Remarks to the Visionary Companies Conference, Billings, MT May 27, 2010
It’s a fact that all net job creation since the 1980s has come with under 100 employees. You are all the future of job growth, wealth creation and better communities.
In brief, my own story involves a software company called RTMS in Milwaukee.
It was bootstrapped. We had a customer and a value proposition. It was simple - Reduce costs and improve consumer experience for the large retailers. We were fortunate enough to have customers like Boston Store, Carson’s, Penney’s, Sears, GNC – and they loved our exceptional customer service and ability to deliver a better value to their customers – and more sales and customer satisfaction to them. We had a hardworking team of great people to pull it off.
The company grew to 250 employees in two states. We paid millions in wages in two communities and saw hundreds of employees achieve their dreams of college for kids, second homes – whatever their dream was. It was sold in 2000 and today is the customer service arm of Fidelity Financial in Florida.
I’ve been fortunate enough to be teaching aspiring entrepreneurs at Marquette University ever since. Today, we have an angel investor network, the Golden Angels, as well as an entrepreneurship center to spread the entrepreneurial word across campus.
I’d like to think that our programs are helping students live lives of meaning through the benefits of entrepreneurship. To me that includes being independent in the sense of having the confidence, through experience, to stand on your own and make decisions to achieve your goals; to control resources beyond what you own; and to achieve at very high levels.
For me, right now, the challenge is what’s next?
I enjoy golf, but not enough to aspire to the “He had a single digit handicap” epitaph. I’d rather see how many people I can help to grow businesses that create challenging and worthwhile livelihoods – achieving their dreams. In short my challenge is “how many jobs can I create?
So as we think about entrepreneurship, it probably helps to think about our goals. When I was a kid, children wanted to be firemen or policeman or airplane pilots.
When asked today a lot say “I want to be rich.”
That’s a sad comment. Last time I checked, I didn’t think that greed was a virtue.
Living a life of meaning is. And to me that means competing – and winning – in business – with an eye toward the purpose that we strive for.
The question before us today: What’s a visionary company? Here’s a list to consider.
Most of these, to an entrepreneur, seems ordinary. But to large bureaucracies, it seems pretty extraordinary.
1. Visionary companies solve real problems for people.
2. They create wealth for themselves, their employees and their communities
3. They bring hope to their workforce
4. All of their employees see a dashboard of financial results every month – and understand them
5. Everyone understands the companies’ belief system – and signs on to it.
6. There are clear statements of “thou shalt not” -- boundary systems that give everyone the freedom and responsibility to apply their full knowledge and ability to daily problems.
7. They are outstanding executors of strategies for growth
8. They have excellent interactive systems for coaching, mentoring, providing feedback, for everyone in the company
9. They have a growth metric – one measurement of success – that focuses the attention of the entire enterprise. Ours was increasing business from current customers.
10. The entrepreneur knows that if clarity of purpose, accountability, and responsibility begin to fade in his organization, then politically gifted bureaucrats begin to rise to positions of power and spread like noxious weeds. The best always have a weed whacker handy.
Let me ask another question --
Why does the world look to America for Entrepreneurship?
What makes us unique enough that other countries come to us to figure out how to encourage the growth of new ventures, owned by the people who started them?
It’s capitalism, of course. But not the capitalism of the big bailout or the failed bureaucracy. It’s the people willing to take risks, on the basis of ideas that solve a real problem, to innovate – to do something better and faster. It’s growing businesses that in turn create real jobs.
Why the US? Because we uniquely seem to know how to start and grow companies. Our entrepreneurs have an independence of mind and a stubborn unwillingness to accept things as they are.
This is the bigger issue and a lot of us take it for granted. I have been lucky enough to have been involved in a small company in Europe – and let me tell you, it’s not the same.
We know how to not only grow our own opportunities but also how to get the best from the people that join us – to help others grow, and succeed, and achieve. And this powerful combination creates significant wealth.
It’s interesting how often the people who join us are not the most experienced, sought after folks – because we can’t afford them, or they won’t join us. Yet we outperform the companies that hire those same folks.
We inspire others. After all, what is the American experience except the desire to make a real difference – to control our own destinies – what might really be called the entrepreneurial spirit?
People have come here for generations – wave after wave – because they often had no economic opportunity and they wanted a chance in America.
They came here for the promise of freedom – for the ability to catch the entrepreneurial wave - to have permission to fail as much as to succeed.
Today, the best and the brightest still come here to start new enterprises. And, as the world struggles with one economic crisis after another, the call for entrepreneurship – once faint and seldom heard elsewhere in the world – is beginning to emerge as a louder call.
The American experience and environment are difficult to replicate. The rest of the world has a long way to go.
In the EU, for instance, it’s virtually impossible to dismiss anyone – for non-performance or anything short of outright theft – caught on video tape by a government certified camera operator.
In Italy, if you bankrupt your business, you lose your driving privileges until you get a job and pay off all of the creditors.
In Greece, 10% of the populace works for the government at higher than average wages. Risk taking is discouraged.
The big money model of business development is utterly predominant. The large companies grow and provide stable, well-paid, secure lifetime employment. The entrepreneurial venture is frowned upon as risky. So the big guy gets bigger, protected by a system of imposing costs and inefficiencies that makes true entrepreneurship pretty difficult.
It’s an environment that virtually legislates against individuals taking risks – for their own good.
Most real entrepreneurs don’t much like being told what’s for their own good.
