Ep. #1030 - The History of Entrepreneurship
In today’s episode of Startup Hustle, let’s take a time capsule and look back at the history of entrepreneurship. And for that, Matt DeCoursey brings in an expert—Derek Lidow, a professor at Princeton University and CEO of his brand Derek Lidow. Together, they offer a deeper understanding of entrepreneurial traits to help you succeed based on historical facts.
Covered In This Episode
Is it true that entrepreneurship came before the concept of the economy? Can we say that the “middleman” is an Eastern concept? What traits should you possess to be successful based on a few historical accounts?
Join Matt and Derek for an insightful discussion on the history of entrepreneurship. And gain a lot of takeaways, especially on how you can become a more successful entrepreneur.
Jump into the conversation in this Startup Hustle episode!
- The Derek Lidow story (02:01)
- Introduction to the history of entrepreneurship (05:10)
- Impact of entrepreneurship on growth and innovation (09:38)
- Traits that make people better at entrepreneurship (12:35)
- Why is competition good? (16:41)
- What happens when you hire the wrong people? (19:11)
- The concept behind the “middleman” (20:57)
- Story of the 17th-century tulip mania (25:26)
- Impact of the Industrial Revolution on entrepreneurs and businesses (31:46)
- Definition of “entrepreneur” in the 1800s (35:38)
- History of venture capital (37:22)
- Matt’s thoughts on the history of entrepreneurship (45:55)
- Being prepared for the ups and downs of entrepreneurship (47:19)
- Top traits that entrepreneurs should have to succeed (50:42)
- Differences between an inventor and an innovator (51:42)
- The importance of having a charismatic nature in entrepreneurs (52:22)
- Do you need to have an original idea for your startup? (55:51)
I personally believe that we have been experiencing a golden age of entrepreneurship in the last 20 years. That is honestly incomparable to any other period because technology has created access to so many things. I mean, just like the ability for someone to step into a good idea and bring it out and create it is so much more accessible now.– Matt DeCoursey
Entrepreneurs are the single biggest force of change on the planet. They far exceed what governments can do, what religions could do, and what big business does. Entrepreneurs are what drive innovation now and forever, going forward.– Derek Lidow
It’s really important to be open to learning things, new things. Also, in copying, being willing to open up and accept that other people can do things very well. And that it’s not just okay. It’s a good idea to follow in their footsteps. So those two things are very characteristic of successful entrepreneurs.– Derek Lidow
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Following is an auto-generated text transcript of this episode. Apologies for any errors!
Matt DeCoursey 00:01
And we’re back! Back for another episode of Startup Hustle. Matt DeCoursey here to have another conversation I’m hoping helps your business grow. What’s the history of entrepreneurship? Wow. I think the better question is: how are we going to get the history of entrepreneurship into one podcast episode? I don’t think we can. But we’re going to talk about a whole lot of stuff today. Before we get into that and welcome someone to have another conversation here on the show, today’s episode of Startup Hustle is powered by FullScale.io. Because hiring software developers is difficult, Full Scale can help you build a software team quickly and affordably. And has the platform to help you manage that team. Go to FullScale.io to learn more. With me, today, I’ve got Derek Lidow, and Derek is a professor at Princeton University. He teaches all about startups as a professor of entrepreneurship and probably knows a whole lot of stuff that you’re interested in hearing about. So let me go ahead. Without further ado, Derek, welcome to Startup Hustle.
Derek Lidow 01:02
Matt, I’m really happy to be here with you.
Matt DeCoursey 01:05
Yeah, I’m excited about this conversation. You know, there’s so much to unpack here. But I think where we get we need to start is a little bit about your backstory. And kind of what brought you to being a professor, and I also believe Dr. Lidow, at Princeton.
Derek Lidow 01:21
Well, I was a science nerd. So I got my doctorate in physics, applied physics, a long time ago. I went into the semiconductor industry when it was the golden age and did just that anything could be done in the semiconductor industry. And eventually became CEO of a large global semiconductor company. An entrepreneurial bug bit me, and I did something that is unusual for successful CEOs. I retired in order to start a company from scratch. And I did that and grew that to be a big global company in the field of market intelligence. A bigger, huge company came in and bought us. And I was shocked when two weeks later, Princeton called me up and invited me to come to teach. So this was a journey that was not anticipated. But since, you know, teaching at Princeton for the last 12 years, I wanted to understand what makes some entrepreneurs successful and others not. When you shouldn’t be able to tell the difference between, you know, the potential of these two people, and that has led me to many places. And most recently, I’ve had to dig into the history of entrepreneurship to understand how entrepreneurship really works. And what’s surprising is we didn’t really understand it. And so all these new revelations are coming out, and I think it’s going to make it more understandable for every entrepreneur. And also something that will get entrepreneurs there relative to being appreciated for how much of the world they’re responsible for creating.
