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Key Lessons about Entrepreneurship by Dr. Rogoff

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Key Lessons about Entrepreneurship:
From My Father’s Store to the Dean’s Office

 

I have three goals that I wish to accomplish during my remarks. First, I want to share with you the major lessons I have learned about entrepreneurship during the 25 years I have been an entrepreneur myself, worked with other entrepreneurs, taught entrepreneurship to students at all levels from high school students to senior citizens and from novices to highly experienced business people, and researched the subject of entrepreneurship. Second, I will give you the key elements of the successful entrepreneurship education program that I helped create at my previous school which has become the largest entrepreneurship program in the United States and ranked among the ten best. Third, I will tell you how universities and governments can play a productive role in the process of economic development through entrepreneurship.

The more I have observed and worked with entrepreneurs, the more impressed I have become by their ingenuity, their creativity, their commitment to both their businesses and their families, and their ability to face difficult times and rebound from them. The world depends on these strong characteristics because entrepreneurs add value to our world – not only through their inventions and innovations, but also through their ability to commercialize and introduce original concepts and products to new customers and markets. Entrepreneurs initiate economic growth and the improvement of the standard of living because their work also increases productivity.

Korea’s commitment to entrepreneurship has put your country at the top of all advanced economies and at the center of an improving world. After the nearly complete destruction of the Korean War, the Han River Miracle turned Korea into a modern, innovative country with a globally significant economy. I believe that Korea is poised to achieve economic miracles again, but now more than ever, through entrepreneurship. Korea is, by any definition, a nation of entrepreneurs.

 

My Story

I too am an entrepreneur and I come from a family that owned businesses. My grandparents on my mother’s side, arrived in New York from Poland around 1910 and soon thereafter opened a fruit store. My grandparents on my father’s side arrived from Russia around the same time and opened a deli. When my father returned from World War II in Europe, he took over management of the deli. The deli did very well. It was located in what then an industrial part of Manhattan and his customers were the blue collar workers who worked in warehouses, factories, on the nearby docks, and in the large central Post Office across the street. The deli sold 3,000 cups of coffee per day and, of course, the sandwiches, and other food to accompany it.

From the time I was about nine years old, I worked in the deli on weekends and sometimes after school. It was there that I learned the most important and enduring lessons of business and entrepreneurship. My father was a capable and smart manager. He hired good people, treated them well, and had almost no employee turnover. His policy was to treat his customers similarly well – they were addressed by name and treated respectfully. “Thank you” was the common phrase said – a policy I keep myself to this day. Overall, the store had a bustling atmosphere as everyone worked to serve people as quickly as possible. But there was also an attitude of fun. Employees joked with each other and their customers. It created a culture of camaraderie that made it wonderful place to work and shop. In every endeavor I have undertaken whether in business or education, I have tried to replicate that formula.

When I completed my Ph.D. at Columbia University, I was gripped by the idea of starting a business. In particular, I had studied the economics of regulated industries and with some knowledge and experience with the media business, felt that radio stations represented a good – and low risk – opportunity. I put together a plan to purchase radio stations in mid-sized U.S. cities and raised money from private investors and later from venture capital to put together two companies with, in total, 23 radio stations. During this ten-year period, I learned a great deal about raising capital, buying and selling business assets, sales and marketing, and managing across large distances. It was a great experience. When the government changed the regulatory system to allow for companies to own large numbers of stations, it was time to sell our venture.

While I thought that I would start a new media business, I also had the idea that I might teach a course. After all, I had an MBA and a Ph.D. and now I had ten years of business experience. So I called a former professor of mine from Columbia who was the Chair of the Department of Management at Baruch College, the business school of the City University of New York, and asked if there might be such an opportunity. He offered me a full-time, but temporary, position and I could teach three courses.

Once I was in the classroom, I asked myself why I had not pursued this sooner. The opportunity to be with smart, motivated students and to be stimulated by their questions and interests was a great joy. In addition, I could think more deeply about topics that interested me, carry out research to add to knowledge about topics of importance, and write for other academics and entrepreneurship practitioners.

I was then asked to participate in the founding of an Entrepreneurship Program which, with my fine colleagues, we built to be one of the top programs in the U.S. I will later share what I consider to be the most important lessons related to entrepreneurship that I learned during this period.

