Habits and Hustle - Episode 84: Ethan Mollick – Professor at Wharton School of Penn and Author of “The Unicorn’s Shadow”

Episode Date: October 6, 2020

Ethan Mollick is a Professor at Wharton School of Penn and Author of “The Unicorn’s Shadow.” This episode is like the “everything you know to know about business spark notes.” Ethan does a summary course rundown of every beginner’s necessities in entrepreneurship with some nitty-gritty details for the veterans out there. Taking idea conception, through launching a start-up, to the formula to perfecting elevator pitches, networking and approaching venture capitalist investing, the biases and myths in the business world, and so much more. Ethan navigates the data and the numbers breaking down the invisible barriers in starting and running a successful business. Maybe you’re looking to start your first company. Maybe you’re a business owner already. Wherever you find yourself, there’s sure to be some nuggets of gold in here that will rock your perspective, but don’t take it from me. He’s literally the professor in this. He’ll handle it from here. Youtube Link to This Episode Ethan’s Website Ethan’s Book – “The Unicorn’s Shadow” ⭐⭐⭐⭐⭐ Did you learn something from tuning in today? Please pay it forward and write us a 5-star review on Apple Podcasts. 📧If you have feedback for the show, please email [e-mail]  📙Get yourself a copy of Jennifer Cohen’s newest book from Habit Nest, Badass Body Goals Journal. ℹ️Habits & Hustle Website 📚Habit Nest Website 📱Follow Jennifer – Instagram – Facebook – Twitter – Jennifer’s Website Learn more about your ad choices. Visit megaphone.fm/adchoices

When there's a penalty on the field, referees are there to sort it out. When there's an accident on the road... Sergeant Lindros, I'm glad you're okay. That's where USAA steps in. We help make the claims process easy, so drivers can get back on the road fast. Making the right calls. That's what we're made for. USAA Membership eligibility and product restrictions apply in our subject to change. USAA means United Services Automobile Association and its affiliates.

San Antonio, Texas. Vitamin water zero sugar just dropped in all new taste. It was zero holding back on flavor. You can be your all feeling. I'll play and all self-care you. Grab the all new taste today. Vitamin water zero sugar. Nourishcare you. Grab the all new taste today. Vitamin water's zero sugar, nourish every you. Vitamin water is a registered trademark of glass O.

Welcome to the Habits and Hustle Podcast. A podcast that uncovers the rituals, unspoken habits, and mindsets of extraordinary people. A podcast powered by habit nest. Now here's your host, Jennifer Cohen. Welcome to the podcast. I'm going to do a quick intro. This is Ethan Mollick, right?

Is that how you say your name? Perfect. OK. He wrote the book, The Unicorn Shadow. And you are basically your professor at Wharton Business School. Okay. He wrote the book, The Unicorn Shadow, and you are basically your professor at Wharton Business School, right? And you study and you study startups, right? So you're like them. You are the maven. You know everything about what a startup should do, what it shouldn't do, and everything in between. So welcome to the podcast. We're love to have you and glad to be here. Thank you. You're

welcome. And I guess why don't we just start with the basics of your background and what kind of makes you the connoisseur so to speak on startup. Sorry, are you a founder? Are you a startup guy? Yes, I lived throughout myself before deciding to become an academic. So I started a company with a college roommate and we were one of the vendors of the Payne Wall. So the thing that can't get you access to like news like that's my fault and I'm sorry. I'm sorry about that. First people said about that. And my roommate was amazing. He had the original idea and was a coder and, you know,

and raised her investor. And I made every possible mistake there. So we successfully went to the company. We built it. It was an exited, went through the whole process. But I kind of realized I need to figure out how to do this, right? So I went to get an MBA and then realized nobody really knew

anything. And so I decided, I'll at least be the cutting edge of not knowing anything. So I went and got a PhD and became a professor in this. So I teach classes on entrepreneurship. I do active research on entrepreneurship, advise lots of companies. So I wanted to just be cautious. You were saying I know everything.

There, no one knows everything about this and I have a very small slice in one perspective out of me. I was actually just teasing you. I know that, but you've spent a lot of your years really focusing on studying startups and what the pitfalls are, the myths and your book really talks a lot about the myths of what what people's things start as a or about. You back the minutes, you talk about what holds back startups, about founders and investors, and what I would like to, I have so many questions for you. I'd like to start by just starting, why did you tell us also, why did you name the book, The Unicorn Shadow?

What was the reason for that? So, I mean, there are two reasons. The first reason is very serious, which is that unicorns are billion-dollar private companies before they go public. Everyone's entrepreneurial goal is to become a unicorn. But the problem is that when trying to be a unicorn, people pick up very bad habits because the models of people who start unicorn companies tend to give you bad ideas about who needs to be a founder, the advice they give is often incorrect, and trying to be Unicorn often leads to trouble.

So, that's the sort of the shadow of the Unicorn. And the other reason is I'm a total nerd, and I thought it sounded like a fantasy novel too, so I kind of wanted to kill two birds with one stone and start off like a new series. If it doesn't so well as an us perorship book, I can always call like number two, the wizard's demise or something and have a fantasy trilogy out of it. So I'm gonna do that. That's a very, there was two very different reasons,

but what can you, can we talk a little bit about some of the most common myths that people have about startups. That's why don't you take it and give us a few? Sure. So I think a lot of them start, there's a lot of different parts of myths, but the myths start with who founds companies, right?

And if you think about famous founders, anyone come to mind when I tell you, when I say like famous founder, like big startups successful. Of course. Mark Zuckerberg would be one. That would be right. Class. And it says probably everyone says the same thing. Few I'm sure, right?

Mark Zuckerberg, Musk, Bill Gates, and Elon Musk of course. Exactly. And so and this model in our head of founders tends to be this 20 something white male college dropout coding geek person tends to give you a review in our head. And that influences people, right? So we actually know that for example, that model discourages people from becoming founders, but that model's like not true in every possible dimension, right? So we could pick any one of those things to talk about why they're not true, right?

We could talk about age, right? So you think about this 18 year old college dropout, 20 year old college dropout, we actually have really good data now thanks to work done by Dan Kim, who's a colleague of mine here, Zule, and a bunch of other people at MIT, who found, it looks at all the US census data, right? So this is real definitive all the day in the US. The average age for a founder in the United States is 42. Okay, but you think, okay, maybe that's just for like founders of any company. What about venture capital back founders also but you think, okay, maybe that's just for like founders of any company. What about venture capital back founders also 42? Well, maybe what about hyper-virtual companies? Companies of the top 0.01% of all growth in the United States. The average age for that is 45 to 59 for founders in that age. So you actually older founders

in the first successful, which makes sense when you think about it because the vast majority of stuff have a connections, having money, understanding how an industry works, working your way up and being successful, and understanding how to run meetings, and keep track of things is actually really helpful, right? So we can't view these sort of young founders as the key, they're not, but we can talk about the other dimensions too. Gender and startups, as I already do a lot of research on about the kinds of companies people found, but almost everyone in these myths is wrong.

And it's important people know that because it discourages people from otherwise trying when they could be successful. That's a good point, first of all, because you think about someone, when you first ask me to name someone who's a very famous founder, I think of someone who has a hoodie on, who basically with that Harvard and dropped out, or something like that, I think of someone who has a hoodie on, right, who basically with that Harvard and dropped out, right, or something like that, right? I would never have thought it would have been someone who's in their 40s, right? It's just not what your mind goes to, and that probably stops a lot of people from pursuing whatever their passion or dream is to start something because they don't think they have

a chance. Yeah, exactly, exactly. Everyone in this pattern matching, right? to start something because they don't think they have a chance. Yeah, exactly. Everyone does pattern matching, right? So what entrepreneurs do is they're very, you know, in venture capitalists, they look for patterns they've seen before and want to jump on those. And our patterns are reinforced by sort of these media views, but not by the actual facts. Right.

So one of the things about being an academic is we get to study the real data behind this. And it does always match our expectations. So can you give me some before I even ask you more about these myths? Is it what's the found? What did you find about people who, like, for example, I want to start a company, right? And I say to myself, oh, I can't do another fitness app.

