Chapter 1 - The Soul of the Entrepreneur
To read:
Jobs to create: McKinsey research warns that one-third of the U.S. workforce could be displaced by 2030
The Anthropocene: The science behind the Texas killer storm in 2021 that killed 246.
Inventor of the term ‘VC’: John Jay Whitney coined the term venture capital in the 1950s, originally the term was “adventure capital.” Read his profile from 1951 in The New Yorker magazine.
The evolutionary history of data: In this series across four parts at the data.world blog Data Prose, I explored the history of data by contouring its evolution along that of humanity.
George Bernard Shaw: The British playwright’s book Maxims for Revolutionists is available for free download.
Seize the future: Join others in Austin, who are doing so - seizing the incredible opportunity we have in front of us, as outlined in the Texas Startup Manifesto.
To listen:
Mark Zuckerberg on Zuckerberg: In this 90-minute interview Zuckerberg talks about a range of things, from news to data to privacy to China to his political ambitions.
Cisco’s John Chambers: In this revealing interview with Kara Swisher, CISCO CEO John Chambers shares his concerns and his vision for the future of venture capitalism.
Chapter 1
The Soul of the Entrepreneur
“The reasonable man adapts himself to the world: the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.”
— George Bernard Shaw
Beyond that familiar quote, there is a great deal of wisdom for entrepreneurs in playwright Shaw’s 1903 book from which it comes, Maxims for Revolutionists. The book is easy to find online and I recommend it, as he could well have been describing Mahatma Gandhi, Galileo, or Rosa Parks. But I begin with that maxim here as I really believe he is describing you. Shaw’s insight captures the overarching focus of my book, The Entrepreneur’s Essentials.
This insight about adapting to the world speaks to me, as it should speak to all entrepreneurs. Because at no time in history has the world faced the challenge to adapt that it does today. And entrepreneurs, broadly defined, are the people to lead this adaptation.
I do need to update Shaw’s point slightly. The “world” to which he refers is not just the physical world, but it is society as well — of which we are a part. So in this broader sense, we do have to adapt ourselves to new realities, planetary and local. I am, for example, a vegetarian (mostly a vegan) and I believe we have to adapt our diets to a more environmentally conscious system of food production and consumption. We need to adapt our lifestyles to reduce our carbon footprint. The pandemic, still with us as I write in the spring of 2022, taught us a great deal about adapting for the good of us all, as we masked up, distanced ourselves from one another, and learned through a time of great pain about the importance of adapting the world to its interdependence. But none of this changes the fundamental insight of Shaw. Quite the opposite.
Because in the century or so since Shaw made that argument, the world has entered what scientists call the “Anthropocene,” a term that dates to no earlier than the 1960s. It refers to this new age in which we bear witness as the Earth is fundamentally impacted and shaped by human activity. We have adapted the world to us in ways that Shaw probably never envisioned, adding both complexity and urgency to his maxim. Climate change is the best example. About this, we know a great deal in Texas where I live, with hotter summers, colder winters, more hurricanes along the coast in the south, and more tornadoes in the north. On the Digital Companion, which I referenced in the Introduction, you’ll find some more detail on this. A deadly freeze in February of 2021 taught us many things, including the need for thoughtful entrepreneurs to get deeper into the energy space.
The reality is that we cannot return to the world before the Anthropocene. We must proceed along the contours of the world we’ve created, following the wisdom of Shaw, adapting it and its institutions to the new realities of climate change, urbanization, growing water scarcity, a transforming economy, and so much more.
This is the call to entrepreneurs, a call to your soul. Only unreasonable entrepreneurs, like you, willing to persist and swim against the current, can adapt the world to the transformations in our economy and society so urgently needed. In the next decade, we need to create between 30-40 million new jobs in our rapidly transforming economy. We need to create new models of transportation, energy production as I mentioned, as well as learning and housing. In the realm with which I’m currently most familiar (at data.world), we need to adapt our institutions to the explosion of data that is now at the operational heart of every business and institution — another subject into which you can do a deep dive on the Digital Companion.
