Introduction: Welcome to Higher Order. We talk to creative people with ambitious ideas that are out to change the world. In this episode we’re exploring the inner workings of the spirit of entrepreneurship. What drives someone to pass up the security of a steady paycheck, benefits, and safety that come with a “regular” job? We dig in with author David Sax, whose book The Soul of an Entrepreneur explores how the drive, passion, and consequences of pursuing a goal can be both the source of one’s greatest joys and deepest pain.
Josh Coon: David, thank you so much for joining us.
David Sax: Good to be here Josh.
Josh Coon: David for our audience, you and I spoke about your last book, Revenge of Analog, which was all about the return of the analog culture and why that was important, why that happened, and it’s still a favorite of mine, I recommend it all the time, in fact I’d sent a copy to the guest we interviewed right before this episode, because he was a big analog fan too.
David Sax: Oh, wow. Thank you.
Josh Coon: But tell us a little bit about what it was that led you from Revenge of Analog to The Soul of an Entrepreneur. Give us a little bit of backstory about how you went on this journey and ended up writing about this as your next topic.
David Sax: This book was I would say the combination of all the books I’ve written up to this, the three other previous books, as well as a lot of the work I did as a journalist, because I’ve always been interested in entrepreneurs. Interested in telling their stories, interested in talking to them. So Revenge of Analog, a lot of the people I interviewed were entrepreneurs. They had started film companies, and record companies, and bookstores prior to that and read about food trends, and so I was interviewing people who ran cupcake businesses, and we’re trying to create the next great apple in their apple farm and own food trucks. And the first book I wrote was about the Jewish deli business.
David Sax: So all of these people were entrepreneurs, and when I was writing stories for BusinessWeek and New York Magazine and New York Times, they were often focused on entrepreneurs, and I’ve always had an interest in them from a personal perspective. I’ve always worked for myself, most of the people in my family are entrepreneurs, and I just identified with them in that way. But I was thinking over the past couple of years about entrepreneurship in a bigger sense. Like there seemed to be something going on in our culture, where entrepreneurs were more valued, they were in the zeitgeists, there were referred to as sexy, there was this sort of boom and startups and young people starting companies, and we were living in this golden age of entrepreneurs.
David Sax: And so the book started out in that way, looking at chronicles of this golden age, but what I actually found when I began doing research was almost the opposite that despite all the startups and what we perceived as the value of entrepreneurs and entrepreneurships growing like crazy and like never before, when you looked at the statistics, the actual number of entrepreneurs in the United States was half of what it was when I was born four decades ago, and entrepreneurship in many areas has been declining.
David Sax: So you have this real disconnect, this paradox between the popular myth and perception of startup boom and Silicon Valley style of entrepreneurship and celebrity entrepreneurs, and the reality for most entrepreneurs out there, which was far short of that.
Josh Coon: Have you always identified yourself as an entrepreneur, or is that something that has kind of evolved over time? Like you mentioned your freelance journalism, you’re a self-employed author. How did you come to self-identify that way?
David Sax: I think that really came out of the process of researching and writing this book because like many people, I’d always worked for myself. I’ve never had a boss. The last boss I had was at a ski school I worked at in Australia in 2000, and I was a terrible employee. I find that like many people I would say, “Oh, well I’m a freelance, I’m independent.” But I although I never really felt comfortable with those terms. And it was through the process of researching these books that I began asking people at the beginning of every interview, “How do you define an entrepreneur?” And those definitions vary wildly. For some people, it was very much that super specific, disruptive innovator and an inventor of a technology that monetizes it into a profitable business and sells that business and gets venture capital financing and very much the model of like the Mark Zuckerberg.
David Sax: And other people it’s like, “Well, it’s anyone who’s creative in their job. And even if you work at General Electric and you’re a manager, you could be an entrepreneur too, if you come up with ideas.” And that struck me as kind of, “Wow. How could you call yourself an entrepreneur and still go and collect a paycheck every two weeks?” That doesn’t really make sense. And so I began asking everyone, “How do you define an entrepreneur?” And I never got the same answer twice. But the thing that I realized that linked all entrepreneurs together, and this goes back to the original definition of the word from 1730, this economist Richard Cantillon in France, it’s anyone who works for unfixed wages and bears the risk of doing that. It’s anyone who has the freedom to work as they want to work, and again, accepts the costs and the risks that come with that freedom. The financial risks and the psychological risks.
David Sax: So I saw that, and after months of talking to people about this, I realized, “Well, of course I can call myself an entrepreneur. That’s what I do. I don’t know where my next dollar is coming from, I don’t know how much money I’m going to make this year or next year, and I haven’t done my taxes for last year, so I don’t even know how well I did last year… That literally I do in a week and I’m postponing it to do this interview.” And I bear the risk of doing that. I have the freedom to write the things I want to write, I have the freedom to work on the project I want to do. If I want to write a book tomorrow about marshmallows, goddamn it I can go and do that. No one’s going to tell me otherwise. So of course, I’m an entrepreneur. I’ve never had a boss. This past three months of working at home in my sweatpants is no different from the past 16 years of working at home in my sweatpants, and having uncertainty in everything I’m doing.
