It was, and still is, my intention to write here regularly. And so many things have happened recently that deserve mention, but I’ve careened from event to event with little time for reflection, let alone time to organize and explicate my thoughts. With that in mind I’m going to give several subjects a short treatment here today and reserve the right to write about each in more detail later should I get some free time. It was October when I last published. Ouch. That’s bad, even for me. I will attempt to do better.
First, we had a successful elevator pitch competition this fall. We loaded up students on duck boats, drove them out into the Mobile Bay and let them give their elevator pitches to judges. We gave away a few thousand dollars and the students had a great time. When I was hired at the University of South Alabama that is what I was hired to do. My previous experience at the University of Cincinnati running their pitch competition was a tremendous help in getting this one off the ground. Because I had been through it before I wasn’t nearly as nervous as the other professors. Having said that there is no way that the event would have been nearly as successful as it was without the guidance and support from my partners in the Melton Center for Entrepreneurship and Innovation. Jennifer and Don were amazing. Our admin Rachel was amazing. The students that helped, Brooke and Henry especially, were amazing. I am grateful to have found a university with so many caring, competent people. If you’re interested in the competition, an article including results can be found here and more information on the competition itself can be found here.
Second, The Roundhouse, a co-working space, angel investment aggregator, and accelerator mentioned in an earlier post, has folded. It appears that some person or person at the facility was less than honest, less than competent, or both. I feel bad for the budding businesses that were harmed by this, and I have reached out to the ones I had a personal interaction with to help plug them into other resources. This serves as a reminder to me, and should serve as a lesson to everyone to do your homework before entering into a relationship with any business or person. To be honest, I’m not sure the community needed The Roundhouse. This community does need actual angel investors though. So if you’ve got some cash and don’t mind taking a little risk let me know.
Third, the spring competition is underway. It is called the Coastal Venture Competition. You can find information about it here. I’m really excited for this competition and much more nervous. I’ve never run a New Venture Competition before. I think we’ve come up with a way to get a great competition out of our students and still meet them ‘where they are at’ currently. The general idea is that they will submit an entrance video, which in essence can be a video taped elevator pitch or commercial, and then over the course of this semester work with me, other faculty, and our mentor network to develop a slide presentation worthy of presentation in front of a live audience of students, faculty, judges, and potential investors. We are not requiring a business plan, but supporting information will be taken into account to determine who gets to present. We’re giving away $12,000 to the top 8 places, so I shouldn’t be worried about getting eight quality ideas, but I still am.
Fourth, we have four local breweries that are all seeking and acquiring funds to expand. It’s odd that they’re all in the same industry and they’re all seeking funds in different ways. As I understand it one is selling revenue shares, one is self funding, one is taking a bank loan and one is doing equity based crowdfunding. It seems like a strange confluence of events and I’m looking for a way to get a paper out of it. If you have any ideas let me know. Speaking of writing, my tenure clock has started (for the first time ever) and I’m planning on writing all summer long. By the time August rolls around my goal is to have three papers ready for USASBE submission, two abstracts ready to go for Babson, two abstracts for APEE (why write the paper if the abstract isn’t accepted) and a paper for the Southern Management Association. I also need to have a good start on AOM submissions. I believe that they allow three, so seven papers and four abstracts. That’s a lot of writing for such a short period of time, but I’m stealing time where I can to get a head start on it. All that to say if you need data analysis, or if you’re working on something cool in the general area of entrepreneurship and you’d like to write with me over the summer I’ll be available.
Fifth, It is Mardi Gras season down here. These people take their holiday seriously. It has been amazing. There are multiple parades every day. There are more parades next weekend leading up to Fat Tuesday than Muncie Indiana (my hometown) sees in a year. And the small ones are better than the big ones up there. There are many, many social events during the season. My wife and I have been invited to one this year. I imagine as we get to know more people we’ll be invited to more in the future. I look forward to that for many reasons, not the least of which is because I’ll get to buy her some nice evening wear and she can’t tell me no. I’ll have to buy myself one to three tuxedos, depending on what events we go to. Full tuxes with tails are a thing down here, and they’re required for certain balls. I’ve been to several black tie affairs in my life, but when this happens it will be the first time I’ve been to an event that requires tails. Fortunately for me , the event we’re going to this year just requires a suit, which I already have.
