Discovery

What does it take to make it as an entrepreneur? And what does it take to get your idea off the ground? In this first episode of The Start-up Cycle, we explore the question of finding your feet as an entrepreneur, looking at everything from the ideal temperament, to the role between passion and perseverance. Featuring guests Elspeth Murray (Associate Professor and Associate Dean of MBA and Masters programs, Smith School of Business); Dave Jackson (President, Hydropool Hot Tubs and Swim Spas); Matthias Spitzmuller (Toller Family Fellow of Organizational Behaviour, Smith School of Business); and Erica Pearson (CEO, Vacation Fund). Your host is Meredith Dault.

Transcript

[MUSIC PLAYING]

It was Walt Disney who once said, “that all of our dreams can come true, if we have the courage to pursue them”. For entrepreneurs, pursuing those dreams generally means a lot of hard work, long hours and a lack of sleep. A dogged unwillingness to give up doesn’t hurt either. In short, while entrepreneurship is not necessarily an easy road, turning an idea into a thriving business can be a hugely fulfilling one. But here’s another hard reality — when it comes to making new ventures work the stats aren’t great. Some say that as many as nine out of ten start-ups fail. Certainly at least half. So what’s the secret to success? I’m Meredith Dault and I’m your host for this podcast series we’re calling the Start-up Cycle. Coming to you from the Smith School of Business, at Queen’s University in Kingston, Ontario. 

Over the course of the next six episodes, we’ll be looking at different aspects of the entrepreneurial journey. From tolerating risk, and securing financing, to scaling and sustaining your business. We’ll hear from people who have been through it and people who have studied it and it’s my hope that no matter where you find yourself in the entrepreneurial cycle, that you’ll find a useful nugget or two to take away with you. Today’s episode, episode 1, we’re going to be starting right at the beginning: discovery. What does it take to make it as an entrepreneur? Is it passion, persistence, or is it just having a great idea and maybe a little luck? We’ll have that conversation. We’ll also hear from one entrepreneur who found her inspiration in traveling the globe – stay tuned.

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[1:57]

MD: Some people know right from the start that they want to be entrepreneurs. Dave Jackson is one of those people.

Dave Jackson: I’m president and former owner of Hydropool Hot Tubs and Swim Spas, we are one of the largest hot tub and swim spa companies, in the world. We’re the largest one outside of the United States and we manufacture products in Mississauga, Ontario and we ship them to customers in approximately 40 countries around the world.

[2:29]

MD: Dave graduated from the Commerce program at Queen’s in 1991 but he didn’t leap into entrepreneurship immediately. He shared his story with me and we were joined by Elspeth Murray. Elspeth Murray is an Associate Professor and Associate Dean of MBA and Masters programs at the Smith School of Business. She’s also the Director of the Queen’s Centre for Business Venturing as well as a CIBC faculty fellow in entrepreneurship. I started the conversation by asking Dave about his entrepreneurial journey.

DJ: You know I always think I knew I wanted to be an entrepreneur.  I’ve seen my Dad both work in a corporate environment and then go out as an entrepreneur, so it’s something I always wanted to do. And I had an experience operating a College Pro Painting franchise for two years during my summers at Queen’s University, so I did get a taste of it. And right out of Queen’s I wanted to find a company to buy into or start my own company. And my father said you’re not half as smart as you think you are, you should maybe go and learn on someone else’s dollar for a time being. I went to Proctor and Gamble in Marketing and about two and half years into that, I decided to start to look for a company to purchase. I was not really a huge idea person and nor at that time, 20-25 years ago, there wasn’t the opportunities that some students have today. And it wasn’t as easy or acceptable to start your own business. I really was looking at acquiring a business. We looked at many, many businesses, and I found one that I was able to get an option to buy half the company. It was a small company, and you know the rest is history 

[4:13]

MD: If you describe yourself as not an ideas guy, then for you entrepreneurship wasn’t about bringing a vision to life – sounds like it was about something else?

DJ: Well entrepreneurship for me is about, running your own company, and making it better. And you may not have the original idea but what I found is, when I got into the business, I quickly developed a vision for Hydropool and where we wanted to take it. Of course, using some of the positives that were already in place and then really trying to take it to the next level. And to me that is a valuable part of entrepreneurship as well.

[4:56]

MD: Well that makes sense. Elspeth in your experience working in the area of entrepreneurship, how surprising is Dave’s path?