There are many tools and means to think about and strategize business success. We’ve reduced these tools to the familiar acronyms of ROI, or EBITDA, or the KPIs of our age: clicks, page views, time on site, conversion, net bookings, retention/churn, Net Promoter scores, etc. These are important tools; as a CEO I have KPIs I check every day the way a doctor checks pulse, temperature, or oxygenation. And then there are “OKRs,” about which you’ll learn more in the chapters ahead.
But the success of these commercial metrics is increasingly dependent on something hard to concretely measure but essential. This is the soul of the business, of the innovation ecosystem, and of the entrepreneur who brings both together. Hence my need to start my book here. Soul is THE essential.
Building on that, there are two essential concepts to which you, as an entrepreneur, will adapt the world; both subjects are near to my heart. These are the ubiquitous access wrought by digitalized knowledge and the hybridization of institutions. And to both, I will return.
As our economy is transformed through global markets, changing demographics, and truly revolutionary technologies, Shaw’s Maxims for Revolutionists is more valid today than ever. And we need entrepreneurs who think not only about the bottom line, but about better outcomes for those who have been excluded from large parts of the economy, and whose prosperity and talents are critical to our success. Again: Soul. This is why you’ll read much more in this book about another set of concepts I hold dear, the Public Benefit Corporation and Conscious Capitalism, about which I’ll also share much more later.
This is the moment that the world needs people like you. People with your soul founded the greatest country in the history of the world. The world benefits from your ambition, your dreams, your daringness, and your willingness to walk into what former president Teddy Roosevelt called “the arena.”
You create the jobs. There is no company that anyone goes to work for that didn’t have a brave creator at the beginning of it all. Your company can grow beyond you, but no one at your company today would be there if it were not for your giving it birth.
You define this soul, this essential, of the company. It was your unreasonableness, your “craziness,” your dream, and, perhaps most importantly, your values that seeded its birth. Others can lead and tap into that soul, but if it weren’t for you there would have been no soul in the first place.
There’s much that Mark Zuckerberg and I disagree on, but also a great deal where I think he’s spot-on: “The company shouldn’t be run to try to build something that is cool, it should be run to build something that is useful and enduring,” Zuckerberg said in an interview with Kara Swisher, on the Digital Companion. “And I still believe that.”
So do I.
Another source of wisdom is John Chambers, the legendary founder and former CEO of Cisco Systems. Again, I include ways to read and hear more from Chambers on the Digital Companion. But a few thoughts he shared in another of Swisher’s interviews are helpful here.
Chambers is worried that we’ve lost our edge as a startup nation of entrepreneurs and he argues that we need to get it back. His new investment firm is, as he puts it: “Really focused on where the world is going, not where it’s been.” He points out that two decades ago, America had 90 percent of the world’s venture capital. Ten years ago it was down to 80 percent. And today. He said in 2018, it’s probably 50 percent.
“Basically you try to bring the country back together,” Chambers said, speaking to the role of entrepreneurs that I am advocating for here. “And you have the courage to lead.”
Since Chambers made those remarks in 2018, there are indications that a rebound is well underway. I dwell on venture capital and urge heed to Chambers’ thoughts not only because I’m an angel investor myself. But because venture capitalism is the driver of our future economy, even society. Shortly before I began revisions for the second edition of this book at the beginning of 2021, the flow of VC investment totaled $156.2 billion in the United States, according to PitchBook. That U.S. figure was amid a doubling of venture investment globally. The numbers don’t mean everything, and much remains opaque. But the money of this particular, soul-backed color, and its flow, are the best metrics we have for the health of the broader ecosystems of innovation, which include social entrepreneurialism and the creative sectors such as music, film, and art.