David Sax: And so I came to see that the broadest possible definition was the one that I identified with, and also the one that I wanted to reclaim for all the entrepreneurs that felt that they couldn’t call themselves an entrepreneur because they didn’t look like Elon Musk.
Devon Higby: Interesting. I really enjoyed that part of your book too, that you’ve got such varied answers. I actually found that still hopeful that we as a society can see the people that aren’t just the Elon Musks, and the Jeff Bezos and the obvious entrepreneurs, if you will. So accepting that there is no one definition, what would you say are the top three qualities that every entrepreneur has in common?
David Sax: Well, I think it’s the two that I said. It’s freedom and risk. And the third quality are values. And when I say values, I mean the reason that someone derives from being an entrepreneur. The reason that they become an entrepreneur and remain an entrepreneur, which is most often nothing to do with money. It’s a desire to get their idea out in the world. To make a change in their community or the greater world, to start over and build a new identity around a business. Or perhaps to build upon a legacy in a family business. All of these values are really individual to each entrepreneur, and which is why two entrepreneurs can start the exact same business a block away from each other, and have totally different results in a totally different environment and field because it’s so reflective of their individualism, which is true. Entrepreneurship is a very personal activity.
Devon Higby: So let’s flip this on its head. What are the three most common misconceptions about entrepreneurs?
David Sax: Well, let’s say the first, to flip that on its head. It’s all about money. Entrepreneurship is just a means to make a buck, which of course, in a lot of ways it is, it’s an economic activity. But I think there’s this misconception that not only is entrepreneurship all about money, but every entrepreneur is driven by money in this, I’m randy in fairy tales zero-sum gamesmanship kind of way. You see the worst of that confirmed when it’s like someone was at Costco buying all the thermometers at the beginning of the COVID pandemic, and some jerk stockpiled all the PRL and was trying to make a buck off it. Of course there’s always going to be people like that, but they’re just jerks. It’s not indicative of any greater [inaudible 00:08:41]. I think the other one big myth is that entrepreneurship is a game or a story with a beginning, middle, and an end that you either win or you lose.
David Sax: And we see that reflected in the Silicon Valley venture capital funded version of entrepreneurship, which is, you have a company and you start it, and here’s how you start it, you write a business plan. Stage two, you’re going to get into an incubator and accelebator, you’re going to refine that business plan, you’re going to do your early market testing. Stage three, you’re going to go out, you’re going to get your see it round. You’re going to get up in front of a stage. You’re going to do your demo day. Someone’s going to give you, “Okay. You’ve got 500 grand. Great. Now go for your series A. That’s your next valuation. Series B, series C. Okay. Now here’s your exit. You’re going to IPO, or you’re going to sell through Google, and you’re going to win at that, or you’re going to fail and the company’s going to fold and you’re going to start all over.”
David Sax: And the reality is that entrepreneurship is not something with a beginning, middle and an end. Most people start a business and it has a lifespan, and that lifespan can last a year, it can last 10 years, it can last for multiple generations. And most entrepreneurs are not in it to build something in order to sell to investors, to sell to the market and get out. They’re wedded to their business. They love it. It becomes a part of their life. It becomes a part of their family. I think the third biggest misconception is that failure is this necessary glorious part of it. Fail up, fail fast, all of great entrepreneurs fail. You can’t be afraid of failure. If your business fails, pick yourself up and go out and do it again. And it’s true, entrepreneurs need a certain amount of resilience, and failure is a very common thing that happens to businesses, but it is not a glorious thing. It’s something that can be life-altering, and crushing and destroy homes, finances, relationships, families’ lives. And again, it’s been glorified, especially by this sort of Silicon Valley mythology around it.
Devon Higby: With such a rich tapestry of entrepreneur stories, how did you find the ones that you highlight in your book, and which ones didn’t make the cut? How did you find them? What drove your choices to include them and who didn’t get included and why?
David Sax: That was a really good question Devin because that was the hardest part of doing this book. I wrote my last book about resurgent analog technologies. There’s only so many companies that are new companies that are making film in the world, or even so many companies that are making vinyl records that started up in recent years. I had a pretty limited pool to choose from, and then with this, I was like, “Great. I could write about any entrepreneur I want. There are three million of them in the United States alone, which ones do I pick?”
