The other day I posted 5 Entrepreneurship Basics B-Schools Can Teach. It’s natural to follow that list here with the exact opposite: 5 other entrepreneurship basics the business schools can’t teach. But I couldn’t quite do it. I had to change can’t to don’t. That, to me, is a significant difference. So here they are  (things they don’t teach, not necessarily things they can’t teach):

1. Dealing with people

Sure, you can teach organizational management, and there are rules for employees, lots of advice on selling, buying, leadership, and all that. But can anybody really teach empathy? Do you learn how other people feel by sitting in a classroom, or by working with (and living with) them. I like the new network television show (Lie to Me — pictured here to the right) where they read physical signs like facial expressions to know who’s telling the truth and who’s lying. The rest of us need a lifetime to figure that out, and, let’s face it, we probably never do.

How about the basics of self interest, like starting every business communication with “you” and the benefits for the reader or listener? Or figuring out who’s likely to be a long-term ally, and who isn’t? Or figuring out that selling right is listening first, and solving people’s problems? Some business schools try to teach that stuff. Most fail.

2. Right and wrong

I know business schools are trying to teach business ethics, but it’s so hard because there are so many different views, and social and political constraints; and ethics means different things to different people.

My bias on this point is that businesses that act in ways that help the community, and their employees, and their customers, and the earth and the environment, and all that jazz, will do better over the long term. Things like fair play and, at the very least, doing no harm, are critical to long-term success.

Fairness is so important. No business deal or alliance will work over any useful time frame unless it offers benefits to both sides. Screwing people is not a successful business model. But can that be taught? I can’t even prove it, let alone teach it.

3. Having a life

With all the baloney we spread about entrepreneurship passion and perseverance and persistence and all, where in the curriculum do we teach putting business in the right order of priorities? Who teaches that it’s easier to find a new job, or build a new business, than a new spouse? Which class is that?

Business schools and business academics undervalue life as they (we) teach starting a business as the classic high-end getting financed and getting an exit. There’s way too little attention to what we (with a sneer, usually) call a “lifestyle” business, or, for that matter, starting up via bootstrapping instead of outside investment. And nobody teaches how to decide what to do when a crucial business meeting interferes with a kid’s soccer practice.

Every class in entrepreneurship should have at least one session with somebody who got so obsessed with the business that they lost the rest of their life. It happens a lot. It needs to show up in the classroom too.

4. Managing risk

I don’t mean the technical side of risk management. Business schools are generally excellent at teaching the numbers and analysis of risk, mathematical tools to evaluate the time value of money, for example, and formulas to compare technical investment risk like the internal rate of return (IRR).

I do mean living with risk. Not betting things you can’t afford to lose. How to sleep at night when your customers owe you enough to destroy you simply by failing to pay what they owe. How to figure out which spend is a reasonable risk for generating a future payback, and which isn’t. How it feels to take a second mortgage, or how it feels to tell a graduating high-school senior with a great record that there isn’t enough money for the college he or she has earned.

Don’t take risks if you can’t live with the downside consequences.

5. When to hold and when to fold

One of the hardest thing we do, in startups and small business, is figuring out when to stick to the plan and when to back up and try something else. There are no magic formulas, no software that can do that for us. It wraps up a combination of guessing the future, projecting different possible scenarios, understanding what’s at stake, and figuring out where assumptions were wrong, where sticking to the plan makes sense, and where it’s going to be like running your head against a brick wall over and over.

Reflection: teaching with stories

How do we teach any of this? The best hope, I think, is by telling stories: Stories of failures, stories of problems, challenges met, situations, and so on. We do deal with business cases in business schools, and cases, when done well, are a lot like stories. Of course the value depends on a couple of important factors, like the case itself (real business, or big business?) and the teacher. True stories, told by the people who lived them, can be better than business cases.

Final thought:

Am I wrong on this? Maybe my experience is out of date. If the business schools are getting better on this, I’d like to know. I’d be very happy to be proven wrong.

You could call this post the taxonomy of trolls. I thought there were fairy-tale creatures, ugly and mean, living under a bridge, interfering with innocent travelers. It turns out, though, they’re real. Just like in the three billy goats gruff fairy tale, they are hiding along the way, jumping out to cause trouble.

