or whatever the latest genius to sort of create something and be super successful, gets more people motivated in business and interested in starting their own thing and leads them to instead of opting for graduating and going to work in McKinsey, and being miserable, you're going to be miserable if you go into consulting guys, hot tip, but rich, but miserable, if they're like, no, I'm going to start that pizza place, or I'm going to start that carparks business or I'm going to start that flower delivery app, whatever the hell that is calling you, then that's a positive thing. The downside of it and the danger is that when we reduce entrepreneurship down to that one model, or that one archetype, and we teach it in that way, and we finance in that way through what I assume is the Ivey Business School incubator, which has probably a number of venture capitalists on its board and has a pitch demo day and a startup day and show me your hockey stick and everybody does their five minute pitch with the same stupid PowerPoint presentation, you're asking people to paint by numbers in a very small box and you're actually limiting the possibilities of what people can see as a potential opportunity in business. You're getting people to to feed what they think that model wants, which is like, okay, well, it's got to be a fast scaling business, I gotta show them what they want because that's what these funders like it's like, Dragon's Den, or Shark Tank in the US, you got to go up and you got to show the type of business that Kevin O'Leary wants, to hell with Kevin O'Leary. The reality is most people that you go and talk to out in the community in the London community, in the Toronto community, or wherever you guys are from, or from parts further away, they didn't build their business by writing up a pitch deck and standing in front of a bunch of wealthy investors and saying, here's how my idea is gonna change the world, they just went out and built that business and did it for their own reasons and they succeeded or failed, based upon what happened in the cycle that business. The other main problem with that is that that model of entrepreneurship, which I call the Silicon Valley startup model, which is very much based upon that, what's your idea? How are you going to present it? Give me your pitch deck? Where's the hockey stick? We're going to inject some venture capital, yada, yada, yada. It's exclusionary by its nature. Can someone guess what percentage of venture capital funding in the United States went to companies led by women in 2018, which is last year is available. Anybody want to hazard a guess, what percentage of VC funding in the US one two companies led by women?
Eric Janssen
Maybe in the chat? Let's see. Throw some answers in there. 10%, 1%, or 77%?
David Sax
Yeah, it was like 2.8%, which was an all time high. So congratulations, ladies, the glass ceiling has been shattered. You know, similar numbers for for minority founders, black Latino founders, this was in the US. You see a similar thing here in Canada. Most of the venture capital funding goes to people who graduated from Harvard or Stanford, it's like 40%, the vast majority of venture capital funding goes to companies that are in the San Francisco Bay Area, and then New York City, even Seattle, home to Microsoft, and Amazon gets like 3% of VC funding. It is a system that excludes the vast majority of people who are entrepreneurs and you can say, well the people who go to Stanford are geniuses and they deserve it but that excludes a lot of you who I'm looking at here. The issue isn't that we've glorified entrepreneurship but that we've glorified only one flavor of a tos the Ben and Jerry's thing, we've glorified the, I was gonna make up some stupid Ben and Jerry's name that would involve something. But if anybody can think of a Ben and Jerry's name that involves Ellonn Musk, or Zuckerberg, or Steve Jobs, please tweet it in here.
Eric Janssen
We'll take we'll take votes in the chat or in this channel.