I'm just saying, right, because it's a saturated market people stop because they also think a Markets are it's flooded with a lot of things already What what kind of data do you show on things that are you know kind of saturated is there room for I guess a unicorn or someone to come in still Yes, there's a lot of a lot of things in what you just said that kind of have to be pulled apart so one of them is Yes, there's a lot of things in what you just said that kind of have to be pulled apart. So one of them is, one third of Americans every year have an idea for a startup company, but less than half of them bother even googling to find out whether the idea exists or not. Almost everyone gives up right away. So they're saturating markets are hard, right?

But almost every market is saturated in some way. So your goal is to find a new customer base and unmet need a market that you could use the size of the incumbent company against them to go against it to go after them. You don't need an idea that no one's ever had in before in the world to be successful. And you know, this is not the only podcast in the world, but you've carved out a really huge niche and rabbit followers, right? And it's not because you were the first to ever come up with the idea of doing a podcast. It's because you found a market need that was out there. We're able to go after it and make it work that other people

didn't. So give us some other myths that people fall on that they just they stop before they start because they think it's, you know, it's the real deal. So another one is that you need to be a certain kind of person to be a founder. You need it, right? This is a really common view. It's sort of the idea that you need something.

And here's the other thing. We have lots of personality stays. People have been studying entrepreneurship for 40 years, trying to figure out what personality types make you successful as a founder. And here's what we found. There's no clear answer. There's nothing actually stands out, right? Now there are some things that help a little bit.

There's a couple of personal characters. Conscientiousness helps you a little bit, but it helps you notice everything you do. There's almost no kind of myth that nothing that works. There are things that predict you trying to start a company. They don't predict success, but they predict trying. Parents who are entrepreneurs is strongly a pretty good of trying. The biggest personality characteristic that predicts trying is overconfidence, right? Because it's like starting a band or becoming

an actor, you have to actually ignore the evidence that you're probably going to fail. Right. Overconfidence predicts trying, but doesn't predict success. So you might see a lot overconfident people. That's not because overconfidence makes you more successful, but overconfident people are more likely to try entrepreneurship. So, if you think you don't have the proselytide, because you don't match a Mark Zuckerberg or you're too caring, or you're not, you're too, you're, you like people too much, or you're not,

you know, you're not, you're not vicious enough, or whatever you think the characteristics are, not predictive at all of success, right? So there's no point thinking of the personality type. With another personality type that you that you can tell me that um it makes people at least try it. You said overconfidence, parents who were entrepreneurs, give me a couple other ones. Yep, there's a bunch of those. So um what's called an internal locus of control, which means you like to be controlled your own destiny. So people like that are more likely to start companies, right?

Actually, a lot of startups come out of frustration from people in large companies who get annoyed and then they leave that company thinking their best ideas with them and then picking their favorite colleagues to go with them, right? So like that's the other reason why 40-something founders often do really well is they're able to take advantage of the fact that they can cherry-p pick the very best people out of a company of already good people and take them with them. So that Locust of Control is another big issue that predicts entrepreneur entry. There's also just, for example, if people just want to be entrepreneurs, we find it's

very consistent. So, people who are drug dealers and arrested for dealing drugs as teenagers are much more elected to become entrepreneurs later on than people who are listed for non-oncronereal offenses or felonies, right? So, there's a lot of that kind of stuff kind of built in. I like that. Let's talk a little bit about, let's say you have an idea and then you want to, can we talk a little bit what makes a really good elevator

pitch and then what makes a really good pitch to get an investor to actually give you money? Yep, definitely. So, okay. So, we got back to talking about where ideas come from. But let's assume you have a good idea, right? Your rate of launcher company. Well, you know, let's start with what you just said. Let's go and chronological order where ideas come from. So you want to start with that and we can kind of move on from there. Yeah, so there's not like one magical way to generate ideas, but there's four or five techniques that we know work pretty well. And there's some stuff you want to do in advance. So it turns out that there's a few things that are sort of on the habit side of habits and hustle

that everybody should get it or very clearly make you more creative and more successful, right? And the clearest one of these is sleep. So I turned that sleep is just overwhelmingly important for creativity, and I say this is someone who sleeps like five hours a night and unfortunately, but it turns out like if you sleep, people who don't sleep generate worse ideas,

but they also aren't as good at valuing those ideas. So people who don't sleep who have Insomnia are more likely to start companies, but they're more likely to start companies around bad ideas. You can sleep more actually, or less likely to start companies with better ideas, right? So actually, there's some evidence like people who have ADHD are more likely to launch companies because, and in the same way, Ins that has some of those same characteristics, right? What you've started a company also, by the way, sleep matters a lot. So, sleep sets your mood, and if you're in a good mood, your company catches your good

mood and makes the entire company more innovative, if you're in sleep, we actually have evidence that it takes your bad mood with you. And also, allow sleep also lets you solve problems you didn't think you had. So, try and solve puzzles and then sleep on it, actually more creative than the next day when they think of things. So mindfulness is helpful, but only about half is good asleep in terms of restoring, it's been in the same time sleeping in terms of restoring that creativity. So sleep is a number one to generate. A nice thing to have in the baseline, right? The thing is that increased creativity, caffeine increases creativity. So far away, caffeine basically does everything good. So increases working

memory fluid intelligence and your ability to, and creativity. Also alcohol actually does increased creativity, we know that up to a point, although a culture of alcohol in started companies is destructive, so just watch your drinking. So that's sort of baseline stuff, right? Also in the baseline side of good ideas, be curious and be learning about the world. So for example, people have better ideas if they're on Twitter and they are connected to lots of disconnected other people on Twitter.

So they're learning ideas from all kinds of places. People have read a lot of information from different sources. So that's all baseline. Okay, so once we have that, how do we come with a good idea? Okay, few techniques, all right. Technique number one is sort of scratching your own itch. So find a problem that you have. There's another reason why somebody's only a company might

to quite well. I often tell people the hint is, if you're in a company and you see Excel being used for anything else, the word program, the office program being used for anything other than spreadsheets, that's a sign of a need. Because Excel is the programming language available to most people at most offices, and people who are providing all sorts of stuff in Excel. So if you see people using Excel for something wrong, you can build a product instead of that Excel thing and often make money. But whatever problems that you've had, you know those problems really well.

That's a really good place to start. A second set of approaches is what's called a factual approach. So, a factual comes from this work by Sarah Zavathin, who's a professor at the University of Virginia, who studied successful entrepreneurs. I found out a lot of them took the typical way people do marketing, which you called causal,

and flipped it on its head, which was called an effectual. So what does that mean? That means you start off with some principles. You start off with the principle, who am I? What do I know? Right, and who do I know? So you start off with the resources you have at hand, and think, what company can I build with that?

So what are my special skills that I have? What do I know that other people don't? What do I know that other people don't? Who do I know that other people don't? What connections do I have? And often people have some weird hobby or other interests that they could potentially turn into a startup company of some sort, right? Right.

So that's the kind of basis that you build from is thinking about what you know, who you know, that's another useful way to think about ideas. I talk a lot. What other? No, no, I was good to say a lot of times, you hear the expression a lot. 1% is, what is it?

Your idea is 1% and the execution is 99%. So really, how good is an idea if you don't know how to execute properly? So that's really where, is that the finding a team around you that supports the things that you're not good at to help you get this idea into an actual fruition? Yeah, so if you have a good idea, you'll need people to do that, right? There's two ways to get people. There's other founders with you, co-founders and a co-founding team. And one of the things I talk about in the book

is that co-founders are something people think are absolutely necessary for startups, but it turns out, at least, based on some data on the research I've been doing with Jason Greenberg and NYU, is that co-founders are actually not always necessary. In fact, solo founders often do better because they're co-founders and then often get necessary. In fact, solo founders often do better because they're co-founders and then often get arguments, right? And then the personal stuff can be really hard. You could also hire people to do that job, right? You can get employees that could do jobs for you. And we're talking about one of the things we're talking about the book is the method that you use to hire people. There's also something that there's

been a lot of scientific research on recently. Vitamin water just dropped a new zero sugar flavor called With Love. Get the taste of raspberry of scientific research on recently. A journal is much more than a book of blank pages. It's a personal journey, a place to gather thoughts, explore ideas, and become the best version of yourself. Papier creates quality journals, notebooks, and more to help you make each day noteworthy. Each product is thoughtfully crafted with gorgeous hand-drawn designs and details that inspire. Papier offers a range of journals from wellness and gratitude to recipes and travel and much more. They're perfectly curated pages encourage you to focus on what's between the lines and

with undated pages you can plan and track things at your own pace. Best of all, each product can be personalized for free, to be as unique as you, or a special person in your life. Put pen to paper and start your journey today with PAPI-A. Visit PAPI-A.com for 10% off your first order. That's 10% off at papir.com. Good to right.