Recently, I was asked to become the Dean of School of Business, Public Administration, and Information Sciences at the Brooklyn campus of Long Island University. I accepted this because it represented the opportunity to apply the lessons I have learned in entrepreneurship education to the entire business school curriculum. These lessons include the importance of incorporating experiential learning into all business curriculum, focusing on preparing students for a new – more entrepreneurial economy – in all fields of study, and connecting the school very closely to business so that our curriculum is the most relevant and valuable possible. Combined with Long Island University’s wonderful location in downtown Brooklyn, which is the fastest growing area in the U.S. and the home to many dynamic and entrepreneurial businesses, and it dynamic and supportive administration, I am sure these goals can be achieved.

It is so clear to me that entrepreneurship and education are closely tied together.  Entrepreneurship – especially entrepreneurship related to technology – cannot move forward without an educated workforce.  Education prepares and trains the people who develop new products and services, the people who market and promote growing businesses, and the people who finance these enterprises. Throughout the world, the more educated a person is, the more likely he or she is to be an entrepreneur. Similarly, the more educated a country is the greater economic boost it will receive from entrepreneurial activities.  Because Korea is such a highly educated country with outstanding economic strengths, it is well-positioned to achieve major entrepreneurial growth.

 

 

Let me explain why I believe that Korea already holds the keys to fostering major entrepreneurial activity. I can reveal these keys through the most important lessons I have learned about entrepreneurship:

Most successful entrepreneurial businesses began as a family business.

All the studies we do – as well as my extensive experience – indicate that almost every business begins with the involvement of family members. Steve Jobs started Apple by building his first computer in his family’s garage with the help of his father. Bill Gates launched Microsoft with the help of his father. Jeff Bezos founded Amazon.com with an initial investment from his parents. Mark Zuckerberg begun his entrepreneurial career at his father’s dental clinic.  Entrepreneurs rely on their families for early capital, space, work, and advice. Families provide essential values that imbue the personal and business lives of successful entrepreneurs.

Most businesses not only start with family involvement, they benefit from that relationship. So please watch carefully what your family members are doing and learn from their experiences. Contrary to traditional beliefs here in Korea and in the United States, being an entrepreneur is not a “bad” career path. I know that many American and Korean parents may prefer that their children become so called “high class professionals” such as doctors, lawyers, and college professors, but successful entrepreneurs have followed their own hearts and passions, and have looked beyond their parents’ expectations. In fact, Korea has many great examples of wonderfully successful businesses with families at their core. These include Samsung with the Lee family, Hyundai with the Jung family, and LG with the Ku family.

Entrepreneurship is a team sport.

The image of entrepreneurs starting on their own, fighting for acceptance, and winning against all odds – by themselves – is largely a myth. Even beyond family, successful entrepreneurs must recruit the resources they need to build their ventures.  First and foremost is the human capital required in the form of partners, employees, investors, bankers, and outside advisors, as well as professional services needed from lawyers, accountants, and other technical support providers. Look at any successful entrepreneur and you will see a team.

Ray Kroc, the builder of McDonalds, is often seen as a man who did it by himself. But the truth is otherwise. Kroc had a brilliant financial partner, Harry Sonneborn, who figured out how to finance growth by mortgaging the land on which the stores sat. He had an operations specialist, Fred Turner, who built the brilliant operating systems. And Kroc had a wonderful partnership with J.R. Simplot, a potato grower, who worked with him to develop the most profitable item on their menu, French fries.

There are no unique characteristics that define successful entrepreneurs.

I witnessed this first hand when I owned a brownstone building on Manhattan’s West Side. My family lived on the bottom floors and we rented out two apartments on the higher floors. One of our tenants at that time was a nice young man with a hearty laugh who worked as an analyst at an investment bank. He worked long hours and hated his job. One of his assignments for his job was to learn about this new thing called the World Wide Web. He returned from the conference with the conclusion that a site on the Web would be a great way to sell a large catalog of items. With that insight, Amazon.com was born.

My tenant, Jeff Bezos, was a Princeton graduate who was trying to figure out how to make his way in the business world and decided to start a business using this new technology called the Internet. The rest, as the saying goes, is history. Jeff turned out to be good at many things: raising money, hiring smart people, managing a growing organization, and having a big vision for the future of his company. I don’t think there was any way to know that Jeff would be one of a handful of truly exceptionally successful Internet entrepreneurs. I admired what he was doing, wished him well, but I didn’t pick him out as that star of the future. As good as he turned out to be at many things, he also had the right idea and the right time and was able to recruit the right partners to support his venture.

