Disciplined Entrepreneurship

Anita Brick: Hi, this is Anita Brick and welcome to CareerCast at Chicago Booth. To help you advance in your career. Today,we're delighted to be speaking with Bill Aulet. Bill is the managing director of the Martin Trust Center for MIT entrepreneurship, as well as a senior lecturer at the MIT Sloan School of Management. Prior to joining MIT. Bill had a more than 25 year track record of success in business. From his start at IBM to his experience as a serial entrepreneur, started and ran Cambridge Decision Dynamics and since Able Technology. He works around the globe to promote innovation driven entrepreneurship.

Bill Aulet: Thank you very much for having me.

Anita Brick: I'm really happy about it. This is a question a lot of students and alumni abuse, and I'm sure more broadly than that, ask. So I'm going to ask it of you. How did you know it was time to jump into an entrepreneurial venture?

Bill Aulet: That's a really good question. First of all, I had no entrepreneurial background. I had no entrepreneurial role models growing up. I grew up in New York and just played basketball. And I went to Harvard, and then I went to Europe and played basketball and I came back and worked for IBM, but I kind of got exposed to it in the early years of the personal computer, when I was at IBM, and I saw what was going on, but I'd never heard the word entrepreneurship.

Then when IBM sent me back to MIT, I got exposed in that environment to entrepreneurs and I thought, wow, this is great. So I tried it. And then once I tried it, it was like a drug. I was gone. This was what I wanted to do. So it wasn't a rational decision. But as soon as I tried, I said, this is so much like basketball.

This is so much fun. It wasn't an economic decision. It was more of a decision. This is so much fun. This motivates me. I'm going to pursue this. I'm sure I can make a living out of it, and I'm sure I can have a bigger impact on the world. So I actually left IBM at that point, six months into it, after I'd taken my first entrepreneurship class.

I then decided this is what I wanted to do. Before I graduated from the master's program. I started a company and I didn't go back to MIT, and that company was Cambridge Decision Dynamics, which you mentioned, which is, I'd like to say, is in full stealth mode. That means it doesn't exist anymore. I was a glorious failure that allowed me to learn.

Anita Brick: Clearly, you didn't get dissuaded by something not working at the level you wanted it to. How did you go back a second or third and beyond time?

Bill Aulet: That's a really good question, because at the time I had four kids and I had a wife and a mortgage, and it was, as I said, an irrational decision in a lot of ways, but very determined. And I did not come from a lot. And getting to Harvard and thinking, wow, this is a whole nother world.

My personal aspirations were high, my financial needs were not so high. It was something that I just felt I was going to do, like basketball. And so losing a basketball game motivates you to go back and learn more and come back the next day and be better. And that was the approach at which I went about entrepreneurship. I was just committed to it. I felt this is what I was going to do, and I was going to defy any odds. There were. The odds were actually much less than what I anticipated.

Anita Brick: Where did you get that courage? So, I mean, it's one thing to play basketball and miss a three point shot, but it's another thing to have everything on the line. Family. How did you have the guts to do that?

Bill Aulet: I just looked at it as if this doesn't work, I'm going to find a job otherwise, and I'll go back to what I was doing. There's always something. It's not like I would be destitute. I remember my father said, hey, you know, I didn't work really hard for you not to do what you really are passionate about. So to me, the economic downside was mitigated.

I just felt like this is how I could have the biggest possible impact on the world. I felt much more alive than I did in a large company. I felt like I was playing basketball again, that everything I did showed up on the scoreboard, that I could help choose my team. I could help make everyone in the team better by what I was doing.

And you don't get that kind of direct feeling otherwise. So I didn't see the downside as much. I have to say, there were times where my credit card got stretched and there were people who were saying, what happened to you? The social pressures at the time were much higher than what they are today. I think people thought entrepreneurs were crazy or unemployed. And I think that's a big change now. You know, when I went into entrepreneurship, it was 1993 and today is a totally different world.

Anita Brick: Yeah, I agree, how did you keep your family on board?