As I say, we can’t measure soul the way we measure market share or productivity growth. But we can get better insight into the entrepreneur-invigorated ecosystem, animated by soul, with an eye to VC investment than with anything else I can think of. After all, as an investor, what I’m really investing in is soul, and after listening to more than 3,000 startup pitches (and backing more than 124 of them as of this writing), this is what I look for above all else when betting on an entrepreneur. And where those bets are going — mine and those of countless other VCs — is an ever-evolving portrait of the feedback loops between all elements of innovation that in turn nurture the best entrepreneurs. This is why we are seeing an explosion of entrepreneurial activity in cities like my hometown of Austin and other emerging hubs of the so-called “knowledge economy.”
The trend that Chambers notes is not necessarily a zero-sum game and it is entrepreneurs in new regions who are fueling the rebound that data suggest is occurring. If we follow VC investment as a marker of the innovative spirit of entrepreneurs, we see it diffusing and spreading. As I started writing this second edition of The Entrepreneurs Essentials in early 2021, Silicon Valley’s share of total U.S. VC investment — which has been falling since 2006 — was forecast to fall below 20 percent for the first time in history. But it’s not disappearing. It’s going to places like Austin, Miami, or Denver. As I conclude this book in mid-2022, the past year has seen not just a record amount of capital raised, but also a record for venture capitalists investing in new regions: “We’re betting that the future of America is going to be built in the middle of the country, in places with good government at a reasonable cost of living,” wrote Palantir Co-founder Joe Lonsdale, in the Wall Street Journal about his decision to move his firm 8VC from San Francisco to Austin.
My good friend Josh Baer has talked about the incredible opportunity we have in front of us if we just seize it in his Texas Startup Manifesto, which I also reference on the Digital Companion. Josh argues that if we work hard at it, together, then Austin can become a beacon for our nation — both in creating the new economy as well as bringing the old economy and those that have been disenfranchised for decades, along for the ride. I agree with him, and others do too. Just look at the Austin region, in fact now No. 9 nationally and No. 21 internationally, ahead of both Tokyo and Toronto, as the destination for VC investment in the entrepreneurial soul.
Many, of course, attribute Austin’s growing appeal to the pandemic, the flight from the old “Gateway Cities” of San Francisco or New York, and the dynamics of housing costs and lower taxes. I certainly concede these are factors. But focusing too narrowly on these headlines obscures the broader dynamics of deeper trends that were underway well before our lives were upended by COVID-19, but that are trends nonetheless accelerating because of the pandemic.
I certainly don’t diminish the devastation wrought by the pandemic, the pain, and the irretrievable loss of almost a million lives in America as I write, almost 15 million worldwide. We need to recognize and confront the failures that the pandemic unveiled, such as the racial, educational, and health disparities in America. But we can do that more effectively, without disrespecting the suffering and loss of so many, when we as entrepreneurs embrace the opportunities and responsibilities within the trends illuminated by this global scourge.
This deeper set of trends, now so clearly revealed, is the entrepreneur-led renewal that will determine the future of the next stages in education, healthcare, social equity, and certainly a new era of business defined by Conscious Capitalism. Animating all of this will be the concept of access, the huge shift that binds so many trends together.
At the outset of the pandemic, Zoom (or Google Meet or Microsoft Teams), telemedicine, streaming, online classes, document sharing tools like Google Docs, collaboration tools like Slack or data.world, digital signatures, online or curbside shopping, and instant message apps were useful, even critical sometimes. But not yet essential. Some of us were more familiar with them than others — those of us in the tech sector had a head start to be sure. So did the digital natives, who don’t remember a world without the internet and who certainly have never used a rotary phone. But quickly, as all of us grasped and mastered these relatively new tools and apps, often to literally keep lives and families together and companies afloat, they’ve become an informational ecosystem of their own, one encompassing so many more than the tech-savvy or digitally native.
As we emerge from more than two years of cocooning, masking, and working and learning from home, these are no longer just useful tools, fortuitously at hand. They are the building blocks of the new knowledge economy and knowledge society that the seers have been predicting for decades. In a word, universal and ubiquitous access is the attribute of hope I see towering on the near horizon.