I think also people end up getting a co-founder because they feel that they sometimes don't feel the confidence in themselves solely to do something that they want to partner in crime. They feel like it'll be more successful just based on having someone that they're in it with. Versus, like you were saying, a lot of times it's probably much better to hire out those people and even own more of the

company you know a lot of the time. Exactly. And so it depends on how much money you have and because back to your topic of fundraising but you know you I think what I would say is if you've got a co-founder also our data shows something interesting which is the best co-founders and again one paper so please take everything with a grain of salt right on one. But it turns out family was actually the best to found with, and most people don't think. And the second best, and the data is pretty strong on this co-workers. People you've worked with before. It can be people you've

worked with in school, people you've worked with outside of school. But people you've worked with before, you're going to have less conflicts with because you know how to work with them already. Well, so that's so funny, because people always, again, these are big myths, right? Because you think that you always hear, never work with family. And you're saying family is a number one person that you would be the most successful. According to the data, I understand. I know.

I know. I don't know how that affects your family when you fail, right? Because it's, you know, so I can't tell you whether it's good personally for you. I know. I know. I know. I know. I know. I know. I know. I know. I know. I know.

I know. I know. I know. I know. I know. I know. I know. I know.

I know. I know. I know. I know. I know. I know. I know. I know. I know. I know. I know. But who cares about that? But it's telling you something, right? Absolutely, absolutely.

And then I guess that's interesting because when you first start a company, let's talk a little bit about when you are looking for people to invest and then we'll go through the other ways of pitching everything. People go to this family angel, accelerators, crowdfunding. When do you use what? When do you go to an accelerator? When do you use an angel investor?

I would imagine a family you obviously go to first, right? That's exceed money. So it depends on your friends and family, right? So if we look at the actual stats, the number one source of funds for high-grace startups in the US based on a representative Survey is your own personal savings. Right? Another reason why somebody was, you know, your personal money. Second is debt, right?

And then on average, the third is all those other forms, what we call diluted funding, angels, and venture capitalists who take a piece of your company and return for give you money. That's why they're dangerous to take money from because they're going to own a piece of your company and they're often very good at using that to their advantage or not to yours. Right.

And the fourth biggest source of funding is friends and family. And if you can get friends and family money, that's great, right? But the one downside is, that's often incredibly stressful to take friends and family money. Because like you believe in yourself great,

they believe in you, but then now you've got your whole family's cash is on the line, not just your own. And we know that stress causes all sorts of things, including not just stressing up personally, but it actually makes you less likely to take risks because you're worried about risking your friends at FamilyBuy. So don't be sure to do it. Lots of people do, it's valuable, but you need to make sure that you're not just kind

of pulling on obligations and you think about how to make that work. So how about it? Okay, so when do you go to an angel versus an accelerator? Okay, so investors will only invest in you, these outside investors, angels, accelerators, and I don't know if your audience knows these different groups, and I don't have to explain them otherwise. I think that what we should do is I would imagine some do, but some won't. So let's just pretend that let's start with the baseline and then move on from there. Okay, so we just talked about friends and family, your own money and debt, right? Your own money and friends and debt are what are we called non-deludent funding, right? No one's

taking a piece of your company. You might also be able to get grant money. That's a great way to go if you can get government grant money because that doesn't take a piece of your company. You might also be able to get grant money. That's a great way to go if you can get government grant money because that doesn't take a piece of your company. You usually friends and family, there's you're deluding your company down, but sort of unfriendly terms. All the rest of the stuff we're talking about is what's called deluded funding. Why is someone investing in you? Because they want a piece of your company, so when your company sells for a lot of money, they get a piece of their return. They're making an investment in you, right? So you can only usually raise most of these kinds of funds if you're planning on going big, right? Most businesses in America is not. If you're trying to launch a

restaurant, it's very hard for you to get angel money or venture capital money or accelerate your money unless you're gonna launch all chain of restaurants because you might make a lot of money running restaurants. It's a very good business right or catering business or or dry cleaner, you know, or whatever you want. Those are very good businesses. You can get very wealthy doing it. But it's a terrible business. I thought restaurants are terrible businesses.

Because like, they, I mean, they fit, but it's a hassle for you, right? What, okay. You want to open a retail store or you want to open a gym, right? All of those things are viable ways to make quite a bit of money for yourself. They're all dangerous. They have their own risks, right? Not getting to huge detail on which ones.

But none of those will get you venture capital or angel investment money generally. Because what you're hoping to do is take home your profits, right? You're going to make a couple of million dollars a year. You pay $100 and you pay 1.2 million expenses. You take away $800,000 and you're a very happy person. But you're going to run that for the rest of your life, right? And that's not something that you're gonna exit or sell too very easily, right?

So even like doctor's offices, right? It's a great business to run or a hire practice or whatever you're doing, good bit of law office, right? Those are not the kinds of things that get angel money generally or venture capital money. So you get angel-to-vents of capital money when you're launching an app of B2B business. A, trying to go a chain of gyms, right? You're trying to go big. Right. My question was more at what point do you go try to get the VC money? What point?

Because you know at what level, right? You go from friends and family, do you do crowd funding? We talk about the crowd thought, like crowdfunding. When do you do what? So let's break it down for people. Because there's so many different ways to skin this cat. And I think it's really important to kind of really explain when in your data, your knowledge, when do you do what? Okay, so the way I think about this is that there's rounds of funding is what it's referred to.

It's sort of Silicon Valley, right? So you have a sort of a, a friends and family round, is usually first where you're getting money from friends and family, then there's what's called a seed round usually, then an A round, a B round, a C round, and each round goes up in size. So in the Silicon Valley world, a, a, a, a, a seed round is usually under, under a million dollars of capital raised,

a, A round is one point.5 billion, and you have $3 million for a B-Round, and it goes up from there. It depends on a lot of circumstances. So usually, you'll go to an accelerator or crowdfunding before you raise an A-Round. So usually you'll get money from friends and family, you use that money, and yourself, you'll use that might approve your idea of works, get some really good initial data,

or prepare for a crowdfunding launch, like Kickstarter, or you'll go to angel investors at that point and try and raise a few hundred thousand dollars based on that initial money. You'll use that round then to show that you can actually scale your business, and then you go to venture capitalists. And venture capitalists usually have to invest a million plus to make it worth their while to talk to you. So you need to show that your company's worth several million dollars to make that happen. Good, thank you.

So thank you for just clarifying all that. Now let's talk about making an elevator pitch versus a pitch. How do you make a really strong elevator pitch? There are a lot of times people like, don't know how they, they don't know how to make that sound by successful and they're like, uh, you know, and yeah. So the book has a little more on this because I'll give you a formula, but it might be a little, it's like, it's pretty quick, right? So the first

thing is to realize that your goal of an elevator pitch is to get someone to ask you questions, right? An elevator pitch will not answer everyone's questions, and the best founders actually leave room for questions. They purposefully leave out something so they control the dialogue, so when they say something, the first question someone asks is, yes, but if you thought about this, you know, yes, I have. I'm glad we're talking about this. Now we're in a conversation.

So, the Elevator pitch doesn't answer all the questions, right? It just shows you the basics. And there's a formula for it. So the formula you start off is, and I'm gonna say my other name's here, for Blake, who blanks, the blank is the blank, the blanks, I'm like, Blake, we blank. So it's for your customer who has indeed,

our product name is a product category that offers some benefit. Unlike our competitors, we're different in the key way. So your goal is to fill in the blank. So let's say we're doing the Tesla pitch, right? For high end, like as a matter of fact, we're doing the original Tesla register, right? For high end car fans, right?

That's our audience who want to hire, that with one of the first cars that's environmentally friendly, the Tesla Roadster is a high end electric car that offers following benefit. It is very fast without any carbon emissions. Unlike for our users, for our competitors, we offer high performance with that damage in the environment. So, in those two cities, they imagine to tell you, what our product is, what category

it's in, who's going to buy it, where are they going to buy it, how will be the competition? So that's a place to start. And that's, so there's an actual formula that people can just follow to really get their elevator pitch to sink like that. The basics, right? Now if you just say that, it sounds pretty boring. So you'll come up with all sorts of other stuff. You'll come up with a cool hook, right?

