Afford Anything - Wharton Professor: The 7 Hidden Types of Entrepreneurs | with Lori Rosenkopf

Episode Date: August 15, 2025

#634: Picture this: you're 26 years old, fresh out of Wharton, and you decide to start a business with two friends. You spend years building a digital marketing firm that eventually works with Dollar Shave Club and Madison Reed. You bootstrap the entire thing without taking a dime of venture capital funding. That's exactly what one Wharton graduate did — and his story represents the reality of entrepreneurship that most people never hear about. Lori Rosenkopf, a management professor at Wharton Business School and head of Venture Labs, joins us to shatter the biggest myths about starting a business. The Mark Zuckerberg college dropout story? It's not just rare — it's misleading. Research shows that the most successful entrepreneurs, those in the top 0.1 percent of venture-backed firms, average late 30s to early 40s when they start their companies. Many continue launching businesses into their 50s and 60s.  Your age and corporate experience isn't holding you back from entrepreneurship — it's actually giving you an advantage. Rosenkopf breaks down seven different types of entrepreneurs, from disruptors who overturn entire industries to bootstrappers who build profitable businesses using their own resources. You'll hear about a founder who disrupted the hair color industry in her 50s with Madison Reed, and a banker who built an entire financial services division inside Square. We cover the rise of direct-to-consumer brands in 2013, why 80 percent of entrepreneurs are bootstrappers, and how artificial intelligence is creating new opportunities for people to start businesses without massive upfront investments. Rosenkopf explains her "six Rs" of entrepreneurial thinking: reason, recombination, relationships, resources, resilience, and results. She argues that most people already think entrepreneurially without realizing it — even parents who optimize their family routines are solving problems through innovation. We explore the world of "intrapreneurs" — people who build new businesses within established companies — and discuss acquisition entrepreneurship, where people buy existing small businesses instead of starting from scratch. Whether you want to start a side hustle, position yourself for a promotion, or eventually launch your own company, Rosenkopf's framework shows multiple paths to creating value through innovation. Timestamps: Note: Timestamps will vary on individual listening devices based on dynamic advertising run times. The provided timestamps are approximate and may be several minutes off due to changing ad lengths. (0:00) Entrepreneurship myths (1:28) Data on successful entrepreneur ages (2:10) Seven entrepreneur archetypes  (3:09) Defining entrepreneurship through value creation (5:27) The disruptor model  (8:13) Direct-to-consumer origins (11:13) Bootstrapper  (14:03) Transitioning from employee to bootstrapper (18:38) AI's impact on entrepreneurship (28:27) Social entrepreneur  (35:31) Technology commercializer  (39:45) The Funder  (43:12) The Acquirer  (58:06) Intrapreneurship  (1:03:12) Finding your entrepreneurial calling (1:14:40) Six Rs of entrepreneurial mindset (1:19:50) More information For more information, visit the show notes at https://affordanything.com/episode634 Learn more about your ad choices. Visit podcastchoices.com/adchoices

There's a myth around entrepreneurship that entrepreneurs are like that Mark Zuckerberg archetype. They are college dropouts who get lots of funding and then go on to become megastars. But that's not actually what the data shows. And in fact, the world of entrepreneurship is much bigger, more varied, and older than you might expect. To discuss that today, we're joined by Lori Rosenkopf, a professor of management at Wharton Business School and the head of Venture Labs. Welcome to the Afford Anything Podcast, the show that knows you can afford anything, not everything. This show covers five pillars. Financial Psychology, increasing your income, investing, real estate, and entrepreneurship.

It's double-eye fire. And today we're going to talk about the letter E, entrepreneurship. Welcome, Lori. Hi, Paula. It's great to be here. Thank you for joining us. Can you start by breaking the myth of entrepreneurship? I'd love to do that, Paul.

We look at our alumni and see them. following many, many different paths. We show a diverse set of role models, diversity in industry, in stage of life, demographically as well. The data actually shows the top 0.1% of entrepreneurs are over the age of 45 at the time that they start their company? Yes, one of my colleagues, Danny Kim, who's a young professor in our management department, work with several other folks. and they did study venture-back firms, as you said, the top 0.1%, and they looked at the age of the founders. So these are incredibly successful firms.

On average, the founders were late 30s, early 40s, many of them going into their 50s and 60s. So again, that myth that we see, I shouldn't say myth, but those anecdotes, those stories that we see, like a Snapchat founder, are exceedingly rare. In your research, you've profiled seven different archetypes of different types of entrepreneurs. And I'd like to go through that, these seven types of entrepreneurs. Before we get into what those seven are, can you talk a little bit about how you developed this framework? Well, the seven entrepreneurs came from observing so many alumni doing so many different things. And the disruptor is that stereotype that we're used to, someone who comes in and creates. creates massive personal and commercial wealth by disrupting an industry.

But I was seeing folks who were doing all sorts of entrepreneurial things in a variety of different settings. They might not be founding a business. They might be acquiring a business or they might be doing a business within an established companies starting a new business. So I wanted to just give a whole set of models that would give people something to illustrate how entrepreneurs are simply people who create value by innovating. And that is your definition of entrepreneurship, right, of value creation through innovation. Can you elaborate on that?

Absolutely. So of course there's financial value. We're the Wharton School. We're very interested in financial value creation. But there's social value. Are you creating jobs? Are you helping with a social problem that needs a solution? There's emotional value.

Are you enjoying what it is that you're doing and finding that it's more fulfilling for you than another sort of career? So anyone who's creating value in any of those ways has to do it by doing something different than they've done it or it's been done in the past. And so innovation, it might be a new product or service. It might just be a new process, a way of doing something differently. Could be a new business model. But by that definition, even the stay-at-home parents who was figuring out a routine that's working more effectively for their family is doing something entrepreneurial. And at the end of it, that's what I want everyone to see.

I'm already doing entrepreneurial things, even if I hadn't been defining myself as an entrepreneur, and I can take it a step further. What then would be the opposite? So if entrepreneurship is value creation through innovation, what would be not innovative? Well, repeatedly doing the same thing over and over without making a change would be very boring, of course. but think about someone who's doing some sort of repetitive production work and isn't trying to think about how they may make that process any more effective. And they're just being asked at their job to perform the same picking of crops or seating of people or massaging or whatever the service is. You don't have to be entrepreneurial, but I think most people seek ways to do something a little bit better, a little bit quicker, for a little bit more profit. So in that regard, the entrepreneurial spirit is something that you bring to whatever task it is that you're doing,

as long as you're trying to figure out how to do it a little bit better. Yeah, I think that that's true. I also talk about an entrepreneurial mindset and some of the characteristics that we tend to see across all the different examples over the seven pathways as well as there's lots of illustrations. All right, let's talk about the seven different models of entrepreneurship then. Starting with the disruptor because the disruptor is the media image that we often see. Right. So the disruptor is someone who is trying to overturn an industry category in one way or another. The disruptor typically is looking for significant funding in order to access a really large market of customers.