David Sax
Exactly. Crushing it flakes or whatever. Anyway, I digress. If you're only promoting that one type of thing, it is turtleneck toffee. If you're only promoting one type of entrepreneurship one, you're doing a disservice to all the people who might be excited about entrepreneurship, but may only see it in a narrow framework, and may not see themselves in that because they don't have the expertise or the knowledge or again it doesn't speak to them and so we'll go and take that boring job at Deloitte and have their souls locked out of them and then only later in life realize that this was the thing that they want to do. More importantly than that, what we're talking about are some of these fundamental issues that we're talking about today, which is economic inequality and the inequality of opportunity. One of the fastest growing groups of entrepreneurs are women of color. In Canada, in the United States, elsewhere in the Western world, right, black women, Latino women, brown women, indigenous women, they are starting businesses at a faster rate and growing every year and yet, of course, they get a percentage of funding and percentage of courses taught about them, this stuff doesn't reflect them, because it's not that big thing and so yeah, maybe they're starting a nail salon, maybe they're starting a small home catering business or a daycare business or something that's going to appeal to that knowledge or skill set but if you're not promoting that, if that seems excluded, and those people are not only seeing themselves less likely to be able to start something, but when they started less likely to get funding and support and education, then you're already growing the gap of inequality that exists in the economy and in the society. We know that for immigrants, for new Canadians, for people of color, for example, indigenous Canadian we're talking about groups that are dealing with a systemic disadvantage. One of the things that has been shown to over the long term shift that disadvantage is entrepreneurship. For many I mean, who here comes from a family of immigrants, second generation or third generation? Right. Who here and that of those families of immigrants have have family members who are entrepreneurs? Pretty much one of us hands goes up. Why, because they're like, oh, Mr. Boyle, what did you do in India? Oh, I was an engineer. Okay, well, sorry, you don't qualify for that anymore but here you go, good luck doing something. I imagine reading the narrative here, that that family member decided to open up their own business out of either an idea or a lack of other option, they became an entrepreneur, and that allowed for that intergenerational transfer of wealth that you don't get when you work at a timmies and so if we don't focus and make it more accessible, that version of entrepreneurship, which is the entrepreneurship that 99% of people are going to be more in touch with than the founder of some genius company, which is always going to happen, you're always going to have your huge successes out there in the world of business, wherever you are, whatever the circumstances, we're doing a disservice to entrepreneurship, we're actually lessening it and as much as you may want to be one, it becomes less accessible.
Eric Janssen
So can you paint a picture then? This is good, because you're covering a lot of the questions that I had in one. Still a handful of people are thinking, this is all well and good for everybody else but like, I'm different, I'm gonna I'm still gonna go for it. Which I hope they are the one. Could you paint a little picture, you did your homework here, you traveled around, not just Canada, but the US and maybe further than that and you talk to a bunch of entrepreneurs who despite the fact that they aren't, the next Steve Jobs have pretty darn good lives and some of them defined that by making decent money, some of them defined that by having a good lifestyle, thinking about the Rockaway Beach story. Could you maybe share some of the stories of entrepreneurs who, assuming that these people are going to learn everything they need to know in this class in order to be successful, of course, but what are some of the nice stories that don't end up like Steve Jobs, but still end up pretty happy?
David Sax
Yeah. You mentioned Tracy. Tracy Lebowski grew up outside New York City in New Jersey, decided to become a pastry chef, I guess in early 20s, after working in a bar graduating from like graphic design school, realizing she didn't want to do art, and got to become a really well known pastry chef in some high end New York restaurants where you know, if you are a chef or a cook, to be written up in the New York Times, and one of the top pastry chefs in New York City is, you're in the NBA leagues of cooking, but, the job was a grind. She would work in basement kitchens without windows from early in the morning till late in the night working for male chefs who would treat her like crap for very little pay and of course the male chefs will get promoted ahead of her and she was burning out like many people do, and many businesses, especially that one, and she also moved out to a place of New York City called Rockaway Beach which you actually can take the subway to it and it's a beach community on the edge of New York in Queens kind of where JFK Airport is and you can go surfing there. I used to go surfing there and she got into surfing she was doing it with another friend of hers who was also a chef at the restaurant, and moved out there and was like, what to hell with this like, I just want to live out here I want to serve I want to enjoy my life I want to work but I'm done working with these restaurants, I'm done with that this is not the dream that I thought it was going to be. She started by baking croissants and pastries in like a broken down shack and a fishing marina. She was dealing with toxic waste and all these fumes in the oven wasn't working, but