David Sax: And so I kind of broke it down initially by, “What do I want to talk about with entrepreneurs? What’s the story I want to tell?” And I first divided into sort of reasons, I guess. Part of those values, those why’s of, there’re entrepreneurs who are into startup and what would that look like? Well there would be startups and where are startups? When you think about Silicon Valley, what Silicon Valley? Silicon Valley is Palo Alto and really it’s Stanford. And this university is known for creating this fertile ground for brilliant young founders who are students to come out and start things in their dorm rooms. So I needed to find a couple of students starting a thing in their dorm rooms, and I found two of them. Entrepreneurship is about starting over. Well, who starts over? Well, immigrants. They come, and they often have to start their life completely new everything, all their experiences, their money, their contacts, everything that they left behind, it doesn’t matter, they are in a new country.
David Sax: I live in a place in Toronto, which is half the residents are immigrants, and Syrian immigrants were arriving at that time in large numbers, and many of them were starting to open up food businesses even in my own neighborhood. So it seemed like an obvious entryway to start talking about the immigrant entrepreneur as the proxy for starting over. And so it continued throughout the book. Some were very happenstance. I wanted to talk about community, but I really also wanted to talk about minority women in America because they’re the fastest growing group of entrepreneurs, but you wouldn’t know it.
David Sax: And so I thought about African American women, there is a large segment of that group as entrepreneurs who end up in the hair and beauty business. And this historically goes back to even Antebellum Slavery, when many slaves would be able to have side businesses doing hair. And so I was going to New Orleans on a speaking job, and I was like, “Well, New Orleans is a city with a tremendously rich history in African American culture, and so I’m going to see if I can find someone who was in the hair business.” And I started calling hair salons and speaking to people and speaking to people in community, loan organizations and banks, and one young man who I was talking to at this community bank was like, “Oh, you should talk to Jessica Du Park, BB Judy, she’s blown up, she’s huge.” I was like, “All right.” And I looked her up and I was like, “Okay, this is interesting.”
David Sax: And I reached out and I spoke with her, an hour later She’s like, “Yeah, okay, come on down, cool. Come meet me this day.” And I didn’t know, but she would end up being one of the most enigmatic characters in this book, and I happened to catch her in what I thought was like two random days where nothing really happened, and yet it was actually the crucial moment, when her business was going from something that was like local and fast growing and getting known around the country online, to becoming this huge company, and her becoming this hugely influential figure in the African American beauty space and entrepreneurship communities.
David Sax: And then others were really hard to find. Like the chapter that I wrote about values. I had this idea of like, “I want to write about entrepreneurs and their values because unlike someone who works for a company and is employed, an entrepreneur has a unique ability to realize their personal values through work.” And so I started asking people and they were like, “Oh, you should talk to my friend. They started a company that makes water bottles out of recycled yoga mats. They started a company that makes yoga mats out of recycled water bottles. They give a T-shirt for every T-shirt that they sell to charity and blind orphans in Africa or something-something.” And I was like, it seemed too easy, it seemed too packaged like it was part of the sales pitch.
David Sax: I wanted something that was the average everyday entrepreneur, kind of the last person you would think about their values. And so I was like, “I want the opposite of that. I want your Norman Rockwell businessman. Like your guy who works in the suburb, in the middle of the country somewhere, and makes some unsexy product, and is a quiet rolled up shirtsleeve kind of person, and could be a Republican or could be a Democrat, and it’s not someone you would think about when it comes to values, and I want them to have a business that the values aren’t just this thing printed on the wall, it’s like something that’s actually made of concrete change.”
David Sax: And so then I started calling around, and I did like 20 pre-interviews with people, and someone’s like, “Oh, this guy in Chicago, he’s amazing, he’s got this metal company and he’s all about his values.” And I was like, “All right, Mike tell me about it.” He’s like, “Oh, my values are teamwork and integrity and this and that [inaudible 00:15:53].” I was like, “Okay, well, what difference does it make? How does that change your business?” And I remember this guy, Mike, Chicago was like, “Well, every month we elect the employee that meets our values the most, and we give them concert tickets and a free bobblehead.”
David Sax: And I was like, “And?” And they’re like, “Well, every year they vote and the guy who really embodies our values gets to go to a big concert at the Hard Rock Cafe and a signed guitar from the Rock God. I was like, “And.” He’s like, “Yeah.” I was like, “Okay.” And I ended up settling on something called an ESOP, which is employee stock ownership plan.
David Sax: Essentially when a company sells ownership of the company to its employees, to me this is the interesting thing. Here is an entrepreneur that takes the thing that they’ve built, their baby, their business, and actually in a way transfers ownership over that, not for no money, but certainly for less money than they could sell to an investor or a competitor, to their employees because it calls to some deeper value in them about fairness or justice, or just what those people have done for them.
David Sax: And I spoke to a few experts in this area, and finally met this one lawyer, and talking to him outside Philadelphia, he’s like, “Oh, I got a guy for you. He’s kind of quiet and whatever.” And that person was the one that Kevin [Malka 00:17:15] that I spoke with. And Kevin was exactly what I had wanted. A very shy, quiet person, didn’t even consider himself an entrepreneur, even though he was, and we talked over two days, very carefully and slowly, he’s very guarded about how we arrived at his values and how that led him over the courses, several years to take this decision.