The disruptor is Amy Erritt, and she's the CEO and founder of Madison Reed, which is a hair color. company. Amy had been an entrepreneur previously. She had been a venture capitalist. So she was someone who was not a youthful founder. She was doing this in her 50s. And so she started the company in 2013 because she saw when this direct-to-consumer boom was really getting going about that time, because this is right after mobile is becoming accessible to everyone for e-commerce, she sees that 95% of women over 35 color their hair. They have to do it repeatedly. And their choices are to go to a salon and spend several hundred dollars or go to a drugstore, supermarket and buy that off the shelf, smelly, cheap coloring and do it in their home. And so she decides that she can disrupt the market by creating

a high quality salon quality product and sending it directly to people's homes with a great kit. And this is her thesis. And as she moves forward, she finds it really hard to get investors at first because they viewed it as not such a big market. And so Amy took some time to really get it going, but then was able to develop a really strong customer base. They used all the tools of tech to develop a great set of data about all of their customers. And then the pandemic happened. and suddenly nobody could go to the salon. They started selling a box of color every four or five seconds, and the company has really, really grown.

They became Omni Channel. They wholesale it to Alta and Walmart and on Amazon and the like, and they have over 100 color bars, which is their name for hair salon. So now you can go to a salon that's very tech-driven and get your hair colored with the Madison Reed Prize. products there. So it's essentially a unicorn at this point. And when that company started in 2013, that was really the beginning of this new category, as you mentioned, direct-to-consumer. So Dollar Shave

Club became really big right around that time. Brooklinen, the luxury sheets, bedsheets and towels company, they have a direct-to-consumer model. I believe, and correct me if I'm wrong, beta brand, the clothing company, and then Rothi's, the 3D-printed shoe company. I mean, there's sort of this proliferation right at that time of direct to consumer. What was behind that? And has that way passed or is there still space on that train? Well, I'll throw in a couple of Wharton-founded ones, Warby Parker and all birds. This was driven by the fact that consumers could use their devices to order these kinds of products. It was driven by the fact that Facebook was opening up their APIs and people could target the very demographic of customers who would be likely

to want that product. Are you looking to sell your hair color to women over 35 or are you looking to sell baby gear to people who are having children? You could do it at that point. So there was sort of a gold rush at that moment of people running into all different categories. The space still exists and is quite dramatic, but it's harder to get into it. at this point. Think back to when the internet started and there were 200 pet food companies on the internet. And then we narrowed down. There was a bit of a shakeout. I think we've seen that in D to C as well. Why would it be harder to get into it now? Is it just because Facebook ad space is more competitive and Facebook ad space is very expensive now and most domains are already

covered in some sense. So unless you have a new product that you can sell to customers, you're really competing against well-established companies. And so if you wanted to get into the hair-collar business right now, you'd be competing against Madison Reed, who has data on 800,000 women and their hair, and they're working very hard to keep those women happy. It would be very hard to pull them away. So you'd be competing against industry leaders.

So you would need to find the category where it hasn't been done in yet, essentially. So that is the disruptor model. And when I hear about the disruptor model, I immediately think of Uber, I think of Lyft, Airbnb, I mean, these are industry models that didn't exist 20 years ago. Netflix even. I mean, the name blockbuster used to be synonymous with unshakable. And now they don't exist.

So, yeah, the disruptor model is certainly, I think, where everybody's attention goes. But beyond that, there's sort of the, I don't want to pit this as the opposite of the disruptor, but the bootstrapper. That's the second of the seven models. Tell us about the bootstrapper. Sure. The bootstrapper is the opposite in that the bootstrapper doesn't want venture capital funding. It doesn't want equity financing, doesn't want debt financing either. The bootstrapper is looking to pull himself or herself up by their own bootstraps, right?

That's where the name comes from. They're using their own resources or perhaps just some limited funding from friends and fans. in order to put out a product where they can use the immediate revenues from the product to grow the business. You're somewhat limited. You can't start a biotechnology firm without a lot of funding. You can't really be a disruptor without a lot of funding, but you can build up a business over time and retain the vast majority of the equity in the business. So the disruptor model is one where there's only a few winners at the end of it. You mentioned Uber and Lyft. There were hundreds of car sharing services at first, but only a few wind up taking on the whole market. And so that's very high-risk,

high-return sort of set up, whereas the bootstrapper can start by selling their own services and slowly build out more of an agency or slowly move to additional customers and the like. aren't the majority of entrepreneurs something like 80% are bootstrappers? Is that right? That is right. And it sounds ridiculously high, doesn't it? Because it's not the model that we're used to. There are close to 35 million small businesses in the U.S. I shouldn't say small businesses. I should say enterprises. And the vast majority of them are small, less than 500 employees. And now with AI, that number is going to be even a bigger majority. Many, many entrepreneurs are people who have sold their own services. You might have a person who comes in mose your lawn or you might go to a nail salon.

There are all kinds of small businesses that exist, accountants that are in business for themselves. You're going to have entrepreneurial activity, but they're not taking any sort of funding to really get their business started. And some of them who are the most entrepreneurial minded, the most interested in creating value are going to look to expand that as much as possible. The challenge with bootstrapping, let's say you're an accountant and you want to go into business for yourself, the immediate challenge when you're making that shift is the volatility of that revenue in the context of needing to buy groceries, pay your mortgage, pay the electric bill, is that simply, as is often taught in personal finance circles, is that simply a matter

of just saving a big, hefty emergency fund? or are there other things that a person can do in order to smooth that transition? Most people are going into bootstrapping with some reserves that they've built up expressly for this purpose. The person who I feature Jesse Poogee as the bootstrapper, he spent three or four years after he graduated from Wharton, along with two of his friends. They co-founded a company. And once they had worked their careers in investment banking and consulting, and career again three or four years, they had enough funds to support themselves because they were 26 years old. They wound up founding a digital marketing firm, but they spent some time

figuring out what that firm was going to be. And that firm is one that they got into Facebook's API right when it was getting started. So they were building the routines that would help their ultimate clients figure out how to best spend their ad dollars. So they were functioning as an agency, and they just kept building up a bigger and bigger client base, a Dollar Shave Club, Madison Reed, many of the companies that you mentioned were working with them. Some other people who may be a little further along in their career timeline, but they may not have saved up a lot of reserves. They may have a partner who says, I'm going to continue with my job, and that's going to tie us over during that time. There are also small business loans that you can take. It starts to

take you a little bit out of the bootstrapper category if we're going to be very orthodox about that definition, but you can get much smaller loans that will allow you to provide the things you need to provide while you're trying to connect up your services or your products with the clients or customers that need them. Now, you've mentioned services or products. Between those two, is it more common for bootstrappers to offer services or to offer products, given the the CAPEX that sometimes goes into product development. Exactly right. So services are really easier to get started because you're essentially selling your own time

and you're not having to put a lot of investment into the assets you would need to assemble products or the like. Of course, these days, people can start to contract for other manufacturing. And if they have some sense that there's going to be customer demand, they could work the flow a little bit. You're talking on-demand, essentially, on-demand product. Yeah. Some of what we see now are people who, in order to avoid the heavy capital expenditure that goes into the development of product traditionally, will have some type of alternative model. One example might be, as you mentioned before, the on-demand product development. Another example might be productized services. So we're seeing sort of a innovation in the field of product development.