Coupled with this idea of access is the second point I want to make, and this is the emerging concept of hybridization. We don’t know exactly how our court systems will work now that even the U.S. Supreme Court has “worked from home.” But we do know that the tools of virtual communication will continue to shape the criminal justice system. We don’t know how temporary regulations allowing online medicine to bend around privacy compliance laws will evolve. But we do know that, according to the CDC, telehealth visits increased by 50 percent in the first quarter of 2020 when compared with the same period in 2019. And all the data now says telemedicine is here to stay: “Commercial interest in telehealth has boomed, with both startups and established companies, such as Amazon, providing virtual care services,” wrote NatureMedicine magazine in 2021. “An area of particular activity has been behavioral and mental health, where multiple companies are vying to provide remote counseling.”
Imagine what our new familiarity with these tools will mean over the long term to those living in remote areas who can’t easily travel for medical care, or for those with disabilities whose mobility is limited. We don’t know precisely how schools, businesses, and local governments will organize themselves when virtual access and connection are no longer emergency workarounds but rather exciting options to improve everything.
This fusion of the digital and analog worlds is hard to imagine, but it is more than just frictionless video communication — as central to our lives as that has become. Think of the way the mingling of cultures through immigration and innovation has created the kosher vegan tamales that are easy to find in Austin. “What,” you ask? Well, just supercharge that melding process of immigration, innovation, and new knowledge and soon you have, as just one example, the first COVID-19 vaccine itself, history’s first mRNA vaccine licensed for use in humans.
This work began with a Hungarian immigrant researcher at the University of Pennsylvania. Her decades of pioneering work, and that of those who followed her, were incorporated into a trans-Atlantic consortium. This became the science-in-the-fast lane, distributed collaboration between U.S.-based Pfizer, which is headed by an immigrant CEO from Greece, and Germany-based BioNTech, headed by an immigrant CEO from Turkey. The other vaccine miracle worker, Moderna, is a venture-backed startup that was not even a decade old at the beginning of the pandemic.
“There could hardly be a stronger proof of venture capital’s utility,” wrote Sebastian Mallaby, in The Power Law — Venture Capital and the Making of the New Future, a great book published just as we were going to press.
I marvel at the pace with which scientists, the private and public sectors, and global institutions, all mobilized to get shots in the arm in less than a year from the first sequencing of the virus’ DNA. But let’s not forget that this stunning entrepreneurial tale, enabled by access to multiple minds, labs, and research, was in many ways a mere dress rehearsal for our future. So much to be done.
Let’s take education. Before the pandemic, my son, for example, was already attending the innovative K-12 school Alpha. Like some other schools, including Austin’s public Liberal Arts and Science Academy, or LASA, Alpha has been pushing beyond the show-up-and-be-counted model for some time. But still, my son’s learning accelerated during the pandemic. Gone was the commute and the wasted time. He attended school via Zoom, made the grades he needed to (and excelled), and then spent the other seven hours per day programming and playing complex games online with friends, constantly chatting via Discord (a Slack-meets-WhatsApp type of tool). He had more time to live his passion, not less.
Not long ago, I was on a call with a fellow CEO to learn more about “Massive Open Online Courses,” or MOOCs, where nearly 400,000 students are enrolled in more than 2,900 classes offered by 160 different universities — all free. Yes, we need to close the so-called “digital divide” ASAP. And the suffering of students without bandwidth in East Austin in the early days of the pandemic is shameful in a city like Austin — one of the wealthiest and most educated large cities in the United States.
The aperture is opening on access to our primary knowledge need: education. And it’s not just learning for those of traditional school age. There are incredible opportunities for those eager to learn to plug into the best minds and organizations.
Or we can take the example of arts, culture, and entertainment. Of course, we’re going back to live music here in the Capital of Live Music. Just as Broadway exploded with theater in 1919 after a year of closure during the flu pandemic the year before, we had a great SXSW festival in 2022. But it was hybrid, and certainly will continue to be. At the same time, the new streaming services of the Alamo Drafthouse, the Austin Film Society, and others will continue to bring access to new films and filmmakers to audiences around the world. For the first time ever, a movie produced for a streaming service, Apple TV+’s Coda, won three Oscars — including for Best Picture — in 2022.