As the man says, ‘that’s the news from Lake Woebegone.’ I’d like to get into some more depth on a few of these things, and maybe I will later. For the time being though, this should serve as a quick catch up of life and business for me in Mobile Alabama.
Over the past couple weeks I’ve been learning how to solve the Rubik’s Cube. It’s a puzzle that always bothered me as a kid. Not because I couldn’t solve it (I couldn’t) but because other kids could solve it and I couldn’t. That is really petty, I know. But it’s true. I could beat those kids in chess, I scored higher on every test (and got lower grades in almost every class, but I didn’t care about that) and was a top performer in pretty much every academic contest you can think of. But I couldn’t solve the cube. I bought a book on how to solve it. That got me to where I could solve one side and the edges on that side, but I couldn’t get any farther. I learned to take it apart and put it back together solved. (That should have told me something about myself. I’m not sure what…) I didn’t peel the stickers off, you could detect that, but if I turned the top side 45 degrees I could pop the corner out and disassemble and reassemble it and no one could tell that I ‘cheated.’ Eventually something else attracted my attention and I moved on. Thinking about it, knowing that all these other people could do it made me feel dumb, and I didn’t like that.
Thirty years later, I see a man doing magic on Penn & Teller’s Fool Us with a Rubik’s Cube. Six dollars later Amazon delivered a ‘speed cube,’ which turns easier and has colored plastic sides instead of stickers to my office. I’m not sure if it comes apart the same way, because I can solve it pretty easily now. It turns out that all the techniques in the cube solving book I studied as a teenager can be distilled into half a dozen fairly short algorithms (in this case directions for telling you which side to turn and whether to turn it clockwise or counter clockwise).
If I thought I felt dumb before I was mistaken. Knowing that there’s a trick to something that I don’t know doesn’t really bother me. I’ve seen Penn & Teller perform the Bullet Catch trick many, many times. I have no idea how they do it. I have theories from the ridiculous (very lightly charged loads that really fire across the stage, break glass during the flight, and end up where they can be easily palmed (even I’m not crazy enough to think that they’re actually catching the bullets in their teeth)) to the highly technical (they have cameras and experts making identical bullets when they secret on to the stage somehow, or a device in their mouth that copies or 3d prints the bullets somehow), to the mundane (plants in the audience, which I’m confident is not how they really do it). I know there is a trick to it, and that’s why I can’t figure it out. But with the cube I didn’t even know there was a trick. When someone solved a Rubik’s Cube in front of me I thought I was watching a wizard perform magic, but I was watching a magician perform illusion. I didn’t even know that I didn’t know.
This is exactly how Steven Brundage, the cube guy on Fool Us actually fooled Penn & Teller. What he did wasn’t illusion, it was artistry. It was artistry developed by deliberate practice. He learned to do something so well, that the performance of it looked like magic, even to trained magicians.
I will never (probably) be able to solve a cube as fast as Brundage, nor will I ever (probably) be able to build a business like Gates, or Jobs, or Branson. But I know some things about entrepreneurship, and cube solving that I did not know before.
First, both are skills, with all that encompasses. They can be learned, and they can be taught. Thinking otherwise just means that you don’t fully understand the algorithms involved yet.
Second, neither is easy, even if you know the ‘tricks.’ Especially at first. I’m two weeks into my cube training, and I still have the algorithms by my side to look over at. I’ve also started, or assisted in the startup of a great many businesses. I still use a ton of tools (tricks) to make sure that the business starts off properly.
Third, nothing happens without thought and action, working together.
Fourth, some people will get it easier than others. That does not mean that those others are incapable of getting it. It just means it will take them longer. If you’re trying to understand entrepreneurship, or trying to be an entrepreneur, do not despair. You can, with help, figure this out.