Matt DeCoursey 03:36
So you have a new book, The Entrepreneurs, which is the relentless quest for value, so much conversation about that, over the years solving a problem and providing value and let you know what went as in order to write that book is that where it seems to me like if you want to study the history of wealth if you want to learn about entrepreneurs, and it’s so it’s unpredictable. So you so you’re, you’re a professor at Stanford, I dropped out of five colleges. Right now, with that, like, what you’re saying, I sometimes get on my soapbox because people like to ask, they’re like, What do you need to go to college? What’s the history or whatever? I think entrepreneurship is really unpredictable in some regards. And in some regards, it seems really predictable because I can meet people, and I’m like, Man, you should be an entrepreneur. You forget you. You seem to have the qualities and the personality traits and the drive and the passion and whatever. But you know, as you’re getting ready to write a book, I’m sure that studying the history of it, according to our friend, ChatGPT, might be a future professor someday. You know, the history of entrepreneurship starts in 4000 BC when the ancient Sumerians and Mesopotamia developed a system of trade and commerce, including the use of currency and the establishment of a marketplace.
Derek Lidow 05:01
So we’ve got 6000 years to unpack if I have a ChatGPT that is not up to the moment. It has not read my book. And I’m able to trace entrepreneurial behavior back to 7000 BC. And, you know, there are many quips about, you know, what the original, you know, professions might have been, but that I’ve referenced that before, professor, and for those of you that don’t know what we’re joking about, many people joke that prostitution was the very first form of sales.
Matt DeCoursey 05:30
Oh, wow, to hunter-gatherers. Is that what we were trying to avoid? People would say that, yes, some people that’s wrong to do it?
Derek Lidow 05:46
Yeah. So because the first entrepreneurs were jewelers. So I trace entrepreneurship back to this tribe, a small tribe of hunter-gatherers in eastern Jordan that spent the winter next to this marble outcrop. And they built what absolutely constitutes a jewelry factory. So they had different, they flattened out a stone, and they chiseled pieces off of the marble, and they had different setups. So the first person would take the chunk, and then you know, create a little square beat out of it, another person would drill the hole, and then another person would form it and round it. And then another one would polish it.
Matt DeCoursey 06:50
And sounds like they invented the assembly line as well.
Derek Lidow 06:52
Absolutely. 7000 BC, hunter-gatherers. So what’s really mind-boggling about this is that this is, this is before there was any social hierarchy. This was before there was any economy. This was before there were politics and power, elites, and the like. So this is a primal human characteristic. Now, what’s also interesting is that it was very, very dangerous. So because entrepreneurial behavior often causes rifts between tribes and between people because one side might feel taken advantage of by buyer’s remorse, it is also timeless. And so many small little societies as they formed, they actually, you know, prevented people from being entrepreneurial. And in some places, they even sentenced people if they got entrepreneurial in ancient stage times.
Matt DeCoursey 08:20
Well, one of the things you mentioned at the top of the show, which is, you know, that full six minutes of history now, is that entrepreneurship is often misunderstood. Now, here we are in recording this. This is. Actually, I don’t like to mention times because these shows don’t come out on the same day we record them, but this is actually my first episode recording of 2023. Congratulations on your top of the list. But, you know, you look at like where we’re coming into 2023, and, you know, entrepreneurship and capitalist type enterprises are beginning to look at SpaceX as a great example. NASA doesn’t shoot rockets into space anymore. And, you know, there’s a reason for that. And there’s a more competitive, innovative culture that exists around capitalism and entrepreneurship. And you’re right, it also does well, like the idea I don’t like to get too political here, but the idea of, you know, communism and everyone doing their equal part and it sounds great, but human nature destroys the feasibility of that immediately. And so, you know, it is one of the positions that you take or that you believe in, that is that at times when we stifle entrepreneurship, we also stifle growth and innovation.
Derek Lidow 09:41
I do believe that I want to point out though, that no leader and no system has ever been successful at stomping out entrepreneurs, so eat today in North Korea every weekend, you will find throughout North Korea, these pop up what we would consider being flea markets. But these pop-up stands where you could buy anything. So you can buy, you know, all this contraband every weekend. And these people, you know, could be arrested and could be, you know, killed for doing this, but they, they risk it. But society also looks the other way. Because, ultimately, entrepreneurs are about making people happy. And so this, you know, hidden entrepreneurship in North Korea is tolerated because it keeps people being less restless with society. So, so communist societies have had lots of entrepreneurs. But a key characteristic of societies that have successful entrepreneurs is that they let the entrepreneurs act in a very self-directed way. They put as few constraints on them as possible. So fewer constraints equal more innovation, period end to report for all time.