This trend of ubiquitous access was already apparent in the music scene before the pandemic. With the rise of social media platforms like Spotify, songs now compete more vigorously for attention and this is changing the nature of the music itself, with artists seeking to get to “the hook” of music faster. As the genre is changed by technology, it also is changing such institutions as the Grammy Awards, which is rethinking the categories of music.
Needless to say, this is important for music and culture industry entrepreneurs. But it’s also a critical moment for social entrepreneurs, as the opportunities to advance the critical and long-delayed reckoning between Americans of all races are now being moved ahead at digital speed. Here in Austin, my friend Dr. Peniel Joseph, founder of the Center for the Study of Race and Democracy at the University of Texas at Austin, and author of a seminal book on civil rights history, The Sword and the Shield, spoke in honor of the late Rev. Martin Luther King during the pandemic at my synagogue — by Zoom of course. But he will continue to speak at countless engagements around the country in the future, as well as in person, in ways that would have not happened before we all became accustomed to the technology.
As I was writing this chapter, we at my company data.world hosted a free and open Data Resource Hub for the study of policing in America, enabling widespread access for researchers, policymakers, and the public. The hub combines information collected by the Policing in America Survey with existing data assets produced by federal, state, and local agencies and other non-profit initiatives. Microsoft, members of Congress, and many others have been eager to partner with us on this.
While this would have been technically possible before the pandemic, it would have been practically awkward if not impossible. Countless other examples abound of new ways to work, new ways to reskill our workforce for the well-paid tech jobs of tomorrow, and new ways to produce power from green energy sources that are being thought through and acted upon because of this new reality of access. It is into these areas in which you, the entrepreneurs, are taking us, and will take us, going forward.
These twin concepts of access and hybridization are key to where I want to close this chapter on “The Soul” of any company, and the culture that is informed by that soul. These two concepts are now foundational to the soul and culture of any new entrepreneurial venture going forward.
Most new startups don’t spend a lot of time thinking about culture. But in my experience and that of others, including Cisco’s John Chamber who I referenced earlier, this is critical. What is your vision and how is it different? Who are your customers and how will you treat them? Who will be your employees and how will you treat them, and how will you expect them to treat others? How will you build your leadership team?
Or said differently, how will you make the world adapt? What is your unreasonable soul?
Whether you are an entrepreneur now or whether you will become one, you will peer deeply into your own soul as you ask these questions. And the answers never stop coming. You have many opportunities and great responsibility, but you also must be mindful that the road is long, often lonely, and filled with ups and downs.
As an entrepreneur, you will know the triumphs and the defeats like no one else. You have ridden the emotional highs and lows in ways that no one but other creators can understand. The company means more to you than it can mean to anyone else — because you were there at its inception. You were in the hospital room for its birth, along with perhaps a few other proud parents (your co-creators). The parent has the most history with the child, even when the child grows into an adult. It is easier to be the grandparent, cousin, or just the friend, acquaintance, or bystander.
There are many operators, but there are very few creators. Many benefit from the few courageous souls who dare to begin in the first place. Your being results in their doing.
You will always be a creator at your core. That is who you are. You were born to change the world. From the nurture of your sweat, many flowers will bloom. When you die, the world will remember the garden you seeded. You will be remembered more for creating than those who were just a part of it. Because without you, none of it would have existed — the world would have merely stayed static and the future wouldn’t have progressed.
Your soul is our future.
This future is the “arena” I mentioned at the outset. Not long ago, I met an up-and-coming entrepreneur with a fantastic idea that I’m sure will be very successful. I asked if he had ever read Man in the Arena, by Theodore ‘Teddy’ Roosevelt. He had not. So I shared it with him, as I’ve shared it with so many others. Interestingly, it’s from a speech Roosevelt gave in 1910, just a few years after Shaw penned Maxims for Revolutionists.
Both Shaw and Roosevelt may have written more than a century ago, but they were speaking to you today:
“It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.”
— Theodore Roosevelt, in his speech “Citizenship in a Republic,” 1910