Fifth, as skills, the more you do it, the better you will do it, but only if you practice deliberately. At some point I will address deliberate practice here, but in the meantime, look up Anders Ericsson’s work on the subject. (If you do that you’ll have no need of my thoughts about it.)
Sixth, even though I’ve used the word ‘trick’ several times, it’s not really a trick, or a set of tricks. It’s a set of techniques that you use in specific situations. You learn the techniques and you learn when to apply them. With a Rubik’s Cube, it’s a sequence of clockwise and counter clockwise turns. With a business it is market research, product validation, value proposition iteration, or whatever specific tool is needed at a given place and time.
Lastly, sometimes businesses (and cubes) can’t be ‘solved.’ They just don’t work. For a cube, this means probably it was taken apart and put back together incorrectly. For a business, there are many, many reasons this might be so, but they all boil down to that business not having the proper parts in the proper places. That might mean that that particular business will never work. It might mean that parts need to be added, removed, or moved around. But what it does not mean is that you are incapable of being an entrepreneur. It just means that you plus that business, in that time and place don’t work. Failure is an event, not a vocation.
On the occasion of visiting the Roundhouse, labeled online as a ‘startup space’ and in a Journal of Organization Design case study as a ‘startup factory’, I set out to clarify my personal knowledge of some of the various components of an entrepreneurial ecosystem. I was seeking definitions and norms for physical locations that, at least theoretically, assist entrepreneurs in launching their businesses. I focused on co-working spaces, incubators, and accelerators, as they appear to be by far the most common combinations of physical structures and entrepreneurship specific assistance. I conclude with a brief discussion of Roundhouse specifically.
A co-working space is a shared environment that entrepreneurs and business people can use on an ad hoc or contractual basis. Often there are shared resources such as internet access, tables, computers, coffee machines, meeting rooms, and so on. Usually, there is some sort of fee for accessing the space, ranging (rarely) from a ‘per use’ basis, to ongoing monthly fees, to annual contracts. There is a growing trend to offer co-working spaces for free, at least in major markets. Before this was called co-working, it was called renting office space. There was a company (probably still is) Called Regus that would rent you space by the day to by the year with shared secretarial, fax, internet, boardrooms, and so on. And people used libraries and coffee shops, with varying levels of success. They still do.
An incubator is a much more sophisticated bundle of resources. The purpose of a business incubator is to help nascent and early stage businesses develop. To do this they offer a suite of services. Incubators vary in the ‘mix’ of products and services offered. Some commonly offered services are high speed internet, help with business basics, introductions to investors and business experts, preferential access to higher education, and intellectual property advice. Sometimes also offered are market research, legal and financial experts, comprehensive business training programs, and access to capital through preferential loans, angel investors, and venture capital. Incubators typically don’t have a timeline for a business’s exit, or if they do it is measured in years rather than months. Incubators are most often grant funded and/or not for profit. Their goals are usually socioeconomic in nature, things like job creation, technology commercialization, or diversifying the local economy. Oh, and they want to help the company succeed too.
Everyone wants to be an accelerator. But they’re not. Incubators and accelerators both prepare companies for growth, and they both provide guidance and mentorship. But accelerators operate on a faster time table, and often put significant amounts of money into the mix. In exchange for this money and the services offered, the accelerator takes a piece of the company. The numbers I found indicate that 6-7% is about average, for cash and prizes totaling $150 thousand to $250 thousand. Most, but not all accelerators have a ‘standard deal’ that all companies must agree to to be considered for admission. An accelerator program is typically an intense 3 to 6-month learning period, during which, and immediately following there is a great deal of very active mentoring going on. In addition to the mentoring, a comprehensive suite of services, similar to incubators, is offered, with specifics varying by location.