that allows for that CAPEX expenditure to be a little bit softer. Have you seen that in your experience at Wharton? Well, where we're seeing a lot of it right now is in the AI space because you don't need that much other than some knowledge of how to build a wrapper to build something that you would be able to productize and sell to clients. And so you were seeing lots of at the top of the stack, the applications in AI, we're seeing lots of students as well as older alumni building out companies that are providing AI solutions that are largely productized and that they'll customize a little bit for each client.

So that's a space where there's not a lot of barrier to entry, but there is a lot of competition. And the analog, the historical analog of that 10 years ago was every student could build an app without having to learn too much to code it. So everyone could have an app on the app store, but it's hard to get the attention to them. Right. Okay, so since you bring that up then, what are your thoughts? You know, there are the technopessimists who say AI is going to take your job. There are the techno optimists who say AI is not going to take your job, the people who know how to use AI. are the ones who are going to take your job.

Where do you fall in this camp? How do you see AI playing a role in shifting where entrepreneurship goes? I think we're going to see some dramatic shifts in the labor pools. As an administrator at Wharton, I see students graduating. And while some of them are going into entrepreneurship right away, still the majority of them have been taking jobs as analysts, as investment bankers, as consultants. and the like, and those low-level jobs are very effectively done by different large learning models at this point. So we're going to have to figure out how to train the students for the next level of work so that they can come out and be supervising these LLMs that can essentially do that work

already. So I think that that's going to create a pretty major shift. I do think that anyone who's doing Anything at this point has to spend their time playing with the different products that are out there, whether it's chat GPT or whichever one you want to use. Use more than one if you'd like. But it's table stakes moving forward to use them for efficiency purposes, but then figuring out how you can make products that are going to sell. If you think about the tech stack, the infrastructure and the models, that's going to be dominated by the large tech firms in my view.

But as you move further and further up the stack, it will be another iteration of the internet boom in some sense. The patterns of technological change are pretty clear from like the steam engine onward. When you have a big technological change, lots of parties rush in. And then there is some sort of a shakeout and a smaller number dominate. So even for AI wrappers at the top of the stack, what we're going to see are productized versions. that there will be a few firms that wind up dominating. And many of the others will be healthy acquisitions on the way. And so it's not like all the other entrepreneurs are going to fail. The exit through acquisition rather than having one of the dominant firms. I do think there will still be jobs, but I also do think,

and I tell my own family members, you need to be boning up on all of those tools and know how to use them and understand when they're working for you and when they're not and learn how to be a good critical thinker. Because, well, let me just say this as a professor, when I give an assignment and I ask people to write and reflect and I give it to 60 students in a class, if 20 of them come back telling me the same thing, it's a little disappointing. And I have to remind them that every student in the world can put the prompt into chat GPT. And so they need to be able to think about what it's giving that's useful and where they have to go beyond that. And I think that's going to be something that will be part of the job market for a long time. Right. I've heard the

complaint both ways because I've also heard of students who say, wait a second, my professor didn't grade my paper, AI did. And you see sometimes that sloppiness of the student gets feedback on an essay and it's clear that AI wrote that feedback. And sometimes the prompt even is still there. So it's interesting. Historically, when there's been a way to cheat on an essay in high school or in college, it's only been one directional. It's kind of interesting to now be in a situation where it's mutual. Yeah, well, I think that the temptation for busy people is really quite high. But in training students, what we're going to tell them is you have to find the thing that you love and you have to push yourself harder and harder on that,

well beyond the boundaries of what you can get one of these models to do for you. How are you going to create the next thing that hasn't even been thought of yet? It's incredibly important for students not to get lazy. Some of the research studies that are coming out now are showing that if you don't use it, you lose it. And once you start using these tools to write, it's very tempting to let them do your writing for you. but I still feel like I can see it. You know, my colleague Ethan Malick would tell me that you can't have a good test of whether a student has used AI or not.

But if I give it to 20 students or 60 students, then you can tell. Is the fundamental skill set then working with it as a collaborator, you know, in the way that you might have two co-authors or in the way that a writer and an editor might work with one another? Is that sort of the model that we should be using? I think that that is one very helpful model to say, let me think first and then let me get some critique from the AI. What are some things that I could add or what's something that's causing concern or where is there a logical fallacy here? I think that can be really super helpful. But going there first and then abrogating that responsibility for the thinking is where I think we wind up dumbing ourselves down. You can also use them for a great deal of brainstorming.

For example, the other day I went to one of the tools and I said, give me a hundred ideas for a business that would help elder care situation. I have an elderly mother. And so it's challenging. She's down in Florida. So I just said, let me see what this can do. I know what I need already. It gave me 100 ideas right away. Were they all good?

No. But were some of them things that I wouldn't have thought about? Yes. So I think it can be really helpful in that way as well. The holidays are right around the corner and if you're hosting, you're going to need to get prepared. Maybe you need bedding, sheets, linens. Maybe you need serveware and cookware. And of course, holiday decor, all the stuff to make your home a great place to host during the holidays.

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And we've talked about the bootstrapper. Let's move to the third of the seven different models of entrepreneurship or archetypes of entrepreneurs. Yeah, so that's the social entrepreneur. So this path is one where the entrepreneur is putting their impact goals side by side with their financial goals. The example is Caitlin Grasso. And Caitlin was an undergrad at Penn. and she wanted to help young women be inspired to have better careers. And so this was a social problem that she really cared about.

And what she wound up doing, she did research on what young girls needed for class. And then she was able to win some awards from the university. And she used that funding to build out something she called Discovery Days Bus Tours. And she would sell tickets on the bus. and the young women would take this tour for several days and they'd go to a bunch of different companies. And so they were coming along, bootstrapping, then COVID. Again, no bus tours.