every morning she would sit there and roll croissant, looking at the sunrise over the bay and smoke a joint and she's like, this is great, borrowed a bunch of money, took loans from the bank, opened up a little bakery coffee shop called The Rockaway Beach Bakery, and basically opened up and that's what she does. Every morning, she wakes up. She takes a bong hit. I've not seen a bong since I was in university but this is a grown woman takes bong hits, something to learn there. She goes out, puts on her wetsuit walks like 500 feet into the ocean goes surfing for an hour, watches the sunrise takes a shower takes her bike or skateboard along the boardwalk looking at the dolphins jumping, opened up her bakery works or ass off like rolling dough, making coffee making pastries for eight straight hours where she barely has time to like take a break to go pee, sells all that stuff talks to people, is sort of the center of this community, closes up, cleans up, preps the stuff the next day, takes the bike back, another bong hit surf dinner, hanging out with friends goes to bed early, repeat that six days a week with like, maybe a week off a year, She works really hard. She makes money but she doesn't make tons of money, she's not making exponential growth. She's not trying to franchise this thing. She wants it to be a lifestyle business, the business was designed to be a lifestyle business. If you speak to a venture capitalist or anyone in sort of the world of private equity, I think a lifestyle business is a four letter word that is the least desirable thing because you can't extract greater profit out of it, it exists in this sort of sustainable state for the owner but if you're that owner, a lifestyle business is great because it affords you the thing that everybody wants and is very hard to buy when you're working your butt off at a job at a law firm or any sort of business that's sort of seeking that exponential growth, which is that lifestyle, it's time with your family, it's time with your friends, it's time to do the things like surf that you want to do. Read the biography of Ellon Musk read a biography of Steve Jobs and beyond the greatness and the genius are the stories of two guys who churn through marriages, abandon their children, never took a vacation never decided to sort of enjoy the things in life and they're hailed as geniuses, rightly so for their inventions and their ideas and whatever but like you have to question at a certain point what life is, and I think a lot of people are like, oh, I'm gonna, you know, I'll sleep when I'm dead are all enjoying my life when I make that billion dollars but that's not how the roller coaster ride works.
Eric Janssen
And not to plug your wife too much but I felt like the one of my wife and I were on that path we got to know each other because your wife helps people with that transition, I think we were on a path where we were not gonna say growing apart, we had a pretty solid foundation in our relationship, but when you have two kids, and you're both traveling a quarter million miles a year, you sort of high five on Friday night, catch up on sleep, and then you're at the airport again, on Sunday, we had that moment where it was like for what, what are we doing here, we're gonna be one of those statistics where you give up everything in order for what a newer car that Porsche no one cares about legitimately. I mean, there's a whole industry now of people who help you through that transition of like that crisis of I thought I would wanted this thing, but I ended up not wanting this thing. This class is about trying to teach people the skills that they need to be entrepreneurs or to think entrepreneurially. You had some anecdotes in the book about things that you learned from your father with respect to entrepreneurship, what are the things that we should be teaching or can be teaching young entrepreneurs or hopeful entrepreneurs?
David Sax
So I think we get back to that definition and I'm not sure what article you shared with the class that I wrote but all that happened in the initial COVID fog, so it was just like stealing five minutes away from my children to write articles for the New York Times. I wouldn't recommend doing that again, but here we are. We talked about that Schumpeter's definition of an entrepreneur but Joseph Schumpeter was not the man who coined the term entrepreneur. He wasn't the first one to write about it in that sense, either. He came around, he wrote that in 1947, I think, like two years before he died, you know, the term is a French term, and it used to mean all sorts of things, military commanders, somebody led an orchestra, it kind of goes back. In about 1730, there's this French Irish economist, Richard Conti in Paris, and he writes a book, which actually gets published like 20 years after he dies. It's a series of essays on the economy. It's one of the sort of first books about modern economics. In it, there's a chapter on the entrepreneur and he says there are two types of people in the world, there are those who work for someone else for a fixed wage, you're going to be paid $1,000 a week or whatever and there's those who work for themselves., and all the rest are entrepreneurs from a beggar on the street and the farmer who takes their pumpkins to market to the wealthy merchants and ships across oceans and sort of grows these empires. I think that is still true today and what is the thing that links all of them together? What is the thing that links, the person who might have a side business or side hustle in their dorm room of Western selling logo caps or, I don't know, used to be weed, but I guess not, whatever, like selling some service, or some sort of thing, anyone here have a small business that they do, I'm going to use you as the example. No? Masks, anybody in the mask making business?
Eric Janssen
They can't get to mute quick enough to put up their hand but there are a handful for sure.