Bill Aulet: That's a good question. I didn't bring my problems home with me as far as they were concerned. I just compartmentalize things that help keep balance in my life. I knew it was really hard, but then on the way home, I just shifted gears and said, okay, I'm going to be with my family and we're going to do this. And I also still played basketball, and they were very active and they didn't care about that. In hindsight, it wasn't there wasn't a great master plan. It was just compartmentalizing and putting one foot in front of the other.

Anita Brick: But it also sounded like you created some balance, which is a little unusual. You don't hear of people working out, and maybe it's a mythology, maybe the 24 seven eating ramen noodles is a mythology as opposed to the reality.

Bill Aulet: Yeah, there's a lot of misleading myths about entrepreneurship. You know that you have to be young, you have to be crazy. And the data shows that that's not the case. It's about focus. It's about working smart. It's about using your resources. And I always used to tell my employees, never confuse activity with progress just because you work until midnight.

What that means is you worked until midnight. That doesn't mean you got more done than somebody else. Results are a different thing, and we're focused on results. You know, there's a lot of ways you can be very efficient. If you have a family, you can go take care of them and then put them to bed, and then you can do another hour or two of work, which is to me, it was ten times more productive than staying just a straight another hour, because I kind of cleared out memory and was able to think of other things.

And this idea that you have to be divorced, you have to do a start up, you have to be single. That's not true. I know lots of people who don't do that. The other thing that's key is, you know, one of the most nefarious myths about entrepreneurs is that it's individual entrepreneurship. It's a team sport.

Ed Roberts has produced data, and I'm sure Alan Rudnick and crew, it is your school of produced data that shows that teams are more successful in entrepreneurship than individuals. That's certainly my case. You have to find great teams, and when you find great teams, then you can have balance and that works out very well in the long term. Ideas are overrated. It's teams and processes that are much more important in the long run.

Anita Brick: Got it. You know, there was an evening student speaking of teams and partners. There was an evening student who said, I am starting a new business with a partner who has not attended business school and does not fully appreciate the organization required to develop a business. He moves when he's inspired, where I think in a more structured approach. Do you have any advice on how we can meet each other in the middle?

Bill Aulet: Some things aren't going to work. One of the things I'd say about entrepreneurial math is two things that are relevant to this. You talk one plus one equals two. This is never true when it comes to entrepreneurship. With regard to people, either the person that you work with is an energy amplifier or they take energy away from you.

It is never zero. So if you and I need to work together, either we're going to gain energy from each other and we're going to be more. It's going to be more than two, or it's going to be less than two under no circumstances in an entrepreneurial venture, because there's so much going back and forth is it just zero.

So it's critical that you get those energy amplifiers. And if the person that you're thinking of your partner is not an energy amplifier, then you should not work with them. That doesn't mean they're a bad person. It just means it's not a good person for you to start a company with. And the second thing of entrepreneurial math, as I would say, is that 100% of 80 does not equal 80% of 100%.

And by that I mean that if someone is working on your company 100%, then they are so much more productive than someone who's not working on your company 100%. Why is that? Because if I'm working on two things, as soon as things get very hard in the startup, I will go work on something else and try to come back later to do that.

And you don't push through. So someone who is 100% committed to the company, the startup, goes to bed thinking about it. They think about it when they're sleeping and they wake up in the morning thinking about it, hopefully with the solution getting someone who's an energy amplifier and 100% committed to the business is what you need to get in a founding team.

And if you don't have that, it's not quite as good. It's just not good. Good enough never is. It's got to be great. You've got to have a great team, and you got two people that are 100% committed to really make things work. That's a bit of an overstatement because you can see it work otherwise, but it dramatically improves the odds of success of your startup.

Anita Brick: So it's less about one person's just more going where things move him and the other person is more structured. It's more basic than that. It's like when you come together as you said, does the energy get amplified? The more that can get done and you can be great or does it detract? So it's not even one person convincing the other that their way is better? Because I guess if you do that, that's going to be a detractor right away.

Bill Aulet: Yeah, exactly. So the biggest mistakes you make in entrepreneurial HR is you hire a job spec as opposed to hiring the person you're hiring a person who has a certain work ethic, a certain level of commitment, certain values. And you can train for skills in a lot of ways, but you need to get someone who you're in lockstep with on commitment and values and intelligence and attitude.