David Sax: And what was interesting was that part of the book was the hardest, and the one that people talk about the least in these interviews, but for me, one of the most meaningful. I sat in the offices of these manufacturing firms and companies that make everything from conveyor belt systems to asphalt, to polymers that go on rockets and missiles and on spaceships, and these, Republican meat and potatoes rolled up shirtsleeves, entrepreneurs would sit there and tear up as they talked about this. And it was exactly what I wanted, but my God, the blood and sweat that it took me to get there was significant.
Josh Coon: Do you think some of that… It’s interesting when you talk about the parts of the book that people respond to, and even this notion of selling your business to your employees and making sure that it carries on. Has entrepreneurship changed from being a team sport to being… Because of that Silicon Valley myth, are people thinking of it as like, “There’s the Mark Zuckerberg?” Like, “He’s the one.” “I’m the one.” It’s not like, “We do it together.”
David Sax: Yes. I think that’s right. If I could add a fourth thing to that, the three big message it is that it’s this individualized thing. And I think that really came out of Steve Jobs and Zuckerberg and Musk and Bezos as these singular Titanic genius figures. And of course you have Thomas Edison, you have Henry Ford, you have all these others who’ve come before them, but it allowed us to deify them and make this a very individualistic thing. That goes back to the Ayn Rand in fantasy of it’s like libertarian poor and it’s like, “Every man should be on their own and they can pull themselves up by their bootstraps, and they don’t need anyone to help them and everyone else should bow down before them.” And that’s not true. Most entrepreneurs that you speak with acknowledge that the people that they work with, the people that work for them, they’re nothing without them. They can’t just succeed completely on their own, because we have these examples of these iconic classic individuals, and because we elevate in the media the individual successes of entrepreneurs to these plateaus, we turn them into celebrities.
David Sax: It feeds into that. And that’s the danger, I wrote about in the book a little bit about Elizabeth Holmes and Theranose the fake blood testing company at Palo Alto, and she never had anything. I read the book, Bad Blood. Fantastic book, and I read it, and it was like she never had anything. There was never any proof. She just kind of lied and bobbed and weaved around stuff and people bought it, and they invested millions and millions of dollars in her… Just a staggering amount of money into this business.
David Sax: Or Adam Newman and WeWork, because it wasn’t so much the business, it was the person. It was like, “Oh, this person’s playing the role, and that’s the role of the entrepreneur. So that’s the person I’ve go to give my money for, because that’s what they look like.” They’re a jerk, they’re a genius. Their ideas are secretive and they could change the world. Like, “Oh, that’s what it’s supposed to look like.” Because we’ve elevated that profile into something that excludes people who build businesses in teams or family businesses or in a cooperative environment.
Josh Coon: And it’s weird. Sometimes it almost seems like people talk about entrepreneurship like it’s a get-rich-quick scheme too like, “I’m going to make this thing and I’m going to sell it for zillions of dollars.” And that’s such a rare part of it all. Or it takes like a 10-year overnight success. And one of the things I loved about the book is how you’re really starting to myth-bust some of those things that have grown up in popular culture about entrepreneurship. With the folks that you were able to talk with, you dug in with, what was one of the things that was most surprising to you that you learned that you just never saw it coming? That really either left you shocked or left you changed as a part of this whole process?
David Sax: Interesting. I think I was in Argentina and I was talking to the owners of wineries that were family businesses. And I remember talking to this one family, which is the Zuccardi family who are very well known. You can buy their wines all over the U.S., they’re fantastic wines. And they were already in the third generation of the business, and had been very successful. And I was saying, “What is the value of the legacy here? Because you’re obviously preserving a tradition and carrying it forward?” And I was having lunch, delicious steak and wine lunch with José Alberto, the father and Sebastian his son, at their gorgeous multimillion dollar winery, and I’d known them years ago when I lived in Argentina, so we connected. And I’m like, “The legacy that you’re passing down, here as entrepreneurship, it’s about continuing that.”
David Sax: And José Alberto was like, “No, no, no.” He’s like, “I couldn’t care if this place burned down tomorrow, the legacy is entrepreneurship. The legacy is that each generation does something new and builds upon what we have, but that they don’t just sit still and preserve it like it’s something, an amber, the legacy is moving forward.” And that was really interesting because I think I had this notion of going into it, especially with that part of the book that, “Oh, well it’s about stewarding and preserving a legacy.”
David Sax: But actually, the tradition of entrepreneurship especially within families, which is something I recognize in my own family, is about moving things forward. It’s not about, “Okay, now here’s the thing. Now to hold on to it, take care of it.” It’s like, “The thing that I’m giving you is the freedom and the risk. You have an opportunity to take it. We’ve built on it. You don’t have to start from scratch, but you can’t just sit there and hold that close to your chest.” That to me was as a really interesting thing that I honestly have not thought about until you asked that question.