Elspeth Murray: Not surprising at all, actually. I think there are a lot of myths about what being an entrepreneur actually means. In kind of the media these days, you hear a lot about the change the world, got this grand idea, the Tesla’s of the world or the Airbnb’s or the Ubers etc. and so that gets the lions share of the attention but the reality is that entrepreneurs come in many shapes and forms.  As long as there’s passion around something, I think that qualifies as being quite entrepreneurial and I think Dave’s experience is one of, you always wanted to do, which I find fascinating and you just figured out a path, to get you to where you needed to go and I hear all the time from students – I want to do my own thing, I want to make a difference, I want to employ people in my town or my city but I’m not the ideas guy. And that’s totally legit. So just find something that you can wrap your passion and enthusiasm around and go for it.

[6:08]

MD: Dave what was your passion?

DJ: Well I really had a passion to do my own thing and to grow a business and hire people and take it to the next level. I happen to be passionate about hot tubs but that’s one of the reasons why when I looked at this hot tub business, among thirty or forty other businesses, it jumped out at me as something that I knew people loved. I knew that everyone who tried my hot tub at home loved hot tubs and I thought it would really be a growing market.  As people started to cocoon at home and spending more time at home. So I quickly got passionate about the idea of growing a hot tub business, and it was something I could wrap my mind around, and something I thought I could leverage my sales and marketing skills, to really drive forward the business.

[6:58]

MD: Right, so passion for business and then passion for hot tubs?

DJ: Yes. 

MD: Ok, which I think is so cool because another kind of myth in the whole entrepreneurship is that one day some great idea lands in front of you. The epiphany moment and the reality is, a lot of very successful entrepreneurs find the thing through a very systematic search. Which is I think Dave, you probably went through a bunch of dogs before you found the hot tub business. And who can’t get passionate about a hot tub business?

DJ: Yes, absolutely and I think many entrepreneurs are passionate about an idea and it doesn’t work. Then they take it a long way and it just doesn’t work. So one of the great skills, is to be able to try something new and to learn from your mistakes, and take another idea and pursue that. And I think you’ll find that some of the most successful entrepreneurs in the world have had one or two or three failures enroute to finding their magic idea and their passion for their magic idea.

[8:05]

MD: Got any examples?

DJ: Of my own?

MD: Any failures along the way?

DJ: Haha, so I was just passionate about entrepreneurship when I was at Queen’s. I purchased a house, a student home, and then I was quickly able to sever the lot, and purchase two more student houses. I thought I would be a property mogul in Kingston and the ’91-92’ sort of recession came along and it was an epic fail. But I certainly learned a lot about business and about failing at a business. I think it was one of the reasons why I changed tactics and went a different route too and then found success.

MD: Fascinating. Thank you. Both of you, and Elspeth, I’ll let you start – what do we know about what entrepreneurial people have in common? Is there a secret? Can I take a class?

EM: The age old question, is there a survey you can fill out? Is there a ten out of ten, then boom you’re going to make it? Which is one of the things that drives me crazy about some of the stuff that’s online now which is just patently false. There is no definitive study anywhere that says, if you’ve got these 16 attributes, and if you get 5 out of 5, that you’re going to make it. The best we have, is that there are a number of common themes. So if you pull together 150 studies that have looked at the nature of being entrepreneurial and being successful – that’s as kind of as good as it gets. It’s the things that you would expect, for example, finding the thing that can get you passionate about, is critical because then it doesn’t seem like work and it carries you through. You know the flip side of that is, if it’s all about the money, that usually a marker that you’re not going to be successful because you’re focused on the wrong stuff or you’ll give up too early. Courage, calculated risk taking, an ability to see the big picture, do the details, those sorts of things. That’s what we teach in the program, it’s not, here’s the questionnaire, it’s like here's what it’s going to take, and have you got it? And if you’re not perfect, then find somebody else who can compliment what you bring to the party.

[10:25]

MD: So then it is that age old question though, is a person born, are those things innate, or can one take a class and acquire the skills?

EM: I get that question all the time, like many things, like leadership, there are people who are just born and you know 2 years old, the proverbial lemonade stand, and they’re just out there. At the other end of the spectrum there are other people in the no way no how category. They just don’t have any appetite for risk or they don’t work well with others…blah blah blah. Then there’s a whole swath in the middle, where you can I think, unlock potential and that’s really what I think you can do in a University program. Is that you either unlock the potential or you provide the confidence or you give someone the courage to actually say, it’s not as hard as I thought, I can actually go and do it. Or you find a co-founder and as a pair, boom you’re unstoppable.

MD: Dave, what I want to know, is were you one of those kids with the lemonade stand, was this desire to do entrepreneurial things nurtured early in you?

DJ: Yes, definitely it was. I did have a lemonade stand and a paper route and a lawn cutting business.