And if that works, then you can solve a lot of the other things. Now, what you don't want to do is get a team. As Professor Matt Marx talks about, a team has homophily, that people are all alike. And this is why it's good to have business people, whether they have MBAs or not. But it's also good to have technical people, and it's good to have people who are designers on the team.

So you want this kind of heterogeneity, this hybrid vigor that you get when you get people with different skills, but the underlying value to the other people values that the people share, the commitment and all those types of things are very important. Again, I'll go back to sports when I trust the person on my right completely, and I trust the person on my left completely when I do my job so much better.

That's when you get super high performing teams. But the moment I don't trust the person on my left or the person on my right because of values or because I don't think they're good enough or are committed, that's when I become much, much less productive. So this whole concept of building a team is what makes entrepreneurial ventures so successful, not some singular material entrepreneur.

But let me just say this that sometimes one of our colleagues here wasn't here yesterday saying, you know, to a startup you need a dreamer. You need someone who can execute, and then you need a son of a son of a gun. So you need to have different types of people in a team and they play different roles, but they have to share underlying values and trust and confidence in each other.

Anita Brick: Got it. So there was an alum in France who said, dear Bill, I'm interested in one day starting a company. I observe that to be successful, I need to do my due diligence ahead of time and identify a best in class incubator that offers a proven, successful bring to market methodology that fits my profile. Would you endorse this approach? And I look forward to hearing your answer in the podcast. Thanks very much.

Bill Aulet: First of all, there's no single path to success. There's lots of companies that have succeeded by going to Y Combinator, Techstars or other accelerators. I will say I am a much bigger believer in accelerators than incubators. Incubators tend to make people comfortable, but they don't have a forcing function to move them along. We believe very strongly here, and I've talked to Alan Rudnick there about why accelerators are much better than incubators, because they move people along.

Being comfortable is not what you need as an entrepreneur. What you need is someone to help push you and structure and support you in order to do that. But there's been successful people who've gone to Y Combinator, but there have been tons of people who went to Y Combinator, who haven't been successful. In fact, the number who have not been successful far, far, far, far, far exceeds the number who have been successful.

It's a very small number. So structure like that can help you. And we believe that that's what we need to do more of. But you can succeed without that. I think what you want is an ecosystem that will help you, and that you have to kind of find your own way in that ecosystem to do it. And that's what makes places like Boston, like New York, like Chicago, like Silicon Valley, like Boulder, Colorado right now.

And Berlin is a place in Europe and London where there are other people where you can bounce ideas off. As Thomas Edison said, the measure of innovation is the number of times you can iterate on a new idea, experiment with it. In the first 24 hours you have it. So this ecosystem to be able to do it is very, very important.

Now, do I believe in structure? Absolutely. I believe that there should be a framework to do that. And that's what the book discipline, Entrepreneurship, we pulled together all the different pieces to do. You can do that in Paris. You can do that in the countryside. But you have to start building an ecosystem, be it physical or virtual, to help your ideas off.

And that's why, you know, the new world of online is so helpful. And it's made the physical constraints of entrepreneurship less relevant. But it still is nice. And I would suggest that you can pursue your idea. And if you can get into an accelerator that helps you and your team time compressed learning, great. But that's not a reason that you can't succeed otherwise. With all the tools, that information that's out there.

Anita Brick: Got it. You know, you mentioned the ecosystem. And one of the students said here in Chicago, there's a lot of energy around building an entrepreneurial ecosystem around the startup scene in the city. But a common complaint one hears about from startups and funders is that there isn't enough venture funding. On a macro level, how can startups help encourage a healthier ecosystem that includes that funding?

Bill Aulet: Your student might not like my answer, but my answer is that every great startup I see gets funding when they get to a certain point, funding is much less of a problem. The hard part is getting early stage funding, and we focus on trying to get funding from customers. If your product is very good and has a strong value proposition, then get customers to prepay for it.

This is somewhat what Kickstarter does, but you can do this with B2B businesses as well. We had one of our companies, Honda, pay us $1 million upfront to get a product. Now we had to go deliver that product after the fact, and we had to give them a discount on that. But that was an incredibly valuable way to fund our business, and it aligned us with our customer to know that we were producing a product that they really wanted.