David Sax
Okay. Yeah. So whatever your business is, whatever that thing is, to your titan of business to the guys at Shopify, or, whoever owns that sort of big thing, the poster child of entrepreneurship and the only thing that links them together, it's not money, it's not growth rates, it's not funding, it's not children screaming in the background, it is two things. It is freedom and risk. Every entrepreneur has an accepts that duality of forces into their life, when they become an entrepreneur, and they live with it throughout the course of their life as an entrepreneur. The freedom is the freedom to determine your work, what you want to work in, how you want to build that work, and why it's important to you and how you structure your life and your work around each other. For someone like my wife, Lauren, who's a career coach, and that's how Erica, and myself, who is essentially a freelance writer and speaker and journalists like, we have structure life around that idea of lifestyle, we want to spend as much time with our kids as possible, and we probably sacrifice money to do that. This past summer, for example, after dealing with fighting with the kids and juggling home school, and whatever, in this pandemic, I was like, I'm not going to work this summer, I'm going to do nothing but like, just be with the kids, because there's no other option and that was the freedom that I had. That freedom on the other end of the spectrum could be I'm going to be the person that builds the billion dollar thing, and nothing's going to stand in my way, I'm going to put 100% of my time to it, and I don't care what happens, I'm going to be the person that chooses my freedom to give back to my community, I'm going to do it in order to live up to a certain set of values, whether they're environmental values, or religious values, or social values, or whatever it is, it is the freedom to define your work in the way that only you can and the only way to do that with complete control is by working for yourself, because you can't go and work in McKinsey and say, oh, but by the way, I want to define my work in this way, they're like, see that thing, it's a dork, okay. Along with that freedom, which is the intoxicating, wonderful part of entrepreneurship, that everybody keeps everybody up at night, thinking about these wonderful things that could happen, the great success, they could have the difference they could have what their life could be like, if only they were to do this comes risk, and they're inseparable. First of all, yes, financial risk. If I don't work and don't succeed, I will not have this roof over my head. I took the summer off of work, I made $0 because nobody was paying me anything, because I decided not to work, there was no check coming in, I didn't take serve and take the Justin bucks probably should have and so there was always that risk. The risk of the business could fail and of course now during the pandemic, you go out in your community, whether it's London, or here in Toronto, and you look at all the stores and restaurants and gyms that have closed down and hopefully seeing the strip clubs. You know that behind that boarded up window is a family, and a life, and hopes and dreams, and investments and debt and that leads to the other part of the risk, which is more than just money, it is that personal thing. As an entrepreneur, you tie your personal identity and your life in with your business. It's your idea. It's your capital, it's how you identify yourself. I am David Sachs, the writer, here's my name on books, this is all I kind of have. I am so intricately tied to that, that when the inevitable ups and downs of the business cycle happen, I am torn along with that personally in a way that I can't blame on the bosses upstairs or the market or Susan in accounting screwed up the thing or whatever, it's all on me. That's the other thing that keeps you up at night is that worry, not just about your financial performance, but about the very essence of your identity and while most courses and books and articles about entrepreneurship will focus on the business strategy, and sales and marketing, and all this sort of technical aspects that you need in order to become and grow and succeed as an entrepreneur, and all of those are extremely important. Whatever Eric's teaching you here, listen to please. One of the things you actually really need to start thinking about, if this is something that you genuinely want to pursue, is that relationship between the freedom and risk and how you're going to deal with that. What is the freedom that you actually want? What is your reason for being an entrepreneur, besides just making money or maybe that's entirely it and what is the risk that you're willing to entail to do that? And how are you going to deal with that, because it is not going to be just this great, I want to be a billionaire, and I'm willing to take the risk, if I lose the money or whatever, it's going to be a much more complicated thing. This is the thing that often separates the entrepreneurs who are successful in the long term from those who aren't, is that they're able to deal with the emotional consequences of it, they're able to navigate, they're able to endure the rollercoaster ride, the ups and downs, and the twists and turns and all the nauseating stuff in the middle, because that's what it is.