I like puns and I like the potential double meaning with trolls. First there’s the beast or character of the troll, like in the fairy tale. And then there’s the verb, trolling, which I think of from 50 years ago when my granddad took me fishing. We’d put the baited hook into the water and move the boat slowly, trolling for fish.

I’ve happened upon several kinds of trolls in business. Maybe you’ll recognize some of these. Better yet, maybe you can avoid them on your travels.

1. Patent trolls. They buy up rights to otherwise useless or abandoned patents and hoard them until they can spring them on unsuspecting businesses. The mere threat of legal action is worth lots of money these days. Do you think it’s coincidence that the vast majority of patent troll lawsuits are filed in a single county in Texas? I don’t. I think that county has developed a symbiotic relationship with patent trolls. Encourage the trolls, get the revenue. The problem is that technology overwhelmed the government so much that the patent system couldn’t keep up with it. A lot of bad patents were issued. They become opportunities to quasi-extort money from innocent companies. These are double trolls: troll creatures (noun) who troll (verb) for opportunities.
2. Idea trolls. Seth Godin posted Trolls last week, referring to people who “gain perverse pleasure in relentlessly tearing you and your ideas down.” It made me feel better to see that even he – because I so admire his work — gets attacked by trolls. He said:
   

   1. trolls will always be trolling
   2. critics rarely create
   3. they live in a tiny echo chamber, ignored by everyone except the trolled and the other trolls
   4. professionals (that’s you) get paid to ignore them. It’s part of your job.

3. Politics-as-business trolls. I don’t mind political opinions, particularly not in blogs, but I do get annoyed by people whose approach is as a small business expert who has dipped their business expert brand into political mudslinging. The right-wingers who object to everything the government does as bad for small business, or the left-wingers who applaud everything the government does as good for small business. I hate the way they hide their politics in business terms.
4. Social media trolls. Talk about explosive growth—how about the growth in social media trolls. These two are trolls as creatures, but they’re also trolling around, looking for opportunities. Like the people who use Twitter or Facebook as media for selling things to people they don’t know, who haven’t asked; now that we’ve interacted in Twitter, will you tell your company to buy my product? Not to mention the annoying recent development of people selling things by tweeting with my Twitter name “@timberry” with a Web address to go to. I hate to think what some unsuspecting person gets if they go to that link. And it’s not like they’ve interrupted my account or done it as me; they just put my name in the sentence. Bummer.
5. Trade-show trolls. This is another double-troll situation because these trolls troll the trade shows catching the poor people behind the tables, staffing the booths, making them exposed and unable-to-escape victims of unwanted sales pitches. And the double-troll-trouble gets doubled again –- maybe that’s cubed – because the companies who pay for exhibition space become victims of trolls who didn’t pay for space but troll for sales victims anyhow. My particular favorite (not!) are the ones who want to sell competing goods or services.

(Photo credit: by John Bauer, via Wikipedia)

Irony: I’m a business planner, and I have been for 30 years now; but the biggest decisions of my real life have been remarkably unplanned.

I could rewrite my own history backwards to make it all seem like it had been planned, but it wasn’t. Going from hippy to business planner to entrepreneur, I tripped over the most important right decisions, accidentally. It was a lot like a shiny metal ball bouncing around in a pinball machine, hitting obstacles and changing directions. Sometimes I made the wrong decisions and got the right results. Go figure.

For example, in college I studied what interested me: Literature. I wasn’t making a career choice, I was taking the path of least resistance. It was an easy step from Literature to Journalism, and — after 10 years with UPI and McGraw-Hill and others — from there to the MBA. And in 30-some years of business I keep meeting people whose careers seem to reconfirm the basic wisdom of studying what interests you. These are people who followed that path of interest and found, later, that it led to the right place.

All of which could end up as dangerously bad advice, I suppose: if taking the downhill path leads only downhill. Sometimes you have to buckle down and work; but at least, if you’re doing something that interests you, the work feels better. That was certainly my case.  I got my first job in journalism in Mexico City, by mail plus a plane trip from Oregon, because I was happy to work cheap and they guessed that since my wife is Mexican I probably spoke Spanish (which wasn’t true until a few months later). There was no planning there; it was a job, in 1971, when jobs were scarce (as they are now). It seemed to prove the wisdom of taking that pinball-like  change of direction.