I think sometimes people pursue funding and use that as a reason to not do what they should be doing. Successful companies actually often don't get very much funding. They learn how to be very lean, mean, hungry about it, and they get customers to prepay them to do things. At some point that runs out. But when you get to a point where your company is $10 million in revenue, let me tell you, there's tons of people who will fund that.

And it doesn't matter whether you're in Timbuk2, Chicago, New York, Boston, Silicon Valley, you will get funding. Why are you the money? But they want to see a strong business, a strong team. And we see lots of money out there now that will go to where good deals are. But they have to be a good deal. The first place you should go to get money is to get it from the customers.

There's this thing called sales, and then once you get sales, you get them to prepare you for it. And that will give you tremendous validation that will help you later raise money. I don't think you can wait. As an entrepreneur, our job is to overcome obstacles and wait to get funding. Funding will find you in time if you have a good business.

So build a great business, focus less on what the investors want and get your money from customers. And of course, you're going to have to put skin in the game and end up that family and friends fund and build a great business.

Anita Brick: Thanks. You know, that was good. This is a complex question and we may need to unravel it a little bit. This is from another executive MBA student, and I think there are actually a couple of things contained here. He said what is the relative value for B2B companies of seeking mentorship or test pilots with customer firms? And I think I have a strong opinion about that or gaining funding.

How do you manage the bridge funding and what's a framework for making those decisions? I heard one company recently talking about a corporate mentorship for a small company, and then he said, you know what? It was really like getting around to funding. I don't think it's either funding or mentorship. What's the interplay of those two?

Bill Aulet: Well, that's a great question. And that gets to the point. We were just talking before getting companies to fund you if it's a great option. I think the whole question of mentorship is a very relevant one here. Mentors play an invaluable role with startups. But much like, you know, a Malcolm Gladwell talks in this book, or maybe it's in antifragile, there's this inverted U curve where having some mentors is good up to a point, but then you can have too many mentors.

I saw this, I recently went to an accelerator and they said, we have 120 mentors. The implication was more mentors is better. Are accelerators better than other ones? Because we have more mentors. And they said and this was a horrifying part to me, as they then said, and we exposed the entrepreneurs to all 120 mentors in the first week.

And I thought I got back, like I said, nothing could be worse than that, because if you go into this, if you just start selling and telling lots of people about your idea, you tend to drive stakes in the ground and then you're no longer in inquiry mode, you're in advocacy mode, and you should be an inquiry mode to try to figure out which is the right path, which is the right way to go.

But because you're talking to 120 mentors, you're just hitting the rinse and repeat over and over and over. You're just pushing the replay button, and you're not really getting much feedback. And you're not being able to really think about what you're doing. The more mentors you get, the more time you're going to have to spend decoding what they have to say.

Famous book for programmers will not be the mythical Man Month by Fred Brooks. And it said the more programmers you get, it makes it less productive on a software project at a certain point. And so there can be this mentorship fatigue that you can get. You know, I think the question here, really your students bringing up is there's valuable mentorship, but you have to think about who and how many and the best ones are, well, I've found are people who are I think it's honest broker mentors.

They look at you as their long lost son or daughter and they want to help you. And they're not in this to get rich. And those people can really be invaluable to you. I remember when miners, Dan Schwinn and Bob Coleman, and they helped and they put some money in, but it really wasn't about the money. It was more kind of about the bragging rights.

But having good mentors can help you get funding. And not just any funding, but the right funding and the right terms and conditions at the right valuation. And so those two things, good quality mentorship and funding are very much linked, but they're not the same thing. They're not the same thing. I don't want, you know, all my mentors to be in it just because they have a big chunk of the company. That's a perspective you want to hear, but then you want to hear the honest broker, third party perspective that's looking out for your interests as an entrepreneur, especially as a first time entrepreneur.

Anita Brick: You know, there is a big difference between money and smart money.

Bill Aulet: Oh yeah, huge and huge difference.

Anita Brick: There's lots of ways of getting money. And here's a question that emerged in my brain after this. You know, what criteria should one use to decide which mentors to put in that cadre of advisors for you? Because there are a lot of people out there who claim to be knowledgeable about things, and people have different opinions. And what I've seen is that budding entrepreneurs will sometimes take that advice as truth. And it's not always true. I mean, it's rarely true, probably. So what are some criteria to decide which mentors, which advisors to bring into the fold?