Matt DeCoursey 11:27
So as we move down the timeline a little bit and 300 BC, Aristotle wrote about the concept of, quote, entrepreneurial spirit. So I mean, that concept, you know, we hear about we that you hear that a lot. Now, I mean, that’s always been, I don’t can’t remember ever, not hearing that, but he wrote about it, and in his work politics and discussing the role of individuals taking risks, and pursuing opportunities for profit. Now, one of the things you mentioned is the study of entrepreneurs. And I am personally of the belief that there are some people that are, okay, first off, anybody can become an entrepreneur, anyone can give it a shot. Some people are, are wired for tolerating it, and making it through alive. And I say alive, because the stress and the effects of being an entrepreneur are handled very, very differently than some people and my wife has a very different personality stuff for me, and she’ll openly tell you, she’s like, I couldn’t do what you do at all ever. Because the stress of decision making just that part of it leads to a lot of problems. We’ve had episodes and series on Startup Hustle that are dedicated just to that, because founders’ depression is a real thing. And there’s a lot to unpack. So, you know, when it comes to the success of entrepreneurs over history, what are some of the traits, qualities or things that you found really make some of us better at it than others?
Derek Lidow 13:09
I was surprised by what I found. So if you study entrepreneurs, and all these different cultures over all this different time, what you find is that entrepreneurship is actually a collective behavior and not an individual behavior. It’s, it’s, it’s a swarming behavior. So when an initial entrepreneur finds that they can create value from applying AI to, you know, to, to sports predictions, or whatever, and that first one is successful. Others notice that other people notice that and say, hey, I can do that. And they and they copy. And all of a sudden, the swarm starts developing around this initial success. Now, not everybody can keep up with that swarm, because within the swarm, and in doing the copying everybody innovates a little bit, whether they realize it or not. The personalization that they do by copying ultimately leads to testing out little ideas that accumulate into bigger ideas and bigger innovations. So this, so the swarm is what makes this such a pressure packed, you know, career endeavor. But from that, there’s this realization that the entrepreneurs’ single highest return on invested time and money is to actually copy what others have done successfully. And achieve that level. And they will be able to maintain themselves in that swarm successfully.
Matt DeCoursey 15:21
Well, that’s the better, faster, cheaper side of things. And, you know, I poke fun at myself for dropping out of schools, one of them was actually a top business school at Indiana University, Kelley School of Business. And they really, they, they, you know, there were so many professors that beat that end to our heads. And, you know, it was like, whether you’re trying to start something or go to work for something, two out of three of the better, faster, cheaper elements have to exist for you to even really stand a chance, if you get three out of three, you’re in really good shape, like really good shape. And but two out of three, if you’re only one out of three, you kind of struggle. And then another thing, too, is, you know, you look at competition, and so many people are like people get freaked out about competition, competition is good for you. Because it stirs up awareness. And it forces and drives innovation, and it kind of forces you to be better. And, you know, one of the things that I laugh at is, as I get people that want input advice, referrals, anything regarding how to get a startup funded, and I get these people that show up, and they say, Well, I don’t have any competition. And first off 90% of the time, it takes me less than five minutes to prove that wrong. Like they just haven’t really looked at it. And then the other times, it’s literally you don’t have any competition. It’s not because you’re a genius. And you figured out something that no one else thought of it’s that you’re there’s not really a commercial commercialized approach to whatever there’s not the value that you believe, or the problem that you’re solving doesn’t have any actual value, which, or you’re grossly overestimating it, which is the number one reason that startups and entrepreneurial ventures fail is the lack of a good product market fit. And, and so yeah, and then you also look at, you go back to that SpaceX, NASA comparison, while SpaceX, while they don’t have well, they can’t. I guess they have competition, maybe not as well known. But that will drive the cost of doing that down cheaper, where NASA was basically a monopoly in that regard. And they’re the only that, of course, your, you know, just lack of oversight control. And I don’t know, I think that’s part of one of the issues is like, if we all ran our businesses like the government ran theirs, we’d all be out, we’d all be out looking for jobs, because we can’t run at this with this negative zero balance. And part of that’s actually part of the problem that we solve at Full Scale, which is time for me to mention that finding expert software developers doesn’t have to be difficult, especially when you visit FullScale.io, where you can build a software team quickly and affordably. We use the Full Scale platform to define your technical needs, and then see what available developers, testers and leaders are ready to join your team. FullScale.io I’m in the business of helping tech companies build teams of offshore developers. And it’s amazing because we were only five years old. And we’re an inc 5000 company, we’re winning awards from Forbes and Deloitte and stuff like that, and you talk about we didn’t invent the offshore developer, we saw the need. And we saw so many businesses and companies struggling to do it effectively. And that people are like, Oh, my offshore developers were terrible. It’s not because people outside of your market are stupid, it’s because you have failed at finding smart people who are everywhere, or smart people everywhere, anywhere you anywhere you want to go, there are smart people, you just have to know how to find them. And you end the value that we provide as helping you prevent failure. Because just hiring the wrong people and getting the wrong people in on your tech projects and all that it’s distracting. And it’s expensive. It sets back your timeline. In some cases, it will just wreck your company. So you know, not I mean, we have tons of competition, and we’re managing to excel and go over and above because we bring an angle and understanding of the problem because we’re software entrepreneurs ourselves. And that’s a different value proposition and it’s a different outlook. And we I mean, we like it if we can’t help our clients and customers when I won’t even take the contract. Like and that’s and by the way, that baffles some people they’re like, wait a minute, you’ll consider not taking me as a client. Oh, absolutely. We tell more people no than we tell people Yes. But it’s a little bit of a paradigm shift with people you know, what people are talking about? Okay, so, so, you know, we kind of move into the, into the ad period. And according to my notes, the concept of the middleman emerged in Europe with individuals acting as intermediaries, and trade and commerce. So you know that that’s been a whole nother thing and some people are obsessed with being the middleman and some people are obsessed with removing them altogether.