The next time I changed direction it was for the money.  I switched to business writing from regular wire-service news journalism after three years of it because my wife and I had two kids by then and with kids, money became an issue. Before that, neither one of us cared that much. Journalism had enjoyed an aura of save the world for a while, but that gets old. That change doubled my income (from very little to a little bit more). I waded slowly and fearfully into business writing with about as much enthusiasm as an ophidiophobe (fear of snakes) wading into a jungle swamp. At first, it was just a sellout; but then it got interesting. I took business classes at night school. I really wanted to know what was going on underneath the press releases, in the numbers, where the truth hides.

So it took me 10 years to get from undergrad studies to business school, but that wasn’t a bad thing. By the time I got there I was — notice the theme here — once again interested in what I was supposed to be studying. I’d had enough of business journalism to want to actually know what I had been writing about (novel idea) and that made business school fascinating. And my years as journalist helped me get through business school while working full-time in consulting. I could write fast, and that’s a good thing in school.

I made some very bad decisions that created very good outcomes. In some circles, we call that luck. Later I quit a good job to go on my own writing computer books, but with the help of my wife and my favorite former client, that became business plan consulting. And that — again with the help of my wife and some clients — became business plan software. It seemed like a natural progression. Just as it was critical to write for readers in Journalism, it was even more critical to write for users in software. And all of this changing directions meant that it wasn’t until 1994, 20 years after switching to business writing, 11 years after leaving that good job, that Business Plan Pro was first released.

And, while we’re on the general subject of unanalyzed decisions with good outcomes, doing what you want, in 1969 I asked a girl to marry me after knowing her about two weeks. Next January we’ll have a 40th anniversary. (And we both agree we were lucky. Don’t try this at home. Wait longer.) And at every key moment from literature to journalism to business to entrepreneurship, it was always two of us, never just me. When things were really dicey — like when we realized we had three mortgages and $65K credit card debt in developing Palo Alto Software — it was never “you idiot, what have you done,” but rather “we’ll take the risk together, and if we fail, we’ll fail together.” Knowing that you’re not going to lose a marriage over it makes it a lot easier to change directions.

Pinball metaphor notwithstanding.

(Photo credit: GTibbetts/Shutterstock)

There can be great truth in stories. People have communicated in stories from the very beginning. We use stories to tell about God, family, each other, and business. Stories can be true or false by the message they carry, not just what happens in the story. Fables, parables, short stories … think about how much you learn, and teach, with stories.

Can a story tell truth without being technically factual? I think we all know it can. Is the lesson of sour grapes less true because there was no original fox? Or is the story of the gingerbread man not true?

Marketing is all about stories. (Aside — great book in this area, All Marketers are Liars, by Seth Godin). There’s the story of how it started, the invention of whatever it is you’re selling, or the invention of your business itself, the story of the brand, the packaging, the formula, or whatever. There’s the story of how the customer finds the solution. There’s the story of how the customer problem is solved.

A good business plan is a collection of stories. Your vision is a story about the future. Even financial projections are stories, told in numbers. If we sell this many units at that price, we have this much in sales; but we also have to spend this much in rent, and so on.

As a frequent reader of business plans, I look for the stories. The most important is the story of the customer, the solution to a problem, the path to find it, and the decision to buy. I also look for the story of the startup, and the story of the growth in the future. I want them to be convincing.

(Photo credit: Pixelbliss/Shutterstock)

I hope you heard–you could have read it here– of the Palo Alto Software’s Oregon Small Business Boost, earlier this month, where we gave away thousands of units of business plan software to help the Oregon economy and reduce its unemployment problem.

The effort depended on more than 85 locations of chambers of commerce and small business development centers and related development organizations. They cooperated by giving away the cards that people used for the download.

I posted here about the results as we knew them immediately afterwards.

Yesterday I received this email. I’m reproducing it word for word here:

One late evening after work, a bunch of us were playing an online game, having fun and just relaxing. It was Friday, and we knew we would be playing all night, since the boss sometimes came in and played with us. It was a great opportunity for the developers, customer service reps and technicians to unwind, though we often were hard core gamers and loved playing whenever we could, sometimes during the day at lunch.