Like, did you go, you know, and I could, if I was a musk, I could have said, like, hey, did you know, you know, I could, if I was a musk, I could have said, like, hey, did you know that the, that the $8 billion a year supercar market has no equivalent to the Prius? Now, that's a really good hook because you probably didn't know it was $8 billion in your market. So now you go from like, how many supercars are out there? So, oh, that's actually a big market. And you start to think, wait, why isn't there equivalent to a Prius in this high-end market? So that's a hook. It gets you in and interested. I could talk about team. I've got like, I'm a successful founder myself.

I could ask you for something. So there's variations, but that's a good place to start. And then how about another, like an actual pitch when you are sitting in front of investors? How do you create a really solid pitch in all the data that you've? Yeah, so it's a formula again. And I've got a YouTube video that goes through it. If you want to do that, the book goes through it. So there's right now, there's 10 slides, 10 to 12 slides. And you do those 10 to 12 slides in a very precise way. And when I launched my startup company in the late 90s or over 2000s, it said you sent people a 200 page business plan. That was your starting fish. Now you don't do that.

Now you sent people a 10-slide deck. 10 years of the future, it might be a virtual reality experience or singing telegram. I have no idea. But right now, it's a slide deck. And there's a really good, there's a clear formula on that also. Now, the step we're skipping is actually getting access to these investors is not easy. You actually need what's called a warm introduction. So you need someone who the investor trusts to make an introduction. Your chance to success is 13 times greater

if you were a warm introduction than a cold one. So your first quest is actually to meet these venture capables and one of the things I outlined in the book and I'm happy to talk about some of the research on how you meet venture capables if you don't already know who they are. Yeah, let's talk about it. I think that's a really good thing to talk about some of the research on how you meet venture capitalists if you don't already know who they are. Yeah, let's talk about it. I think that's a really good thing to talk about.

Sure, and I'm sorry for all the data dumps, by the way. So I'm happy to talk about anything else here. No, I really, I actually enjoy the data dumps because you can learn a lot from this stuff because this is what you do, right? You like, you research and you see so much data and you're, what, what, why I wanted to have you on is that we can cleanlean a lot of information from this data that most layman people don't know, right? So we're going off these generalities that we see around,

but like you said, I didn't know until you're on here that the actual average age of an entrepreneur was 42. I really did think it was someone who were in their late 20s, for example. So you learn a lot from this stuff. And by the way, you have lots of really impressive people on this podcast. I think I always have a balancing knowledge and wisdom. So the wisdom they have is valuable,

but it may be out of play to you. So it's worth knowing the cold hard facts. Because 100% like that's exactly it. It's one thing the cold hard facts. I think that's not a good idea. 100% like that's exactly it. Like it's one thing to hear from someone who's sold their company for a billion dollars. But it's another thing to really know the real meat on the bone of how it's actually done. So let me tell you the secret to, okay,

so there's actually the best way to raise venture capital, all right, this is gonna shock you is to have already raised venture capital. So if you've already been successful, people will keep throwing money at you. I know. This is a shock. So it's true though. Yeah, and it actually is. It turns out actually, there's a lot of research trying to figure out what the value of being a serial entrepreneur is, right? So starting companies multiple times. And the latest data we have is kind of suspicious because it seems to show that almost all the

value of being a serial entrepreneur comes from no venture capitalists and that they'll fund you. If you take away that element, they're not that much better than first-time founders. Wow. The only real benefit is that they actually know a person that can actually give you the money, a venture capital, a VC person. So that's some of the data suggesting that. I don't think there's nothing, but it's less strong, like,

you think it's because it's so wise. It's less strong, yeah, it's not as strong as you would think, right? There's a lot of times, how about if you're a serial entrepreneur that actually hasn't had that much success? I mean, they've had like moderate success, but not anything that, I mean,

was there anything to that? They'll keep on getting money also, just because they've done it so many times. They know the right capital. If they've heard cash reform, they tell a good story. In fact, one of the reasons why it's really hard to learn from other people's failures in entrepreneurship is that we actually have really good

ethnographic studies that show that the stories people tell about why they failed, and nothing to do with why they actually failed. It's all about telling a story that you're still the hero, wasn it your fault? So you always hear like, oh, we just tied the market wrong. So they were like, I yelled at everyone in the office.

They were like, hey, did me. And they blew all the money out of bad intuition. More from our guests, but first a few words from our sponsor. Indeed, knows is a cautious time for businesses across America. Uncertainty flavors every decision, every financial commitment is vetted. And now your next important hire is more crucial than ever, and indeed is here to help. Indeed.com is the number one job site in the world, because indeed gets you the best people fast. Unlike other sites, Indeed gives you full control and payment flexibility over your

hiring. And you only pay for what you need and you can pause your account at any time. And there are no long-term contracts. With 73% of online job seekers visiting Indeed each month, Indeed is going to get you the important hire you need. Just like they have for over three million businesses. Right now, indeed is offering our listeners a free $75 credit to boost your job post, which means more quality candidates will see it fast. Try indeed out with a free $75 credit at indeed.com slash hustle.

This is their best offer available anywhere. So go right now to indeed.com slash hustle. Terms and conditions apply. Offer valid through December 31st. But let's return to the steps and entrepreneurship. Okay, I'm getting back to Capital Money. So there's this is a paper by Kathy Eisenhart. And I'm trying to remember the second person.

It's in the book. I apologize if my colleagues are listening. I'm not trying to not credit you. But they found it's in the book. Look for the 150 foot notes, 80 pages. But still. I love it. It's also so little.

Like you can get through this. It's a handbook. Yeah, it's tiny, right? Tiny short. There's a couple jokes. Not too bad. Mostly dad jokes. I apologize in advance. But so, okay. So it's a four-step process, all right? So step one is called casual data. And this is actually what's called in the in the method. So in casual dating, your goal is to create connections with venture capitals before you need their money, right? You need those warm introductions. Once you start asking for money, it's a trouble. So you need to build out your network first.

So how do you build out your network? Venture capitals spend a huge amount of time meeting people. So if you can get into that network and get introductions and meet people, people are happy to meet you for 20 minutes for lunch or breakfast, usually breakfast meetings in venture capitals. And you want to meet as many of minutes for lunch or breakfast, usually breakfast meetings in venture capital. You want to meet as many of them as possible, and you want to have a conversation that are neither about asking for money, nor are they entirely like how should kids have life. They need to be focused but not entirely about business.

The thing you usually want to do is ask for advice. They love giving advice. You want to ask for advice though about things that are actually super you, like, that are to make you look good, right? So you want advice like, you know, how do I apply for a pat and they're like that person is a competent. Instead, you want to say like, I have these two amazing customers. Which one should I go for?

Right? Like, you want to give back kind of advice. So you have a lot of kind of advice. I love it to you to make you look like you're like, you're like, start after, but not like that you're a moron that you don't know how to figure, you know, fill out some kind of application of some kind. Right. And you're giving them stakes in your decisions, right? Yeah. So casualty. The fine lines.

Yeah. Exactly. So like you have to have to have to do this in advance, right? And you need this well in advance of raising money. By the way, it's 83 days on average as you can contact me at VC and raising money if you do. So it's the whole one. It's the one process already. You need to start this months in advance of that. Wow. 83 days between meeting the VC and then actually being able to ask them for money. They're closing the deal. So, and that's assuming they have the first, that means you're starting the process. So you need to start this even more in advance. I've been thinking about six months or so before you want to raise cash, you're starting the process. So you need to start this even more in advance. I've been thinking about six months or so before you want to raise cash

you're doing casual bidding. Okay. You need to do. Here's a big secret of venture capital is like nobody knows who's gonna win in the early stages of companies. We can't actually predict who's gonna win very well. What's your passive quality threshold? Right? So we can rule out like bad players pretty easily but once it's like oh that's a good idea and you seem qualified, it's hard to know who's gonna win. So you need to show signals to the venture capital that you're gonna be one of the winners. And how you do that is by what's called

proof-point timing. You wanna show a lot of evidence you're gonna win all right before you need the money. So that means that you're trying to get like a flow of good news that you can tell your casual dates about. You're just basically hopped bragging to them, right? Like, so what you wanna do is like, hey, you want to do any amount of a customer just to read the buyer product.