The Round House
Based on their website, the Round House offers all of the above in Opalika, and now in Mobile Alabama. From their website it looks like they offered a traditional accelerator in 2015 in partnership with John McAfee and others. However, I don’t see any current evidence of a typical accelerator format. In any event, a visit to their space in Mobile and a talk with Kyle and Robin left me convinced that they were something new. They have co-working space. It is very nice space. If I were in the market for co-working space it would definitely be on my short list. Kyle didn’t seem to care for the incubator model however. He indicated that he wanted to move much faster with the companies he chooses to mentor. In general, I view that as a good thing. Fail fast, fail often, fail forward and all that. And if you’re going to succeed, why not now? Why drag it out? That all makes sense. And as I’ve come to understand the rest of the model, it makes even more sense.
What this company seems to do, at least some of the time, is make what can only be described as angel investments in nascent and young companies. Instead of forking over a bunch of cash however, they provide all the same services that an incubator or an accelerator would provide, plus additional services, such as hiring programmers to finish your software. I can see the virtue in this. Often, a fledgling entrepreneur doesn’t really know what to do with the money they get. Without going through their process myself, or without analyzing the numbers for the businesses they have ‘graduated’ I’m not sure if they’re a good deal or not. At first blush I believe that they are taking a larger equity stake and providing similar services to companies than accelerators do. That being said, I imagine that most of the companies that they take under management (or whatever) wouldn’t be able to get into an accelerator in the first place.
So really, it’s the same old story. If a company could qualify for Y Combinator, or The Brandery, or Amplify, they’d be in one of those types of startup accelerators. Since they can’t, they are coming to a lower tier of service provider. Let me be clear, when I say lower tier, I do not mean that Round House is not as good as Y Combinator. (That’s a bad example. Probably no accelerator is as good as Y Combinator, but you get my point.) All I mean is that their money seems more expensive than other money. It’s similar to someone with a higher credit rating getting a better interest rate. The better ideas get better terms. But if you’re in Mobile or in Opalika and you’re looking for access to capital and mentoring, do your due diligence and check out Round House. It might be a good fit.
What is entrevangelism? What do I mean when I say that I am an entrevangelist? What gives me the right to make up words, willy nilly? I’m a PhD, that’s what gives me the right. Well, that and I say so. So there. Who made up willy nilly? You have to admit that entrevangelism sounds way cooler than willy nilly, right? Besides, all words are made up (mind. blown.).
So, let’s wrap our heads around what I’m trying to communicate with this portmanteau. (a portmanteau is a combination of the parts of two (or more) words. Typically the meaning of the portmanteau is obvious if you know the root words.) It is a combination of entrepreneurship and evangelism. It could mean the financial exploitation of the Christian religion, ala Jim and Tammy Fay Baker, but it doesn’t. I’m using evangelism in the more abstract, as a zealous promotion of a cause. Entrepreneurship, I’d love to say is self-explanatory, but after spending the first year of my PhD program with a small plane load of very, very smart people trying to agree on a definition, I’ve concluded that entrepreneurship means different things to different people, and we will likely never agree on a common definition.
So I guess the next thing is to determine what entrepreneurship means to me. If I am holding myself out as an evangelist for something, it would be pretty useful to know what that ‘something’ is. Before the PhD, an entrepreneur was someone who started a business, so that can be the base of my definition. It’s both more and less than that though. I don’t believe that a business is strictly necessary for one to be an entrepreneur. It is more convenient to have a business, or to be thought of as being ‘in business’, especially if you will be engaging in the same or similar entrepreneurial activities over and over again. But if your activities are varied, but value creating, I could still consider you an entrepreneur without you having an actual business, whatever that means. (And I’m sure you’re super concerned whether or not I consider you an entrepreneur.)