Derek Lidow 20:17
It’s true and ChatGPT has a Western bias. And therefore is overlooking some important things that are happening in China.
Matt DeCoursey 20:32
Where I should probably mention that I’m not standing behind these facts. I asked AI this just said, because I’m on the show with a professor from Princeton, a professor of entrepreneurship, I had to have my shit together here.
Derek Lidow 20:48
So Confucius actually talks about the middlemen. And, and he, one of His followers was a merchant, a middleman merchant, okay, that, that Confucius in, in, in his Analytics, you know, uses him as a metaphor for what is, what is good. What’s a good profit motive? So this guy’s D Dong was good, because the profit he made, he used it to help the, you know, the poor people around him. And he used it to help his, his community and his family to be healthy and to prosper. And so this issue about middlemen actually, is more of an Eastern concept than it is a Western concept. The West God got it, you know, independently or maybe, you know, through diffusion, but, but it shows up in the East first. And what’s interesting, also is that this middleman concept proves to be the most potent form of entrepreneurship, highest chances of success, and the one that’s embraced most by minorities and immigrants throughout time. Why? Because everybody loves somebody that’s, you know, willing to be servile to them, and they pay handsomely for that.
Matt DeCoursey 22:47
That’s interesting. And, you know, the, I mean, and I agree, like I’m sitting here reading this and you know, it’s telling me the concepts and the middleman and I’m thinking this probably occurred a lot earlier than that. And Confucius was around from 551 BC to 479 BC. So he’s back there and yeah, that’s a long time ago. And I’m willing to bet that there was a middleman wave of way, way, way, way, way before that. Yeah. You might, you might for you might be a direct seller to one person, you can be that you can well, no, I mean, there’s always someone sending something off it’s excess capacity, or a little bit of this or a little bit of that middleman. The middleman is a well, maybe I’m a middleman. I don’t know where you want me to go. Yeah, it depends. It depends on how you’re putting two groups together. So here we are in this world in this age of you know, the world is shrinking global commerce. You know, I have 300 employees that are literally on the other opposite side of the planet from where I’m at, in the 1600s, the Dutch East India Company, which is pretty well known. That may have probably been one of the biggest global corporations on record, traveling all around now, one of the things that isn’t in these notes was, you know, some of these things as they came along. We started getting a lot of study and input on things like the law of supply and demand, which when you put the word law in front of something, it’s pretty concrete like the law of gravity, I’m talking about the law of supply and demand is something you can’t overcome but it was also the I believe it was the Dutch that were behind the tulip. What was the tulip mania?
Derek Lidow 24:34
Yeah, tulip mania. And you and you get all of these. These Manias, and and of course, swarms of entrepreneurs form around that.
Matt DeCoursey 24:46
Well, let’s tell the story of tulip mania just a little bit because I don’t think everyone’s familiar with it.
Derek Lidow 24:52
Well ultimately it is In, in the Netherlands around in the 17th century, they were very successful as a country, very prosperous. And some entrepreneurs started enticing the public to buy tulips, particularly ones with unusual patterns as to display in their window boxes or the like, to this show status. So all of a sudden, it became very important for people to have almost like a badge that they could display tulips around their houses that indicated how successful they were. And so there was the bidding wars started over the more exotic forms of tulips were, in a matter of, you know, a few months, tulips were more valuable, these exotic tulips were more valuable than gold. And this frenzy was something that people would spend much of their time and a lot of their money doing. But ultimately, with all of these bubbles, somebody of note says, hey, look, I’m, you know, I have high status, and I don’t really care about these tulips anymore. And when that person, you know, turns away and gets bored with it, then all of a sudden, the market collapses. And there are many instances in history where that happened. Entrepreneurs tend to be the ones that instigate and they’re the ones that suffer when it collapses, but I want to make, I want to point out something that entrepreneurs are really, really, really good at. Okay. And that is, they can create demand.
Matt DeCoursey 27:34
Yeah, creating hype, it’s a superpower.
Derek Lidow 27:37
Right? And, you know, let they, they’ve been doing it since at least, you know, for 4000 years ago, when when they had their their version of sort of celebrity endorsements, where an entrepreneur would make something, and they would give it to the king or they give it to the vizier or whatever.