But this becomes the spur that really changes Caitlin's business because she has to make all of her curriculum virtual. And then suddenly it's infinitely more scalable than getting more buses with more women and more places for them to go. And now she sells curricula to corporations, to schools, and she merchandises, and she does all sorts of events. And she has, I believe it's a dozen employees now. They're very profitable. She's thinking that maybe she'll take a round of investment because she could become an even bigger platform. But a tremendous success story. And it was all motivated by this reason that she wanted to help young women find great career opportunities. Social entrepreneurship then,

from what I'm hearing, is when the impact of the company is equally as important to the founder as any profits that the company makes. There's a formal designation of B-Corp. Would it be accurate to say that all B-corps kind of fall under that purview of social entrepreneurship or socially oriented companies, but not all socially oriented companies are B-Corps? I want to be real careful with these words here. There's a benefit corporation, which is a legal form of corporation. And that requires that the owners declare here are impact goals as well. So that becomes part of their reporting.

And then B-Corp is a standard that companies can aspire to. So it's an accreditation, if you will. And so people who wish to pursue that, cost some money to pursue it, will do that. They like to hold up that label to say, you know, we're about purpose as well as profits. Those are two separate things, but they tend to get conflated. I think all corporations that are registered as benefit corporations, I would call them all social entrepreneurs. I think the B-Corp are a subset of those. So you might go for that designation and put all the time and money into it if you're already a benefit corporation.

The way people use the term social entrepreneur really varies. Here's something really interesting about our students. If you ask them, are you a social entrepreneur? And we've done this at Venture Lab. About one in seven of our student founders will say, you raise their hands, say, I'm a social entrepreneur. But then if we ask them a different question, we say, are your impact goals? you have impact goals for your organization. 70% of them will say, of course I do.

You know, it's important to me, particularly for the young generation. They really want to work on some of the issues that are really important. And so there's this disconnect between people claiming that label of social entrepreneur. And I think that might be because historically, women are better represented in social entrepreneurship. There are about 50% of social entrepreneurs, whereas only about 20% of entrepreneurs. of entrepreneurs overall. Some of our students, I think, are very wary of that label because they don't want people to think they're not about being a high-growth entrepreneur.

But, of course, they are saying, I want to do things that are good for the environment, good for society, good for people, and the like. In essence, there might be a residual social perception that if you're a social entrepreneur, or you're not necessarily going to be super high growth. You're not necessarily going to be super profitable. You might be a nonprofit. Right. The reality is they're not mutually exclusive,

but sometimes they can be seen as mutually exclusive. I think that's right. Think about nonprofits and say, well, this isn't about creating lots of financial returns. But what we're seeing is that more and more social entrepreneurs are finding ways to be very profitable. like the story of Caitlin. Another story is about Miranda Wong,

and she has built a company that cleans plastic out of the oceans. And when she started it, it was totally a non-profit sort of situation because you get that plastic and you have nothing to do with it. And it costs money to do this. So you have to get donations and grants and the like. She eventually figured out a way with chemicals to upcycle that junk that She was taking out of the ocean, and now she's selling that. And so she's found a way to make the company profitable as well.

And she's gotten lots. I think she has about $27 million in funding now that she's been able to raise now that there is profit motive that she can show for that. So more and more people are moving in that direction, but I think the historical connotation really did come from the nonprofit world. You know, maybe even to stereotype, but think way back, you know, the women at home, the housewives. saying what can I do to help my community and slowly building that into some sort of social service organization. But again, that's not what we're seeing. Certainly with the students at Venture lab, they're interested in high growth entrepreneurship with a social purpose. So we've talked about the disruptor, the unicorn. We've talked about the bootstrapper.

We've talked about the social entrepreneur. Yes. What's the fourth type of entrepreneur? The technology commercializer. This is the person who does not invent a technology. but finds a technology that's already out there and figures out a way to bring that to some set of customers that need that. The story I tell is Joan Lau, and Joan is the CEO and founder of Spirovant Sciences, which is developing a cure for cystic fibrosis. So this is a life-changing cure if they can make this work. And, of course, pharmaceuticals is a space where it just takes forever. It's expensive and it takes years. I think $2 billion on average to bring a drug to market 14 years.

So she's got a long road ahead of her. The interesting thing about Joan is that she calls herself an accidental or an unintentional entrepreneur. She was trained as a neuroscientist. She was working for Merck, a big pharmaceutical firm. And so she was working on problems of health and fulfilling some of her personal mission and purpose. But she said there was so much bureaucracy. And she'd spend time in meetings with a bunch of people talking about whether pills should come in two packs or four packs. And she wanted to really focus in on how do you make something more life-changing.

And she wound up leaving the big company to go work for someone who had a small biotech that was pursuing an interesting cure. She became CEO of that company. Then she started investing in other companies with a partner. and now they have, she and her partner have a series of firms that they've been building up to commercialize these technologies that are invented in universities by scientists who don't really know how to commercialize them. So it's a lovely story. And there are so many different sorts of technologies that are out there at universities. In companies, there are lots of orphan technologies as well. And so you don't have to be a scientist to do this, but you have to do this. But you have

to be able to think about how to connect this science to an application that people could use. So if a person wanted to follow this route, would they read patents, get to know people who are in the research field, and then propose partnerships? They can do that. They also can just license those patents from universities all have technology transfer centers where they can do that. And then they would build out the partnerships and maybe get an advisory board. Let me give you another example.

A student of ours, her name is Ray Jing Zhang. And Ray Jing entered a contest at Penn. It was called Y Prize. What they would do each year is say, here's a technology that's been patented and we don't know what to do with. Nobody's doing anything with. And the students come up with ideas of how it could be used. So that year for the competition, the technology was nanotechnology, super small materials.

And Ray Jing, she was a big. business school student. But her parents, I think they were eye doctors or they were certainly doctors. And she wound up thinking about the eyes and the fact that if you have glaucoma, you have to do things to reduce that pressure. And if you could use a really small scale material, the kinds of implants that people will get could be a lot smaller, which means they're more comfortable, they're less likely to fail. You can install them. The operation to put them in is quicker, and she won the competition, and she has been building out a company, and now they're in clinical tests with rabbits, and it's working. So she started to think about problems

because there was a patent there. But other people might say, here's a problem, and we need some technology to solve it. To go back to the Miranda Wong example, Miranda knew she had to do something with this plastic. She had to figure out, you know, what's the chemical reaction that would allow me to do that. So far, we've discussed the disruptor, the bootstrapper, the social entrepreneur, and the technologist or the technology entrepreneur. The fifth is the funder. The funder. The funder. And this is fundamentally different, no pun intended. Most people don't think of funders as entrepreneurial, but I'm seeing a lot of people who are starting their own funds. So they are building a small company. The sales part of entrepreneurship,

they're trying to sell their thesis to limited partners. They're trying to sell their backing to all the founders who are looking for funding. And they're trying to sell themselves as an employer of the people who they're bringing into the firm. So the activities are much the same. The person I profile in the book is Jared Tingle, and he is the founder and managing partner of Harlem Capital. Jared is African American, and he was working in private equity and felt like he was seeing underrepresented founders and CEOs not get as much at the table. And he felt like money was being left on the table, and he wanted to do something about that. So he wound up joining with a friend, and they founded Harlem Capital with the mission of funding 1,000 diverse founders.