EM: Amazing.

DJ: And yes it was something that I loved to do and wanted to do at an early age.

MD: Okay, so your classic, back to sort of Dave’s journey, getting a corporate job to round out what you innately bring to the party, is always such a good idea because it’s rare that someone is perfect in everything. Whether it’s a more innate skill, like that risk taking or whether it’s knowing enough about marketing, or just systems and processes. A lot of people learn how to create a business but not actually how to run and grow a business. Those are different sets of skills. Here’s a question, what’s the difference between being a good entrepreneur and being a good leader?

DL: A couple things, I believe a good skill of an entrepreneur, is also to have a level of modesty and to really understand what you’re good at and what you’re not good at. I think Elspeth said earlier, many successful entrepreneurs understand that early.  And then they find people or partners that have complementary skills, and they can work together and feed off of each other to really build a great vibrant business because there’s other people with either technical skills or sales and marketing skills or finance skills that you don’t have, so I think that is pretty critical. I think not every entrepreneur is a leader and not every leader is an entrepreneur, I think they are somewhat different. Clearly, if you have an entrepreneur, who loves to take the risk and have a passion for an idea, and they also have leadership skills, I think that’s exceptional and they may go further, faster, but you can be an entrepreneur with a great idea and a great skill set and maybe you are not a leader of other people but you can find team members who are great leaders and you can always find a role. It’s really understanding what you’re good at and what you’re not, and finding team members who can complement your skill set to take your company as far as possible.

MD: Elspeth?

EM: Ya, so I’ll weigh in –  couldn’t agree more, and I think that’s where you see these killer combos of Bill Gates and Paul Allen, you know, the inside, the outside person, and you do see that, so the great PR, wave the flag, higher people, then someone behind the scenes just actually getting a bunch of stuff done. But it’s interesting getting back to your question, these attributes of most successful entrepreneurs, and there is a bucket called, leadership, and so if you unpack that and look at some of the elements, I’ve always found that most important, is this notion, of most successful entrepreneurs in the leadership venn diagram where they crossover, the most important attribute is this internal locust of control.  Most successful entrepreneurs believe they can control the world around them. And so, everyday you wake up and you say, I can make a difference, and I can get the deal, and I can get the cash, or I can hire the person, and so it’s never someone else’s fault. It’s always you thinking that you can actually be the one to you know bring the stars into alignment in your galaxy.

[15:09]

MD: Beautifully said, thank you. So Dave, final question, what’s the single biggest piece of advice you wish you’d been given, when you started out as an entrepreneur?

DL: Let me just say one of the things, maybe not the biggest single advice I wish I’d been given but if I was to give young entrepreneurs advice, I would definitely say, there’s so much more opportunity now for young people. It is more acceptable for people to become an entrepreneur. The technology has lowered the cost of starting up a business. In many respects, I think it is a fantastic time to be an entrepreneur and take a couple years of your life when you’re young to try and follow your dreams. And if you do it smartly, with the right team in place, and get some mentorship, and some advice along the way, I think you have a high, high probability of being successful and I would encourage anyone that is even remotely interested to try and take an entrepreneurial route.

MD: Advice from Dave Jackson, President of Hydropool Inc. As we just heard, his passion for hot tubs grew from his passion to grow his own business. And that idea of passion comes up a lot when we talk about entrepreneurship. That without it, a person is less likely to want to put in the hours and hours it requires to make a go of something new. As Steve Jobs once said, “If you’re not passionate enough from the start, you’ll never stick it out”. But what if that’s just not true? What if we’ve been looking at the relationship between passion and perseverance all wrong? Looking for answers, I went to see Matthias Spitzmuller, an Associate professor, and the Toller Family Fellow of Organizational Behaviour at the Smith School of Business. Hello Matthias.

[16:56]

Matthias Spitzmuller: Hello Meredith. Thank you for having me.

MD: I’m glad you could be with us. So Matthias, what are we misunderstanding about the relationship between passion and what we call perseverance but some people would maybe call effort?

MS: I believe when we are thinking about passion – we believe exactly what you just mentioned, it’s the idea that passion is the driving force behind entrepreneurship. If you don’t have passion to begin with, your venture is not going to be successful or you’re not going to be able to overcome obstacles, ultimately your venture is not going to be successful. I believe that is the idea that most people, most entrepreneurs, would subscribe to. What we find in our research however, is that passion just doesn’t start, that often times, what is the first step in the venture, is the effort that an entrepreneur invests into the creation of a company, just really hard work. The effort ultimately drives the passion. Once we have invested more and more, you become increasingly invested in the idea, in the company that you are growing. So the passion follows, from the effort that you invest and it’s not that passion drives the effort that you put into your venture.

