Why entrepreneurs need to be a little delusional
(Poets&Quants) — Ask any of the founders behind Harvard Business School’s most successful startup — from clothing swap service thredUP to website optimizer CloudFlare — and they’ll all point to a single key to getting a business off the ground: Tom Eisenmann, Harvard’s veteran entrepreneurship professor, whose legendary Launching Technology Ventures course has helped legions of budding entrepreneurs find their focus and bring their ideas to fruition. Eisenmann co-chairs HBS’ Rock Center for Entrepreneurship, the campus’ nucleus for new ventures, and leads trips to Silicon Valley and New York for students eager to experience America’s innovation epicenters firsthand.
While Eisenmann looks the part of the tweed-jacketed, Ivory Tower professor, his knowledge of cutting-edge startup practices has won him a dedicated following that extends far beyond academia. But in the classroom, Eisenmann’s genuine interest in his students sets him apart. From nudging them in the right direction when their ideas are out of whack to slipping business cards to those who couldn’t get in his classes, Eisenmann is known for his open door and sage advice. In an interview with Poets&Quants, he shares his insights on entrepreneurial MBAs’ most common mistakes, the Steve Jobs effect and the worst idea he has ever heard.
Poets&Quants: What are the most common misconceptions your students have about launching startups?
Tom Eisenmann: I think we can talk in class about how hard it is to be an entrepreneur and the ambiguity of it all, but it’s hard for them to understand. In most jobs, somebody gives you work. But if you’re an entrepreneur, you must decide what’s going to happen or nothing will happen. It’s this notion that there’s total ambiguity, and it’s all up to you.
I think they also underestimate the emotional ups and downs and the amount of time they’re going to spend selling. Very few MBA programs, ours included, do a good job of teaching sales. And in entrepreneurship you are constantly selling to a new employee, investors, customers, and partners. But we don’t teach it very well, and people aren’t drawn to it. So when students are about to launch, they don’t realize how much selling they’re going to do and how much they are going to have to put themselves in front of people over and over again. In any kind of sales, there’s a lot of rejection, so there’s a lot of emotion that comes with being told ‘no’ nine times out of 10.
We can tell students what the failure odds are, but it’s one thing for people to know the stats, and it’s another to actually feel it’s going to be you. A lot of people think they will be that one person to beat the odds, and I guess that’s good to have that confidence. Basically, we need people to be a little delusional.
What are the most common mistakes that MBAs make when launching startups?
A lot of what we do in the classroom is teaching students to take an idea, turn it into a business model, break it into pieces, and figure out how to evaluate it. But an awful lot of entrepreneurs don’t do that, and they rush into their vision.
There are also a lot of young entrepreneurs who don’t want to expose their idea until it’s perfect. Or they fail because they’re too headstrong, and they keep pushing the idea when the whole world is saying no. Other students flip around too fast from idea to idea, and some never quite quit their day job because they don’t have any confidence in their idea. So there’s a zone between being headstrong and lacking resolve that students have to live in.
To what extent do you think you can teach entrepreneurship?
People who study entrepreneurship debate this endlessly, but I wouldn’t be doing what I’m doing if I didn’t think it could be taught. We can definitely make people better at it.
There are a lot of misconceptions about entrepreneurs, when really they’re just people with a lot of very different personalities. And so the notion that an entrepreneur is an avid risk seeker is not true at all. Some of the greatest entrepreneurs are great at shifting risk to other people.
Do you think there are any entrepreneurial skills that you can’t teach?
The Walter Isaacson biography of Steve Jobs talks about Jobs creating a reality distortion field. That idea has been around since the 80s from Star Trek. It means that Jobs was so mesmerizing and charismatic when he talked about his ideas that anyone he spoke to would just fall under his spell. They would become so captivated by the idea that they would want to follow him and would want to help him succeed. His original Macintosh teams put in 90 to 100 hours per week for the span of a couple of years.
Some of our finest student entrepreneurs have that reality distortion field going, but I don’t know if I can teach that. I can really just show it, put a camera on it, and point it out to students.
Do you ever try to talk your students out of ideas?
I view my responsibility in the MBA program as mostly to teach them. And if I think they’re going to learn something from working on a bad idea for a little while, I’m okay with that because a lot of ideas I think are bad can pivot into something very, very good. Entrepreneurship is all about failure, so there’s a great deal they can learn from discovering why a bad idea is a bad idea.
I’m not too heavy handed in terms of steering people away from ideas. If I think something is just silly or has some obvious flaws, I will intervene. The place where I weigh in is when they are about to come out and launch their startups. At that point, I make them promise me that they will set a deadline for themselves where I check in with them and ask if they’ve made progress and hit those milestones.
What is the worst idea you’ve heard from a student?
In the 2009 graduating class, James Reinhart started thredUP. But the original idea was to have 25-year-old hipster males swap shirts by putting one in a bag and sending it. I told him, ‘James, really, maybe there’s 10,000 people on the planet who want to do that.’ But in the process of developing that bad idea, he quickly learned that families of small children have an amazing need to swap clothing. And that eventually exploded in a good way. He has raised $20 to $30 million from top firms. So sometimes I can see it. Sometimes I can’t.
As entrepreneurship continues to change and evolve, what skills will students need to develop?
We talked about the sales thing a couple of times. It’s always been in entrepreneurship, and we’ve never done a great job in teaching it.
I also think that in Silicon Valley people have a really refined sense of product, and a great entrepreneur is someone who recognizes a great product. So I would say today’s students need to understand design thinking and acquire a designer’s sensibility to understand a great product.