And they've been quite successful thus far. They've had two funds. They were raising a third at this point. And so his goal is to be ringing the bell at NASDAQ with some of those firms. They have lots and lots of internship programs, and they're proud to say that one and nine of all, the diverse people working in the field of venture capital have gone through one of their internship programs. What's interesting to me about that is that the investment thesis is essentially a value-oriented thesis. There's alpha being left on the table. We can capture that. This can be

highly profitable by virtue of finding these undervalue gems. Jared would answer that question by saying it's a growth thesis, that there really is a flywheel here, that the more more that you can put people with this mission at the table, the more founders are going to come to them. They get an incredible number of inbounds. Most of their deals that they fund are actually coming to them inbound because of their reputation. And the more that they are creating their folks through their internship programs and putting them out there. So I think you would argue that. So it's a growth thesis then? I believe that it's a growth thesis. We've just seen Cherry Rock Capital.

This is another Warren alum, Stacey Brown Philpott, enter this same space looking to raise well over $100 million for her first funds. So I think that we're going to see more growth in that space. On the other side of the funder is the acquirer. Tell me about the acquirer. More and more schools are starting programs in what they call ETA, entrepreneurship through acquisition. This is because there is a tremendous opportunity to acquire small to medium-sized businesses, too small for private equity, but small to medium businesses where the founders are looking to cash in, the original owners are looking to cash in, and there's opportunity for modernization and scale and the like. So professionalization can really help. a great example, two of our alumni, went into the funeral home space. And this is because

funeral homes, think about it, they're very local. You have to know and trust your undertaker. So they're hyper-local. And the older generation that has been running this family funeral home, in most cases, for many years, has a set of offspring who want nothing to do with the business. And so these two gentlemen from our program wound up acquiring over a dozen funeral homes at this point, and they're still growing and scaling. And then you can start to enjoy the economies of scale of having multiple ones. You have to acquire and grow carefully because of that set of trusted relationships that you have to look to maintain because people don't want to feel that it's too corporate. Right. So that's a great space.

And so you see acquisition. You see it in some of the same spaces where you see bootstrapping in that it's a lot of personal service, our home repair sorts of things, where traditionally people have started their own companies. And then again, they've done well and their kids are off doing things that are very different and not taking over the business. There's a lot of opportunity to consolidate them. Think about home repair that you go around in a van and you have to figure, you're spending a lot of your time driving from place to place. If you can roll up several of those sorts of businesses, it's much easier to manage an overall fleet.

You can use tech to do that. And so you can handle a lot more business with the same set of employees. For the average individual investor who's listening to this, who's interested in possibly acquiring a business of their own rather than bootstrapping one, what recommendations would you give? Due diligence is incredibly important here. you want to be able to ensure that the company's revenues are legitimate, that the processes are in place, that you're acquiring a business that is already going to give you a predictable revenue stream, but where you see lots of opportunity to really grow and expand that. And that growth might be by rolling up several of the same, like the funeral home example or

dental offices, med spas, another example, or that growth could be more vertical or complementary. Example, a Perry Steiner started Xactus, and he bought a mom-and-pop data service for mortgage services, and then he started building a set of complementary services by buying up companies, and now he has a more full-service shop with Xactus. from an individual investor's perspective, does the funding for these acquisitions, does it come from, from savings from home equity, from perhaps some retirement funds? Some entrepreneurs, right, let's call them acquirers for now, some acquirers will use their own funds, but others will create a search fund. and so they'll raise from other investors who want to back them as CEOs funds, first of all, to support a search for a particular sort of business.

So you would say, my thesis, I want to look for med spas in this space that have the potential to grow in such and such an amount. And you search for a year. And this is very popular with our students that are MBA students. They're maybe 30 years old or so. they've had a little bit of corporate experience. They have enough bearing, particularly military veterans. We have a fair number of veterans in our MBA population. And so they say, I've run stuff in the field and they have this great bearing because these investors who are going to support your search funds, they have to believe that you're going to be a great CEO in order to do this because the acquirer is going to purchase the business and then run it themselves as the CEO. Once you've found the target, usually the search fund investors, will then provide funds for the acquisition of the business. So you're sharing all of the growth that you're going to create with your investors,

but it allows people who don't have a lot of resources to do that. Some people also will use small business association loans for the smaller sorts of acquisitions as well. How many investors usually participate in a search fund and how big is that search fund? Different entrepreneurs who wish to acquire might have different size targets. Some of our students who are coming out might say I'm looking for a business that's doing one to five million dollars a year in revenue in, say, the med spa space, as an example. Sharbel's Reich. He did graduate from our program, but then worked for a while as a consultant at McKinsey,

helping others to be great leaders. And he decided he wanted to be a leader for himself. He has such an interesting backstory because he, came with his family from Lebanon when he was eight years old. He didn't even speak English when he came here. He was able to get scholarships into school and then work the corporate jobs and the like, but he wanted to find a company that he could run himself. And so he was looking for something that was a bigger company, I think in 10 to 25 million dollar revenue range, that he felt that he could double or triple in a short amount of time. And he was a big. And he was a big or a big,

wound up acquiring a company that provided Wi-Fi service in hotels. And they provided this for 800 hotels or so. And he bought this company and wound up building it out to cover 3,500 hotels. And so he was able to sell the company for triple after a short number of years. And interestingly, the company was acquired by a private equity firm that also had. a business that did TVs in hotels. So you know, they're very complimentary, right? It makes sense to put those together. And he was fortunate in that he was sort of tired of doing it by the end and wanted to go on

and do something else. Usually you get locked up if you're acquired. You need to stay with the company for several years and run it. But Chabelle was able to leave the company when he was acquired. which is not typical. That is rare. There is typically that lockup period. I know people who have sold companies and then have needed to work there for two to three years afterward.