It’s ironic that just as the rest of the world is coming to America looking for entrepreneurial knowhow, we are in danger of becoming a European style bureaucracy.
In the United States, average civilian federal wages per full-time employee were $79,197 in 2008, compared to private sector wages per full-time employee of $50,028, according to Bureau of Economic Analysis data.
Including benefits, total compensation per employee was $119,932 in the public sector compared with $59,909 in the private sector.
The premium for federal employees over private sector employees has increased since 1998 in wages from 36 percent to 58 percent and in total compensation from 70 percent to 100 percent.
We should all be concerned about where this is all going.
Entrepreneurs are independent of mind and stubbornly unwilling to subjugate themselves to an established order.
Remember Victor Kiam, best known for his “I like it so much I bought the company” line? In discussing his views of entrepreneurship, he said
“Entrepreneurs are risk-takers, willing to roll the dice with their money or their reputation on the line in support of an idea or enterprise. They willingly assume responsibility for the success or failure of a venture and are answerable for all of its facets.”
Here in America, 95+% of all entrepreneurs never have had any external investment financing. They’ve relied on their ability to generate sales from improved and innovative products and services and have bootstrapped their businesses to success.
None of this is new or recent. Benjamin Franklin was an entrepreneur; so was Henry Ford. Ford worked – for Thomas Edison’s Edison Illuminating Company – until he began Ford in 1903.
“Make the best quality possible at the lowest price possible, and pay the highest wage possible,” he advised.
“A business absolutely devoted to customer service will only have one profit problem – it will be embarrassingly large.”
Real entrepreneurs focus on customers – they know how to sell. They know that customers are the only real game in town and with them comes success. And customers will tell you what they need and want – if you listen.
Would you go to the doctor and tell your symptoms to an intermediary who would go and talk to the doctor and come back and tell you what the solution is? Why do this with customers?
“I find out what the world needs, “ said Edison, “then I proceed to invent.”
Look at Greg Gianforte right here in Bozeman. He founded RightNow Technologies in a spare bedroom in his home in 14 years ago - by bootstrapping. He called lots of people in customer service functions in lots of companies to ask what they needed – he proposed it, and when he got it right, he invented it – wrote the code himself.
Today, Right Now is the largest commercial employer in Bozeman, where they’ve been responsible for $500MM in local economy wages. Today they have over 400 employees in Bozeman.
This continues to have a huge impact on the local
In these economic times, and since 1980, all new job creation has come from startups, just like this one. And just like all of ours.
It’s always all about the people.
Every time I look at a business opportunity – several hundred a year – the people in the business are key to success.
– Not the idea;
– Not the technology;
– The people.
– Because the successful entrepreneur provides leadership and the ability to attract other great people.
– And to lead them in a way that gives them the opportunity to contribute fully and completely and to realize their own dreams.
So why don’t entrepreneurs work for big companies? What makes people want to do their own thing?
1. The quality of leadership in any company is absolutely critical for the company to get maximum benefit from the contribution of every employee. How much has been written about this? Jim Collins, Good To Great is just one example. It seems sad that entrepreneurial leadership in large corporations is so exceptional that a book has to be written about how leaders who lead achieve great results.
2. Poor leaders use information as power, manipulate the very people who have offered them their most precious resource – their time and attention – and do it all to avoid the very qualities that make corporations worth working for – accountability and achievement in a higher purpose.
3. It’s not an accident that every country singer on the planet is required to write a song called “Take this job and shove it” or some variation thereof before they’re allowed to buy their first Stetson.
4. Some entrepreneurs left where they were because they felt underutilized, underappreciated, under-everything, and in the face of a great idea, decided that was their opportunity. Many of you did.
And a lot of people admired you when you pulled it off.
What is the point of all of this?
One of our biggest challenges in entrepreneurial ventures is growth. Growing means
– turning one-off activities and disparate tasks into a series of routines
– that run well and lower the costs and increase the quality of outcomes
– and begin the process of sustainable growth
And, if we have learned from the non-entrepreneurial climates we’ve been exposed to, we can work that experience to our advantage when we set out to do this.
Because we can best achieve this with a group of motivated, dedicated people who believe in the company and its vision.
So to achieve sustainable growth, we ask ourselves:
· Do we engage our teams to create processes that both bring out the best in people and build efficiency?
· Does every employee see the company P&L every month? Do we discuss the big challenges with them?
· Do we have a belief system that everyone supports?
· Do we have a real dedication to training and education?
· Do we give people responsibility?
There’s a great Harvard case called Altex Aviation. In it to aspiring entrepreneurs bought an aviation operator at a small airport. The company was command and control oriented, had what appeared to be weak employees, and was failing. They paid $100,000 for it.
The new owners immediately – within weeks – made each little unit – gas sales, flight school, maintenance and so forth – an independent business. They helped people learn how to manage their new responsibilities. They really lost no one. They became profitable, grew sales from $2MM to $30MM in eight years, and sold the business for $3MM. That’s a thirty times return in eight years.
Their employees, and the employees of great entrepreneurial companies say:
The best leader I ever had was a person who…
· Listened to me
· Helped me make a valuable and lasting contribution
· Cared about my success
· Let me do my job the way I thought it needed to be done
· Let me make mistakes
· Coached me and saw potential in me
· Challenged me
· Taught me
· Gave me the confidence to hire people better than me.
So: Who’s the future of your business?
How do you account for the talent you’ve been given the opportunity to work with?