Oh, one that's grand, this grand. Oh, we just want to start a pitch contest in one. Oh, we just hire this famous person. All the good news has to happen like a drumbeat, one after another, right before you raise money. So, when the venture couples get emails about this because you now can contact them because they're casual dates, they're like, well, this company is hot, right? So you want to give the appearance of hotness.

So that usually means you'd up good news, but you could also be slowing down news that might hit at the wrong time, so it all hits the right moment. When you download the Croger app, you have easy access to savings every day. Shop weekly sales and get personalized coupons to get the most value out of every trip every time, whether you shop in-store or online. Download the Kroger app now to Save Big. Kroger, fresh for everyone, must have a digital account to redeem offers. Restrictions may apply, see site for details. Save Big on your favorites with the Buy 5 or more Save a Dollar each sale. Simply buy

5 or more participating items and save a dollar each with your card. Kroger, fresh for everyone. Oh my gosh, it's very methodical actually. You have to be methodical about this process. Well, and that's I think the big failure people with this start-ups need to be biased towards action. They need to be doing stuff, but they should be doing random stuff. They need to be doing the right things at the right times. Right.

I'm just going to make things happen at the right times. Right, right. I'm just going to make things happen. You might succeed, you might not. And of course, the bottle people follow with things like Facebook, right? Where it's like, oh, they just did stuff, it's stuff happened. If you're lucky enough to be at the right time at the right place, it marks

that the book did not invent social networks, right? They're really super clever idea here. I was launching a college's first, but it wasn't even clear it was clever as much as luck. They lucked into that because he was at college. But like once Facebook was on the exponential curve, you could stop it. It wasn't like it was brilliant leadership and marketing, it was, wow, this is the thing everybody wants. So, is that more momentum? Yes, momentum. Right, momentum and good timing at the right time. It's not like that's smart,

right? Right. And you know, argue about whether Zuckerberg has grown into an amazing CEO or not, right? And there's, you know, arguments both ways. But he certainly wasn't an amazing CEO as an 18 year old, right? Or 20 year old or whatever. He was running a hot company and it would be hard to do real that. So that's not the model you want to follow. That's not the unicorn model. You want to follow the methodical model to become a unicorn, not all of their models. So that was step two. You're giving the last couple steps real quickly. The third step is you actually need to know why your funders want to invest in you. So they want something too, right?

Are they want to invest in you because they've had a lot of big hits and they think you're the next one. They want to invest in you because their investment fund is winding up and they need a big head and they missed one. They want to invest in you because they're interested in the space. But you have to understand that. And finally, you're going to structure competition so that there's lots of options and some people are bidding for you in a useful way. I talk about that more in the book. So if you do those four steps,

you can get a similar outcome to knowing VCs, but it takes a lot more work. Talk about the last one about a lot more options and they're bidding for you. How do you expand on that? Okay, so you need to figure out a way so that you have alternate paths to get in resources if you can't get VC. So maybe you're going to run a crowdfunding campaign. Maybe you have a way of keeping growing with your current revenue, even though it won't be as fast.

So that way if the VC doesn't, you don't have to be begging for them. You can sort of back off if it's not going well without burning all your products. Secondly, you want to do a structure competition. So you want to start with your least desirable partners. As soon as somebody says yes, that everybody jumps in and says yes. So you need to start with the person who wants you,

you've already scrutinized their interest, you want to start with the person who needs you most, even if you don't like them, because the ball rolling and start the process. How much, okay, so I just asked you a little bit about this, but how much of this in your data is about momentum and luck? How much of it is all these strategies and methodologies, and how much is it just simple luck and momentum? So momentum comes from strategies and methodologies, and how much is it just simple luck and momentum?

So momentum comes from strategies and luck. So momentum is what happens afterwards. Luck is huge, right? But skill is also big. So, when I told you it's 30% luck or 70% luck, it's still going to be either 70% skill or 30% skill. Skill still matters, right? The skill does matter. It's timing matters. It's so complicated. The reason we can't predict success, even knowing all of this stuff is it's complicated, right? It's a big mess. Like there's so much stuff that has to go right and you have to have lucky breaks. And but you have to also take advantage of lucky breaks. You have to make your own luck. Resilient entrepreneurs who bounce back from failure do better. Almost all entrepreneurs who are successful do

sub pivoting or changing of direction as they go. So you're almost certainly gonna fail a bit. So, taking that failure, turning into success by pivoting, all of that has to come into play. How much is branding? And just Mark, and just being smart and what your brand, how you're branding yourself. So I think you need to know your talent, right?

If you are really good at branding, if you, you know, and I've got, you know, I've looked a little bit into some of your work too, like this is something you're obviously very good at doing, then your special skill or talent, go all the way back to that effectuation idea really matters. What are you good at that no one else in the world is good at? But if you're not good at branding, if you're not good at marketing, then marketing often comes later for startup companies. You usually only want to market as a startup company, once you have what we call product market fit.

Once you know why people are buying a product, because then you market to why they're buying, rather than based on guesses about why they buy. Now, there are a magical marketers out there who could start with a brand and then build things around it. But often, even the magical brands start with the idea of, what's the need? How do I know the need is there? And then how do I build from that?

And then, okay, so let's get back with the investing, right? So how do we actually get the investor to give us the money? Like, do you talk a little bit about in the book? Because I'm going to call it simple love success? Yeah. So it's one of these things. It sounds like it's like fictional, right? It sounds like it's like a visualized architect, but it's not.

It looks plain wide. So it's called symbolic action. Entrepreneurs who look like. Oh, okay, this is it. Yeah. Symbols of success. Same thing, right? The entrepreneurs who look like they're going to succeed are more successful.

And the reason goes back to what I was telling you before. We don't know who's going to succeed. So we're looking for signals. We're looking for things that might indicate success. We're looking for patterns that match other founders. So if you look like you're going to be successful, which can mean many things. We'll talk about that.

Investors and stuff will say, yeah, that person seems like they know what they're doing, right? And by the way, you aren't kind of showing, you know, what you're doing because you're doing enough to kind of put together the story of a founder, right? So there's a bunch of categories here. And I often like to use the example, I think I do in the book, it's a point of Theranos. So if you ever watch like Bad Blood or Re-Bad Blood or watch either the Theranos documentaries of the Battle of Lizard Homes.

No, but tell me, I know, but I never read that, but tell us anyway. I'm sure a lot of other people have. It was like a Netflix documentary and an HP documentary. And it's about this amazing con woman, Elizabeth Holmes, with wears like a black turd that I could speak with the gravity voice. And I'm going to start watching it. Yeah, it's a fun and it's really amazing, right?

It was raised like a billion dollars of venture capital and the product never, it was a blood test. Oh my gosh. Right. Of course, I'd write it a while ago. This was a few years ago, wasn't it? Yeah, the doctor just came out like this spring or this fall or something like that, but yeah,

it was a- This story happened a few years ago. Exactly. I do remember this actually. Yes, yes, yes. So, especially like how did this woman raise a billion dollars with the non-working products and have hundreds of employees and how did this not happen?

And part of what she did is she did this symbolic manipulation stuff. It starts with personal. So Stanford dropout must be good at what they're doing. Where's a black total like steam jobs? In fact, all the articles referred to as like model that for Steve Jobs. Well, like, what does it have to do at all with success?