Many studies have been undertaken to define the entrepreneurial personality. Contrary to the stereotype, entrepreneurs are not necessarily loners or geniuses or visionaries. The research is clear:  No one is born an entrepreneur. All of us – including entrepreneurs – are greatly affected by the combination of the values acquired from our families, our education, and the opportunities we identify for all kinds of work.  But there are some key skills that most entrepreneurs need. Successful entrepreneurs are able to attract financing and partners, and can convince customers to buy their products or services. In other words, they must be good salespeople. When salespeople are studied to determine if there is a particular sales personality, one quality is the most significant: they have a love of learning. Salespeople and entrepreneurs who love to learn are successful at figuring out what their potential customers want and how they can meet their customers’ needs.

Positive characteristics that aid entrepreneurs are self-awareness, flexibility, and the ability to collaborate.

Entrepreneurs who can strengthen these skills have a distinct advantage.  First, in order to build a successful team, entrepreneurs must be aware of their own shortcomings and develop strategies to fill these gaps. Early-stage entrepreneurs typically find partners whose skill set completes the expertise that is needed to make the venture successful. Second, entrepreneurs must be flexible to adjust to changing market demands, competition, financing constraints so they can take advantage of new opportunities. Third, entrepreneurs must know how to collaborate and inspire others to do their best.  This builds a positive work environment for investors, partners and employees.

About 15 years ago, I had a Chinese student come to me. Xaioxing said that she noticed how many American couples had adopted Chinese babies. When she spoke with them, many told her they wanted to keep their child close to her Chinese culture. So Xaioxing thought she could have her sister buy and send her books, clothes, and toys from China for Xaioxing to sell in New York. She created a website, ChinaSprout, and very quickly had a profitable website. Today, that business has evolved into a seller of Chinese-oriented products to large school systems. Xiaoxing demonstrated that she is a flexible entrepreneur.

Failure is part of the entrepreneurial process and often brings important long-term benefits.

Very few entrepreneurs start only one business during their entire careers. It is much more common for entrepreneurs to be serial entrepreneurs – they start and run multiple businesses in succession, some of which are successful, while others may fail.

The largest donor to the Entrepreneurship Program at Baruch College is Mr. Lawrence Field. Mr. Field has become wealthy as a California real estate developer. But he started off slowly and went through tough times. More than once as an ambitious entrepreneur with a young family, he was threatened by banks to take his house to pay back his non-performing business loans.

There is a saying that either you make money or you gain wisdom from every venture.  Successes make you rich. Failures make you wise. Mr. Field became wise then he became rich. Becoming wise about business is an equally beneficial boost to the next venture as earning money. Research shows that experience improves the likelihood of success with the next business. Failure is painful, difficult, and expensive, but it can provide priceless wisdom.

Government plays a major role by creating a supportive environment in which entrepreneurial ventures can flourish.

Every business has at least one partner – the government. The government establishes the rules and shares in the profits through taxes. Successful entrepreneurs accept the role of government and use it to their advantage. Denying government’s role can lead to failure. Government can also be a major potential customer – and provides about a third of the economic activity in most developed countries. Government grants valuable rights such as licenses for the commercial use of the airwaves (Verizon Wireless), the approval to drill for oil or mine for coal (Exxon Mobil), or permission to construct a building on a parcel of public land (Donald Trump). Government sets the rules through regulations on how many exits a store must have, how large its sign can be, and how it can raise money through private sources or public offerings. Many American and Korean entrepreneurs have built successful businesses by helping clients comply with complex government rules, including H&R Block which prepares tax returns for American citizens and the lawyers who guide businesses through the process of complying with complex employment laws. Entrepreneurs who understand the role of government in business and build a strategy around government’s benefits are well-positioned for success.

Prior to becoming a professor, I was an entrepreneur in the radio broadcasting industry. Over a ten year period, I bought and sold 23 radio stations. I may have been a good operator, but the number one factor of success in broadcasting is that government regulation limits competition. The same can be said about cable television, land-based and wireless telephony, and many transportation industries.

There is no single strategy, industry, or technology that defines entrepreneurship.

