Speaker 1: You're listening to Bloomberg Business Week with Carol Messer and
Speaker 1: Tim Stenebeck on Bloomberg Radio.
Speaker 2: What do Josh Hicks, the co founder have plated, Jenny Flies,
Speaker 2: co founder of Rent the Runway and Guilt Group, and
Speaker 2: glam Squad founder Alexandra Wilkis Wilson all have in common.
Speaker 2: They're all entrepreneurs. Of course, they also went to Harvard
Speaker 2: Business School, but they have something else in common.
Speaker 3: Well, and they were once a head of startups that
Speaker 3: became so much more right. They're also all featured in
Speaker 3: a new book written by two startup founders and angel investors.
Speaker 3: The book is called Smart Startups What Every Entrepreneur Needs
Speaker 3: to Know Advice from eighteen Harvard Business School founders. And
Speaker 3: we've got the authors of the book here, Katalina Daniels,
Speaker 3: venture partner at Entrepreneurs Roundtable accelerator, and Jim Sherman, Angel
Speaker 3: investor and entrepreneur here, both in our Bloomberg Interactor Broker Studio. Welcome, Welcome,
Speaker 3: congratulations on the book. My guess is your world you're
Speaker 3: constantly thinking about the startup community in terms of what
Speaker 3: you do at Harvard.
Speaker 4: Well, in terms of thinking about the community. Yes, because
Speaker 4: we've both been startup founders ourselves, actually so myself with
Speaker 4: having launched or exited three different companies, Catalina as well.
Speaker 4: And we came together, I guess about six years ago.
Speaker 4: We were classmates at HBS, but we came together to
Speaker 4: write this book really because we wanted to impart our
Speaker 4: own wisdom from having spent time as entrepreneurs. But we
Speaker 4: also thought it would be super special to write the
Speaker 4: book including many other HBS founders of companies, and to
Speaker 4: learn about the collective wisdom that they bring to bear
Speaker 4: as well.
Speaker 1: Well.
Speaker 3: Maybe by saying it Harvard, I meant like, what is
Speaker 3: it about what's the secret sauce? Because we've gone to
Speaker 3: a lot of business schools, done broadcasts, and there is
Speaker 3: something about certain environments that are just right for entrepreneurship.
Speaker 3: Oh is that fair to say that?
Speaker 5: Yes? I mean you mean in business school what the
Speaker 5: secret sauce is? I think it all starts with, uh,
Speaker 5: you know, admission, the type of people that they admit
Speaker 5: to the school. Harvard Business School is now doing a
Speaker 5: great job in terms of entrepreneurship. I mean has a
Speaker 5: huge number of Unicorn founders, huge number of founders in
Speaker 5: general to be an entrepreneur. To be a founder, you
Speaker 5: need to have a certain personality. You need to be resilient,
Speaker 5: you need to show passion, you need to be willing
Speaker 5: to go for it. And I think it all starts
Speaker 5: with the admission, you know, admitting people that have these traits.
Speaker 5: That's one thing. But then you know, there's so many
Speaker 5: courses at business school taught by wonderful professors that probably,
Speaker 5: well we were studying at the time that there were
Speaker 5: only two entrepreneurship classes, so we missed up.
Speaker 6: We missed out quite a lot.
Speaker 1: It's probably a lot.
Speaker 5: Yeah, it's it's it doesn't is there really? And you know,
Speaker 5: wonderful professors. You must know that a business school, the
Speaker 5: Harvard Business School is based on a case study methods.
Speaker 6: We mentioned it all the time, so you know, I
Speaker 6: mean there is something between recruiting the right people, putting
Speaker 6: them in front of the right people, talking about the
Speaker 6: right topics that should inspire.
Speaker 5: These people to basically go out do something and become successful.
Speaker 3: We're going to talk about those successful people and some
Speaker 3: of the companies they've started and the commonality. We're going
Speaker 3: to come back continue talking on smart startups. It's a
Speaker 3: new book right here on Bloomberg. I want to get
Speaker 3: back to the authors of a new book, Tim.
Speaker 2: Yeah, Katleena Daniels, and James Sherman. They are the co
Speaker 2: authors of Smart Startups, whatevery entrepreneur, entrepreneur needs to know
Speaker 2: advice from eighteen Harvard Business School founders. They're here in
Speaker 2: our Bloomberg Interactive broker's studio, Jams, I want to just
Speaker 2: ask you the question that I think you probably get
Speaker 2: a lot which is a lot of entrepreneurs would would
Speaker 2: sort of scoff at the idea even going to business school.
Speaker 2: They say, we don't need to go to business school.
Speaker 2: I mean, we'll get some of the most prominent entrepreneurs
Speaker 2: out there today. Mark Zuckerberg dropped out of Harvard, didn't
Speaker 2: go to graduate school. Bezos did not go to get
Speaker 2: an MBA.
Speaker 1: What would you say to those folks, Well.