Matt DeCoursey 28:12
And then they go around to all the other, you know, wealthy people and they say, look, became one influencer marketing, man.
Derek Lidow 28:14
You got it 4000 years old.
Matt DeCoursey 28:19
So, well, you know, the tulip mania is a very interesting thing, because it was a very, very well documented study and supply and demand. And you know, like the hype creates this craze. And then, you know, obviously tulips so they’re talking about bulbs that can be brought in, and then there’s this glut in the marketplace, or maybe people are a little bored with it. And all of a sudden, there’s you that the point with the idea of supply and demand is when it’s a law, it’s undefeatable in many regards. And, you know, that’s why there are so few things that are truly like a law, and as an entrepreneur, understanding that law of supply and demand and if you can’t just just you can’t just well, you’re way past it, it’s difficult to innovate past it. It’s, it’s, it’s a concrete thing similar to gravity. And, you know, that’s an important side of understanding stuff. And you ran, I mean, there’s the modern era. Well, we had the beanie baby thing. You know, that was one of those 80s or 90s those 90s Right? pet rocks. Yeah, pet rocks, I mean, and then and then on some levels, crypto is has been has had a there’s been some mania surrounding that and you’re seeing that cool down and you know, like whether, you know, a lot of the stuff that I don’t think beanie babies, babies don’t have utility, necessarily, but things like you know, Blockchain my that, you know, a lot of it is you know, sometimes I’m looking at stuff and I’m like, How is this what NF Ts and if T is where last year’s were last year. It’s a kind of digital Splosion and where are they? I mean, that’s just imploded now. So, there’s a lot to go, you know, now, now moving down the timeline and an important part of an entrepreneurship, you know, the Industrial Revolution during the 1700s marked a huge change in the, and just the manufacturing and production. And you know, that, that, and in many ways built new forms of entrepreneurship. Now, you mentioned, it’s, it’s really interesting, I didn’t realize that, that, you know, the assembly line model was seven, 9000 years old. And you know, what I find, I find, the older I get, the further history goes, goes back. So it’s probably what we’ll do this show in like, five years, and you’d be like, so in the lab and 1000 BC. So yeah, I find that history is flexible, when it comes to the teaching of it. But the Industrial Revolution was a big thing. And it brought a lot of manufacturing and kind of like, well, you talk about supply and demand increasing entrepreneurs’ abilities to make more supply.
Derek Lidow 31:06
Yeah. Well, what’s interesting is people don’t realize this hit the Industrial Revolution, was actually crushing for most entrepreneurs. So it crushed entrepreneurs in two ways. So those that didn’t adopt new steam enabled technologies, of course, couldn’t compete. But even those that did adopt the steam, Beast, you know, unlimited production models, they fail, because they produce too many. And there wasn’t the demand, there was a small demand, and they out produced it. That’s the era when all of these major innovations were done in how to get people to want more than they actually need. And so the modern shopping experience before the Industrial Revolution, shopping was a chore. After the Industrial Revolution, mostly through the innovations of Josiah Wedgwood, you know, the potter, and, you know, vase designer, he produced so many more ceramics because of this, that he realized, I got to create demand, I’m producing more than then, you know, my normal customers want. So he created the tranquil shop, the shop where ladies could come and browse examples of pottery and tea sets that the Queen used or Zarina, Catherine, Catherine the Great used or whatever, and they, and there were sales people around that would educate the ladies. And this created a sensation of, you know, a great way to spend an afternoon was just, you know, perusing all the different designs and the light. And, and, of course, like everything, it was so successful that lots of entrepreneurs copied it, and you had all these stores opening in London. And they, you know, became the most, you know, successful at creating enormous, huge demand that still significantly stimulated the economy. And the industrial revenue revolution would not have succeeded without it.
Matt DeCoursey 34:08
But, you know, that experience is a big thing. And, you know, that’s, you talk about increasing the demand. And that’s been the thing that’s really been eye opening, as I’ve you know, talking about opening a an enterprise in the Philippines is there’s a while they have a lot of modern things there you see so many people that are happily surviving and doing fine without all the materialistic stuff and you’re like, wow, they’re pretty happy without all the crap and all the stuff and you know, yeah, I don’t want to get too far down the rabbit hole. But, you know, a lot of our creation of consumerism and stuff like that is, oh, there’s a lot of people who think that that will also lead to our ruin, and they might be right. Okay, so the term entrepreneur is in The 1800s coined by French economist John Baptiste Say, to describe individuals who take the risk of starting and running a business. So maybe if we’re going to talk about the history of entrepreneurship, there’s, there’s, there’s the word. And by the way, which one of you listening can actually spell the word entrepreneur without having to look? Yeah, that’s what I thought. It’s so funny. If it wasn’t for spell check, I probably would finally get it right. All these years later, but yeah, not the easiest word. It’s not the shortest word. But yeah, so then I you know, as in the 1900s, entrepreneurship becomes more broadly defined to include a wide range of business activities, concepts and becomes really associated with small business. Now, let me shift for a second here, because there’s a common question. So you know, we have you look at that the franchise is a very important part of small business ownership, I get a lot of people that say, as a franchise owner and entrepreneur, oh, yeah, they are an entrepreneurs, anyone that takes the risk, it’s are they a founder, not of the franchise, but they’re a founder of the organization that owns a franchise? You know, when it comes to franchise activity? Now, while I’m not a super religious person, myself, the church is a pretty effective franchise, it’s been worldwide for a long time. Did you find any, anything related to you know, franchise behavior and activity, and like, I’m not trying to put you on the spot here. But I mean, that feels like a very, very important part of entrepreneurship for so many people in the modern age, that Romans.