Devon Higby: That is really interesting because one of the things we were going to ask you about is how culture drives or fosters entrepreneurship. Especially with your own circumstance and your wife’s too of having that example set before you by your parents who were also entrepreneurs, and here’s this story about the Argentinian vineyard, where it’s handed out and handed down, but it’s like you’re creating your own culture. The culture is entrepreneurship, it’s not the exterior culture that’s driving those decisions really, which is really fascinating.
David Sax: Yeah, exactly. There was a paper that they called it Entrepreneurial Legacy, and it referred to the tendency of the children of entrepreneurs to continue as entrepreneurs, even if it’s in a different business because that behavior of freedom and risk is modeled for you.
Devon Higby: So what are the ways that entrepreneurs get in their own way?
David Sax: Oh God. Shall I talk about today? [inaudible 00:24:26]
Devon Higby: Minute by minute.
David Sax: Entrepreneurship is a solitary endeavor, and in many ways it is the individual wrestling with their ego throughout their entire life. You don’t have too many outside voices telling you what to do. The downside of that freedom is it’s intoxicating and that intoxication can blind you to the mistakes you’re making, whether they’re financial business mistakes or whether they’re personal personality mistakes. And so the entrepreneur is constantly waging a battle with that ego as they deal with the ups and downs of every single day. And I don’t think that ever stops. It hasn’t for me, it hasn’t for any of the entrepreneurs I know, because things are never stable.
David Sax: Things are never just straightforward and consistent, it constantly vacillates, there’s always a new crisis, there’s always new worry, there’s always new risk. There’s unforeseen risks like what we’re living through now. The entrepreneur needs to separate themselves as a person, they need to separate the Devin and the Josh and the David from the business. Or the sponsor that you had falls through, or you get a bad review on Apple Podcasts, or whatever the hell it’s called now.
David Sax: It would be easy if you were working for a Gimlet to be like, “Oh, well shoot, that didn’t work.” But what can you do another day at the office versus like, “Oh, Devin, you’re an idiot.” “Josh, why’d you do that? You’re a failure.” And it’s not true, you’re not an idiot, you’re not a failure, things happen, mistakes are made, you can fail at individual things and learn from them. But the entrepreneur often conflicts their sense of self-worth so much with their work, that it’s a vicious cycle, and it can be a trap when things are bad, or when things are good.
David Sax: “You’re a genius. Everyone’s an idiot. I shouldn’t listen to anyone I know everything that’s going wrong, the only problem is nobody’s listening to me.” And entrepreneurs get into that as well. “I have to work, work, work, nothing matters. Forget about family, I don’t have time for family. I don’t have time for social life or whatever. It’s all about the business.”
David Sax: These are the traps that entrepreneurs fall into in a way that other people don’t, and they can be deadly. They can lead to depression, that can lead to divorce, they can lead to family strife, substance abuse, suicide. All these things are characteristic of the behaviors that entrepreneurs can get into if they don’t figure out how to maintain that healthy mental balance in what they’re doing.
Josh Coon: Thinking about the situation entrepreneurs are in now with the COVID pandemic, many businesses are closed, People’s livelihood since they’ve invested so much of their life in, is potentially on hold for an unforeseen amount of time. What kind of toll does a thing like this take on the entrepreneurial spirit?
David Sax: It’s horrendous. This is crushing. There was a professor I spoke with in the UK, his name’s [Butestefan 00:27:23], and she studies entrepreneurship, she studies the psychological effects of entrepreneurship and stresses. And she says, look, stress can be good. There are motivating stresses. The stress of getting a product to market, the stress of launching a new business, the stress of finishing that project, getting it right, these are the exciting stressful times that keep you up at night with ideas and get you burning the midnight oil and excited about the possibility and stuff. And then there are what she called hindrance stresses, which are things that are outside of the entrepreneur’s control.
David Sax: Some of the business gets sick or dies. You get hit with a lawsuit that you weren’t expecting. Your market falls apart for circumstances entirely out of your control. You worked with Kodak, Josh, and that was entirely within their control, they invented the digital camera. But these things are devastating. There’s no silver lining in the shit cloud that we’re all under right now. This is terrible, and I have friends who own businesses and over the past month, as I’ve been promoting the book and writing about it, I’ve heard from entrepreneurs all over the world who are losing their businesses, who are afraid of losing their businesses and feel hopeless and say, “I’m too old to start all over, I can’t do it, I’ve invested everything in this. What can I do? The government’s not helping me.” And there’s this terrible feeling of hopelessness. And what’s at stake is not just financial, which is a huge part of it, it’s the person’s sense of self. An entrepreneur’s identity is so tied up in what they do that it’s impossible to separate from who they are.