Eric Janssen
I think there's, at least I thought I would be the exception, like, no, I can balance it all, I'll have the perfect family life, and I'll be in good shape, and I'll eat well, and I'll be a great dad, and I'll keep cooking my own meals, I'll volunteer and all those things. The reality is at least for me after kid number two, I was like, somehow keeping it together, and then it all just sort of fell apart.
David Sax
You're not supposed to tell that to the 20-year-olds Eric. There not at the breading age yet, come on. Kids screwed up children. Here's the lesson.
Eric Janssen
But they're a forcing function because it made me think about what actually was important and I ended up coming back to teach full time. I feel like truly this is where I want to be in some capacity for the rest of my life. So cool. The balance between freedom and risk, I like that. We're a little bit over time, but I know you've got some flexibility it sounds like which is awesome. We won't spend too much time but I've got a bunch of questions not in that chat, but privately to me and students have had a chance to upload them. There's one that got uploaded the most and that's from Osman, do you want to so the original question was your view that the vast majority of VCs, don't realize that all of these biases are baked into their investment philosophy? The question was, do they not realize that those biases are baked in and why do they continue to focus on this sort of model given that the majority of companies and founders don't fit that narrative?
David Sax
That's a really good question. I think there's a realization that it is an issue like other issues, like systemic racism and various other parts of the society, but it works for them. We've elevated the venture capitalists to this exalted place as this kind of gatekeeper of entrepreneurship and that's happened through the success of companies like Facebook and the popularity of well known VC investors, like Peter Thiel, who is a truly evil individual and, Marc Andreessen and, others here in Canada, for example, who are constantly written about and profiled and, and asked to sit on panels, and whatnot and we bake it into these models of demo days, and incubators and accelerators and whatnot. We have to remember that venture capital is like a very small percentage of the world of investing, even in entrepreneurship. Most entrepreneurs, most people starting businesses, even successful, huge businesses that you know, about Canadian Tire, Lululemon, Pizza Pizza, they don't go to venture capital, they don't seek venture capital, they don't need venture capital, venture capital is for a very particular type of business and yet we've expanded it in our popular imagination to be part of something bigger and something grander. I think, to your question, why do they not sort of seek that it's like, they're seeking the thing that fits into their model, they're seeking the peg that's going to fit into the hole that they have, which is like we want a company that we can invest X amount of dollars in, it's going to do you know, 10 to 100 X in under 10 years, we can deliver this return to our investors at 10% minus our 2% and 20 carrier, whatever, that fits into that model but that doesn't suit most businesses, that doesn't suit most entrepreneurs and when you focus so much on that, you're actually missing a ton of economic opportunity of all the businesses that don't necessarily fit into that, but could be huge, wildly successful businesses that if you invest in in a different way, could actually provide a great return. There are a growing cohort of alternative investors alternative investment funds, even in the world of kind of venture and technology, they're saying, hey, this model of the way the venture capitalists been structured and the incentives that it has, and the problems that are generated by virtue of what it demands, is broken and they're trying to build new alternatives, that are going to allow for, let's say, more sustainable growth, or for a company to say, look, we want you to grow this company, we want you to have profits, we want you to grow sustainably, we don't want you to just have it an exit in five years, that is actually against what we want and we can see a greater value in that. But we become so obsessed with that one thing that we measure so much against them.
Eric Janssen
Another one here, that's got up voted the most, do you see a problem with the way business planning is taught at universities? How best can you balance the importance of good analysis? For example, in our one of our projects, write a business plan, and how big is the market and who are the customers and all those things, so how do you balance good analysis with just paralysis by analysis? It sounds like a lot of the entrepreneurs you interviewed didn't even write business plans, they just said, I want to do this, let's go. So how do you balance those two?
