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Saturday, December 28, 2013

Review: Just Start. Future best seller?

Just Start: Take Action, Embrace Uncertainty, Create the FutureJust Start: Take Action, Embrace Uncertainty, Create the Future by Leonard A. Schlesinger
My rating: 5 of 5 stars

Adam Smith's The Wealth of Nations took 8 years to become a best selling book. I expect the same thing will happen with this ground breaking book.

The conventional wisdom is that business startup depends on market research and careful, formal planning.

Every college and university teach those working with startups to ask, "Have you written a business plan?"

If this conventional wisdom was valid we'd have a planned economy, not a market economy.

What's driven the phenomenal growth of this country until the early 70s was the fact that nearly all startup were boot strapped, there were not written business plans.

That fact was clearly demonstrated with the research of Dr. Amar Bhide, documented in a series of articles in the Harvard Business Review and culminating in his book "The Origin and Evolution of New Businesses" in 1994, at which time the publisher of Inc Magazine said it was the most important book about startup ever written.

He was also influence by the first hand experience he had growing up with a successful entrepreneur, from how he could observe what he calls in the book "opportunistic adaptation." We spent a day on the University of Denver campus talking with instructors and visiting classes, the way he would explain the process, "you don't want to buy this lamp, here, how about this rug."

Bhide's book was well researched, well documented, well written, but still it was ignored by the Small Business Administration, the tax-funded mechanism set up in 1953 by big businesses with the intention, I believe, to snuff out the entrepreneurial spirit of America, along with the entrepreneurship educational network across the country.

More recently Sarah Sarasvathy has reached similar conclusions to Bhide using a different research methodology.

The authors give credit to Sarasvathy, but not to Bhide. When I asked them about this on a webinar, Len admitted he knew Amar, had taught with him at Harvard, he was very much aware of his insights, and that it was a mistake not to have given him any credit at all.

What are the Bhide/Sarasvathy insights that are incorporated into this book? That in past years when the USA economy was flourishing, successful business did not start the way the SBA has said since 1953 that they should start. This SBA drumbeat has been picked up by every college and university entrepreneurship program. Show me one that requires Bhide's book to be read. Outrageous!

Insights include the fact that successful entrepreneurs in the past did not do formal market research or engaged in formal planning. The business plan competitions are an enormous was of time and money, and they teach the wrong lesson.

Insights include the fact that successful entrepreneurs bootstrap, they don't try and borrow money. As Mark Cuban has said, "only a fool would borrow money to start a business," yet students of startup today are being taught about how to impress venture capitalists.

Insights include the fact that successful entrepreneurs don't think long range, they for sure don't have an exit strategy when they are just starting. Recently a survey found that 87% of business owners do not have a exit plan.

So where does Just Start fit in? This bold book is a radical attempt to right the wrong, the festering wound that erupted in 1970 when Nixon went to China, the culmination of the disease that was spread by the SBA, that was perhaps was first allowed to infect this country in 1910 when Harvard awarded the first MBA.

And it has been virtually ignored. It should have been at the top of the best seller list, and in my opinion, as I said earlier, I believe that could still happen.

What will bring that about would be a changing of the guard at the Kauffman Foundation. Marion Kauffman was an entrepreneur very much in the classical mold, starting a very, very successful business out of the trunk of his car. He died, and it appears his well intentioned widow, now deceased, was misled, and a mechanism for pouring gasoline on the academic approach to entrepreneurship that is killing startup in this country just as surely as some see the academic approach to poetry is killing of real poets and poetry (see Epstein's column in last April 1st Wall Street Journal.)

There is hope. Steve Blank and his student Eric Ries have moved away somewhat from the academic approach to startup, at this point it's hard to tell if Startup Weekends, Global Entrepreneurship Week, Tech Stars, etc etc are helping or hurting.

What is clearly the major problem is the Small Business Administration. When I asked Steve Blank what he thought of the SBA startup efforts, the whole complex of activities from SCORE (I've suggested they should change their name to SQUASH), SBDCs (Small Business Development Centers) across the country that disseminate the SBA research/planning propoganda, a network created by virtually bribing local chambers of commerce. Blank has told me that from his perspective at Stanford, he didn't know anyone who has anything to do with the SBA.

That may be true for the Stanford crowd, but the deadly network is having an impact, it is clear.

For proof of the deadening effect, the smoking gun, the statistics that show our stagnations, see Nobel economist Edmund Phelps recently published, very fine Mass Flourishing. When Phelps was introduced at Oxford, it was said the book will, "transform economics." Some have said it's the most important book since The Wealth of Nations.

Phelps effectively demonstrates that what he calls corporatism combined with socialism have just about killed off the new economy that build this country, research and planning have choked off the vitalism and dynamism that we saw from about 1840 or so to 1970.

Phelps offers some remedies worth considering, for one thing study groups in Washington DC that would take up his book, and I'd suggest they also read Bhide and this book that is under consideration here, Just Start.

As a matter of fact, I suggest that the DC study groups start with Just Start, or at least read the one page summary in the back. What do we want? To restore vitalism and dynamism into our economy. What are the smart steps we can quickly take in that direction?

The first thing let's do, let's kill the SBA!

If you are serious about startup, skip the SBA. Instead buy this book, take an afternoon and digest it, then the next morning Just Start!

The book suggests bringing other people along. I always suggest that those starting check with a good CPA before investing a lot of time or money. A good CPA will help you quickly see the financial implications of what you are considering, and they will make sure that you can skip going to a lawyer until you are further along.

But don't expect encouragement. For that attend one of our Small Business Chamber IDEA Cafe Startup Workshops. Or at least watch The Startup Show, live by 5 p.m. Mountain each day on my or YouTube Live Events or Google + Live Hangouts.

This life is very short, so Just Start!

Mass Flourishing: How Grassroots Innovation Created Jobs, Challenge, and Change

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