Entrepreneurship isn’t for everyone, but it is possible for anybody.
Ray Zinn, Silicon Valley’s longest serving CEO and the model for entrepreneurship, discusses why you might – or might not – want to be an entrepreneur.
Guy Smith: Well, welcome to another episode of the Tough Things First Podcast and it’s no surprise to our loyal audience that there are a lot of entrepreneurs or entrepreneurial wannabes in the crowd. That’s what we’re going to talk about today, is entrepreneurship right for you? It’s not for everybody, but anyone can be an entrepreneur providing that they have the right mindsets and basic skills and whatnot. Ray Zinn, our perennial star of this show is a Silicon Valley’s longest serving CEO and probably an icon entrepreneur in the valley. Hello Ray. How are you today?
Ray Zinn: Doing great, Guy. Thank you.
Guy Smith: Yeah, well thank you for being here again. My father was kind of like a serial sideline entrepreneur. He started everything from a cattle ranch, to a photography studio, to a advertising agency. Can’t say many of them were profitable, but he had no fear about starting a business. So what really makes people want to start a business? What makes them so different that they’re willing to go out there and take those kind of risks?
Ray Zinn: It varies again, from person to person and situation to situation. Now my father was a cattle rancher and not very successful, but he provided a living for his family and a lot of difficulties and so forth that came along, which is classic with being your own boss as you would, but he stuck with it. I mean, no matter what problem came up, he seemed to have a good solution. So being an entrepreneur is kind of a wannabe thing. Some people, like I’m talking to a fellow who’s going into dentistry and he wants to join his father in his dental practice and then ultimately take over the practice himself.
So whether you work for somebody else or whether you are working for yourself, being an entrepreneur is pretty much an individual thing. So whether you’re a housewife, or you’re an executive, or an employee of a company, you can still be an entrepreneur. Entrepreneurs create, innovate and then they negotiate and you do that when you go look for a job. You create an opportunity and then you innovate in how you’re going to do that to get that job and then you negotiate your salary. So create, innovate and negotiate is really what entrepreneurs do. So I think to run a business as opposed to being an entrepreneur is what we really want to focus on because we’re all entrepreneurs, whether in high school, or whether we’re in college, to whether we’re digging a ditch as they say, or just retired like I am. You’re still an entrepreneur.
Now, as far as running a company as an entrepreneur, that’s really the focus of today’s discussion. I think the key to being a good entrepreneur or at least a successful one is your passion. In other words you have a passion for what you’re doing. You can’t hardly wait to get up in the morning and tackle the day as you would and the ability and desire to do the tough things first as we talk about in my book, Tough Things First. You just can’t wait to solve problems. I mean, you just, you like to fix things. I mean, if you’re a fix it person, then you’re more likely to be a good entrepreneur.
Guy Smith: I’m so glad that you phrased employment as entrepreneurship. I’ve always kind of viewed that and an employee is basically a one person business and you’re providing a service to whoever your employer is.
Back in a previous career, back when I was a mainframe guru, I always did what you said. I woke up every morning and I was wondering what problem I was going to solve, a technical problem granted, but how that was going to excite my customer, my employer, and thus make the employer want to keep me on, and increase my salary, and hand me stock options, and all those wonderful side effects of being a one man show so to speak.
In terms of starting a business though, a bit more complicated, a bit more expansive, why should people start a business and maybe why should they avoid it? What are the positives and negatives that are either going to make people say that, yeah, that’s a great idea or that’s something that I should never consider doing?
Ray Zinn: Some people think if they get enough education that they can be a successful entrepreneur. You look at Bill Gates who wasn’t even a college graduate, did quite well as an entrepreneur.
So, it doesn’t mean that getting an education is not useful or beneficial, but it’s not the end all. In other words, first glance you have to have the desire and the passion to do it. I know that there are a lot of people who have PhDs in business that aren’t as good as somebody like a Bill Gates who has no education in that area or very little. So education in and of itself is not going to make you a good entrepreneur.