Bill Aulet: Great question. What we do here, which you probably do with your program at boot as well as with Elon, is that we expose them to multiple mentors in the process of our class, in our programs, and then we bring them back and we may be the mentors. And then after that, I say, you've now heard from many mentors, all the mentors, just like I, I'm now going to go get my Acura.

I'm going to turn the radio on. I am now going to drive out to our house in Belmont, and then I'm going to pour a drink, and I'm going to watch The Daily Show and then The Colbert Report, and you are going to be sitting here trying to figure out what to do next with your company while I'm doing that.

Why I say that is because this is yours. You own it. And when mentors give you advice, they then leave and at the end of the day, much like when I was an entrepreneur, I had to decide what piece I would take from which mentor and in fact, which mentors I really wanted to keep because there's a cost to keeping mentors and managing them.

And so you have to be selective about which mentors and which piece of advice you're going to take from them. And the mentors have to understand, as I got to when I got much better at this and I was at first, that some things were going to grant, some things were not. But at the end of the day, I'm responsible for this.

I'm accountable for this company. I'm listening to you, and then I'm going to make a decision and I will give you feedback on that. But we're not always going to agree. And that's very important for the entrepreneur to have that perspective. Now what types of mentors should you get? I think there are at least three buckets that you should look at.

First of all, you would have a domain expert, someone who is an expert in the field that you're. So if I'm selling to hospitals, I need someone who's an expert in the hospitals. And then secondly, I need someone who's good in the technology side. The product side. How do I develop this product? Do I know what's possible? The other one that's very important here is a process.

Someone who's kind of gone through the entrepreneurial process. It doesn't even have to be the same industry. Understanding the process. It's critically important. The fourth one that comes along the bucket that we look at is financial. Let's review the finance. It's kind of like an audit committee at a board. How much money do we need? How should we get it?

What do we think about it? Are we making good financial statements? Because at the end of the day, if people don't have oxygen, they die. If startups don't have cash, they will die. So as we always tell people, you know, the number one job of the CEO of a startup is to make sure that company does not run out of money.

And so having someone who is overseeing it and pushing the CEO and the executive team on their cash management and making sure they have good financial statements and projections, is the fourth important kind of mentorship area I would focus on. That is the fourth one. You need the domain expert, the kind of product person in the process. And the financial stuff is actually relatively easy to find.

Anita Brick: It is all great advice. Here's another question that is a little complex. I think we have a trend here. A weekend student said or asked, what are the three criteria that you typically look for in a new venture which may trigger a major pivot in a business model? How long should you typically give to any given strategy before pivoting and asking these questions?

As I did not pivot fast enough on a venture that I worked on, and ultimately we missed the market window, even though we did eventually pivot to a better business model. So what are the criteria that you might look for that may trigger a major pivot in a business model? And how long should you give a strategy? I think this is pretty variable, but overall, when you see it, how would you answer those questions?

Bill Aulet: This is the most difficult thing an entrepreneur does from extracting it to even the ultimate pivot, which is this company is going to work. Let's shut it down and move on to the next thing. People you know admire entrepreneurs for their perseverance in what they do. That is something that is very important. But there's a difference between perseverance and being stubborn and stupid.

That is a very fine line sometimes. So the criteria ultimately determine this. And we try to work a lot in this is your primary market research, your customer traction. You may believe this to be true, but how do you validate that it is true? How do you validate the underlying hypothesis that will make it? If true, the integrated business will work.

But we try to test individual hypotheses. But you can test individual hypotheses. And at the end of the day, when you assemble them all together, much like in engineering, the individual modules might work, but the overall system still doesn't work. Test individual hypothesis. That's one. And then overall, once you put them all together, will it work? And this is what we call will the dogs eat the dog food?

Well it all makes logical sense. This dog food tastes good in our individual test. It costs less. It's better for the dogs. It's better for the owners because the dogs sleep better at night. And so they go off and build a $1 million plan, and then they find out that the dogs don't eat the dog food. It's just a bad kind of planning, testing, and experimentation.

