DARE - Because Entrepreneurs Do

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There are many ways to experience entrepreneurship before you start off on your own

When journalists interview me in my role as the head of INSEAD’s Entrepreneurship and Family Enterprise department, they almost always ask two questions: why do students take entrepreneurship courses and what makes us think we can actually teach people how to be entrepreneurs?

Philip Anderson

The answer to the first question is easy: more than 85% of our MBA’s take at least one entrepreneurship course because they want to have the option later in their careers of starting or joining a growth venture. They don’t believe they can count on lifetime employment in a big company. They also realize that a great track record in a large organization won’t necessarily help them get a job in a young, fast-expanding enterprise.

Many entrepreneurs are wary of people whose resumés show a consistent record of achievement in a larger firm but who have no experience in a startup or fast-growth setting. Too many have hired people who performed well in an established company but fail miserably in an entrepreneurial setting. “Talent” depends on the context, and it often doesn’t translate from the corporate world to a startup venture.

Some corporate veterans fail because their performance depends on having a business card from a famous company. For example, selling or negotiating partnerships is much easier if you represent a well-known brand than if you act for a small company no one has heard of. Others fail because they are too specialized. In a venture, everyone wears multiple hats and job descriptions usually don’t count for much. You have to make your own photocopies and you have to lend a hand wherever it’s needed.

Consequently, MBA students take entrepreneurship courses to learn how to translate to a startup venture the skills they have developed in larger companies. Our job is to teach them how to hit the ground running in a young, fast-growing enterprise. We show them what issues arise in these settings and how successful entrepreneurs overcome them. For example, any MBA learns a lot about working capital, but finance courses usually teach them how CFOs and financial services providers operate, not how entrepreneurs squeeze every drop of blood out of their cash.

If you understand why MBA’s take entrepreneurship courses, you also understand my answer to the question “What makes you think you can train people to be entrepreneurs?” I reply, “We don’t.” Our courses can’t turn anybody into a successful entrepreneur, but they’re still worthwhile. Why?

The best way to learn how to be a successful entrepreneur is to work at the right hand of a successful entrepreneur. Entrepreneurship is passed on through apprenticeship. When you work with an entrepreneur, you see all the problems that arise in venture settings and how they are overcome. For example, a serial entrepreneur in Bangalore told me once, “In my first venture, we spent months deciding on a stock option plan. In my second venture, that took twenty minutes because the management team had all been through it before.”

If you seek funding from a venture capitalist, the single strongest asset you can have in your background is significant responsibility in a successful venture. Even experience in an unsuccessful venture is better than no startup experience. As one venture capitalist based in Mumbai told me, “I don’t back people who are learning on my nickel how to start a company.”

Unfortunately, if you want to gain such experience, you face a classic chicken-and-egg problem. The best way to prepare yourself to head your own venture is to work closely in a venture with a successful entrepreneur. But why should he or she hire you if you don’t already have that kind of experience? Your prospective boss would prefer to hire people who have a track record of performing in a young, fast-expanding company.

Entrepreneurship courses in a business school like INSEAD aim to overcome this chicken-and-egg situation. We write original cases about the problems that real entrepreneurs are wrestling with right now, and bring these entrepreneurs to class so the students can think through with them what to do. [For example, Dilip Kapur joined my students in Bangalore to co-teach with me the HiDesign case you’ll find in this issue of DARE.] A few students have been hired by entrepreneurs who were particularly impressed by what they heard in class or read in a written analysis of their case. We also have a clearinghouse that allows entrepreneurs who need help to match up with students who want to work with real companies on their course projects. At the end of the engagement, the entrepreneur gets a useful result while the students get a reference letter explaining what great work they did in a venture setting.

So how do you overcome this problem if you’re not getting an MBA in a school with a top entrepreneurship program? You do the same thing, but you have to work a little harder. Find a way to apprentice yourself to an entrepreneur. Even if you initially have to work for free during your spare time, never pass up an opportunity to work directly with an entrepreneur who has a track record of success. Do a short project for someone that yields a clear result, and then ask him or her for a reference letter. You’ll be amazed how many opportunities will come your way once you have proven your worth to an entrepreneur. Most of them have friends who are also running growth ventures, and every entrepreneurial CEO is always looking for people who can get things done in this unique setting.

Journalists usually think that MBA’s take entrepreneurship courses in order to write a business plan, win a competition, and start a company. Some do and some succeed, but we advise the overwhelming majority of our students not to launch their own venture until they have significant experience in someone else’s. There is no substitute for working at the right hand of a successful entrepreneur. If you are reading DARE and dreaming of starting a company some day, the best way forward right now is to find the right role model, do something for him or her, and prove that you can be a great asset in an entrepreneurial environment.

INSEAD deals with entrepreneurs from all over the world, and in my experience, it’s easier to meet venture CEO in India than it is in most other parts of the world. TiE (The Indus Entrepreneurs) events are especially useful for making contacts, but I find it remarkable how many Indian CEO’s will meet with someone unknown to them if they are approached in a sincere way by a person who wants to help while s/he is learning. In this and its future issues, DARE will expose you to the stories of some of India’s most fascinating entrepreneurs. It’s up to you to take the next step by meeting them, finding a way to create value for them, and building a name for yourself as someone who can hit the ground running in a young, fast-growing company.

INSEAD Alumni Fund Professor of Entrepreneurship, Director, Rudolf and Valeria Maag International Center for Entrepreneurship and Director, 3i Venturelab

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