Entrepreneurial advice from the horse's mouth

A few books have been released recently where entrepreneurs impart their managerial and strategic advice on the world. Of course, they are all successful which means that ultimately they are explaining what they did that made them successful. We should be sceptical. I remember an old Dilbert cartoon with the boss saying something “I’m reading the books of successful leaders and am going to do the things they all did.” The response from Wally was “none of them read the books of successful leaders.”

I have read four of these books recently. In each case, I thought they were books I would like my MBA students to read. The advice was likely to be right and they all had the quality of challenging conventional wisdom. The first I’d like to mention is How Google Works by Eric Schmidt and Jonathan Rosenberg. These two were for a decade the ‘adult supervisors’ at Google. I have written about Rosenberg before  The book is a set of anecdotes peppered with good advice. The best advice is to ‘default to open’ both internally and externally within a company — if only I could get my own employer to think like that! It could easily have been entitled “You’re wrong” because basically it is story after story of some non-adult teaching the adults how to think differently. In other words the theme is the common: “I went there to teach these young kids a thing or two and ended up learning more from then than they did from me.” I can’t help but be reminded of this Onion article but that doesn’t make their journey any less interesting.

What that book misses is a real over-arching framework. It offers advice supported by an anecdote but does not really give you a way to think through situations. That is a common thing. For instance, from what I have seen to Y-Combinator President, Sam Altman’s, Stanford Start-up class, it is all basically the advice-anecdote route. That does not mean that this is bad and it is a good prod to get you to think but it is far from a ‘Master-Class’ that a University would provide. A more academic approach gives you the framework.

Which brings me to Peter Thiel’s Zero to One. This also started as a Stanford course but Thiel has a framework. For entrepreneurs he advocates looking for monopoly. Now I have written about this before and I think there is merit to the approach. But it is also interesting how it is diametrically opposed to the message given by Schmidt, Rosenberg and Altman. That I suspect comes from the fact that Thiel’s approach is closer to a standard economic approach to entrepreneurship whereas the alternative is something different. And as I have said before, that something different does not necessarily mean wrong but more that it has received insufficient attention from economics and, indeed, all management academics.

Is there a sweet spot between the anecdotal and the analytical? Six months ago, Yale professor Barry Nalebuff sent me a copy of Mission in a Bottle: The Honest Guide to Doing Business Differently and Succeeding, a book he had co-authored with Seth Goldman, his Honest Tea co-founder. I love Barry’s books. They have been important in so many ways. Thinking Strategically helped get me into game theory. Why Not? helped me think out of the box. And perhaps most importantly, Coopetition became the basis for my own MBA classes (leading to my own textbook  and set me down a 15 year course of thinking about bargaining more seriously as a foundation for economic models. So you would think that I would have picked up his new book and started reading right away, just like all of the others. But no. It was a graphic novel and I had never really liked reading those. I found the mixture of artwork and text just too confusing. I love cartoons but this longer form mode was never my thing; although I found the Madefire approach pleasing so maybe that is the future. Finally, it was just going to be their story of founding a Tea company. I thought I knew that story already: professor and student find gap in tea market, brew tea in kitchen, sell it to Barak Obama, sell to Coke, yada yada yada, made lots of money.

Last week I ran into Barry at a conference. We talked about the book and, indeed, that I wanted Honest Tea to be a case for my entrepreneurial strategy class and writings — it is a great example of a value chain strategy. He told me that I could just give them his new book but I had to admit I hadn’t read it yet. Barry had explained that they had chosen that format to do things a little differently and that it would be more digestable that way. I said that it wasn’t for me and that I worried that my MBA students would not like it either.

Back in my office this week, I picked up the book and, I know this is cliched, I couldn’t put it down. As it turns out, the graphics in the book are not of the ‘action’ variety (how could they). Instead, they are simple and friendly and as it turns out, while 300 pages seemed daunting, 2 hours later I was through and had absorbed the whole thing. Their format call had actually paid off once my initial barriers — and I have to admit a dose of guilt — had been overcome.

But more than that is the content. This book falls into the “focus on execution” mantra that is Schmidt/Rosenberg/Altman more than Thiel. But it also fills in the “yada yada yada” in important ways. First and foremost, it is a book that takes you on a 10 year journey of a hard start-up life. Mostly that is Seth Goldman but the pressure was clearly felt throughout the founding team. More critically, however, the hand of an analytical framework existed in the whole start-up’s story. Barry is a game theorist and fancies himself an strategic entrepreneur (indeed, back when I first met him in 1996 we had a conversation about what he would have done if he were not an academic and he said “entrepreneur.” I told him he was dreaming but, as is often the case, I’m eating my words now). The point is that Honest Tea was a teaching case for him and a playground to try out his own ideas. There are flashbacks to class discussions — that would have been hard to capture without the graphic format — and there are internal debates of the kind “Barry comes up with completely off the wall idea, someone tells him he is crazy, he adjusts and they do something moderately off the wall instead.” Each one of these moments is a teaching case.

The upshot is that Mission in the Bottle is the top of my pre-reading list now for all my entrepreneurship classes. It is a must read. It is not high tech and not as well-known (especially since I still can’t get Honest Tea in Canada!). But it is the right mix of analytics, anecdotes and advice.

Finally, I started this post with a Dilbert quote let me end with the book Dilbert’s creator, Scott Adams wrote offering his own advice. How to Fail at Almost Everything and Still Win Big: Kind of the Story of My Life is a fun read. It is at the Thiel-spectrum of analytical (Adams is a former econ major after all) but it has some useful pointers as to habits that can make you highly productive. I think it could be shorter but if you are looking for a little thoughtful inspiration, it is a good place to start.

One Reply to “Entrepreneurial advice from the horse's mouth”

  1. I enjoyed this post. Would you mind elaborating more on how you are ” thinking about bargaining more seriously as a foundation for economic models”? I find that approach ensnaring.

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