Speaker 4: I'd say that you certainly can be successful if you
Speaker 4: don't go to business school. And you mentioned a few
Speaker 4: great names of people that became huge successes. So you
Speaker 4: don't have to go to business school to be a
Speaker 4: successful startup founder. But I think you're going to increase
Speaker 4: your odds of success if you do, especially these days,
Speaker 4: at the school where they've got a tremendously robust set
Speaker 4: of courses around entrepreneurship. So you will learn fundamentals, you
Speaker 4: will learn frameworks, you will learn.
Speaker 1: Case study through the case study method.
Speaker 4: Successes and failures, and I think that can only help
Speaker 4: and improve your odds of success. And by the way,
Speaker 4: that's very important because the fact is seventy percent of
Speaker 4: seeded startups are going to fail. Seventy percent, So keep
Speaker 4: that in mind.
Speaker 1: Odds are not with you.
Speaker 4: Yeah, exactly, so you improve the odds as best you can.
Speaker 5: Yeah.
Speaker 3: No, it's interesting that you say that. Come on back in.
Speaker 3: As you guys worked on putting this book, what was
Speaker 3: it that kind of stuck out for you or stood
Speaker 3: out for you in terms of the individuals you profile,
Speaker 3: the businesses you profile, the entrepreneurs that you profiled.
Speaker 5: Well, many things, actually, and we don't have that much time,
Speaker 5: so I'm not going to mention everything, but a couple
Speaker 5: of things stood out. For example, there is this myth
Speaker 5: with within the entrepreneurial ecosystem that you need to have
Speaker 5: a certain team to start with, not go for it alone,
Speaker 5: but have two or three co founders, a ceo, CTO,
Speaker 5: a cmo or I would.
Speaker 3: Say, no, no, and no, is that true? Do you
Speaker 3: need it?
Speaker 5: Well, I mean it's you can need it, but you
Speaker 5: don't have to. What I mean by that is what
Speaker 5: came out of our research and our interviews is multiple
Speaker 5: models can work, and it's there is no myth about
Speaker 5: the twosome or the freesome. We had a we had
Speaker 5: multiple solo founders. We had a team of five recruited
Speaker 5: by headhunters or by one headhunter. We had a mom
Speaker 5: and her son, we had a married couple, we had
Speaker 5: best friends. So you know, this was a bit of
Speaker 5: a surprise because as an angel investor, you know you're
Speaker 5: in the middle levon these discussions. Should we invest in
Speaker 5: that team or not? Well, I mean they don't have
Speaker 5: a CTO, or he or she is alone. Well, I
Speaker 5: mean look at these cases. It was all over the place.
Speaker 5: So that's one example. There are multiple examples. I think
Speaker 5: that's why the book is interesting. You know, Jim and
Speaker 5: I started with an idea of what we would write
Speaker 5: about because we've both been entrepreneurs, were angel investors operating
Speaker 5: the tech ecosystem. But I can assure you that the
Speaker 5: result is different than what we had in mind. When
Speaker 5: we started come.
Speaker 4: On in well as Catolina was beginning to give you
Speaker 4: just one exit example of some surprises that we had
Speaker 4: not expected, I mean, another one, if I were to
Speaker 4: think of it would be how creative people were invalidating
Speaker 4: the demand for their service before raising money or anything
Speaker 4: material in terms of fundraising. And that was really impressive
Speaker 4: with how creative they were in coming up with ways
Speaker 4: to validate that consumers or businesses would be interested in
Speaker 4: their product or service. So, for example, rent the Runway,
Speaker 4: which everyone knows today a very successful company, public company
Speaker 4: rental of dresses. The way they began to prove that
Speaker 4: model was not even putting up a website. They actually
Speaker 4: did pop up stores at several college campuses to demonstrate
Speaker 4: that women were interested, not only interested in renting the dresses,
Speaker 4: but were passionate with this opportunity, and they videotaped it
Speaker 4: further so that they could document that passion, which was
Speaker 4: very impressive when they then presented those findings to venture
Speaker 4: capitalists later. So, these kinds of creative methods to validate
Speaker 4: the demand was something that really surprised me.
Speaker 2: I do forgive me, but I have to push back
Speaker 2: a little bit with a couple of the examples in
Speaker 2: the book, just because you know, sometimes they enter their
Speaker 2: life as a public company and things don't necessarily go
Speaker 2: totally as planned. Shares of Rent the Runway have plummeted
Speaker 2: this year. It's been tough since the IPO Blue Apron.
Speaker 2: I mean I was there at the New York Stock
Speaker 2: Exchange when the company went public. It's a shadow of
Speaker 2: its former self today. I mean it's you got an
Speaker 2: eighty three million dollar market cap. Talk to me a
Speaker 2: little bit about how things are still. There's still speed
Speaker 2: bumps after you know, quote unquote successful exit.
Speaker 4: I mean, to be fair, we don't cover what happened
Speaker 4: after the exits for the companies. We don't get into
Speaker 4: that because when there's the exit, we do analyze whether
Speaker 4: we think it might have been successful or not right.
Speaker 4: If it was a fire sale exit and investors didn't
Speaker 4: get their money back, that's one scenario. If there's an
Speaker 4: exit where everyone did get a return, that's something else.