David Sax
It's remembering this thing's inherently personal and there's no right answer to it. I think that's the thing. Coming up with a plan is good looking at, okay, how much is this going to cost, let me do a little bit of research into this to see if it's sort of a viable thing is a smart exercise and these are tools that you can use, but I think where it gets dangerous, or almost anti-productive is like, okay, so as long as I tick off these 10 boxes, then it's going to be a good successful business. I think that's where that sort of business plan competitions or the pitch deck demo day thing twists a little bit of that around, it's like, okay, you've said hockey stick growth check, okay, you have this cool graphic check, like you promised to change your world check, you have ukulele music in behind your Kickstarter, video, check. All these things are good, yours is going to be the successful business and oh, you say you're gonna start a company that, sells craft cider? I don't know, do we need more cider? It's like, oh, well, that one ends up being successful. At the end of the day, it's a tool. When you ultimately take that jump into business, one is like your plan changes on that day one, because it meets the reality of the market and again, becoming an entrepreneur and starting a business is not an entirely economic thing. It is a personal thing. You're putting yourself into that your desires, your tastes, your histories, your biases, all of that none of that fits into business plan, but a lot of those things are going to be what makes that business what it is. I think you have to remember that. You're remembering that it is that risk, it's that personal freedom aspect of it that is going to make that business yours, it's going to make that business its own thing and some of that might be contradictory to what should go in a business plan. Some of that might make no economic sense on the face of it, but might actually be the thing that that does well, Ben and Jerry's they didn't get investors it was two random hippie stoner dudes in Vermont who were like, oh, let's make like these funky flavors and we're going to drive around, it's going to be organic and nobody even knew what that was back then and we're gonna put these funny like, things on let anybody come to our factory and they went to investors, I'm sure people like guys, this is the stupidest idea, what, what are you two bong heads thinking about? And yet that's what it was. That's what the essence of what it is versus someone who is trying to copy Häagen-Dazs or Baskin Robbins for example. The business plan is a tool and a very valuable one that you need to pay attention to but it is not the key, it is It is a starting point.
Eric Janssen
The last one here that I think still is the one of the higher up voted ones. You mentioned about this sort of wall of heroes with these great entrepreneurs sitting next to the people who changed the world in different ways. The question was, do you think that with that great power comes great responsibility where entrepreneurs are now going to be held to this sort of higher standard where they sort of new definition, it's not just innovation and disruption, it's actually going to be measured against social justice and activism and all those sorts of things, sort of the not just for profit businesses is our narrative of what makes the hero entrepreneur changing?
David Sax
Possibly, I mean, look, Peter Thiel, Mark Zuckerberg, they might be your hero, if those are your values, if you're a libertarian, and you believe that the thing that an entrepreneur stands for is what you read in the fountainhead and t's all about just innovating and creating, growing the economy and like, that is the thing. There are others who like Ben and Jerry believe that it means something greater, or Yvon Chouinard from Patagonia, or any other numbers of entrepreneurs that believe it's for the greenhouse, that's where that personal aspect comes from, I think and that's where that diversity of voices and faces and entrepreneurship is something that's important, because we typically, there's this like, tack on of values and ethics, it's like, oh, we're a company and for every shirt, we sell you, we're gonna give another one to charity and, that's the good thing that we do and you're like, okay, cool, tick, you've ticked off the, the Corporate Social Responsibility box and that's what gets your articles written about it or whatever but there's another aspect of it as the company that makes sure and they don't give them away, but they actually have created a more cooperative system of the way they treat and pay their employees and they'll brag about it but it's actually something that keeps more people in that community and keeps more jobs and gives them a better wage and this is sort of that quieter thing. Every entrepreneur brings their own personal values to what they do, regardless of what those values are and that shapes that business. I think there's definitely a corrective that we're seeing now, especially in the world of tech. I mean, if I asked you guys 10 years ago, the Ivey class who would see Mark Zuckerberg as a hero, there would probably be a lot of hands going up. Does anyone see Mark Zuckerberg as a hero today? No, he's like a pitiable, despicable. He's was asked questions the other day about something and in an interview, it's like, so how did you feel about this genocide that happened specifically because of what you did? And he's like, well, we just try to, let everyone have conversations. That does not seem like the type of person that belongs next to Martin Luther King on a wall in Conference Center in King city, Ontario.
Eric Janssen
Okay, well, David, we could go on for some time and I got a bunch of questions here but I've kept you 15 minutes past. I promised I'd have you out of here. I really appreciate you coming in and sharing a little bit about what you learned with the class and your expertise, it's been good to reconnect. You're welcome to stick around, but I know you've got other obligations. Please, get out of here, but we really appreciate it. Thank you.
Introduction/Outro
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