Essays / Global
Good business, only better
Just as the global economy is in a state of flux, our ideas about what makes a successful entrepreneur are ripe for re-evaluation. We hear from seven savvy voices about universal constants in commerce and the key elements for success in the new world of enterprise.
Death of the charismatic founder
by Michel Hogan
A string of recent high-profile falls from grace has underscored the importance of humility in business. It also shows how the notion of the visionary founder is, well, foundering.
During recent years, a generation of huckster entrepreneurs has finally got its comeuppance, and observing its members’ falls from grace can teach us all a lesson. The downfall of Wework’s Adam Neumann and Uber’s Travis Kalanick, as well as the conviction of Elizabeth Holmes, whose Theranos health start-up falsified blood tests, suggest a timely swing against the fêted founders inflated by messianic zeal.
I work on making brands stick and I don’t think that a cult of personality can ever be a proxy for good leadership. To me, the idea of the visionary entrepreneur singlehandedly changing the world is both irksome and clichéd, and ignores the mountain of other people’s (often unheroic) work that usually underpins such success. Unfortunately, blind hubris and unchecked excess are hardly new and they don’t just affect start-ups. Luckily, however, now feels like a good moment to challenge it and consider what can take the place of this unhelpful trope.
Founders with Hindenburg-sized egos float at first but they often end up blowing up their beloved endeavours entirely. In doing so, they have ignored a few of the most tried and trusted building blocks of management: avoiding the hot air of hype, the pursuit of sustainable growth and taking a rational view of risk and fallibility. Whether you’re running a shop in a one-horse town or riding in on a unicorn, entrepreneurs ignore these simple principles at their peril.
In the past few years there has also been something of a positive move to hold more and more of these charismatic but badly behaved founders to account, which can only be a good thing. Now, more than ever, if you misbehave your board is likely to show you the door. This feels like a much better balance than in bygone years.
Still, it is too simplistic to lump all entrepreneurs together. The notorious few might inspire headlines and television shows but there remains a quiet majority of businesses that continue to steadily bank value with honest intent. As for mainstream role models who sum up the simple, sober antidotes to the excesses of founder culture? Well, the man behind clothing company Patagonia, Yvon Chouinard, is an example of someone who has managed to build a sustainable company with a stellar reputation.
Such entrepreneurs understand that brands accumulate value by making promises they can keep and not by relying on grandiose ideas and pure self-confidence to justify iffy short-cuts or missteps. Good leaders still need a clear sense of who they are but must also combine it with a purpose and set of values that they make widely understood to their staff. It’s this that shapes the day-to-day workings of a company.
We should also remember that what propels a business – at any size and stage – is the everyday work that balances the books, cares for customers and colleagues, and sorts the product. Then does it all over again the next day. The grandstanding and glamorous bits of any job rarely make up the majority of people’s work.
Perhaps it is time to consider a different crop of entrepreneurs: the sort of people who have the confidence to ditch dreams of world domination, zillion-dollar valuations and ego-inflating articles in favour of more modest and meaningful goals. The sort whose success isn’t defined by making the magazine covers or having a television show made about them.
If you ask me, it is time to bury the idea of the iconic, faultless and charismatic founder, the person who built an empire on an idea, amassed impossible wealth and power, and avoided the failures that colonise the path to success. We should also ask ourselves, honestly, if these mythical beings have ever really existed or whether we have created them ourselves.
By sharing those stories, we can perhaps elevate a different type of founder: entrepreneurs with the confidence to forego shallow, self-aggrandising fantasies and instead lead sustainable businesses that contribute to a better world.
About the writer: Hogan is an Australia-based business adviser who helps companies large and small to avoid the risk of making the wrong promises. She is also a regular contributor to various publications and the author of the book The Unheroic Work.
Out of the frying pan...
by Charmain Ponnuthurai
A successful venture begins with an idea that inspires you, coupled with the impulse to pursue it. But you also need focus, the humility to learn from your mistakes – and plenty of tenacity.
Entrepreneurship is like writing a poem: it’s about following a feeling. My immersion in the world of food began 20 years ago when I worked part-time co-ordinating events at a shop called Books for Cooks in west London. It was a place to discuss ingredients, tastes and food. Inspired by that time, I compiled Midnight Feasts: An Anthology of Late-Night Munchies and donated the proceeds to a dyslexia charity called Springboard.