Today we live in an age that is driven by the commercialization of amazing new technologies built on silicon chips. When we think of entrepreneurs today, we often think of internet companies first.  But in my opinion, the shop owner, the dentist in a private practice, the musician who plays at wedding receptions, and the house painter should be considered entrepreneurs as much as Bill Gates.  They all need strategies, marketing plans, an understanding of their customers, and the ability to deal with highly competitive environments, and the skill to manage their finances. I have admired entrepreneurs who run businesses of every size, in every industry, and through the implementation of a variety of successful and brilliant strategies.

 

 

Now let me explain how our faculty at Baruch College has built the largest entrepreneurship program in the United States, a course of study that has been consistently rated as one of the best. Because entrepreneurship education is a relatively new discipline, we have – to some extent – been learning as we go. So let me share with you the seven main building blocks that we have identified to create a meaningful curriculum.

#1. Entrepreneurship is a process and the curriculum must mirror this process.

Entrepreneurship begins when someone has an idea, then tests its feasibility, develops a plan, and, finally, launches a venture. The basic entrepreneurship curriculum should mirror this process. At Baruch College, students take a sequence of courses beginning with an introduction and overview of entrepreneurship, followed by a family business course because, as I stated earlier, most entrepreneurial ventures are rooted in family values, goals, and assistance.  Students then take a course in which they consult with an existing business. They end the required curriculum by writing an actual business plan for either an imaginary or a real venture. During this final requirement, students may take electives on a variety of more specific topics, from exploring venture capital options to examining entrepreneurship opportunities in the social media industry.

A few years ago, I had two students in my MBA business plan course. One student, Jon, worked doing digital video editing. The other, Varun, was an engineer from India. Jon told Varun that digital video editing was a profitable business. Varun asked if anyone has looked to outsource it to India. That was the birth of their business which today has two employees in New York and nearly 200 in India. Along the way, Jon and Varun not only took courses at the MBA level, but they used the services of our Entrepreneurship Center to meet with faculty from the Law, Marketing, and Computer Information Systems Departments. The Center connected them to possible funding sources and helped to find them office space for start-ups. In the two years since they started, they have returned to the Center many times for further technical assistance.  

#2. Entrepreneurship starts before courses and continues after them.

The reality is that entrepreneurship training begins before our students even sign up for our courses and often continues long after they graduate. During our students’ education, they may be engaged in many other entrepreneurial activities outside of our courses, from building prototypes, to piloting their products or services, to raising capital. As educators, we must strive to support our entrepreneurial students as they build successful businesses, but we must accept that we cannot accomplish all of this within the sequence of only four or five courses. Nearly one third of our students – both at the graduate and undergraduate levels – have started their businesses before they graduate.

This is one of the reasons we have established an Entrepreneurship Center as an important part of our program. The Center provides one-on-one counseling, specialized seminars, networking events, and opportunities to collaborate with other students, faculty, and industry experts.  We also have developed a simulated business world called The Institute for Virtual Enterprise which allows students to “run” their businesses in a virtual world without risk. Finally, universities can house business incubators or accelerators in which entrepreneurs can actually start their ventures while still in school or shortly after graduation. I will talk more about this later.

#3. Entrepreneurial thinking works for non-profit ventures, too.

Entrepreneurship does not apply only to for-profit businesses. Some very creative entrepreneurs have launched highly successful non-profit ventures such as charities and schools; others have created organizations with a strong social agenda, such as political action groups or community-based ventures. Intrapreneurs create ventures as divisions of large companies or non-profits. An entrepreneurial approach can lead to positive results in any industry or setting.  Entrepreneurship education must address all these possibilities.

#4. Entrepreneurs need flexible resources to acquire what they need, when they need it.

Businesses and entrepreneurs follow individual paths. Some ventures grow from existing businesses.  For example, the owner of a restaurant might wish to open a catering business. Other entrepreneurs create the product first. George de Mestral, the man who invented Velcro, was inspired after he walked in a field and burrs stuck to his clothing. Others buy or inherit existing businesses and work to improve them, like Ted Turner. Education must reflect these differing needs and greatly varying timetables. That is why we let each entrepreneur decide how and when to use the resources of our Center for Entrepreneurship.

#5. Entrepreneurship courses must provide role models and teachers with actual business experience.