But that's fine, right? Absolutely. But where the lap coming over that, even though she didn't, you know, it could probably personal story with so what fictionalized about her uncle with cancer. You know, all of that showed, I'm the person, who's like, I look like a founder,

who's gonna be successful, right? And then there's like, you know, winning awards, so in prototypes, that was important. Having a board of directors, she had this amazing board of directors, including people like Jim Mattis, who was the Secretary of Defense, right? Henry Kissinger was on a board of directors. Like, all of those people, though,

very important people, not a single one of them, knew any of you at Biotech, right? Not one. A fancy name list, and if you could have fancy names you must be successful she had like a fancy office right with like all these equipment that look like the kind of things that you're you know all of this stuff was symbols of success and it becomes self-fulfilling right because you're like well these people thought she was good and she's dressed like this and she acts like this. That might be successful. It's true. You know what? I mean, just on that same vein, you know, people I look at a lot,

I see a lot, like all the time actually, who I feel like, what did they ever do? But they come from the right pedigree, right? They know a lot of very, very wealthy people who are very successful. So through just association, people would assume that they are, and they're able to do all sorts of things that other people are not. Not because they are extraordinarily talented or skilled or smarter, it's just because of their ability to kind of, there's either the social circle or their ability to kind of cause somebody to believe that they are by just perception, like by their visual, by their,

I find that to be so interesting because it's a psychological thing. You think people would kind of like kind of know better by now, but it doesn't seem to, seem to work all the time. Right, I mean, it works positively and negatively, right? Like, so, you know, it's really, there's some interesting sets of trade-offs All the time. Right. It works positively and negatively.

It's really, there's some interesting sets of trade-offs that kind of happen depending on how you present yourself. It's not always presenting yourself as super slick. It could be that being in the silence, there is also to be helpful. It's showing people what they want to see, because they don't have other evidence. We're looking for symbols that you know what you're doing. Not because it's like, you know, we're programming you with those symbols or it's like, you know, but it's, I don't know if you're going to succeed or not.

How do I know, you know, like, before, you know, before I listen to your podcast, how do I know it's going to be good, right? So I look at those, don't start that. Look at the, I go to the website. You've got a very nice professional website that makes it look like you know what you're doing on this and there's a great part of this picture. point. I tricked you. And it's great. I'm really having a beyond it. But it is about like first impressions and second impressions matter and good founders take advantage of that. It doesn't substitute for substance,

by the way. Right. It's not the same thing. And as you get more, as the company moves on, you go from like all of this sort of soft stuff to like show me how much revenue you have, right? Like everything else we're saying is trumped by like I make you a lot of money, right? That will get you open a lot more doors than anything. Right, right. We're talking about that early stage when you're still trying to kind of get that sense, then the symbols matter more. What other things are ways that or are things that the investors look at to actually give to pass over the money. What else?

So, another thing is for, there's a difference between professional and amateur investors, venture capitalists and pre-angial investors, things Shark Tank being professionals, right? And most other angel investors would be amateurs. Professional investors, interestingly, are not swayed at all by the passion of your pitch, right? Like, you can be really good at pitching. I'd use all kinds of, like, be really charismatic does not move the needle. They're looking at the data.

And they only care about how prepared the pitch is, how well the pieces fit together, how logical it is, because they've seen a thousand of these, right? So like, you can be really passionate and really convincing, and they'll see through the symbols better, while amateur investors much more sweet with passion. Is that like that? So that would be more like a shark tank, right?

Like what would make a shark tank pitch really hit? It gets all four sharks to invest. What would be the things that would love success? Yeah, so it's interesting. We actually have shark tank data that actually shows really good, really good demos is what makes Shark Tank succeed. Really? It does all the symbols up. It shows that the product actually works.

Right. It shows you know how to sell it. And it lets people visualize what the future looks like with your product in it. Right, right, right, right. So that stuff all seems to play a role. I mean, now I will be clear, like one of the negative things is like there's downsides of this too, right? So that stuff all seems to play a role. I mean, now I will be clear, like one of the negative things is like there's downsides of this too, right? So like female entrepreneurs

make up 30% or 8% of all businesses in the US are started by women. But do you know what I may be remembered the book, but what percentage of VC back companies have female co-founders? Isn't it a very, it's a low number, isn't it? Five to eight percent. Yeah, I was going to say it. Five to eight percent. I was like lower than like five percent. Yeah, it's insane, right? Especially because we actually have really strong evidence that women are at least as good

as running companies as men, right? The data is scattered between no difference and a positive difference at this point. Once a conditionally getting funding, right? And not only that, we've been find areas of businesses and other, my other different represented groups do as well, that wouldn't be available to, you know, to like a white male started a company, right? Because you, again, you start with your own interested background when women, for example, female inventors tend to create patents in areas that are less clear, that they're less patents in, and they tend to be more focused on problems that women have.

So there's a lot of reason why a man should invest in women, female let's start up. Part of the reason they don't is because of some of these biases of perception. So there's a really cool study by Dana Kans and Laura Hwang and others that shows that female investors get asked different questions. The female entrepreneurs get asked different questions than men. So when we get asked about how they're going to avoid losing and men get asked how they're going to win. And women get more penalized for using risk language. We're talking about how they're going to take a risk. So the stereotypes are ways in these cases, yeah. You know, I have one that I want to know if it's a myth or not that people tend to want to do

business also with people that they feel that they are similar to, that look like them, that they feel that there's like a similarity between them. Is that true or false? A hundred percent should we call that principle homophilic? It would, it wouldic. It's basically like people like us. It's actually like Aristotle came over here and always like birds and the feather flock together. Basically, keep in principle. We like people like ourselves. This leads to all kinds of trouble if you're trying to be innovative because diversity brings innovation. But we end up being cultural with people like us. And then there's some advantages. We know like,

South Asian American, like Indian American entrepreneurs, invested more Indian American companies, Chinese American entrepreneurs, invested more Chinese American companies. Part of that's homophily. We like people like us, but part of us also networks, right? If I've checked you up on you, I want to make sure you're actually good. We're from the same community. I could check it to that.

So it becomes reinforcing a lot of ways. But this becomes a problem in receiving in venture capitalists, right? Because VCs tend to be mostly fast, majority of white males, often from like five schools, right? So it's like Stanford, Harvard, Penn, a couple other places,

and their networks consist of people like them. So when I talk to even very enlightened male VCs, and like why are you not a mess in more female companies, they'll often say, I don't see any female entrepreneurs, why are you not a mess and we're feeling like companies? They'll often say, I don't see any female entrepreneurs, they're just not coming to me. And that's because their network is also all of men. And they're all men, yeah.

And so it's really hard for women to even break into this network in a warm introduction way, not because it's personally biased, but because their network is biased. Right, so really good founders or really good investors are realizing, like I need to invest in more black founders, I need to invest in more female founders, because that's how I'm gonna grow my portfolio.

But I can't use the same tools of assessing, do I like this person? It's just a terrible principle in general. It's bad for hiring, it's bad for innovation, and it's bad for investing. So I, and you just said something that's interesting. You're like, you keep on naming schools. Like you said, you keep on saying Stanford, Harvard.

I don't think I've heard you say Wharton yet. Penn, Penn, where did you go to school, Penn? Okay, but still, okay fine, but still, like aren't you specifically doing a, aren't you a professor in the Wharton, in the business school of Wharton or no? Yeah, I'm gonna brag too much. I mean, well, I'm happy to do it. But yeah, so okay, here's the brag.

You should brag. Okay, here's the brag bit combined with a problem. Okay, so I'm going to give you both things. Okay, so I don't feel too bad about bragging. All right. Okay. So just to show you how uneven the venture capital game is, last year, and everybody in the nations of France and Germany put together, raised $5.8 billion of venture capital. last year. Everybody in the nations of France and Germany put together raised

$5.8 billion of venture capital. Pengrads, working res raised 8.7 billion of venture capital. So more than everybody in the two most two of the three most advanced economies in Europe put together. Now I'd like to say that's all because I'm going to keep them because I teach them and it's great. I've been like people raised like a billion dollars if we see them because it's wonderful but I it's not. People raised billions of dollars, and we see them because it's wonderful, but it's not that, right? It's about these networks and these connections

to help with these cases. Absolutely, but I actually have here written down to even ask you about that, because what I find very interesting is that I was going to say to you, it's right here. It says, why do you think that there are so many Wharton pen, I put Wharton slash pen students that when they leave, they do so well in the real world. Like, I think it's an exponentially

better than other places, even other business schools. There is like, I'm not even I saw that data. And I know for myself, my, my first cousin went there and he's extraordinarily successful and everyone of his friends are extraordinarily successful in lots of areas. What is the reason? Besides you, of course, being their professor. Besides that, that's obvious. Let's not state the obvious.

What are the other reasons? So reason one is we get to pick the best people in the world. So everyone applies. We get whatever it is it is 10% 15% acceptance rate. We get a cherry pet, right? So it doesn't harvard also in Princeton and New York and so that's very true, right? So other places do it. We're not gonna neck with these people, right? It's you know, it's it varies one way or another, right? I also think that we do like I think that we do a good job of evidence-based teaching. I think our teaching is really good.