I tried to involve French cookware giant Le Creuset, which had brought out a range of items in midnight blue. The company never responded but the experience inspired my own business, Crane, and its first prototype for a milk pan. We crowdfunded its creation and selected an old foundry in France to start production. What I’ll say to people who want to start something similar is that the cookware market is hard to crack and is full of established players. I remember talking to staff at our induction day – no pun intended – at Harrods about why they should sell our four pans in a room crowded with pieces by Staub and Le Creuset.
We sent pans to cooks and chefs around London and Crane’s sales grew by word of mouth. monocle even gave us our first press feature. It was all very serendipitous and organic, despite our lack of a proper marketing budget. At the time we didn’t even have packaging materials, such as printed boxes in which to send out the pans – just stickers.
In the eight years since, I have learned a lot and, like all entrepreneurs, made some mistakes. We were behind the curve of direct-to-consumer cookware brands coming up in the US; at the time we were wholesaling to shops and were too slow to adapt. This year we encountered supply-chain issues with our stainless-steel pans. We have had to deal with factories closing and long delays. I’m the only person in the office responding to emails, sometimes slowly, and people can get angry. It’s hard not to take it personally but we’re all so used to immediate shopping, click-and-collect options and next-day delivery that the idea of a four-month delay now seems unreasonable.
Starting a business means coming up against boundaries, such as money. Stay focused, intuitive and tenacious: the rest will fall into place.
It can be hard to take time off but you need your own life and spending time away means that you come back with a clearer head. And it’s easy to assume that other people are as passionate about your product as you are but it’s important to understand how your customer thinks. You need to communicate. Otherwise it’s a monologue, not a conversation.
I’m working on another project, Larder. It’s a response to the collapse of farm jobs and aims to give a voice to producers. It’s also about helping people feel confident in the kitchen using basic ingredients instead of relying on meal kits or recipe cards. What can you cook when you get home and all you have are some tomatoes, pulses or fish? What can you make that isn’t expensive or time-consuming? There are simpler paths to follow but I love being an entrepreneur: following the feeling and writing the next line.
About the writer: Ponnuthurai is the founder of Crane Cookware. Her new firm, Larder, will launch in October 2022. This essay is taken from an interview by monocle researcher Grace Charlton that features in The Monocle Companion, which is out now. Buy your copy today.
What makes an entrepreneur?
by Stefan Allesch-Taylor
There are a million and one guides supposedly offering the keys to success, so sometimes it’s good to revisit the simple, core elements of building a business.
I have often been asked what makes a good entrepreneur. For many “experts” the answer always includes the same never-give-up clichés. But there’s much more to think about today than steely determination. There’s an economic tempest raging: supply chain problems, workforce shortages, high inflation, a climate crisis and war.
These are far from the challenges that others faced, even five years ago. I’ve found that the forces that make a successful entrepreneur vary with the times. For those looking to start up right now, though, here is my advice:
Give people what they want.
Research from CB Insights shows that 42 per cent of businesses that fail do so because no one wanted their product or service in the first place. Listen to your biggest critics: they are your most valuable asset. If you can answer the naysayers, you’re off to a good start.
Lousy hires destroy the very best ideas. I would advise any entrepreneur to get a good understanding of human resources – not just to ensure the swift exit of a “bad fit” but also to understand more about team building and motivation strategies beyond just money.
No entrepreneur is an island. Don’t embark on any venture if you haven’t built up a network of people who are already engaged in your market or have the skills that your business needs to get moving. You’re not proselytising; you’re motivating the people who share your vision and believe in your start-up.
Too often I see 90 per cent of budgets go on development and very little on marketing. Business titan Andrew Carnegie wrote, “If I had $10,000 to start a business, I’d spend $1,000 on the product and $9,000 on marketing.” And it is not just algorithmic ads; it needs a bit of “you” and a bit of magic dust to stand out from the dross. The overwhelming majority of internet traffic goes to a handful of websites. Think about how you’re going to be heard and seen.
Have a purpose.
For example, our climate is rapidly changing. This will bring displacement and scarcity. A new generation of consumers wants to buy into companies with authentic goals beyond “greenwashing”. Get ahead by making a difference.
Don’t be afraid to change course.