You really have to constantly stay in touch with what the trends are in the marketplace. And we call this primary market research. Yes, you test your hypothesis and all that, but sometimes the primary market research isn't keeping up with the new idea. The customer says, look, if Steve Jobs says, you know, don't ask the customer what they want, you know, you're going to tell them what they want.

Well, that worked for Steve Jobs sometimes, but not all the time and less than it didn't. People forget that ID, DVD and all the other things that didn't work. That's really what you're talking about. A colleague of mine said pivoting is when you've run out of ideas but you haven't run out of money. I thought that was pretty funny.

Anita Brick: I like that, I like that.

Bill Aulet: I think in the case of your student, they're probably thinking, how do I just keep changing my strategy? To summarize, it comes down to whether you will have certain beliefs, test hypotheses, but test them with real customers in the marketplace, get real data and don't believe your own B.S..

Anita Brick: That's a very interesting one. And just a follow up on that. Before we jump into a couple more questions, how do you not when people start throwing money at you and they tell you, wow, this is so brilliant, this is game changing, how do you stay sane enough and humble enough so that you don't go off in the wrong direction?

Bill Aulet: All I can tell you is that I did. I believe that this is what I call wisdom. Wisdom is scar tissue from making a mistake. One of my companies, we had someone that came and offered us something and I was drinking my own Kool-Aid too much. And it happened twice. And it cost me and my shareholders literally hundreds of millions of dollars because I was emotional.

I said, if you can do it, we can do it. So I was competitive about it. I didn't step back and say, wait a second. This is a major point of reflection. And what I tell my students now is whenever someone comes up and makes you a major offer like that via to buy your company, be it to license your technology, do not just dismiss it quickly.

And I say use the following word. Say I am always open to rational business discussions and then go home. Go to the gym, work out, and then go call your mentors and then talk to them. As an entrepreneur, you're in advocacy mode. You're selling your idea over and over again, but sometimes you have to step back and not drink the Kool-Aid and be what we call a paranoid optimist.

You have to say, wait a second. What could go wrong? And that's the role of your advisors and your board. And you shift gears because when you're at the company, you're pushing, yeah, we're going to do this. We're going to make the impossible possible. We're going to take this square peg and fit in this round hole.

But at the end of the day, when you leave work, you have to go and meet with your advisors and be the paranoid optimist to say, wait a second, is this the right time to sell the company? Are we really going to get into the medical business? What would have to go right to do that? Let's stop for a second, step back, and let's tone down the testosterone, and let's just start being a little geeky here and look at some numbers. And that's what you really need to do. It comes with age, and it comes by having a good mentor network that you really listen to as an entrepreneur.

Anita Brick: So you have to be really open and realize that even if you've been doing this for a short time or a long time, you don't know everything.

Bill Aulet: Oh yeah, you want to believe you do. You can take on the world, but you need to have advisors who are going to say, wait a second, this is a good opportunity. And I literally now sit down with them and I draw decision trees, and we start putting outcomes and odds and you know, what could go wrong and where does that lead you? You can't just make emotional decisions like I did when I was younger.

Anita Brick: Got it. There was another exec MBA student who said in your book, Disciplined Entrepreneurship, you made the choice to focus on startups launching in the technological innovation space. In your view, what would be the main difference in your approach if it was a non technological startup.

Bill Aulet: We don't focus on just technology, innovation, innovation, and I think I put this in the beginning comes in many forms. Innovation can be technology. It can be processed. It can be a business model. It can be positioned. It can be lateral innovation and it can be disruptive or it can be incremental. It can be any of those if disciplined.

Entrepreneurship definitely applies to things like business model innovation, which is actually more bang for your buck than technology innovation. It seems today when you look at companies like out of Chicago, there was Groupon, but you also have companies like Google, which fundamentally, at its core was a business model innovation, because that's what they did in or an advertising company.

It wasn't the algorithm, it was the AdWords. That was really the breakthrough. And when you look at Apple, the business model innovation of iTunes was about how they charge for songs, because before that it was a subscription basis and they said, no, no, we're going to go to $0.99. And if you look at Salesforce, so business model innovations, we have an enormous amount of respect for.