David Sax: And I believe it was the same academics, there have been studies recently at Stanford which studied in Germany the psychological effect of people losing a job or losing their business that they owned. And both were negative obviously, but the psychological effect on someone’s mental and physical health of the entrepreneur losing their business was a degree greater than someone losing their job, because their identity was so intertwined in it. And so we talk about people, what they’re losing, they’re not just losing their livelihoods, they’re losing the core part of their identity.
David Sax: If I’m not the guy who owns this restaurant that I’ve had for 40 years and I greet everyone at the door, and people in the community know me as David’s Pizzeria, who am? That is a deep existential threat to someone’s existence.
Josh Coon: Wow. And you don’t hear people talk about the stakes of entrepreneurship as much as the reward. And do you think it’s beneficial for that to be talked about more so people almost understand what they’re getting into as they go in? Or does it not really matter? You’re going to do it regardless of the risk because it’s just in you and the way that you talk about it being entwined with your identity?
David Sax: I think both. I think people are going to do it regardless of the risk, and people do all the time. People who have tremendous risk in their life, who have absolutely nothing or have everything to lose, go and do it because they’re so driven by some idea, by some opportunity that they don’t want anything to stand in their way. But I think they need to know what that actually entails and looks like, so they can prepare themselves. Because if they do, then when things don’t go right, in normal circumstances or in extraordinary ones like this, they’ll hopefully be somewhat prepared and have the tools to be able to deal with that, so that it doesn’t smother them and drown them. So that they can find that resilience within that and continue on. And I think the problem and the negative thing is we’ve been selling them on just the sunny side of stuff.
David Sax: I think about entrepreneurship education. One of the fastest growing disciplines in academia and the world over the past couple of decades. And so much of it is really just success stories. “Oh, today we have Josh. He founded this multi-million dollar company, and he’s going to come in and tell you how he did it.” And you’re going to be in like “Hustle, hustle, hustle. Work harder. Never take no for an answer. Blah, blah, blah, blah, blah. Here’s how I did it. Here’s how I grew. You too can be a millionaire too.” “Yeah, I’m going to go out and do that.” And that’s everything from Shark Tank and Mark Cuban and Gary Vaynerchuk, and all this huge multi-multi-billion dollar industry of entrepreneurship rally, which is great. I think it’s good to have cheerleaders, it’s good to get people motivated, that’s a positive thing. But if you don’t talk about the suck, if you don’t talk about the risks and the downside and that part of the journey, you’re only getting a part of the story.
David Sax: It’s just as important to follow up that speaker about success and to talk with someone about, “Now David’s going to come in and tell you about how he lost his company, and how it went bankrupt, and what it was like for him. And he’s not going to come out at the end of it and tell you the silver lining, but he’s going to tell you what that’s like.” So that’s seared into your brain, part of that experience, and you can learn from that. I think it’s necessary. It’s like a right that we have to give, it’s something entrepreneurs need to know.
Devon Higby: I like that perspective so much when you were talking about the college kids and scheme, and how Stanford just kept bringing in all these success stories to teach kids how to get their A papers, and all that stuff and all that underwriting and kept feeding into the myth. And I thought where they were in life, they were pretty in tune with the fact that all these success stories weren’t actually helping them, as kids who were trying to get something off the ground. That they wanted to hear the uglier side of it, they wanted to hear their failure, they wanted to hear they’re like, “Yeah, what did you do when you couldn’t pay your bills?” That they were hungry for that.
David Sax: Yeah, because they were facing real problems already. And they were wondering like, “Oh, well how did this person deal with it?” And not just deal with it and then get the check from Peter Thiel and go on to found a multi-million dollar company, billion dollar, sorry. A million dollar company’s for losers, as I count to like $20,000 in my bank account right now. They wanted to know what it actually looked like when things didn’t work out, and maybe then how to avoid that. What mistakes that individual made that they could learn from. Or maybe just when to call it quits. I think that’s a genuine thing and to hear that it’s okay to do that. I think even Nikhila and Andrew, the two young men who started this internship matching software company at Stanford, and were getting lectures from the greatest, most brilliant minds in the world, we’re seeing that they were only getting a part of the story and they wanted all of it and they would go out and find it on their own, and they were.
David Sax: They were finding people and talking to them, and learning more from that than they were from these gilded lectures, but a university like Stanford or a startup conference, they’re not going to have, “And now our next speaker, somebody went bankrupt.” That doesn’t impress donors, that doesn’t sell tickets. That you want to hear, “Oh, I got to see Gary Vaynerchuk.” “I got to see Mark Cuban.” “I went to this thing and Elon Musk was there and I got his autograph.” But again, you’re only getting part of the story.
Devon Higby: Yeah, for sure. Gosh, having spoken to all of these people and heard all the stories, the good, the bad and the ugly, as an entrepreneur yourself, what are your fears and what weight do you carry that maybe some of us with “regular jobs” might not have to worry about so much?