Speaker 4: But we we actually don't attempt to cover what happened
Speaker 4: years later after going public in this case.
Speaker 3: But I do wonder it's like venture capitalists when you
Speaker 3: guys are looking at you know, offers or ideas that
Speaker 3: are out there. An entrepreneur comes to you.
Speaker 6: Can you tell the difference.
Speaker 3: Between something that may have some legs, may go public,
Speaker 3: but you don't know if it'll be a longer, longer,
Speaker 3: longer term play versus something you're like, okay, this is transformative.
Speaker 3: Do you know as a venture capitalist and I know
Speaker 3: you guys play at a different part well of the
Speaker 3: spectrum and a lot of ideas go out there.
Speaker 5: Yeah, So just to be clear, we're we're angels, which
Speaker 5: is just very very you know, so you really don't
Speaker 5: know basically, I mean, but you need to look at
Speaker 5: a couple of things which you're willing to throw right,
Speaker 5: because it's not always a ton of money, right, but
Speaker 5: willing to invest in a bunch, yeah, because they're always startup.
Speaker 5: But so the model is, or you know, the way
Speaker 5: you think about it is, is this a team that
Speaker 5: has some of the traits we talked about two minutes ago,
Speaker 5: you know, the passion, the resilience, et cetera. As as
Speaker 5: a founder, I mean, there are a lot of things
Speaker 5: you don't control. So the very first thing is you
Speaker 5: invest in a team.
Speaker 1: How can I tell that about a team?
Speaker 5: Though?
Speaker 1: Just by meeting people I feel like it's like when
Speaker 1: you so tough.
Speaker 3: I don't know if you ever like I had to
Speaker 3: try out to be an ra and they actually had
Speaker 3: to do like this team dynamic and that was such
Speaker 3: a big part of the interview. You see how we interacted.
Speaker 5: Who was the body.
Speaker 3: But I'm wondering how you guys do it well.
Speaker 5: I mean, you know, I don't know if we've got
Speaker 5: the answer. But basically, you look at.
Speaker 3: Do you invest if you don't like them, I.
Speaker 5: Don't invest if well maybe sometimes that's that's that's that's
Speaker 5: something else. I mean, you know, you don't need to
Speaker 5: be best friends with the I don't have.
Speaker 3: To like my doctor. But if I know they're good,
Speaker 3: I'm good exactly.
Speaker 5: But but there is something within the investory community where
Speaker 5: you know that some investors have nose for a good startups,
Speaker 5: et cetera. And we talk about that in the book.
Speaker 5: There is this set the dominos thing. I mean, if
Speaker 5: you find a good investor that invest in you, maybe
Speaker 5: other ones will funnel. They might not be in love
Speaker 5: with you as a person, but they might look at
Speaker 5: somebody else that has done very good investments in the
Speaker 5: past and think, okay, this is a good opportunity. You know,
Speaker 5: I'm not in love with the person or the people
Speaker 5: pushing the opportunity, but it's a good opportunity. It's the
Speaker 5: good time, a good time to get what they're trying
Speaker 5: to say, a set of good investors, you know, and
Speaker 5: you could do it, I think, Jim, did you could?
Speaker 1: Did you go ahead? Jim?
Speaker 5: No?
Speaker 1: No, no. I was just going to add that.
Speaker 4: I think a lot of times people as an angel
Speaker 4: investors or vcs talk about founder fit. Are they a
Speaker 4: right fit for the opportunity, And you have to be
Speaker 4: very careful as well about founders who are a practical
Speaker 4: and charismatic and can sell a vision and a story.
Speaker 1: Because by the way, they have to.
Speaker 4: They are the chief sales officer, but not just in
Speaker 4: closing sales, in terms of hiring in her getting partners,
Speaker 4: getting suppliers. They're constantly out there selling the vision and
Speaker 4: moving things along. It has to be part of the job,
Speaker 4: right that as part and parcel of the job. But
Speaker 4: they can't be delusional as well. They can't be delusional
Speaker 4: and you know, because investors can sniff that, and they
Speaker 4: can't be annoying because if people are going to have
Speaker 4: to want to work for this founder. So that's really
Speaker 4: I've seen many things.
Speaker 3: You wonder about. I was just like, we're running out
Speaker 3: of time, but you make you know, you wonder about
Speaker 3: these individuals who attract a ton of investor money really quickly,
Speaker 3: just quickly.
Speaker 1: Yes, you know, like the Adam Newman's of the world.
Speaker 5: Number the eighteen founders that we interviewed raised one point
Speaker 5: seven billion dollars at time of writing. So yeah, so
Speaker 5: they obviously like, so you know, whatever measure you used,
Speaker 5: many made it.
Speaker 1: Many made it and some didn't. And we talk about both.
Speaker 3: Well, it's very interesting. It's called Smart Startups. What Every
Speaker 3: Entrepreneur Needs to Know Advice from eighteen Harvard Business School
Speaker 3: founders Katalena and Daniels and Jim Sherman. They are the
Speaker 3: co authors