And then we've got great networks. We're a bigger business school than some. So the top business schools were one of the larger ones. And so we have a pretty big connection. Now we're more CEOs and become self-fulfilling. So the highest representation of CEOs of tech companies come from, and like so the CEO Google is a working ground, right? And so we have a lot, you know, Elon Musk is from, and like, so the CEO of Google is a warden grad, right? Right. And so we have a lot, you know, Elon Musk is from, and we depend.

So we have a lot of like top people, but that there's a sort of self-fulfilling prophecy. You get the network connections, we get people hired from there, so you get a good first job. I did some research on looking at people who went to high prestige companies, instead of lower prestige companies that paid more, and they get less pay early on, but they make a lot more to put money later on in life because they're high prestige. So you're kind of paying for the prestige early on. So I mean, there is a bit of talent, there's a bit of luck,

and there's a bit of prestige that gets transferred to you from being at a top school. Now, for you guys to take, for Wharton to take students, this is like a discussion I have with people, my friends a lot. Does it matter what high school that the kids go to as a feeder school to get into Wharton or is it easier to get into Wharton

if you're at a public school where you can be a superstar, right, getting like eight plus plus plus or going to a private high school where it's super competitive amongst children and they grade where it's harder to get like an A-plus, let's say, than it would be at a public school. So I'm not in the admissions committee and I'm going to have to talk to them under, you know,

under most circumstances. So yeah, I don't know why, you know, they've made the subject. But so I think, I mean, and, you know, I only could do so much. I grew up, it was constant. I could never even bid like the days because school's still I went to college. I totally get that. I think that when I hire RAs,

someone I get to see the resumes of my under-presidents, I would just say they're all extremely talented. One of the things to think about is the school's taking advantage, your background, the adversity that you faced. But it being entrepreneurial about not just making money, but being entrepreneurial about finding opportunities to show off how great you are, how you can make a difference, how you create new things, or make a really big difference in this.

So I think it's really thinking about that. And I'd encourage people to do, to show they're clearly passionate something and actually be passionate something rather than just trying to check every box. Right. No. So are you saying then that I understand to having extracurricular things that show that you are, well, you know, you have, you have other hobbies and you're good at other things. I understand that. Now, just on that one question about private school versus public school, just from what you've seen, doesn't make a difference. What your theater is, if it's a, do you see more people getting in that were from private schools

that were like a theater or is it just the same equal value going to a public school? So I could tell you, I went to public school and I sent in my kids to public school. So I can't give you what exactly I've been doing. You are sending your kids to public school. I was going to his public school. So it's hard to know, right? Like it's definitely the case that like,

I was an undergrad at Harvard, you know, whatever, 20 years ago, whatever. And there were less people from Wisconsin where I grew up all four years at Harvard than there were one year from Phillips Exeter Academy, which is like a fancy private school. So, you also seem to do okay. So it's hard for me to know as somebody who's like,

has been away from the admissions process and didn't come in through that elite world. Right. I can't tell you, you know, I'm first that I can't give you the hints on this. I'd like to know the secrets myself actually for my own kids about how to break into these school. Yeah, yeah. So I'm telling you, that's what I'm looking at the students who are like my kids, the

kids are teaching now and I'm like, oh my god, they're so qualified, I would never get to college today. So. That was my next question. The people that you're teaching alone, are they mostly from, are they mostly kids who went to a private school or people who went to the public school? About a quarter of international or 20% of international, you know, from all over the world, you know, and then the others, it's really a mix. I mean, I see a lot of public schools, a lot of

private schools. I don't know what the ratio is. Sorry, you know, if I are a dad, a person, yeah, well, yeah, except I don't have the admissions data, right? The one thing they will, so I can you, can you, can you, can you steal it from them and kind of get back to me on, on, on, on the, on the DL later on? I can get the DL, yeah, exactly. Okay, that's fine. I'm, I'm going to hold you that. Okay. Another question I wanted to ask you is what's the most surprising thing you have found in your research? So it really shocked you. What are a couple of things that you were like, wow, I would never have thought this

to be the case. So a few things that I think are important. One of the things that I found that was really surprising is, okay, so I told you we've been disadvantaged in a lot of cases in raising money. The one place that women outperform men is in crowdfunding. So a female run project, a competitive male run project, is 13% more likely to succeed. And why is that the case?

I delve into this problem with Jason Greenberg. We found the answer was actually, women were outperforming men. We thought it might be because there's like, we're women in crowdfunding, right? So there's like, fashion crowdfunding without maybe you're getting more money. There's more women creating companies and we're women backing companies, maybe that's what the reason.

Turns out women were outperforming men where they were the least women. And things like video games, the technology products, women were doing the best. And we found that the reason why was that there's a small percentage of women, right? A third of women who actively try and support other women when they see them being disadvantaged. And that was the reason why women were so successful. So it turns out that women helping each other, and two thirds of women, by the way, wouldn't help other women. They actually were negative towards other women.

I was going to answer you that next. The one third of women that helped each other out was the reason why women were succeeding. So there's something about actively supporting each other. It seems to be really important. It was a surprise finding, I think, from some of the work that we do. That is very interesting to me. You did find, though, because that was literally my next question about women, was you're saying that in your data, the majority of women actually don't only do they not help other women, they

probably do the opposite. They probably do rail them in some way. But the ones who actually do help, those are the ones who become exponentially more successful when they actually do help each other. That's the way this community advances. So what we did is a side experiment was we took the exact same thing kickstarter project, right? And we showed two versions of it. Like so we did surveys of hundreds of people, you know, experiments of hundreds of people, and they saw one of two versions of the product.

They either saw a version created by a man or woman. All we'd change was the picture. And by the way, we actually used the elaborate Princeton to confirm that the pictures were exactly equally attractive. So it equally attracted a man or woman. And all we did was change their name from Jessica Smith to Michael Smith, right?

So one was Jessica Smith, what was Michael Smith? The most common name for Millennials, by the way, in the US is Jessica Smith and Michael Smith. Really? So we're trying to keep everything the same. Otherwise, nothing changed. Okay. So one didn't show bias either way. They didn't seem to be like whether they put it

about the same amount of money and whether it was a male or female run project. Two-thirds of women said the project created by the man was better. Those people also were people who tended to answer questions that it wasn't important to help out other women that you didn't see women in disadvantage. They thought the project, if they saw the male creative virtual project, they thought it was better. A higher quality, more likely to succeed.

One-third of women, the ones who tended to also answer questions that it's important to help out other women succeed, women, we have to help each other overcome disadvantage. Those thought the products created by women were better, and they were more likely to give money than any other group to the women. So it was that swap, and we find the same effect by the adventure capital. On average, female venture capital partners invest less money in women-loan ventures than male venture capital partners.

Wow. So it's about not just being representing your group, but also thinking about how you help each other out. No, I tend to, I feel that anyway. I feel it's very true. I've experienced that, right? I think that there's been now more efforts to make a shift, but I don't know how genuine it is, right?

Because I've noticed that too. You know, I feel that women tend to, even that may not be PC to say it, I feel that a lot of women are feel very competitive with other women and therefore would not be a support system. This is actually back to you up on this. So for most people, there is what's good for if you're no matter what your minority status is, right? It can be gender, it can be race or it can just be that you're from a different country and you know in another group. But there you that if you're a minority member, there is incentives for you to preserve your minority member. So women help other like for example, female bosses promote other women until the level below them

has represent number of women and they stop doing it. Both because they see less disadvantage that, but also because they don't necessarily want to threaten their own position. So because tokenism affects it, it's a very real thing that you're talking about. It's called what tokenism? Tokenism.

I love all these terminologiesologies. I mean I'm trying to think of what else I wanted to add. I've got so many good different questions I want to ask you. Is there anything else that I've missed that you want to talk about that is really important in you know talking about what really holds back startups, how to help us start up. Is there anything that I'm missing? One last thing I wanted to say, which is, because we didn't talk about the later stage of startup, and I think the number one answer is like, don't be a jerk.