Derek Lidow 36:41
Romans would basically franchise by allowing their famous name to be used.
Matt DeCoursey 36:56
Derek Lidow 36:58
And that was, I think, demonstrated that that, you know, the famous name could bring business to a shop, or to an importer or the like, and so they would pay about 10%, similar to what franchise fees are today, for the use of a family name. And the family, of course, had to approve, you know, they didn’t let anybody just use their name. So there was an agreement, you know, a written agreement, a franchise setting similar to a franchise agreement, that, that we, you know, we promise to only produce the highest quality, whatever it is, Brad, you know, and, in return, you will let us use your name, and we’ll give you 10% of our revenues.
Matt DeCoursey 38:04
That’s interesting. I wasn’t aware of that, you know, I find that a lot of stuff traces back a lot of capitalists and, you know, commerce stuff. I mean, I mean, it’s been around forever. I mean, it’s been around, you’d find vestiges of it everywhere.
Derek Lidow 38:20
A shocking example of this venture capital, right? So we think that American venture capital, particularly as centered in Silicon Valley, has really cracked the code on how to stimulate innovation. And an A does, it’s really important. And it’s a great asset for the country. Turns out in Mesopotamia, and 2000 BC, there were venture capitalists, and they were using the exact same form of finance structure, as Silicon Valley entrepreneurs do today. They would get money from investors and put it into 10 year limited liability partnerships. Where their version of the general partner would receive 1/3 of the profits, and all the investors would receive two thirds of the profits investing.
Matt DeCoursey 39:32
I’d also mean that the history of bad pitch decks go back to the Roman era, too. So yeah, you’re probably presenting a tablet or a scroll. But then I bet back then you still probably got funded when you had a shorter one that really defined your problem, your solution and the return you would give to the investor tablets on cleantech.
Derek Lidow 39:58
But they still had closing parties when they close the finding.
Matt DeCoursey 40:05
Nice. Nice. So they still said that that also means that the poor use of investment capital also goes back to the Roman period.
Derek Lidow 40:16
No, this is Mesopotamia. Oh even better, even NPC.
Matt DeCoursey 40:20
So for those of you that just got funded that are using the money poorly if you get called out on it say hey look, we’re not near this has been going on since the Mesopotamians just deal with it. Okay, so here and, you know, on we’ve, we’ve moved through the history of commerce and entrepreneurship so quickly and effectively. And that brings us to my lot, okay, I personally believe that we are, we have been experiencing a golden age of entrepreneurship in the last 20 years that is honestly incomparable to any other period, because technology has, has created access to so many things, I mean, just like the ability for someone to step in to a good idea and bring it out and create it is, is so much more accessible now. And you look at like, like people that invent little electronics, you have things like the Raspberry Pi, which makes, you know, makes it possible and programmable for someone to do something where, you know, 40 years ago, they would have had to build the whole damn thing. And had, I would have had a hard time getting the parts or finding the guidance, or, or, or a video of someone talking about how to do something, you know, and it’s just like, so. So here in 2000, and, you know, the internet digital technology and this explosion of entrepreneurial activity, VC activity, rise and fall of a lot of different stuff. I mean, what I’m curious to hear, hear your commentary on now.
Derek Lidow 41:58
Which I can’t help but put into a context, okay? Because there have been dozens of entrepreneurial golden ages. And so Rome, for example, could not have existed and swollen to a city of 1 million people with 30 million people in the Roman Empire. Without entrepreneurs, figuring out how to get supply chains to work. It was the golden age that enabled all sorts of previously inconceivable, you know, activities and products and movement of people and the like. And there were, you know, quite a few other periods like that in history. But bringing that back to the present, okay, is that entrepreneurs are the single biggest force of change on the planet, they far exceed what governments can do, what religions could do, what big business does. Entrepreneurs are, what you know, are what drive innovation now, and, you know, forever going forward. A challenge, though, is that there are all these side effects from the innovation that entrepreneurs do. And we tend to gloss over that. Okay, so the problems with privacy, the problems with, you know, entrepreneurs are responsible for most of the pollution and a lot of the climate change, and, you know, type two diabetes and things like that.
