Stanford University is firmly embedded in the ecosystem of Silicon Valley. Numerous high-tech stars have received training and made key connections in this cauldron of creativity. Stanford’s campus has birthed companies such as Hewlett-Packard, Sun Microsystems, Silicon Graphics, Cisco Systems, Yahoo, eBay and Google. In 1996, the Graduate School of Business at Stanford established the Center for Entrepreneurial Studies (CES), not only to teach students, but also to “provide resources for students and alumni embarking on entrepreneurial ventures” and “establish relationships with the local entrepreneurial community.”
At the heart of the academic machine is H. Irving Grousbeck, director of the CES. I spoke to Grousbeck about demystifying the nature of entrepreneurship. The full interview is included in Entrepreneurial Excellence: Profit from the Best Ideas of the Experts. Grousbeck explained that one aspect of demystifying entrepreneurship is to identify commonalities among successful entrepreneurs. Grousbeck identifies five attitudes that he has observed often accompany success.
First, accomplished entrepreneurs demonstrate “an unending dissatisfaction with the status quo.” The entrepreneur thinks he/she can do something better than the way it is being done at present; in other words, he or she pursues opportunity through change.
Second, an entrepreneur must have “a healthy self-confidence.” Grousbeck explains that an entrepreneur must be “willing to be lonely, to make tough decisions, to stand on a level of the organization chart with no peers, and to have the buck stop with him or her.”
Third, an entrepreneur must be good at what he/ she does; Grousbeck calls this “reasonable competence.” Without skill or talent, an entrepreneur will have difficulty assembling a team and launching a venture.
A fourth beneficial attitude is “concern for detail.” While some entrepreneurs are big thinkers and visionaries, they always have someone looking after the details.
Fifth, an adept entrepreneur must have a “tolerance for ambiguity” ; in other words, he or she must be willing to accept an uncertain future. After all, not every venture succeeds, and rarely does one evolve according to plan. Grousbeck clarifies, however, that being comfortable with ambiguity is not the same as accepting unnecessary risk.
These five attitudes are a starting point for success in the entrepreneurial process—but this must be coupled with a clear understanding of the fundamental issues of money and timing. With respect to money, Grousbeck teaches that the functions of the entrepreneur and the capital provider are very different. According to Grousbeck, don’t bring your own money to your new venture. He and his co-founder each provided $3,500 to found Continental Cablevision in 1964; these personal resources were then supplemented by $650,000 in bank and investor financing. Grousbeck states that an entrepreneur who relies on his own money for launching a venture typically puts a ceiling on ambition, because “one tends to define the scope of one’s venture by the size of one’s pocketbook.”
With respect to timing, Grousbeck warns, “An entrepreneur may need to live for six months to two years without any income while his/her idea is being market-tested and perfected.” In other words, an entrepreneur must figure out how to buy some time—and shouldn’t plan on instant success. Furthermore, Grousbeck notes that careful analysis is part of the equation: “Analysis is not something to be left at the doorstep; rather, it is a critical element in optimizing the odds of entrepreneurial success.”