I know it’s counterintuitive but you will need to navigate data points that block your path. There will be many, especially in volatile times. In the long run, it will save you heartache and money to cut your losses and change tack. Doing so will also demonstrate your self-awareness to supporters and staff.
Breaking even as quickly as possible should be a core part of your mission. If you do, you’ll be in control of your destiny. If you don’t, you’ll always be a slave to someone else – assuming you’re fortunate enough to be in the 1 per cent of start-ups that survive and scale.
Entrepreneurs are made, not born.
We are always of our time and what makes an entrepreneur in 2022 is not what made one in 2012. Focus on building your business, not your origin story, and you’ll be on your way to self-made success.
About the writer: Entrepreneur and philanthropist Allesch-Taylor is professor of the practice of entrepreneurship and a fellow of King’s College London. He has since invested in, co-founded or served as chair or ceo of more than 100 new companies, operating in more than 15 countries.
by Fiona Wilson
In Japan, taking time for a midday meal is seen as a productive part of the day. Here’s what the rest of us can learn from the time-honoured ‘teishoku’ break.
Many things could account for the diligence of the Japanese workforce but I have a hunch that one element is the unerring commitment to a decent lunch. Not the must-impress client type, either, but instead the daily ritual of a fair feed and the fact that so many companies – big and small, lavish and humble – understand the importance of leaving your desk and eating well. While people elsewhere in the world unfurl sad sandwiches or Tupperware containers brimming with last night’s leftovers, Japan lunches from a different menu.
From 11.45 on, employees pour out of workplaces and head to their preferred spot for a teishoku set lunch: the true cornerstone of Japanese cuisine for anyone, from entrepreneurs to employees. For about ¥900 (€6.30) – more and you might be accused of extravagance – diners can expect a tray with rice, miso soup, pickles and a light main dish (think salt-grilled mackerel or braised pork).
Queues regularly swell outside the best places but tend to move quickly. That’s the other business- friendly factor in teishoku culture: the speed. A proper meal, served with a glass of iced water and a hand towel, can – and should – be eaten in less than 30 minutes. The idea is to be in and out as quickly as possible. Everyone knows the drill. There’s no time for languid lunches when there’s work to be done but it’s still a chance to leave the office, reset and be back at one’s desk – replete but not sleepily overfed – and ready for a productive afternoon.
For some employers, the importance of lunch to morale, health and getting the most from staff might lead to the creation of a canteen. The most famous is at Tanita, a maker of electronic scales. The healthy menu at the Tanita canteen was deemed so delicious that it spawned a blockbuster cookbook and a restaurant in Marunouchi in Tokyo called Tanita Shokudo (Tanita Canteen). So now even people who work for less enlightened employers can see what they are missing (and the business itself gets to diversify a little).
This being Japan, the roots of this healthy way of eating (replicated in families, schools and hospitals up and down the country) lie in centuries of tradition. The original concept of ichiju issai, one soup and one dish, dates all the way back to medieval Zen Buddhist monks and it lives on in Japanese home cooking today. It’s not a fixed entity; you might also be presented with ichiju sansai (one soup, three dishes), when the tray will be loaded with extra sides – perhaps a little simmered tofu or sautéed lotus root. But the principle remains the same: a balanced meal served in small portions. The Japanese population’s trim waistlines, longevity and dedicated work ethic suggest there’s something that’s well worth the rest of us chewing over.
About the writer: Wilson, monocle’s founding Tokyo bureau chief, has covered Japan for the past 15 years and is well versed in the country’s small-business scene and snagging interviews with top ceos. She is the editor of The Monocle Guide to Japan, published by Thames & Hudson.
When the stakes are high
by Jens Serup
Former Danish soldier Jens Serup co-founded a firm training people for hostile environments. He shares his experience as a hostage negotiator and how honing these skills could help entrepreneurs too.
Working as a hostage negotiator has given me an insight into human psychology and I have found that some of the strategies I use in a high-stakes situation can be fruitfully deployed in the civilian world too. Together with my business partner, former special-ops soldier Norman Kristiansen, I run a travel and security advisory firm called Guardian – Security Risk Management (Guardian-SRM), which trains people in how to survive hostile situations in lawless locales and war zones. My clients are mostly journalists heading off to report on dangerous places, while some are ngo workers or contractors. Whatever their line of work, I try to provide them all with a toolkit to deal with and adapt to potentially extremely stressful situations. This may mean unpredictable encounters at a testy checkpoint, where to seek shelter in an emergency or how to behave if kidnapped by militants.