And they're generally very unhappy when they're not working for themselves anymore. Yeah, yeah, exactly. Particularly because it's the same company, it's the same brand. It's the same, largely the same work. But it's a weird mental shift when suddenly you're the founder, but now you're someone who got hired. And it's really something to keep in mind for people who are thinking about should I be making an acquisition. Because if I'm advising students in our program who are 35 years old, the idea of 10 or even 15 years doing the same thing might not be something that bothers them. But people who are thinking about acquiring at a later stage of life, they can't assume they're going to have that Charbel story and be able to turn something around in five.

years, you know, a year of searching and then three years of running it and then you're kind of out. But rather, they have to think about this could be a very long tail in order to recognize the real gains from all the work you put in. Right. Yeah. Turnarounds take a lot of time. And it's not even always a turnaround. Like you're not usually trying to buy something that's so troubled that it's not going to start generating profits right away. But it really is about that mentality of value creation that you can build a machine that will generate more by thinking about ways to use technology in an interesting way by creating a portfolio of businesses that you roll in together in order to make the whole

greater than the sum of the parts. When you're doing a roll-up, when you're building that portfolio, how big should that portfolio be? Are there any heuristics? Are there rules of thumb? When do you know that you've reached minimum viable economies of scale? That is such a personal question. I think that when we go back to the original definition of entrepreneurship being value creation through innovation, how much value do you want to create? Right. And I think that there are some people who say, I'm going to buy this successful business and run it as a revenue stream and maybe builds it out a little bit, but I don't want my life to be consumed by this for many, many years, and that might be enough for them. And they might be looking to flip it sooner or to just

continue to run that and pass it on in their own family. Well, there are other people who are saying, how can I do more and more and more? Now, if you're in a search fund, you're going to have that pressure from your investors to create more and more and more, just like the pressure that someone who takes venture capital would have. But if you've been able to do this with less external financing, then you have the luxury of deciding how far you want to push yourself. We were talking earlier about how when companies get acquired, oftentimes, the founder, the CEO has to remain there and continue working there for a little while. Part of what is challenging about that, that lockup period,

is the fact that someone who is wired to think very entrepreneurially is operating, in a W-2 capacity. The flip side of that is that there are some people who thrive while working in a W-2 capacity and who also think very entrepreneurially. Yeah, that's the intracurpreneur, and that's the seventh path. And this is the person who is essentially building a business within an established company. But so they're building something different, and there can be all sorts of corporate resistance, but there can also be all sorts of corporate support because you don't need to raise external

funding, you're getting your resources from the company where you work. The story I tell is Jackie Reesis and Jackie founded a bank, Square Financial Services, within the company Square, which is now, of course, Block. So Square Financial Services is a wholly owned subsidiary of Block now. But to tell this story from the beginning, Jackie had had a successful career in private equity, and she decided she wanted to try tech, maybe about 15 years ago, and she had a short stint at Yahoo, and then she wound up joining Square. And at the time, 2015, Square is a company that is making the little white square point-of-sale terminals

where you tap your credit card or swipe your credit card on someone's mobile phone. They are a hardware company. I should note Square is one of our podcast sponsors as well. Ah, okay. Jackie joins Square and she sees that these terminals are collecting an incredible amount of information about every transaction that is happening in a small business. And because Jackie is a banker, she sees that this information is really valuable. And so she says we could provide loans.

to these small businesses. Small businesses are notoriously hard to assess what are their revenues and whether they're good credit risks and the like. But she's saying we've created a device that is giving us this information. And I want to underscore this. She can only see this because she's a banker. Anybody else says this at Square? We should be a bank. They're talking crazy talk, right? But because Jackie's a banker, she really understands the implications of what this data can be. And so she gets the go ahead to pursue this. And it takes close to five years, but she's able to get a banking charter so that Square can indeed provide these loans. And during the pandemic, they are one of the major providers of the PPP loans. So this has a tremendous impact on small businesses

and their ability to stay afloat during these times. That's the story of recombination, because Jackie's previous experiences were what allowed her to see that this, in her mind, this is not risky. But to other people, it does sound a little bit out of the box, but she had a firm belief rooted from her prior experience that this could work. And she's very, very tenacious, very resilient. And they took multiple tries to get that charter from FDIC because they don't usually issue them to entities that aren't already banks in one form or another. But Square Financial Services still exist. Jackie has gone on. This is a great post script to her story. She's gone on now from there to acquire a bank, a more traditional bank in the Midwest that she is

converting into a bank that is really supporting fintechs. Because she's saying, this is the bank that I needed and wanted when I was working at Square. So now her company now is called lead bank. So that's just a great example of how people can follow more than one path over time. Wow. Can you elaborate actually a little bit more on people following more than one path over time? Because as you talk through these seven different archetypes of different types of entrepreneurs, I'm drawing a connection in my head between being a funder, being an acquirer. That's right.

It's kind of easy to see how those two might be related. But then that actually also links a lot to being a bootstrapper, particularly if you're, you can really see how many of these tie in with one another. Yeah, the seven pathways are not mutually exclusive. And they're also not mutually exhaustive. Caitlin is my social entrepreneur, but she was also a bootstrapper. Jackie, as I just mentioned, was an entrepreneur. And we should talk more about how people can be entrepreneurial as well.

But then she becomes an acquirer who's now trying to disrupt the way that banks serve FinTech. She's been named to the CNBC Disruptor 50 the last two years. She's doing a fabulous job on that front. Jared, who's the funder, he also has a social mission that's really paramount in his thesis. So many people are following multiple pathways, sometimes simultaneously, but also over the space of a career. So they're really meant to just highlight different aspects of ways that you can take your talents and apply it to an entrepreneurial domain. Right. And these seven types of entrepreneurs, it's an interesting framework for understanding the

landscape of entrepreneurship. Well, it gives people a sense of the many ways that people can create value and the many different ways in which you can do something where you have a fair amount of control, where you're able to capture more of that value for yourself, as well as created for others who might be investing in you or others who depend on you in society. We didn't quite elaborate on entrepreneurship. So for someone who's listening to this, who works at a company and wants to continue working at that company, but wants to be more intrapreneurial within the scope of their current role,

what can they do? How can they approach that? Yeah. I think the first thing a person needs to do is take a good, hard look at that company and say, are they encouraging innovation and building structures that are really allowing for entrepreneurship to happen? Or are they pretty discouraging and inertial about it? Some companies will create places. And I say places.

It might be a physical place or it might be. more of just an organizational unit where people are pursuing new ideas for the company. If it's a very big company, it might have a corporate venturing arm where you're investing in other companies and looking at them and seeding new business. It might be more of a skunk works where you're trying to build out new competing products or services that might someday supersede what the company is currently providing. Some companies will have hackathons, to celebrate big in AI right now, you know, who can come up with a great application. And so they'll have those sorts of competitions and prizes.