As it turns out, we soon discovered a small business that had opened up in Huntsville, Alabama, called Net-Tricity. It was a computer center that had dozens of stations and with all the newest software that we otherwise didn’t have or didn’t want to purchase for all of us to play. So, on many occasions we’d pack up and head over there and commandeer a dozen stations and duke it out online! The business was a hit and the year was 1997, and such stores were far and few between. Often the only venue for gamers was the colleges and universities, till they started restricting who could access, let alone play. Quake was big then and seemed to be on every available system in the area, though many establishments overlooked it, many did not and made it harder and harder to enjoy camaraderie in a LAN environment.

Eventually, the owners of Net-Tricity sold their business and in the subsequent months, the new owners mismanaged and the store closed. A tried and tested success, shut down after only a year in the black and led the way in the south for this business model. It was 1998 and I was determined to reopen that dream and make it mine.

As with life, I had a family to consider, remarried, moved, change career goals, and resumed trucking. Many years went by as I raised my kids, drove a truck across America, and day dreamed about opening my business. Fortunately, I started a side job repairing computers and consulting for friends in 1998. It was called N3tricity, sounding pretty much like the other company, and exclusive to my operation. It didn’t amount to much till later, as fate would have it. In 2004, my family moved to Oregon to be closer to our family roots.

In 2007, frustrated with serving others interests and making little to nothing for it, I went to visit the Eugene Chamber of Commerce. With a half baked idea and a good intention, I soon discovered that without a business plan, it would be hard to convince anyone to help me out. I hung up my dreams again and returned to my job. Determined to make some progress, I kept running into Business Plan Pro advertisements. I couldn’t afford it and settled with something less and waded through the mountain of information. With my laptop, hunched over my meal in a truck stop, I poured over countless articles online about writing a business plan. It was enough to discourage even a hard-core trucker.

In late 2008, I lost my job and faced the reality that I was quickly becoming too old to be a new hire, and the fear that everyone faces when re-entering the job market. My skills were dated and what worked years ago is no where good enough by today’s hiring standards. The recession made it worse, since it was now an employer favored climate, job seekers are not in demand and businesses can be picky. As early as January, I was quickly moving from interview to interview, all of them saying no, or no thank you. I began ramping up N3tricity’s services through craigslist, business cards, word of mouth, and even networking through the Web.

Now, volunteering my time in the community, church, and social groups, I took another look at business planning software, and came across your product. I still couldn’t afford it and knew if I was to move this project forward, now was the time. I began attending life coaching seminars, gained self confidence and reached out to the malls to find out what they thought about my idea. They loved it. I actually sat down and manually wrote my business plan out. It was done in about a week and I was exhausted. Determined to see N3tricity impact the local community during this recession, I visited SCORE, often. I learned about the give away and planned my entire week around insuring I was first in line.

Now, with it up and running, N3tricity business plan has gone through several revisions, using the resources, assets and outlines, I have a nearly complete plan. It has given me the renewed vision and focus to recommit to building this business. In a follow up meeting with SCORE advisors, the plan actually allows me to focus on what’s important, concentrate on weak areas of my vision, and use my time more wisely. Though it doesn’t remove the anxiety a start-up, it has relieved me of many of my obstacles by simply letting me build a bridge, one step at a time.

Today, N3tricity’s team is becoming a reality. The business plan continues to be a center piece for negotiations, that prospective candidates want to read it, look at the numbers and understand where, what, when, why, and who. Last week I secured my operations coordinator, a gentlemen with over 50 years in the entertainment industry, this would not have been possible without having this plan. Yesterday, I spoke someone I want to be on my IT staff, and he also looked at the business plan first. Later that day, I secured my CPA. Again, the business plan was the first thing they looked at.

With the help of the Chamber of Commerce, SCORE and Palo Alto Software, I am well on my way toward meeting with investors in Seattle and delivering a convincing business plan. There isn’t enough I can say to express my deepest thanks and appreciation for this opportunity you’ve provided to so many, including myself. The simple fact is that this tool is an essential component of any businesses ability to succeed. The resources within were immediately recognized, valued and quickly utilized to create momentum, polish the design, and forward my project to print.