And it seems right now that actually you get more bang for your buck than technology innovation. I think that the process of discipline, entrepreneurship applies very much to all those types of innovations. The real distinguishing thing about it is if you want to do just an SMB, something that's not, which is fine, but there's no underlying innovation of any kind.

It's just we're doing a nail salon or we're doing a local IT service company, or we're opening up a pizza parlor. Disciplined entrepreneurs will help you, but that's not what it's really about. Discipline. Entrepreneurship is what we call innovation driven entrepreneurial ventures. And those are ones that are looking at global markets or at least super regional markets, because their product has something that makes it so different.

It's not just serving the local market. What's your student's question is I would say discipline, entrepreneurship. It was written to apply to technology innovation. This is my motivation to process innovation or just positioning or other innovation, even lateral innovation. But it has to go after a broader market than just the local market.

Anita Brick: That makes sense. Do you have time for one more question?

Bill Aulet: Yes.

Anita Brick: Okay. Let's say that you were going to advise someone who was thinking about or actually even, you know, jumping into an entrepreneurial venture. What are three things that they should begin doing today to take this more disciplined approach to entrepreneurship?

Bill Aulet: So the first thing they should understand is what do you need, what planets need to line up for startup? And there are three key things that need to line up. There needs to be a fundamental catalyzing idea. Then you need to have a team, and then you need to have a process that you go about doing this and people love to, you know, focus on the idea.

But of those three things, the idea is the least important. It's all about execution. And what execution comes down to is, by the way, there's lots of companies that took an idea being Zipcar or, you know, Salesforce or Google or Apple, but they just out executed them. And how do you do that? The idea will change over time.

Research shows that. But you really need to focus on finding a team. And by the way, if you're not the ideal person just in class yesterday, we're talking about using improv humor to show how a group can come up with good ideas much more powerfully than one individual. And then the other thing is, you know, this is the discipline, entrepreneurship. We have to come up with frameworks that help you increase your odds. Where do we start? Where do we end? And that's what the process is about. And it's a highly iterative process. It's not an algorithm. It's not a mad libs fill in the blank. It's not, you know, an equation to be solved. It's a framework that you go through.

And as you get more data, you come back and you update your previous parts. And as you do that, the business will change. The idea will morph, your team may change, but at the end of the day, a good team with a good process will have a more than sufficient idea and they will be able to execute it.

And that's what will create value. And that's what people really should focus on. How do you get started? I wrote the book Discipline Entrepreneurship, because that's the book that I wish I had 20 years ago. And then once you do something like that, you have to get into action. You can't read books. Entrepreneurship is not a spectator sport.

You got to get on the field, go to a hackathon, try something out. Whether the idea is good or not, don't worry about it. See how you work with other people. What kind of people do you like to work with? What are you strong at? What type of people would be complementary? And if at that hackathon you meet one other person who is complementary to you, then that's a fabulous hackathon.

Forget the fact of whether the idea becomes a company or not, and also start to apply the process. And as you apply the process, you'll get better and better at it. The data is very clear, you know, much like myself, my second company, much more successful, my first, my third company much more successful than my first or second company.

That's true for the data. So you can learn it, but you can't learn it as an individual. You can't learn it just from books. You got to get on the field with a team and try it and iterate. At the University of Chicago, you have a fabulous program there. I work with Ellen Rudnick. I think she is just a thought leader in this.

Steve Kaplan is well recognized, terrific resources there to take advantage of, and we love to work with it. As we say, you know, anyone who is working on entrepreneurship is our friend. We want to change the world through entrepreneurship. It's not a zero sum game. It's a collaborative sport.

Anita Brick: That's wonderful. I mean, I love the fact that your wisdom comes not from a theoretical perspective. It comes from being in the trenches and having done multiple ventures, some that succeeded a little and succeeded a great deal again. I know you're super busy, so thank you so much for sharing all this wisdom with students and alumni from Booth.

Bill Aulet: My pleasure. We need more entrepreneurs to change the world and make it better. There's so many intractable problems, so thank you for having me, Anita, and good luck.

Anita Brick: Thanks so much and thank you all for listening. This is Anita Brick with a CareerCast at Chicago Booth. Keep advancing.