I'm thinking of Sunderbysh, giving out the golden jacket in his competitions. Companies have set aside time. People talk about, again, to cite Google, 20% time that comes from 3M way back when, having 15% time that people were encouraged to spend 15% of their time thinking about new businesses for the future. And not that everyone would say, well, it's a 40-hour week, so I'm going to spend six hours a week doing that. But if somebody was chasing a new idea, if anyone gave them grief, they could say, hey, that's my 15% time. I'm allowed to do some of that. So some companies are very encouraging of that. And if that's true, taking advantage of these

opportunities, some companies even offer sabbaticals. But coming up with ideas and setting aside even just personally yourself, some time to think about what might disrupt us, what are the new opportunities for us? How can I take any of my unique expertise and experiences to identify these ideas and start to share them and tell them to people to see if I can get any traction is going to be helpful as well? There are some settings, however, where I think it's just super hard to innovate. Consumer packaged goods, I think, is one of these spaces. What you tend to see most of the new brands that are coming into the big multinational, you know, food, beverage, personal products are being developed somewhere else and then being acquired in. And what frequently

happens is that the employees of these big CPG firms, they get frustrated over time because they have great ideas and the margins are not good enough for a company of that size. So they leave and they pursue these options and then the company acquires back the things that are indeed successful. My own daughter works in CPG right now. So I keep saying to her, there's going to be a moment where you might want to take some of these ideas and run with some of them. And if they're good ideas, you're going to find yourself very, very valuable later on. What would a person do if they're working for a very small business? You've talked about 20% time. You've talked about some companies even offer sabbaticals. I can see in very large companies that have a lot of resources and that have a lot of structure and that have an HR department, how that can be the case. But let's say you're working at a company that has a total of 10 employees. You may be highly entrepreneurial. In fact, I think a lot of people who are drawn to working for small business are. But there's a lot of people who are also just not a lot of bandwidth.

Yeah, yeah. Well, that's super interesting because in that setting, you're probably an earlier stage company. And so part of your effort is trying to understand what is our market. How can we find product market fit? How can we deal with all of the negative feedback that we're getting in addition to positive feedback and use that to adjust our product, our service in a way that's going to make it attractive to more folks. And as you're starting to get that traction, then to start to think about adjacencies to say, well, okay, if we're serving teenage boys right now, is the next step

teenage girls or is the next stage, you know, those post-teenage boys, those 20-year-olds that aren't quite a dull yet but aren't teenagers anymore. But so do we go that way or do we say, you know what, we've been serving the U.S. market and can we take this to another country? Thinking about the nearby opportunities and looking and assessing which of those can be the best next space is a recipe for growth. On that topic, how do you know when you're being strategic versus when you're throwing spaghetti at a wall? It's easy to know in hindsight and perhaps not. so easy to know when you're doing that. I think this is where some of the brainstorming capabilities

and the assessment capabilities that we are starting to see emerge from large learning models can be really, really helpful because you can develop all sorts of synthetic customer personas and get their reaction to a series of approaches. It's not going to be perfect, but you might be able to identify of 100 to say here are the five or so we should really push and follow up on and here are the 50 or so that we could just throw out right now. So I think that those capabilities are really a great way for testing and learning right now. As we sit here talking about entrepreneurs, it strikes me that there are probably a lot of people who are listening to this who don't know, maybe they have a bit of an entrepreneurial spirit,

but they don't know if they want to be, for the remainder of their career, an entrepreneur working at a company, but with an entrepreneurial vibe, or if they want to go off on their own and actually become an entrepreneur themselves. In all of the entrepreneurs that you work with, how do people know that this is the path for them or that this is their calling? Reason is one of the six hours of the entrepreneurial mindset. And what was fascinating to me, as we really dug in on these stories, about half of them had this burning passion that they wanted to pursue.

Those people were driven by wanting to solve a problem. Also, Joan is there, you know, creating life-changing cures for diseases. You can pursue that reason inside a company or beyond a company, but that reason just gives you a North Star that makes you keep pushing and pivoting when something isn't working. You want to solve the problem, so you're going to pivot. The other half of my subjects, they just want to be entrepreneurs. These are the people who would tell you, oh, when I was in middle school, I brought my Halloween candy in and started selling it at a markup and the principal suspended me, or I was the best paper boy or the best Girl Scout cookie seller. These are folks who are just saying, I just want to be in

business for myself. I want to make money. I want to have this responsibility. And that passion comes later. Amy Erick was not an eight-year-old girl saying, I want to be a hair color, baroness. But now that she's found this space where she can be a fabulous entrepreneur, I would just encourage people to really double down on their thinking about what is the reason that's important to me. You know, is there a problem that has come out of my? personal experiences, and whether that is as a member of a particular group that you feel has a disadvantage that you're trying to rectify, or whether it's because you've been deeply working in a particular space like pharmaceuticals, and you see, here's a problem that needs

solving. Figure out what that is. And if your only reason right now is, I just want to be an entrepreneur because I want to make a lot of money, start thinking about how you can find that space. If you've had some length to your career, you can look across the different experiences you've had and think about how they might intertwine in an interesting way. That's why Jackie, a former banker, sees that Square can become a provider of loans rather than just a hardware company. Think about have you, are you the person who's lived in multiple countries and could bring something from one country to another? I, you know, I've had some. You know, I've had some sinus problems lately. So I think of the netty pot. It's so obvious if you come from a culture

like that, but you know, here are Americans spraying all these chemicals in their noses. And now, finally, there are Americanized versions of that. So like that recombination is another one of my R's. But look for those interesting mixes. Maybe you're the person who's been in a corporation, but you've had jobs in four different parts of the company. How do you see the different pieces mixing together? Things that are obvious insights to you are not obvious to other people who haven't had that set of experiences. And just to take the counter of that when we have the young students who say, I don't know what problem I want to work on yet. I say, go out there and do something interesting. Go take a job for a while. You don't have to be an entrepreneur right away. Take a job.

Learn an industry vertical. Or if you're just starting your college career, take an interesting course. Don't take the same 15 courses everybody else takes. Take a course in cinema studies and see if that gets you excited about opportunities in a film industry. Think about how you spend your summer internships and don't just go to the same company and work there three times over your three undergraduate summers, but spend a summer abroad. Do research somewhere.

Do something that gives you a unique mix because many of our entrepreneurs, like they saw their opportunities because of the mix of things that they've had. Since you mentioned the six hours, I, of course, now have to ask, about it. So reason is one, and you also talked about recombination. Reason and recombination are two out of the six. I know another one is resilience. Can you talk about that? This is probably the most important characteristic. Every single one of my entrepreneurs tells the stories of the moments where

many people might have walked away and said this is impossible. You're getting negative feedback on the product that you've designed, maybe say this isn't any good, or do you start to sit with that negative feedback and treat that as a gift and a learning experience when you get a customer who'll say, here's why I won't buy this for you. Yeah, I'll take it for free, but you want me to pay, I'm not paying for this, but to be able to sit with that and ask why and to get that ability to solve a problem in a different way, you know, understanding that problem is solving in a different way. They're resilient because things happen that you can't control. right? COVID happens. So what are you going to do differently? Are you going to walk away and say,