I owe a lot my success to Wings Seminars, the process of moving me off the fence and back into my life, taking charge and moving myself towards my goals, through deliberate action and commitment to change. I owe Business Plan Pro, SCORE and Chamber of Commerce a huge round of applause and gratitude for being available, supportive and a constant reminder to me that success is about passion, drive and intention.

Thank you.

Kind Regards,

Richard Beers

So there: trucker, entrepreneur, and a really good writer of emails (that one is not edited at all, that’s the way I received it).

Thanks for asking. Our Oregon Small Business Boost day (business plan software free for Oregonians) yesterday went even better than expected. I like this summary from our local newspaper, which tagged it as “frenzy” on its front page this morning.

And you can click here for our summary of it.

We distributed 16,200 cards through 85 locations. By the next morning, we’d had people logging in and registering their new software from more than 170 different cities and towns in Oregon.

When some locations ran out of cards, we got them more units, even though we’d run out of the formal preprinted cards. We made do. As far as we know, no adult Oregonian who went to one of those locations to get Business Plan Pro for free was turned down.

That was hard. One location had 80 people waiting when they opened the doors. Several locations ran out within the first hour or two.

Was it worth it? Well, just for the skeptics, this was not a light version, hoping for an upgrade. It was Business Plan Pro Premier, the more expensive of the two versions we have. And it was not an end-of-market version either; it’s our latest, and just in case anybody notices a later version within the next few months, if that were to happen, it would be upgradable for free.

So was it worth it? I’m big on planning, objectives, and metrics. Here are some values:

• We won’t know for a while how many people actually used the software to create new businesses or manage existing businesses better. That will be hard to track. We will be asking people for stories.
• We know for damned sure that we’ve already helped a bunch of people think about their businesses better. And we’re ready to bet that the massive distribution of business plan software is going to end up helping small business, in general, in Oregon. Which means job and economic improvement.
• Our 85 distribution spots were organizations trying to help business, not commercial businesses: either chambers of commerce, Small Business Development Centers, economic development agencies, town halls, or similar organizations trying to help people do business. None of them had commercial motives. Calling attention to those locations is a good thing. It did our hearts proud to see crowds outside the SBDCs, for example.
• We met a lot of cool people, doing good work, within those organizations. That makes us very happy.

So we’ll see. It will be fun to watch. If you’re one of those who got a copy yesterday, keep us posted, okay?

During in the recession of 2001, I let 5 people go in a single day. Our sales were down, but we held on, for too long, hoping things would turn up in time to save the jobs. They didn’t.

Letting people go is the hardest thing a small business owner does.

But from that hard time I discovered something surprising. It was easier to let 5 people go, all on the same day, than to fire one person separately.

When it’s 5 at once, they don’t feel like they’ve failed. They don’t suffer that personal failure that comes when it’s one person at a time. They know it’s the economy.

When it’s one person, there’s no way around the sense of failure. No matter what the circumstances, or what the words, it hurts.

The hardest thing I’ve had to do was fire somebody who was honest and hard working but had to go anyhow, for good reasons. That was way harder than letting 5 people go on the same day.

We went from 36 people before the 2001 recession to 24 at the worst of it. Most of that decline was through attrition, but there was that one hard day.

I’m glad to say that Palo Alto Software seems to be weathering the current recession without laying off any employees, this time around. We’ve actually taken a couple of new people on. That’s a credit to the new management team, not to me.

What reminded me of this was Bob Sutton’s Layoffs: One Deep Cut Versus Lots of Little Cuts, on his blog. He refers there to a fascinating discussion, in video, of his recent Harvard Business Review article on Good Bosses in Bad Times.

Wow, this is fun. ‘CSI’ Writer Sued For Revenge Naming Show Characters After Real People, which I saw on Huffington Post.

How ironic is this:

LOS ANGELES — A couple sued a writer for the CBS show ‘CSI,’ claiming two shady characters on the show were named after them in revenge for a real estate deal gone bad.

Real estate agents Melinda and Scott Tamkin on Friday sued writer and producer Sarah Goldfinger for defamation and invasion-of-privacy. They are seeking $6 million in damages, alleging the show hurt their real estate business.”