I think people tend to do edge frameworks because they're always shown as jerks. Like entrepreneurs or like, Steve Jobs was a complete jerk a lot of the time, right? Mark Zuckerberg, these are not people that are like, oh, I want to hang out with these people. And that becomes the impression that you need to be some sort of like, you know,

Jericho, you know, objectivists, you know, kind of caring about yourself, kind of approach. And that just isn't true, right? It turns out that companies where like people are supportive and care about each other, outperform companies where that doesn't happen. And companies can't have it all.

So culture that is good in caring and also be good in innovation, it can also be good in execution. So this idea that there's some sort of jerky center of capitalism is not actually supported by the efforts, right? Kindness matters. Kindness matters. You just said corporate culture, I wanted to ask you about corporate culture Because with corporate culture comes an employee employee satisfaction, right? Which then helps you know employees a happier environment would create a happier product blah blah blah

Is there any data that talks about the corporate what about corporate culture and? Let's talk about that. Yeah, there's pretty overwhelming work on corporate culture. And as you expect, like cultures that are pro-social where people help each other have all sorts of advantages, places where people feel belonging, have all sorts of advantages. And even very direct in startups, we know that organizations that are built

around a sense of commitment to each other are more likely to IPO, gain more money, and are more likely to IPO, gain more money, and are more likely to survive bad times than those that are built around cash or work or greed. Right. What's the exact course that you teach at Wharton, by the way? So I teach a northeastern. Yeah, it's an introduction. It's pretty a ship, and then I have some very strange courses where I also, we were talking about this, but I'm also super into using games for teaching. So it'll be available in public in about six months, I think, but we actually have games that will teach people how to be an

entrepreneur, so I'm working on some of those things to it all of how to do that. Games? Yeah, exactly. I would love that. Well, the one, another question. Now I'm remembering a couple other questions that I had for you. One was, and then we could definitely come back and talk about that. That would be very interesting. It's an entrepreneur like we were talking when we first started this podcast about personality traits that make people that, you know, you were saying that there's no, there's actually, there's no real, the data shows that it's not actually clear what makes someone a good entrepreneur, but what character traits make them even actually clear what makes someone a good entrepreneur,

but what character traits make them even try or attempt to be an entrepreneur. But my question to you was, now I forgot what the question was. Oh yeah, how is there ways that you can actually learn? I mean, people think you're either made that way, you're born that way or not. What are some things that you teach people how to actually be a better entrepreneur, how to actually go into it and be a better entrepreneur? What do people do if they're not,

they don't have the money to be at war and or the grades? Yeah, so, first of all, the book is a distillation of the course. So that's a place. So, I know. Yes, yes, yes. We're talking about the importance, you know, in the academic. So that's a place. By now. We're talking person. See on the academic. There we go. Looks good when you do. So, so the I would say that the there's a couple of years we know. First of all, entrepreneurs

are not bored. Right? I mean, they're, again, attempts can be bored, right? So we do know there's even some slight evidence that there might be a genetic component about risk-taking that people make people founders, if your parents are founders of a world they're gonna try, but it doesn't make you successful, right? So one of the things that drives me crazy is this idea that entrepreneurship is,

are born and not made, is bad in like three different ways, right? It's bad because it makes you think I don't have to learn anything, I just do this. Like this is a natural skill like being, you know, and like, that's just insane. Like even if you're naturally gifted at basketball, it makes you think I don't have to learn anything. I just do this. This is a natural skill like being, and that's just insane. Even if you're naturally gifted at basketball,

you're still gonna practice if you wanna be elite, right? So if you don't wanna be a student, you have to learn anything, right? You absolutely have to learn something, right? The second thing it does is say, if you don't feel like you're a founder, then maybe you shouldn't be one, and that's not true either. And the third thing is, then you look at the people

who feel like they're born founders, and they're often the ones who are free of doubt, and they're like, and that's not the model to follow, but you don't have to be free of doubt to be a good founder, right? So I think it's a really terrible idea. And we already know, actually, there's really clear evidence that when you teach people to be a founder,

better found like entrepreneurship skills, they become better founders. So just two examples from recent research. If you teach people in the book, go through this in more detail, how to run experiments, right? Entrepreneurship is an experiment. You're testing things out to see what they work on them.

If you do that, this one man, our nice study out of Italy just found that your twice is likely, generate twice as much revenue. And you're later, if your school business taught you experiments, versus taught other things, not about experiments. We also know that you, we taught how to pitch better.

So these things are learnable skills. I'm not saying you can learn everything, but you can learn enough stuff and if you're going to spend your time doing this, you should learn. No, I think that's great. I think that this book really is extremely helpful for people who are interested or doing a startup or interested in starting a startup because like you said you may you may not a Nochpin or may not be born they could be made and if you learn how to do a proper elevator pitch learn how to do a A regular pitch know how to you know what people are looking for how to talk to VCs

Also went to go for an angel versus crowdfunding whatever whatever. These are very, very valuable tips in here and practical tips that people can utilize to be, have a shot at being as successful as a startup and as a founder. Yeah, that's a hook, right? And it's a small buck, right? I'm actually quite like, there's better books that will walk you through every step of,

here's how you incorporate that's not here, right? But this is our best evidence we have. it's what I teach in my classes. And I think things are just brilliant now. I also think that you're just, you're, you're, you're underselling the fact that it's a small book. I think people appreciate the fact that it's a small book because you're not like feeling it with a lot of like nonsense and jargon that's not helpful. So you get, you get the breast, you get the meat,

and then all the other fluff is, you can find it somewhere else. Yeah, I mean, when I was looking at creating a book, I was thinking about like, okay, the usually if you repeat these concepts 20 times, and you need to tell a story for each one, and there's some stories in there, right? But like, I didn't wanna have like a 20 page,

like story where if I talk about one founder, like there's lots of other good books. It'll tell you that stuff right. So this is really just the narrow like I'm trying to get me key sentence hit and that's the goal. No, I appreciate that believe me because I have to go through a lot of books in this podcast with guests and how often do I tell you that I have to read a book that's very very long, 500 pages and most of it 300 of it, 455 pages of it is nonsense.

But you have to go through these stories and case studies and this and this and that. And you have to just to get to one point. And like I said, people don't want to do that. They want to get to the meat of the matter. And you've done it really well, Easton. And so thank you for coming on the podcast. Tell people where they can get the book

and where they can follow you or find out more of your findings and data. So the book is actually partially its private, my own Twitter feed. So I tweet out tons of articles and random stuff. So you're welcome to follow me at email, like on Twitter. And there's links to my Twitter profile. And then the unipornch-shadow.com,

you can buy the book there, but it's also, I have tons of free resources, so like everything I collect that I give links to my students for classes, like, you know, videos and other information and web articles, you can go there and read all that stuff for free, and then buy the book either like from whatever retailer, and if you buy an Amazon, you like it, you could write a review that would be bad. And then, yeah, so again, not marketing as well as you are but I'm trying. Yeah thank you so much but thank you so much for coming on the podcast it's been a total delight in a pleasure I've learned a lot myself so I

appreciate that. Thank you. Hopefully I can come back and we can do a treadmill thing at some future point. Oh my god, absolutely. You got it. This episode is brought to you by the YAP Media Podcast Network. I'm Holla Taha, CEO of the award-winning digital media empire YAP Media, and host of YAP Young & Profiting Podcast, a number one entrepreneurship and self-improvement podcast where you can listen, learn, and profit. On Young and Profiting podcast, I interview the brightest minds in the world and I turn their wisdom

into actionable advice that you can use in your daily life. Each week, we dive into a new topic like the art of side hustles, how to level up your influence and persuasion and goal setting. I interview A-list guests on Young and Profiting. I've got the best guest. Like the world's number one negotiation expert, Chris Voss, Shark Damon John, serial entrepreneur's Alex and Leila Hermosi,

and even movie stars like Matthew McConaughey. There's absolutely no fluff on my podcast, and that's on purpose. Every episode is jam-packed with advice that's gonna push your life forward. I do my research, I get straight to the point, and I take things really seriously, which is why I'm known as the podcast princess, and how I became one of the top podcasters in the world in less than five years. Young and profiting podcast is for all ages. Don't let the name fool you, it's an advanced show. As long as you want to learn and level up, you will be forever young. So join podcast royalty and subscribe to Young Your Profiting Podcast.

Or yeah, like it's often called by my app fam. On Apple Spotify, Cast Box, or wherever you listen to your podcast.