Now, it can help you become a better entrepreneur, but it isn’t the guarantee that just because you have a master’s degree or a college degree in business that you’re going to be a successful entrepreneur. So I know that now many universities offer a degree in business management entrepreneurship, in other words asset combinations. Your emphasis is, rather than being marketing or accounting or something else, your emphasis is being an entrepreneur because you’re learning what the various component parts are in starting and running a business.
In ZinnStarter, which is one of the programs that we have it here in Tough Things First, it’s several universities around the country, is to help fund these kids, these students while they’re still in school and learning how to run a little business. So we provide some seed money for them to start their little business and see how they do.
So that’d be one way to find out if you’ve got the moxie to do it, is to get involved with the school that has a program like ZinnStarter and then start your business and see how it goes. If you do well, that means maybe you have that tendency to be a good entrepreneur. If you didn’t do so good, maybe you’re not really cut out for that sort of thing, but I think ZinnStarter has been a very good program. So Guy, why don’t you talk a little bit about ZinnStarter.
Guy Smith: I’m personally excited about ZinnStarter and on multiple different levels.
College entrepreneurs face one of the most difficult tasks that I know of and that’s how to get over that initial speed bump. They may have the idea, they may have actually done some coding, they may have a very, very rough prototype, but they don’t have the resources to move to the next level which is becoming market and business ready. So ZinnStarter, your program, is filling in so many blanks on that. It’s getting a little pocket money into their teams so that they can finish the prototype and they can become a creative viable product, but they’re also getting mentoring.
That’s an intrinsic part of the ZinnStarter program is that every team gets mentored by an experienced executive and thus can shave all the rough corners off of their business plan, off of their go to market strategy, off of their product itself, and thus the probability of its success out of the gate is much higher. In fact, one of the proof points and we see this a lot at Virginia Tech, which was ZinnStarters first campus, is that so many of the ZinnStarter students move on to regional funding competitions and the success rate that they’re getting at those competitions is astounding, because they are ready. The ZinnStarter program got them to that level of readiness so that regular venture capitalists perk up, take notice and give them the next round.
Ray Zinn: Exactly. In fact, I was talking to a female student on Monday who had been started with ZinnStarter. This was at San Jose state, because of their ZinnStarter program, they got their product to a point where they now could launch it into a GoFundMe or some other means, Kickstart to really get them going even when they graduate.
So it really has been a benefit. The kids love it. I mean because we’ve introduced ZinnStarter in so many universities, those schools have grown dramatically in the entrepreneur program because the kids get excited when they get a chance to really start a business while they’re still in school.
Guy Smith: I think one of the side effects, and you and I haven’t discussed this very much, but it’s ZinnStarter help students believe in themselves and I think that’s very, very intrinsic to being successful. If you don’t believe in yourself you’re never going to put in the extra effort to complete the project, put the polish on the product, et cetera, and I think one of the places we’re seeing this most is West Virginia University.
For anyone who has watched the news over the last couple of decades, you know that the economic situation in West Virginia borders between bad and dire, depending on where you are and West Virginia University is very much trying to create a entrepreneurial mindset. What we’ve seen there is that the student entrepreneurs begin to believe in themselves at an incredibly higher level than they might have without ZinnStarter and because of that it may actually be transformative to their regions. People are going to say, “Why can’t we all start businesses? Why can’t we reach out beyond coal and do something different for a living?”
Ray Zinn: If they want to learn more about ZinnStarter they can go on toughthingsfirst.com website and learn about it and then find out which universities actually have a ZinnStarter program and see what that does.
So, I mean, by the way, you don’t have to be a person actually in university that has a ZinnStarter program. You can find out what kind of program they have that’s similar to ZinnStarter. You can go to your advisor and say, “Say, do you have a program like ZinnStarter?” Which they do, almost every school has some program similar, it just happens that ours, ZinnStarter, is one that we run and that we have at several universities. If that’s something you would like to look at, go on our website toughthingsfirst.com and look at the ZinnStarter program. They’ll at least tell you the format that we use for our entrepreneur program.