I don't have a business anymore? You're going to find a way to do it differently. I mean, now tariffs happen. That's been an incredible source of uncertainty for so many, particularly in the retail space. How do you work through that? And entrepreneurs really have the ability to say this is a part of the story. I'm trained originally as an engineer, and so I have a little plaque on my desk that says everything is figure outable. It's just a very engineering mindset. There's lots of different ways to solve a problem. And I think it's also the entrepreneur's mindset that, okay, this didn't work, but the problem's still here, and I have to figure out a different way to solve it. And there are lots of clues coming at me if I'm willing to listen to those that's incredibly important. And it's

also the part, whenever I'm sitting with an entrepreneur and interviewing them, our panel at an event, when people talk about when it was hard, that's when everyone in the audience is the most wrapped. Because it's easy to hear those success stories as if this all came together, but everyone has these crisis moments, these moments where they say, is this really worth it? Can I really do it? How am I going to do it? And being able to get themselves through it is an important part. So of the six R's then, we've talked about reason, we've talked about recombination, we've talked about resilience. What are the other three R's associated? Yeah, so I kind of think of them as pairs. So reason and recombination is more the ideation phase, like how do I figure out what I'm

going to do? And then in the middle are relationships and resources, which for me, they're sort of twins because relationships are just incredibly important to access resources. All entrepreneurs have to be thinking about how am I getting the talent, the advice, the funding, the customers, and the like. And much of that does come through relationships. And the advice that I like to give people at any stage is keep building those relationships and build them before you need them. invest in relationships. You're in college. Where better time is there to create a set of people who will have your back in any situation? Because it's a lot harder down the road if you don't have relationships to suddenly create them and activate them when you're at a point where you need

to be instrumental. But having said that, most of us have a tremendous stock of resources to draw on. I'm not talking about the people who you're connected to and, you know, whatever social network. you're doing. But the people you've worked with over the years, the people in your community who you've done all sorts of social events with, the families of the kids who your kids are going to school with. And so thinking about those networks and thinking about ways to be really helpful to people who you interact with, that pays back over the long haul. So that's relationship and resources. And then on the far side, resilience and then results. getting back to this issue of what results are important for you, what value do you want to create, how much is enough for you to feel personally fulfilled on this path? How do you measure your outputs, particularly in the early stages where you don't have a lot of profits or revenues yet? Is this going to be about how many sales calls you've gotten your team to make in a given time? Or if you're a social entrepreneur, how many lives are you changing?

how many young women are reporting that they feel more excited about a STEM career. There's so many ways to think about how you measure your results, but being really thoughtful and articulate about that, I think is incredibly important for people to develop their resilience. Well, thank you for spending this time with us. Where can people find you if they'd like to know more? Well, the best place to find me is LinkedIn. It's Lori Rosenkoff. I always have to spell this for folks because I'm an L-O-R-I, Lori.

and then Rosenkopf, R-O-S-E-N, K-O-P- like Peter, F- like Frank. And the book is, of course, available wherever books are sold. I'd love it if people are able to read it and give it a review because that gets it in the attention of even more folks who can benefit from an inspiration to be more entrepreneurial. Wonderful. Thank you to Lori Rosenkopf, Professor of Management at Wharton Business. School, head of venture labs, and the author of a book called Unstoppable Entrepreneurs,

published by Wharton School Press. What are three key takeaways that we got from this conversation? Key takeaway number one. The real face of entrepreneurship is not what you think, because there's this myth about college dropouts. We have this myth that the most successful entrepreneurs dropped out of college when they were 19 and they went to start this big, crazy unicorn company that blows up and is worth billions of dollars. It's this very popular story in the media, and there are a handful of outliers

that really grab our attention. The most successful entrepreneurs are actually experienced professionals who are in their 40s or 50s or older. The data actually shows that top-performing venture-backed founders are in their late 30s to early 40s, with many also in their 50s and 60s. And that means that your age and your experience is not holding you back, it's actually a huge benefit. One of my colleagues, Danny Kim, who's a young professor in our management department, worked with several other folks. And they did study venture back firms, the top point one percent. They looked at the age of the founders. So these are incredibly successful firms. On average, the founders were late 30s, early 40s, many of them going into their 50s and 60s.

So again, that myth that we see, I shouldn't say myth, but those anecdotes, those stories that we see, like a Snapchat founder, are exceedingly rare. So that is the first key takeaway. Number two, the majority of entrepreneurs are bootstrappers. So I mentioned just a couple of seconds ago that venture-backed entrepreneurs are often in their 40s, 50, 60s, but only about 20% of businesses get outside. funding. 80% of entrepreneurs are actually bootstrappers who build businesses using their own resources. They use their own savings. Maybe they go into business part time or on the side at first before they're able to scale it up to full time. Maybe they save up for a while and they've got some savings that they can live on while they're beginning. Maybe they borrow small amounts

from friends or family. But for the most part, it's the revenue that comes into the business that fuels the operations and eventually the growth. And so this bootstrap model offers more control and actually maybe contrary to what we see in the mass media, it offers higher odds of success as compared to high growth, high risk, winner take all, venture capital-backed routes. What that means for you, particularly for knowledge workers, is that you can start that side hustle today without having to pitch a bunch of investors. That is right. And it sounds ridiculously high, doesn't it? Because it's not the model that we're used to. There are close to 35 million small businesses in the U.S. I shouldn't say small businesses. I should say enterprises. And the vast majority of them are small, less than 500 employees. Now with AI, that number is going to be even a bigger majority. Many, many entrepreneurs are people who have sold their own services. You might have a person who, comes and mows your lawn or you might go to a nail salon. There are all kinds of small

businesses that exist, accountants that are in business for themselves. Finally, key takeaway number three, you're already more entrepreneurial than you realize. Because entrepreneurship isn't just about starting companies, it's about creating value through innovation. And that means figuring out better ways to do things, figuring out innovative improvements or iterative improvements. So maybe you're a stay-at-home parent and you're figuring out how to optimize your family's routine. That is value creation through innovation. That means that you're also an entrepreneur. Or maybe you work as a W-2 employee inside of a company, but you are innovating within the scope of your role. You are also an entrepreneur or an intrapropreneur. So if we define entrepreneurship as

value creation through innovation, then anyone who's being innovative, who's looking for ways to improve things, who's looking for ways to create more value or new value where it didn't exist before, anyone with that spirit and that mindset is entrepreneurial. Anyone who's creating value in any of those ways has to do it by doing something different than they've done it or it's been done in the past. And so innovation, it might be a new product or service. It might just be a new process, a way of doing something differently, could be a new business model. But by that definition, even the stay-at-home parents who was figuring out a routine that's working more effectively for their family is doing something entrepreneurial. And at the

end of it, that's what I want everyone to see. I'm already doing entrepreneurial things. Those are three key takeaways from this conversation with Lori Rosenkopf. Thank you so much for tuning in. If you enjoyed today's episode, please do three things. First and foremost, share this with your friends, family, with the entrepreneurs and entrepreneurs, with the W-2 employees, with the stay-at-home parents, with the people who mow your lawn, the people at the nail salon, the accountants who are in business for themselves. Share this with all of the people in your life. That is the single most important way that you spread the message of F-I-R-E. Sign up for our newsletter, afford-anything.com slash newsletter, where we send you.

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