Also, not all engaged in business are entrepreneurs, at least not to the same degree. This is highly subjective, and as with many highly subjective things, probably wrong. But I view the businessperson who runs a Subway franchise as less of an entrepreneur than the independent restauranteur. Risk is part of it, but not just risk. The high stakes gambler is taking huge risks and not an entrepreneur. Creativity is part of it as well, but also not just that, the artist is not an entrepreneur by virtue of creating art. Both to me are less entrepreneurial than someone who creates a new product or service and delivers it. Again, it’s not the creativity or the newness, inventors, just by the act of inventing, do not become entrepreneurs. It is only when they somehow shepherd their products to market, either through forming a company or getting some other company to do it that they become entrepreneurs. The essential piece in this case is that their vision has been delivered to the word, and is now creating value independently in the lives of the inventor’s customers. I could parse this all day, but instead, in the interest of saving words, I’ll say that I have an idea of what I’m trying to bring more of to the world.
So how do I do that? I have several strategies. First, I have placed myself in the academic system. There I get to engage with students who are predisposed to starting businesses. They are taking classes in New Venture Creation and so on. They are soft targets. So I train and encourage them. My office door never closes. I push them to create businesses in class and in their lives that will matter.
Second, beyond my required classrooms, whenever someone is talking entrepreneurship I try to be part of the conversation. Honestly, quite often I’m a silent part of the conversation. If I have nothing to add that will make a big difference, I don’t speak up. I’m not in these rooms to be heard, or to stroke my ego. I’m there to make sure that entrepreneurship happens. Sometimes these rooms contain University Committees. Sometimes they contain student groups. Sometimes it’s interested members of the community, or angel investors, or some other group that can help make things happen. Whenever I move to a new community I try to find out who those people are, who works well with whom, and how to get them what they want, which is usually what I want, which is more and better new business.
Third and fourth are outgrowths of two. I group them because they involve public policy. Some of the ‘groups’ I join and interact with are governmental in nature. My instinct, and my long held beliefs tell me that the government that governs least governs best. And from a philosophical position, I still think that. But the fact of the matter is that the United States of America has a giant tick on its neck called Congress, and that tick is sucking the life blood (in the form of money) from the country. Unlike a regular tick however, some of that money is fed back into the country, using an arcane process no one understands. Through my participation in these particular groups I try to access that money and put it to the uses I think best. (The best use of this money would be to leave it in the hands of the people it is taken from but that is not an option, and I trust me more than I trust a random bureaucrat.) So, three is participating in the government led confiscation and redistribution of wealth. I didn’t think I’d ever write that sentence. I feel a bit dirty.
And four is doing research and writing about public policy issues. This is where I attempt to redeem myself, at least a little bit, for number three above. I will always report the truth as I find it. But from countless studies I’ve read, and from the research I’ve done so far, it seems to be that the government that does least is in fact best. Lower tax rates promote business. Lower regulations lead to more and better businesses, and so on. So when I write that, I hopefully move the conversation in the proper direction, by being absolutely truthful.
I am always looking to add to the ways I promote entrepreneurship. I’ve considered public speaking, and I’m preparing for when that will be a part of what I do. I’ve considered starting more businesses of my own, and perhaps I’ll do that too. I’ve considered expanding the message to high school and adult populations and that’s a possibility. I’ve considered adding my voice to the growing entrepreneurship podcast community. I don’t know what all I’ll end up doing, but as long as I’m passionate about it I’ll continue being an entrevangelist.
The most important question though, is probably why. Why is this important? Quite simply, I think that this is the only thing that can possibly save first the United States of America, and then the world. It really is that big of an issue. The United States is drowning in debt. The US is fomenting a race war. The US is making enemies all over the world, and could perhaps be involved in a religious war on a global scale. It is my firm belief that satisfied people don’t fight. If we can create a society that is prosperous enough for all, many of our reasons for fighting go away. I do not mean to make light of people’s legitimate (or even illegitimate) grievances. I understand that in the US there is explicit and hidden racism, sexism, and religious bias. I realize that there are huge disconnects in the belief systems of Jews, Muslims, Christians, all other religions, and atheism. But I do find it hard to believe that young men will be willing to die for these causes when they’re allowed to exist unharrased, practice their faiths as they wish, and they have full bellies, healthy wives and children, and prosperous lives.
It is through creating prosperity that we will create peace. And it is through entrepreneurship that we will create prosperity.