Where entrepreneurial spirit and financing collide
Lately, I've gotten addicted to an NPR podcast called “How I Built This,” hosted by Guy Raz, offers compelling stories about the concepts of entrepreneurism and financing and how invariably they're intertwined in every business's efforts to succeed.
The concepts of entrepreneurism and financing are intertwined in every episode, with Raz peppering guests about how they found money to start their company, how they survived some disaster or another and, in many cases, how they ended up selling their company. The journey the entrepreneurs describe is what makes the show so compelling.
Raz bills the show as a showcase of innovators, idealists and entrepreneurs.
Guests have included Tom Chappell, founder of Tom's of Maine, and Lewiston-born Yvon Chouinard, founder and owner of Patagonia. If you're just jumping in, I'd recommend the interviews with self-made billionaires Mark Cuban and Richard Branson, as well as those with the founders of Kate Spade, Lonely Planet, the Knot, Larabar, Warby Parker, Ben & Jerry's, TOMS, Honest Tea and Burton Snowboards.
Five themes from 'How I Built This'
- Lack of knowledge: First, I'm always struck by how little many of the guests knew about their field before throwing themselves in. Ben Cohen and Jerry Greenfield, convinced in the late 1970s that the world needed more ice cream places, didn't know how to make ice cream — to learn they took a correspondence course.
- An ability to learn: The namesake of Kate Spade, Kate Brosnahan Spade, didn't actually know how to make handbags before launching what became a global brand (which she and husband Andy Spade sold to Neiman Marcus for $93 million). The founder of Larabar, Lara Merriken, was making nutrition bars on a home Cuisinart and had no idea how to take her idea to an industrial level. But she wasn't afraid to surround herself with experts, ask questions and fail repeatedly. She later sold the business to General Mills, reportedly for $55 million.
- Desperate nature of bootstrapping: While some of the guests Raz interviews had family help — an initial loan or investment — the nature of even those entrepreneurs and others he interviews has more to do with their ingenuity, thriftiness and ability to raise money from multiple sources — friends, family, crowdsourcing, private equity sources, public offerings. Financing is also fleeting, as the founders of the Knot found: In the dot.com boom, they raised $35 million in an IPO; months later, the boom became a bust, and shares were worth just 26 cents, prompting many employees, vendors and advertisers to bail out.
- Disaster averted: Honest Tea had a product recall that hurt a year's worth of sales. Patagonia grew too fast and had to cut jobs and other expenses. TOMS had favorable media coverage, but then a blitz of orders overwhelmed its tiny network of manufacturers. In each case, the founders problem-solved, negotiated with backers and/or found a resolution.
- Skill vs. luck: Raz commonly asks guests — many of whom have sold the brands that they're best known for — about the role of luck in success. Mark Cuban, who sold Broadcast.com to Yahoo for $5.7 billion, was confident he'd be wealthy, but becoming a billionaire? That was luck based on the right product at the right time when the markets were flush with cash.
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