Matt DeCoursey 43:59
But other entrepreneurs come along, and often fix these problems, too, though, that weird little cyclical nature of that. And I agree with what you’re saying at the same time, like, because an entrepreneur doesn’t, they look at a problem, and they see an opportunity, where people that are not entrepreneurs, just look at a problem and see a problem, right?
Derek Lidow 44:19
And so the challenge is because innovation is happening faster and faster, because of our technologies. And because of entrepreneurs. We need to respond faster and faster to these unintended consequences. And that is what, you know, maybe hasn’t been invented yet.
Matt DeCoursey 44:49
You Yeah, and I hear you on the there will be another golden age of entrepreneurship and another one and another one and another one, assuming that entrepreneurs the side effects or whatever something doesn’t have upload all of it now, as you know, at my advanced age of 47, which is experience, not age people, I’ve lived through several apocalypses already. So I’m sure entrepreneurs will continue to figure things out, you know, one of the things that when I’ve looked at the history of entrepreneurship, I’ve always, I’ve always referred to it as being very Darwinistic. And, you know, sometimes it’s market conditions, sometimes it’s not like, you know, COVID, for example, created entrepreneurial ideas, and it also crushed a lot of businesses that were, quite honestly not very well equipped to do anything more than last for a week without revenue. And, you know, I’m sorry, if you’re one of those people, I don’t mean to say that and make those comments in an insensitive way. But, you know, we we just talked about, and, you know, as we kind of, you know, come to an end of this, and, you know, it’s probably a good time to remind all of you that Startup Hustle is powered by FullScale.io We can help you find software developers, we can help you move your innovation for, we can do it quickly and affordably go to FullScale.io We love talking to people about how we can help them, you know, help their dreams come true, you know, as we kind of wrap, you know, wrap a lot of this up and you talk about, you know, this this nature of of, you know, I think that they’re all want maybe one of the laws of entrepreneurship is that things will always change and competition will increase. And I think that you’re one of the things I learned during the pandemic is to almost be running a business, as if tomorrow’s calamity were about to happen. And you know, being prepared. And that’s and sometimes, you know, there’s, there’s bad timing, and now I’m not a big believer in luck, I believe in preparation and opportunity. It was also the Greeks or the Romans that pointed out that that was that, you know, that that we refer to Locke, I’m not a lucky man, I’m hard working. I don’t feel lucky when I work a 90 hour week as an entrepreneur, or when I have to travel around the world to go, I still live the life I chose right. And there’s ups and downs that come with that, you know, we started kind of into this historical journey. And now I’m willing to bet on the history of entrepreneurship, it’s always been stressful and difficult. And it’s created wealth. It’s destroyed wealth. It’s, that’s what you sign up for. And, you know, I think as we kind of, and thanks for joining me once again, Professor Derek Lidow, I just ordered your book on Amazon, I want everyone else to go do it, too. It’s a It’s I I’m a nerd when it comes to this stuff. My wife will be like you should stop working. And so I stopped working and I’ll go watch a History Channel, like a History Channel series. Like I love the whatever that made the American series, whether it’s food, toys, you know, Titans, all that stuff. I’m so fascinated with that. And I think as an entrepreneur, that that stuff for me is like elementary school history that you can learn so much from. I didn’t mention earlier, I’m actually on the side, I have a hobby of studying the traits of genius. And people keep saying they’re like, you’re gonna write another book or do another pot? I’m probably not, probably not because, you know, 1.4 million new books come out, I think the world of literature will be fine without my next one. And, but with that, you know, there are a lot of very repeatable traits of quote, genius, which is very misunderstood, much like entrepreneurship. And there’s things that you can do to be a better genius, or bring out your genius are things you can do to be a better entrepreneur. And then some people are kind of made a little more for it. One of the things that I’ve found that really crosses over between people that we call genius, which by the way, are almost all entrepreneurs. There’s an enter a level of enterprise that exists and in the people that we often refer to as genius, and that keeps them moving. But curiosity is a big thing. And that’s a very important part of successful entrepreneurship. It’s a trait that people have with genius, and most people that studied the genius side of things, believe that you don’t have a shot at being a genius if curiosity does not exist. So in your study, if you have to break this down to like one or two things that if they don’t exist and an entrepreneur, your likelihood of success is animal. What do you get?
Derek Lidow 49:44
You nailed it with curiosity, because it’s really important to be open to learning things, new things. Also copying gotta be willing to open up and accept that other people can do things very well. And that it’s not just okay, it’s a good idea to follow in their footsteps. So those two things are very characteristic of successful entrepreneurs.
Matt DeCoursey 50:26
Most of the peeps, most of the people that we associate with, quote, inventing something, weren’t the first people to do it, right. And they just kind of came along and did a little better and, and perfected it or just took a different look at it. And a lot of times, it’s because the original inventor or innovator, wasn’t very entrepreneurial, they were just kind of like building something that they thought was cool, it’s kind of back to that classic, I focus too much on the product and not on selling the product, because that won’t really create an enterprise without the sales side of things.