[18:16]

MD: But surely you need some sort of spark of passion to start the initiative?

MS: You do need a commitment; I would say whether the commitment derives from passion or from an interest in a product or a service. Or sometimes also much more mundane things such as perceived opportunities in the marketplace. I think there has to be a commitment at the beginning that gets effort going but passion is this warm fuzzy feeling, this strong identification, that sense of identity that you want to express through your venture. It’s something that doesn’t have to be as strong at the beginning, instead it can follow from the effort that you invest into your business, and the initial successes that you accumulate along the road.

[19:05]

MD: So in other words, we should not be sitting around waiting until we feel passionate about something, enough to start a company?

MS: That is exactly I think the key message and I think that is not just important in the context of entrepreneurship, the same applies to pretty much everything we do in our lives. Often times we’ve got this feeling that we have got this passion in us that we just have to find, and wake up, and then we just get going until the end of our days, and that is just not true. Passion is something that you have to work for, that you have to make your own, through hard work. If you look at the beginnings of some of the most successful ventures, very often, it was not a strong passion for something that drove it but it was perceived opportunities. It was an interest in a product or some service that eventually developed into this strong passion, that we later on, came to associate with the likes of Steve Jobs or Bill Gates.

[20:05]

MD: Do you have any examples?

MS: If we look at the entrepreneurs with which we have worked, with in our research, many of whom are in African countries, Uganda, Tanzania, and Kenya. For many of those entrepreneurs their venture is not the product of a strong identification with what they do. This is an opportunity to make a living. But they become passionate over time, they become passionate as they realize that wow I’ve got my first paying customer, I’ve got more customers right now, I’ve got the first employee who is making a living off my venture, and that is how the passion eventually grows. And this might be an extreme context because entrepreneurship in an African context is certainly different from the types of ventures that we often times have studied in our context but I still think it still makes the point, that passion develops along the way as a function of hard work and early successes that you make.

[21:05]

MD: It’s a very, it feels like a very western world way to think about things.

MS: Ya, it’s a very good point, where the western world view we often times believe that we’ve got this intrinsic drive, that we’ve got this passion that you just have to identify and wake up, and once identified it going to just carry you all the way to the finish line.

MD: And conversely that somehow if we haven’t found that passion, that somehow we have failed in our mission.

MS: Ya, and I also see that a lot with my students that I teach at the Smith School. There is a great anxiety in many of them. That they feel that I haven’t found this passion yet and I’m not really sure what I’m supposed to be in here and I don’t want to be just another accountant. And there’s this anxiety, what do I do with this, answer it in situation, and what I try to tell them is, this is pretty normal. Essentially what you have to do, is you have to pick a field that interests you and then make it your own, through the progress that you make, and the people you get to know, and the excitement that you generate, or products and services and that ultimately then is going to create your passion. And I think that all the students, they get that, because they’ve seen that in their own career trajectories, that passion is not that easy, it is not just something that you have to wake up.

[22:26]

MD: How did you conduct your research?

MS: We conducted our research in different settings. One article that we’ve had published in the Academy of Management Journal used two different samples. One was a sample of entrepreneurs in Germany, who we followed over a 10-week period. What we did, was we always asked them, so how passionate do you feel about your venture? How much effort have you invested? How much progress have you made in this particular week? And as we were able to measure these constructs, over a 10-week period, we were also able to model statistically whether passion is there, construct that drives effort. Or whether effort drives passion and we realized the relationship is much stronger in the reverse direction. Such that passion follows effort. The second study, which we conducted for that particular paper, was in a lab setting in which we had students develop an adventure idea and we provided feedback to them on the success, which they made early on, as they were developing their business plan.  And we were interested in finding out: so how passionate do you feel about idea then? Under a controlled setting we were essentially replicating and investigating the psychological mechanisms through which effort drives passion.

[23:48]

MD: That’s really interesting stuff, I feel it’s so applicable to so many aspects of our lives. If you were going to give us one take away for inspiring entrepreneurs, what would it be?

MS: The one takeaway is hard work is something that I think every entrepreneur will tell you, that without hard work, you won’t be able to succeed. Sometimes entrepreneurs will tell me that, or when I started my business, I wanted to move away from my 60-hour work, I wanted to have control over my schedule, I wanted to spend a bit more time with my family. And then it turned out they were working more hours than they did before. They were much more psychologically invested in it. I think it takes this strong commitment to growing your business, investing in it, making it your own, identifying strongly with it. But this belief that you have to be absolutely in love with your company from day one, I think is an over romanticized and ultimately, I think a dysfunctional view of the process of entrepreneurship.