Students need to see that entrepreneurship is possible for them. Those who grew up in a family business understand this model from an early age. Others need to acquire role models through an education process that includes guest speakers in class and the opportunity to work with mentors through their school’s entrepreneurship program. If students don’t see the path of entrepreneurship as possible – and desirable – they will not work to make it a reality for themselves.

#6. Collaboration should be built into the program’s DNA.

I said at the beginning of this talk that entrepreneurship is a team sport. We must build this sense of collaboration throughout our academic programs. Team projects in class and collaborative designs and plans for operating businesses help students build these skills. But collaboration can also be taught by providing students with specific tools for class problem-solving, brainstorming, and group leadership. These exercises are fundamental in creating successful academic entrepreneurship programs.

#7. Universities should support the process of business incubation.

Educational institutions can and should play a major role in inspiring both entrepreneurs and individual business ventures. I know of business incubators that focus on food businesses and ones that focus on high tech. Many schools have investment funds they can infuse into business ventures. This helps in two ways. First, it gives the entrepreneur much needed money, but it also provides credibility that other investors will rely upon in offering additional funds.  The technical support of faculty who are experts in finance, marketing, or technology and provided valuable advice when a student entrepreneur was proving feasibility or writing a business plan can be equally important during the operating phase of a venture. Finally, the university can provide an environment – an ecosystem – of support which includes not only a physical space, but the opportunity for entrepreneurs to interact with other entrepreneurs, financiers, bankers, and faculty. As I said earlier, entrepreneurship is a team sport, and this type of environment enables the team to be strong.

When we look at the role that universities can play, we see a broad arc – from first introducing students to the idea of becoming entrepreneurs, to teaching the necessary skills and providing the tools to develop and stimulate their business ideas, to finally providing the environment and resources to actually start their ventures.

One of the challenges we have faced is how to measure our results. These include jobs created, businesses started, innovations developed, export growth, and social benefits. The results of entrepreneurship can years, if not decades, to reveal themselves. Tracking and keeping in touch with graduates for that long is a great – and expensive – undertaking. Proving these results is something that governments and private supports are asking for and we need to provide. In my opinion, the cost of this tracking needs to be built into programs when they start as an essential part.

 

What is the Future?

Thirty years ago, entrepreneurship was just beginning to show up in college curriculum, governments had no programs to support and promote it, and incubators were used to hatch eggs. Today we see huge resources going to support the efforts of entrepreneurs to build their businesses, create jobs, and improve regional and national competitiveness. Funding sources have similarly multiplied with hundreds of funds, accelerators, and crowdsourcing platforms that fund early-stage businesses.

I believe that the future is more of all these. But with increased specializations among them. In the future, entrepreneurship education, funding sources, and government programs will specialize. Policy makers and educators will realize that it is not possible to understand all industries and markets. They will be forced to specialize and with this increased specialized knowledge and experience, their success rates will go up.

In the future the definition of entrepreneurship will broaden out beyond building businesses around the latest technology and attempting to hit home runs. More pedestrian business focus will emerge as founders and policy makers realize that there is money to be made not just in apps but also in apples. Of course, the focus on technology entrepreneurship will continue as long as technology continues to evolve. But, I believe expanding interest and support for entrepreneurship will broaden areas of interest.

 

Conclusion

I have tried to give you the essence of what I have learned about entrepreneurship and entrepreneurship education. I greatly admire all academic disciplines, from anthropology to zoology, and the brilliant people who advance them. But today in every country, entrepreneurship occupies a special place of importance. New technologies have created great opportunities for new ventures. Every country, indeed the entire world, needs additional jobs. And traditional career paths through large corporations are not as prevalent or as rewarding as they once were. Many students do not have the financial resources to invest in the lengthy educational track to become physicians, lawyers, or rocket scientists.

All of you here today, whether you are business people, nascent entrepreneurs with ambitions to build a business, established serial entrepreneurs, educators, or students are already using entrepreneurial thinking and entrepreneurial activity to lift up your nation and create the next great Korean economic boom.

Entrepreneurship is the key to unlocking human potential and accomplishments. It has always been so, but now more than ever before. Education and educational institutions have the ability and responsibility to play a central role in leading us to a promising future through entrepreneurship.

Thank you so much for your time.

 

Professor, Dr. Edward G. Rogoff

Dean, School of Business, Public Administration, and Information Sciences, Long Island University (Brooklyn Campus), NYC

Rofoff