David Sax: Look, I literally spent three and a half years working on a book that was going to pave the way for my future, which came out on April 20th, in the middle of this pandemic, and has not fallen on deaf ears, but it’s certainly not known to as many people as I would like it to, and certainly is not going to be an overnight bestseller and success, let alone probably make the publisher any money. And so immediately, as my worries are the immediate term. My speaking business which I made most of my money at, that’s gone, that died in March. So my worries are financial as any other entrepreneur is, because I don’t have a regular salary or paycheck. I live from job to job, from book to book, from article to article, from speaking gig to speaking gig, and whatever other random stuff comes my way.
David Sax: But more than that, the risks I face are those same risks to my ego. “Oh my book didn’t get reviewed by The New York Times this time, it got reviewed last time, maybe it’s the COVID thing.” “But these other books were reviewed by it, well then why wasn’t yours? Maybe it wasn’t good enough. Maybe you’re not good enough. Maybe you shouldn’t write another book. Maybe you shouldn’t be a writer.” And on and on and on, down into that rabbit hole. And so every day I have to wake up, curve out some time from homeschooling and raising kids in this, to try to sit down and convince myself to convince the world that the work I do has worth, and that’s a struggle. That’s like a hill I’ve got to climb every day. And some days I get up, and some days I’m out of breath and puking in the middle of the hill to really beat I might have fallen down.
David Sax: And that’s the risk I face. But it’s one that I’m going to continue facing, first of all because I’m completely unemployable. I’ve worked for myself my entire life. Nobody would ever hire me, let alone in this economy, but I have an idea, I have an idea for the next book. I have an idea for a podcast. I have an idea for this thing that I could do in like, “Well what else am I going to do, but act on that idea.” I have the freedom to do it. So I have almost the obligation to do so. And so I know what the risks are. I’m living with it. I deal with them, I wrestle them every day, but I also have that freedom to drive me forward.
Devon Higby: Well, it’s the reward side of the risk it sounds like. So that the entrepreneurial spirit means that you take that diversity and it drives you. Where it were maybe some of us who draw the regular paychecks, maybe silence that voice of that thing, that idea that is sort of chirping in the back of our heads. May we try to-
David Sax: Until it will no longer stop chirping, until it’s just deafening, and you feel obliged to do that. Absolutely. And that’s what drives someone to just cross that line and start their own thing, when it just is no longer possible to put it off. When it’s calling you so much.
Josh Coon: One of the topics we talk about on the show a lot, and the part where you really dug into values, spoke to us a lot is this idea of noble ambition, that ambition itself is often in an entrepreneurship, it can be given a bad rap, where it is like it’s this thing that if left unchecked can do damage or leads people in bad directions. But we have talked about it on the show a few times, and really seen the value of noble ambition. So ambition coupled with the desire to do good for your community, to do more for other people, can be a really positive and powerful change. And I feel like you’ve seen that through some of the things that you’re talking about with these entrepreneurs. Can you talk to that at all? Is that something that resonates with you from what you’ve seen?
David Sax: Of course. There are people who obviously launch large ambitious projects with desire and a goal to specifically change their community or the world through what they’re doing, through a business. And that could be a business that just has high environmental standards and works to really do good work. I think of a company in Philadelphia, one of these ESOP companies called NewAge Industries and Ken Baker, the owner took it over from his father, they made plastic tubing, garden hoses, stuff that would go in McDonald’s milkshake machines and he grew the business, and moved into the medical field. Now they’re making all sorts of COVID testing stuff. But really he put his values in that he not only began the ESOP to sell it to his employees, but he made the plant zero waste, a quarter of the power is derived from solar and renewables and he’s growing that, 100% recycling.
David Sax: He tried to get everybody to become vegetarian and help them with health and driven to make that difference in the world through what he’s doing. And then there’s other people who are driven to do stuff because they want to serve people like them. I remember this young lady in New Orleans, [Nicki Dejon 00:39:57], she was finishing up her degree in entrepreneurship from I think Loyola university there and wanted to start a beauty shop that sold beauty products to young African American women like her in a positive space, where I could teach them how to use those products, but also how to become more confident and maybe how to launch their own businesses, and she did it because the beauty shops that were selling products were often not run by people who look like her and were discriminating against her and were positive spaces.
David Sax: And so she just wanted to put something out there because she couldn’t find it. And that’s what she wanted. Even to Nikhila and Andrew at Stanford, their whole idea for scheme, this internship matching program was based on the fact that they didn’t have the good connections that their classmates had to get the internship at Google or Salesforce or Goldman Sachs. They were at a disadvantage and they knew there were a lot of students that are disadvantaged who by not getting those internships would continue to be at disadvantages. And so they wanted to level the playing field in a way by the company that they were building. I think again, it comes back to that entrepreneurs’ value. Those values drive them. Values are what drive those entrepreneurs, it gives them that sense of purpose and that continues to inform what they do throughout their careers.