[24:52]

MD: But I just have to ask, when does it morph, just feeling like hard work to feeling like something you want to be doing?

MS: I think that process develops relatively fast. We have also seen that in the study we conducted, in which that already happens within the first year.  That this passion develops but the passion doesn’t necessarily have to be there with a strong intensity from day 1. But I would still agree with the original statement from Steve Jobs, if you haven’t developed that passion after a year of trying to grow your venture, you’re probably not going to be able to stick it out. You’re probably not going to be able to still grow that venture after we encounter the first obstacles and every entrepreneur knows very well, lots of obstacles will come your way.

[25:42]

MD: It sounds like keeping an open mind is the best approach being open to the possibility that one could become passionate.

MS: Yes, probably, also not overly monitoring it. Everyday…have I developed my passion today? How do I feel about it? I think it’s ultimately the commitment to the venture, the idea that is associated with it, and sometimes passion develops without us being fully aware of how this seed is slowly growing into a solid plant.

[26:12]

MD: There you have it, if you’ve been waiting for a spark, a lack of passion is no longer a viable reason for not kicking off your entrepreneurial adventure. 

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[26:42]

MD: And finally, it’s time for [DING AND CHEERS] how I got the idea [APPLAUSE]. This is the segment where we talk about how people find the spark that kicks them into entrepreneurial action. Today we are asking how Erica Pearson got her idea for Vacation Fund, a Toronto Startup that helps companies help their employees save for vacations. Erica graduated with a Bachelor of Commerce degree from the Smith School of Business in 2014, here she is.

Erica Pearson: Vacation Fund is an employer matched saving program offered as a company benefit. So employees have the ability to direct a portion of their paycheque into a separate vacation funding account and employers are typically matching 50% of the contribution, capped at a certain dollar amount per pay cheque or annually.

[27:32]

MD: So you’re saying that without even really trying, I could amass a good amount of money, sort of like I would, with a pension without even noticing it.

EP: Ya, absolutely. That’s the nice thing about the payroll contributions. People actually forget that they are contributing and then they log into their account, and they think, oh this is incredible, I can actually afford to use my vacation time properly and go somewhere amazing.

MD: That’s great, well because this segment is, ‘How I got the idea’, I need to ask you, how did you come up with the idea for Vacation Fund? 

EP: So out of my Commerce degree, I went into finance, I loved aspects of capital markets, but eventually I sort of got the itch to start my own company because I really admired the stories of start up founders that I was reading  about and I didn’t want to live my life with any regrets. So I was doing my homework, on how to start a start-up, and I learned that you shouldn’t necessarily start a company unless you are so passionate about solving the problem, that you can’t not do it.

My initial thought was, what am I passionate about? Enough so that I can put all of my time and energy into starting a company. So what I realized I was truly passionate about was a mix of financial wellness and travel.  Primarily because growing up, my Father would spend money on almost nothing but travel.  No unnecessary air conditioning, no meals out, and so as much as we travelled, incredibly economically, he took us on about 3 trips a year. By the time I turned 22, I had visited over 40 countries. I like to joke that he was sort of a Millennial before Millennials – encouraging experiences over stuff.

I’ve seen people joining bucket list platforms and I thought that’s awesome. People are setting and checking off their goals as they go. But knowing how expensive travel can be, I thought well that’s great if you want to go on a safari one day but if you don’t start saving for it, you’ll never actually get there.

The initial intention was just build a B2C financial technology platform that would help people save specifically for their travel goals. But I very quickly started to ask people, ok, are we actually solving your problem? Is this really what prevents you from going on vacation. And when we asked people that, the response seemed to be 50% of the people said, I can’t afford to travel as much as I’d like to and the other 50% said I’m really hesitant to ask for time off. And around that time, I started talking to tech CEOs in Toronto, who said, do you know how tight this labour market is? Like we’re trying to offer things to our employee’s, things that will actually resonate with their priorities and their values. And that on top of people having this failure to disconnect mentality, companies that were really forward thinking started to ask: what if we offered this as a company benefit? What if we put money towards people’s vacation? So it was kind of like the end user and the companies were handing me a pivot from  B2C fin tech to a B2B company, offered as an employee benefit, sort of on a silver platter because they said this is really where the opportunity lies.

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[30:52]

MD: And with that we have come to the end of episode 1. Next up we’ll look at the question of risk. Can you be an entrepreneur without embracing it? I’m Meredith Dault at the Smith School of Business, Queen’s University. Thanks for listening.