Guy Smith: Yeah and there are even universities that don’t have entrepreneurships programs, but they’re in a regional where their regional university entrepreneurship bake-offs where you can go and pitch your company and your product idea and whatnot. They are open to pretty much any full time student who’s in a college in that region.
So, to students who may be listening, if your own campus does not have an entrepreneurship program, or a ZinnStarter like program, fire up Google. You’re probably going to find something in your region where you can drive an hour and go compete.
For these same student entrepreneurs, or for that matter anyone who’s thinking about starting a business, what are some of the fundamental skills that they should have? I mean, I went to business school, so I had the full battery on accounting and marketing and all that stuff. That would be overkill for the average person who wants to start a business, but what are the fundamental things they do have to have in their arsenal before they go and get their business license?
Ray Zinn: Well, there’s four basic classes that I encourage that all the entrepreneur students to have.
The first is economics, second is business law, third is accounting, and the fourth is financial and managerial accounting. Economics, people understand, that’s pretty obvious, but when that’s maybe not so clear is the one on financial and managerial accounting, which is really understanding and reading balance sheets and income statements. That’s a very important one. You’ve got to understand cash flow and how the funding of the company all works together.
So again, business law, accounting, economics and financial and managerial accounting are the four, I think, basic core courses that you need to have if you’re going to start off being an entrepreneur. Almost every community throughout the world has those kinds of classes available, so whether you’re an electrical engineer graduate, or a psychology graduate or whatever, if you want to be an entrepreneur, go back and take some evening classes, extension classes that include those four core courses, economics, accounting, business law and financial and managerial accounting.
Guy Smith: And you can find those at community colleges, some high schools in more rural areas offer those kinds of extension classes. I think even the service core of retired executives, they used to have kind of a business startup bootcamp where you could get a lot of those basics as well.
One last thing I would like you to do, if there are people listening to this podcast today and they’re thinking about starting a business, what would you person to person say to them in terms of what’s been holding them back? What should they know about the business life and starting their own business that’s going to give them that motivation to push forward?
Ray Zinn: Well for example, if you have a fear of flying, or a fear of swimming, or a fear of being in enclosed spaces or some other phobia like that, don’t do it. Don’t start, don’t try to be an entrepreneur. If you have a fear of starting your business and being on your own then don’t do it, because that phobia …
We all have phobias, every person has some phobia with it. Some got an eating things, things they like and don’t like, or whether they don’t want to jump out of an airplane in a parachute or whatever. If you don’t enthusiastically want to have your own company, don’t do it.
The other thing I might mention, Guy, is that when you start your business, make sure you have enough money in your reservoir and in your bank to be able to run your company for three years, because that’s usually the break point, is most businesses fail within the first three years. So don’t spend all your time looking and raising money. Make sure you have enough money to get a profitability over three years. So that’s the key, the key is getting to profitability within three years or don’t start the business.
Guy Smith: Well and you said in Tough Things First, no one has ever gone out of business with cash in the bank because cash is king.
Ray Zinn: That is true.
Guy Smith: Well anyway, thanks again, Ray. I’m really hopeful for the world in terms of things like ZinnStarter which are encouraging people to start businesses because it really is businesses and serving needs out in the world, that create a vibrant economy, that create growth and opportunity for everyone. I’m just tickled that you are imparting your life’s wisdom skills, educations and insights through your book, through ZinnStarter and other means, and giving people a intellectual leg up.
For people in the audience who have not, you’ve got to get a copy of Tough Things First. I’ve read a number of management leadership books over the years, this is the one that needs to be on everyone’s reading list because it really does both give you the inspiration, but a lot of the nuts and bolts about how to lead, and how to manage, and how to do so frugally, effectively and always with that bottom line profitability in mind.
Also, let me ask you to rate and review the Tough Things First podcast while you’re sitting at your podcast device on iTunes, Google, Stitcher, whatever your podcast source of choice is. It’s those ratings and reviews that let your friends and neighbors know that this podcast is worth listening to. So thank you again, Ray, for your wisdom and I hope you have a wonderful day.
Ray Zinn: Well thank you, Guy. It’s always been a pleasure to be with you. You’re always a great host for these Tough Things First podcasts.