I served 20 years in the Danish army and trained units for deployments during the Iraq War before hatching the idea for Guardian-srm. It’s an unusual niche but at the time, in 2005, there were as many as 300 to 500 people a year being taken hostage in Iraq. There was a market for my services and I set about creating a programme for the Danish government to meet the challenges. In 2010, however, I took leave and, together with Kristiansen, started this business that adapted the training for civilians.
Cutting deals as an entrepreneur might seem benign compared with searching for an agreement when lives are in danger but I’ve found that above all – whatever the stakes – you can’t have a successful negotiation if you can’t put yourself in the opposition’s shoes. A little compassion goes a long way and all negotiations are about finding a sweet spot between getting what you and the other side want. The caveat must also be that neither might get everything they desire. The winner-takes-it-all mentality is usually a losing one.
When it comes to how to behave in these types of situations, we teach people about the need to manage their stress to assess what’s happening fully and properly. When we are exposed to stress, our cognitive abilities tend to shut down and we are faced with choosing from a series of standard, and often unhelpful, responses: to fight, freeze or flee. These reactions often provoke the worst outcomes and this is when people get hurt.
So being able to cope with stress allows people to think clearly when things get tough. In our training for journalists going into combat zones, we even simulate being kidnapped (I’m not suggesting you do this to your staff). Exposing students to a highly stressful, but ultimately managed and safe, situation can prepare them.
Prior to any big pitch or stressful negotiation, for example, entrepreneurs – like hostages – must think through exactly how they might feel throughout the event and the many different ways in which the situation could unfold. Having done so, you must then try to calm yourself and carefully consider the outcomes you want. The better prepared you are, the less energy you are likely to expend on anxiety about how things could play out. Take a deep breath. Assess your options. Consider your next move thoughtfully and with an eye on what the consequences might be.
Lastly, try to buy some time. Any negotiation is a process of building a working relationship with the opposition: whether that is a hostage-taker who holds lives in their hands or a battle-hardened ceo looking to close a complex deal while fighting on a few fronts. If you rush to find a solution, you will probably struggle to understand each other enough to find an agreement that works.
At its core, my work in hostage negotiation is about keeping lines of communication open through a crisis to allow me to seek a solution that both sides can get behind. The endgames might look different in a heated boardroom compared with a hostage situation but the basic theory remains the same. It starts with a deep breath, consideration of the other party’s position and keeping a cool head when all around you are losing theirs.
About the writer: Former soldier Serup is a Danish hostage negotiator and co-founder of Guardian – Security Risk Management. The risk advisory firm provides hostile-environment-awareness training to journalists, aid workers and others heading to conflict zones.
Straight from the heart
by Natalie Theodosi
Selling direct to your customers offers a level of control for small brands not found in third-party retailing. But do the risks outweigh the benefits?
Any entrepreneur making and selling something should spot the benefit of selling straight to the people who want it; the direct-to-consumer (dtc) method cuts out the wholesale middlemen. Third parties, whether shops or websites, can help you reach more people but will nibble into your margin, compromise your cash flow and exert control over the thing you’ve worked to create, price and sell.
So is dtc really that simple? It can be. The idea led recent start-ups to initial stratospheric success, from mattress-maker Casper to Harry’s razors and eyewear brand Warby Parker. All used the same formula: creating a single product at a competitive price, acquiring customers online and bringing them to the brand’s own website or shops. The approach has been a success but if the novelty fades or product quality drops, then it can backfire. In February 2020, for example, Casper’s shares debuted on the New York Stock Exchange below their targeted range, while beauty brand Glossier, a dtc pin-up, recently announced a round of layoffs, with founder and ceo Emily Weiss stepping down. Despite this, entrepreneurs should not write off dtc.
And there are other reasons to be hesitant about wholesale. “It opens companies to the risk of discounting at the expense of their long-term brand equity,” says Luca Solca, senior analyst at research firm Bernstein. And some online multi-brand platforms are known for imposing unfavourable payment terms or asking brands to pay for exposure.