Josh Coon: Yeah. And it takes me to a kind of a quote from the end of your book. There’s a passage that I really loved reading like “Entrepreneurship is what happens when ordinary people take your ideas about the world and build a business around them like that.” I hadn’t thought about it really that way before, but like so much of the examples that you have and as I’ve thought about it since so many examples of people I know, it is driven by a worldview, by a desire to bring something forward that you think is going to either make things better or lift your community up or change things in a way. It’s a really great-
David Sax: But again, it’s not a lofty thing. It is, “I really love baking bread. I’m spending my COVID time baking bread and this town needs a great bakery. I’m going to make this bread for this… This is it. I love to make bread, and I want more people to have this bread.” It can be as simple as that. It doesn’t have to be miraculous blood testing. Or some sort of moonshot thing. Sometimes it is, but often that bread’s probably going to change more people’s lives than the VR headset that you’re inventing.
Josh Coon: Right. All right. Well, it’s always so great to talk with you and we both really enjoyed your book. One last thought I want to get from you and then we’ll close out and you can tell everybody where they can go buy this thing. Way back at the beginning of the interview, you mentioned that entrepreneurship has fallen off. There’s less entrepreneurship now than there was when you were born. How can we turn that around? What can people do to really… What are the circumstances that need to happen for people to take these leaps?
David Sax: Well, unfortunately the circumstances are here, which is tremendous job losses. 38 million Americans and hundreds of millions of more around the world out of work in the past two months. Without jobs to place those people in, the people are going to be obliged to find their own way and start something that’s going to allow them to live. And so entrepreneurship is going to probably see a growth in the next couple years, out of necessity. But that’s okay. There are lots of great businesses that were formed in recessions and depressions and it doesn’t make the experience of entrepreneurship any less real, it doesn’t make the possibility for growth and success any less relevant. And so we’re probably going to see a growth in entrepreneurship, but it’s not going to be, George Clooney launching a tequila brand type of entrepreneurship.
David Sax: It’s not going to be venture capitalists throwing checks at anybody who has a cool idea and says they’re going to change the world. It’s not going to be a hundred new scooter companies. It’s going to be the businesses around us, in our community that are based upon the skills and ideas that people have that fit the world that we’re going to be living in and are living in. You’re probably not going to see a lot of sit down five course, 5-star dining, high touch restaurants based on cruise ships in the next couple of years. Hopefully just no cruise ships at all, to be honest.
Josh Coon: I they have a long road back, the cruise ship.
David Sax: No, they’re selling tickets for them and people are buying them in minutes. Its insane. God bless those people. We should just line up icebergs and get them ready for the cruise ships to got to sea. Where was I? Cruise Ships?
Josh Coon: Yeah.
David Sax: It’s going to be businesses that suit the time we’re in. It’s going to be people doing homemade mask companies, and food delivery things, and stuff that’s going to serve the needs of the economy that we’re in and the times we’re in, and it’s going to be very personal.
Devon Higby: … And your book will be even more relevant and necessary. So let’s tell people where they can find it. How do they get their hands on this? And then we’ll know how to be an entrepreneur?
David Sax: How does one buy a talk? Well done. Books are a material good, that can be purchased at bookstores, wherever finer books are sold. I will not plug for any specific bookstore, but I will say that the independent bookstore in your city, in your town in your neighborhood and in your part of the world will probably carry this book, and they will be able to deliver it to you or drop it off safely outside the door, or give it to you with the cash, wearing their personal protective gear, and by doing that, you are going to be supporting an entrepreneur in the business that is a foundational part of your community. To live in a community without a bookstore is not a happy place.
David Sax: You can buy it from Amazon of course, but bookstores are more than just places to buy books. They’re places that bring together ideas, that bring together speakers that stand for something. And so I would recommend finding whatever independent bookstore you live near, and contacting them and ask them to either sell you the book or order it for you, which they’ll happily do. And if you want an easy way to do that, there is a wonderful site in the United States called bookshop.org which directs online sales to independent bookstores, either a specific bookstore that you choose near you or that you like, or just generally and they’ll spread the profits around, and they’ll sell it cheaper than Amazon. So save a buck, save a business, save your soul.
Josh Coon: Fantastic. David, thank you so much for joining us. It was a pleasure to talk with you. We love your book. Anybody out there who has an entrepreneurial spirit, or is thinking about this, has been pondering, pick it up. Get it from the bookshop.org. Thank you so much David.
David Sax: Thank you both, and it’s always a pleasure, Josh and Devin.
Devon Higby: Thank you. Thank you so much and be well.
David Sax: You too.
Devon Higby: Well that’s our show. We hope you are inspired to pursue your noble ambition. Let’s chase it together. This has been a Truth Collective Production.