Derek Lidow 51:02
But that’s the difference between an inventor and an innovator, and inventor is all focused on, you know, perfecting this new way of doing something while an innovator is focused on bringing new ideas to two groups of people who think that that’s the best thing they’ve ever seen. And so, in that inventors are not very successful entrepreneurs. Never have been, they can be geniuses. Absolutely. You know, Louis Pasteur genius, right. But he didn’t deliver pasteurized milk to children in the, you know, millions of gallons, it was entrepreneurs and innovators that did that.
Matt DeCoursey 51:57
Well, and without a charismatic nature, it is as if I had to add one more thing. And because you mentioned that, and I’d like to use the end of the show to kind of wrap up a few of the key points. But I think that one of the things that kept going through my head is I’m one of those people, you hear me say that CEO needs to be the company’s best salesperson. And, and people ask me a lot, they’re like, Well, Matt, what do you want to do? What do you want to become, I’m like, I want to become Mickey Mouse. Mickey Mouse stands in front of the magical kingdom and waves for everyone to come in. And, you know, and that he is kind of the CEO and Disney in that way. And he’s out there, Hey, come on, if you trust me, here’s the thing, when you get it, when you get in Disneyland, or world or wherever it is, you’re going, you don’t see Mickey Mouse a lot inside that he’s not in. And that’s the thing is like, there were it’s a challenge that that charisma, that sales nature, the promoter, being able to create hype, and getting people excited, it’s and it’s not just like the buyer, it’s also the people that are, you know, all you can do is all you can do. So if you can’t get those that are working on it with you excited, you have a very difficult time pushing things forward. And that’s that, and you know, there’s this stubbornness that exists in inventors, innovators and entrepreneurs. Now, look, I know I put a couple more, and I’d be rude if I didn’t, is there? Is there another? Is there another couple of traits you’d like to bind the land here?
Derek Lidow 53:27
Well, so I’ve written three books. My first book was startup leadership, and that talked about what it takes to be the leader that can assemble a team to take an idea out of thin air and develop it into an actual, you know, value producing self sustaining, you know, enterprise, like, why do you do it? And the second book I wrote is about the characteristics and what it takes to prepare to be an entrepreneur. Do you have it? How good do you have to be, you know, how, how much money do you need? Really, or not?
Matt DeCoursey 54:22
More as the answer to that one, maybe.
Derek Lidow 54:28
And, you know, so there’s been a lot of research in this area, a lot of insights and findings. But ultimately, preparing to be an entrepreneur is far more important than any single characteristic. It’s somebody that puts their mind to it. I’m going to do this. I’m going to Think about what’s necessary. We’re gonna find my competitors; I’m going to figure out who to copy. And they’re the ones that are the most successful.
Matt DeCoursey 55:11
I’m often heard saying, hey, it’s America. You don’t have to have the original idea. You just have to bring it to market and figure out how to do it better, faster, and cheaper. And then you stand a chance. Yeah. One last thing is, I didn’t think in the history of entrepreneurship and commerce, one of the things that that I also learned was kind of a big, I don’t want to say it’s a law, but it’s getting close to it. When you talk about placement in industry and, you know, as former GE Chairman Jack Welch, that went in and sold off all the things that GE did that weren’t number one or number two in an industry. And if you’re not, if you’re trying to. So you talk about where disruption and startups and entrepreneurs come in, you know, some of the best advice that I received was on this show from Laurel Holt, who’s been in one of my books. And he was the founder of an automotive technology franchise called CARSTAR. He said, hey, man, I’m a coward. And I was like, man, you don’t seem like it. You seem pretty brave. And he’s like, no, I’m a coward. I like to take an idea that no one else is doing where everyone will leave me alone. And then I get really good at it. It’s like, I don’t try to take on the giants. I don’t try to. I’m not coming out of the box and be like, I’m gonna take down Google or I’m going to take down Amazon. That’s too brave. I like the cowardly approach. And then people don’t understand that it took me, like, it took me a little bit to actually kind of like, absorb that and bring it in. But I think that that’s also great advice for so many different people. It’s like, that’s a daunting task to take down Goliath, you know, and, the fact is, isn’t that you hear David and Goliath, but in the alternate version is that 99,999 times out of 100,000 Goliath just stepped on David, and kept moving and didn’t even know he had done it. So, you know, there’s a lot to be said there. I’d love to have you back on the show some time to talk about personality traits. I love the versus things. I love versus questions. And I actually wrote down here innovator versus inventor. Genius versus crazy. Are you driven? Are you obsessed? There’s this interesting fine line that comes through that we’re out of time on this episode. But as I said, I’d love to have you back. This is an episode I’ve wanted to do for a really long time. And thank you for participating in it with me.
Derek Lidow 57:37
Hey, Matt, thank you so much for inviting me. I really enjoyed it.
Matt DeCoursey 57:41
I’ll see y’all down the road.