“Wholesale partners are not always the marketing channels that brands hope they will be,” says Athens-based accessories designer Marina Raphael. “A small brand does not automatically get introduced to its customers, making unreasonable sales terms even harder to swallow.”
Raphael’s business, founded in 2019, is a good example of using the dtc model. Early on, she shifted her focus from chasing wholesale deals to her own sales channel and building a dialogue with customers. “They provide feedback, which helps me adapt,” she says. Her business enjoyed 420 per cent growth in 2020 and a steady 20 to 30 per cent since.
Continuing to innovate beyond a signature product is key, as is thinking past faceless marketing with tailored experiences. Raphael regularly debuts exclusive designs, created in collaboration with people she admires, on her platform. She’s also planning pop-up shops and a flagship opening. Wholesale doesn’t have to be a complete write-off but a self-sufficient dtc business gives entrepreneurs leverage to negotiate better terms and be more selective with their partners.
So to dtc or not to dtc? While some may desire the validation that third-party retailers can offer, it’s a risk. Going your own way shows confidence that your business can stand on its own two feet and keep its cash flowing.
About the writer: Cyprus-born Theodosi is monocle’s fashion editor. Her beat extends from covering fashion weeks to the boardrooms of major retailers and involves seeking out honest and interesting brands from the smallest ateliers to luxury labels on the up.
Appetite for destruction
by Edward Chancellor
Those concerned by rising interest rates should take heart. Here’s why bold action today could create a more dynamic business landscape tomorrow.
Entrepreneurs need investment to get started and, at first glance, the historically low interest rates of recent years might seem to benefit them. And yet in 2016, business deaths in the usually dynamic US outnumbered births for the first time since the Census Bureau started keeping records. Ultra-low rates have dampened what Austrian economist Joseph Schumpeter called “creative destruction” – the decline of unsuccessful businesses and the rise of successful ones – by keeping inefficient firms in operation. Since the 2007 to 2008 crash, bankruptcies have been suppressed by the financial doping of easy money. Sectors dominated by corporate “zombies” have lower returns, which discourages innovation and new entrants.
This environment has also created a demand for investments with high prospective returns. Silicon Valley was flooded with “blind capital” and speculative bubbles proliferated – in cryptocurrencies, electric vehicles, flying taxis and space tourism. Some ventures, such as Theranos, the blood-testing company founded by Elizabeth Holmes, turned out to be outright frauds. As Karl Marx once said, “Inordinate swindling is often bound up with a low rate of interest.”
Joseph Schumpeter believed that interest rates served as a “brake or governor” on economic activity and he would have been highly critical of the recent era of easy money. Born in 1883 in what is now the Czech Republic, Schumpeter rose to fame in 1919 when he served briefly as Austria’s finance minister in a revolutionary socialist government, of which he quipped, “If a man wants to commit suicide it’s good to have a doctor to hand.” Schumpeter viewed capitalism as an evolutionary system, forever in motion and constantly changing. In his view, the entrepreneur played a pivotal role, introducing novel technologies and methods of production, opening markets and finding new sources of supply. His entrepreneur is a revolutionary figure, eliminating the least-fit companies and transforming the business landscape. Schumpeter deemed this notion of creative destruction the “essential fact about capitalism”.
Now inflation has returned and central banks are hiking rates. Economies on both sides of the Atlantic are contracting. Stock markets are on a wild ride. Capital is becoming more expensive. Yet it’s possible that, just as ultra-low rates didn’t bring much benefit to genuine entrepreneurs, so rising rates might turn out to be a boon. As Schumpeter hinted, economic downturns are the times when creative destruction is most virulent.
As the cost of capital rises, there will be fewer speculative start-ups. Entrepreneurialism will probably move away from luxury ventures, which have benefited from rising inequality, towards more dynamic endeavours such as green energy and construction. It is the entrepreneurs, not the state, whose innovations can solve the cost-of-living crisis; and entrepreneurs, not governments, who are best placed to provide alternatives to our dependence on fossil fuels. Mark my words and Schumpeter’s wisdom: a golden age awaits capitalism’s intrepid heroes.
About the writer: Chancellor is a British financial historian, award-winning finance journalist and former investment strategist. His latest book The Price of Time: The Real Story of Interest, a long view of capitalism through the history of interest rates, is out now, published by Allen Lane.