This reminds me of a mirror facing a mirror, reflecting infinite images. How would you associate a fictional character with yourself? You’d identify traits. But if those are negative traits, why would you claim, in court, that they have similarity with you. Why not just satisfy yourself with coincidence of name, coincidence of appearance, and not identify with the fictional character at all? As it turns out, it went to production without even the name similarity:

The characters had the last name Tamkin in an original screenplay and Goldfinger helped cast actors who looked like the Tamkins, according to the lawsuit. The Tamkins claim the characters’ last name was changed to Tucker at the last minute, which they said was evidence Goldfinger borrowed details from their lives.

Why would the Tamkins, concerned with the possible parallel with these fictional villainous characters, proactively claim similarity? Shouldn’t they say, quietly and to themselves, “that’s not us”? But in this case, they filed suit to say that is us. That’s deep irony that I can’t resist. Aren’t they identifying themselves by what these fictional villains do? Aren’t they claiming those traits from fictional characters?

They say that it’s hurting their business. But they’re the ones doing the identifying with fictional characters. And now they’re on the news everywhere, and I’m even writing about them here. Does that hurt their business?

It’s a looking glass thing: curiouser and curiouser. Interesting irony.

(Image here from Flickr by Mikey aka DaSkinnyBlackMan in Iraq)

Wow. Take a look at an amazing collection of small business and startup stories at Intuit’s Story Gallery.

This is a collection of very short and easy-to-watch videos about different businesses. There are startups, nonprofits, lots of small personal businesses, some restaurants, some make-up artists, music lessons, dance, gyms, a real variety of different businesses.

What they’ve done is put together their stories, in short videos, in the hope of winning grants of up to $25,000 from Intuit.

People have been voting on these for several weeks. You can sort them according to the votes so far, to get the most inspirational, the most useful, and the funniest.

And if you register, which is free, to become a member of the Intuit site — I can’t think of a good reason not to — then you can also vote on your own favorites.

Warning: you can get lost in this. It’s only a few minutes per clip, but it’s hard to stop clicking for the next one.

I’ve posted before on this blog about The Black Swan: The Impact of the Highly Improbable, Nassim Nicholas Taleb’s powerful book, written before the big downturn, which some say (he wouldn’t) predicted it. 

With a beautifully written mix of history, stories, studies, and logic, Taleb shows how the big events are completely unpredictable. And that we kid ourselves, afterwards, trying to rationalize that they would have been, if we’d only figured out the signs. We want things to be logical, and, therefore, we could have predicted them. But we couldn’t have. That’s his point.

We define swans as white. Then we see a black swan. It cracks our world view.

In the book, Taleb talks about turkey logic. For 999 days of its life the turkey sees overwhelming evidence that the farmer is its best friend. Farmer feeds it, cares for it. And then, on the thousandth day, the axe. We’re like that.

So I was interested when I saw Taleb’s byline on this story in the Financial Times: Ten principles for a Black Swan-proof world. The title itself is ironic. There is no such thing as a black swan-proof world. Still, here’s his list (although just the list, with explanations cut to shreds; you should read the source): 

1. What is fragile should break early while it is still small.
2. No socialization of losses nor privatization of gains.
3. People who were driving a school bus blindfolded (and crashed it) should never be given a new bus.
4. Do not let someone making an “incentive” bonus manage a nuclear plant – or your financial risks .
5. Counter-balance complexity with simplicity. Complexity from globalisation and highly networked economic life needs to be countered by simplicity in financial products. Capitalism cannot avoid fads and bubbles: equity bubbles (as in 2000) have proved to be mild; debt bubbles are vicious.
6. Do not give children sticks of dynamite, even if they come with a warning.
7. Only Ponzi schemes should depend on confidence. Governments should never need to “restore confidence”.
8. Do not give an addict more drugs if he has withdrawal pains.
9. Citizens should not depend on financial assets or fallible “expert” advice for their retirement.
10. Make an omelette with the broken eggs. Let us move voluntarily into Capitalism 2.0 by helping what needs to be broken break on its own, converting debt into equity, marginalising the economics and business school establishments, shutting down the “Nobel” in economics, banning leveraged buy-outs, putting bankers where they belong, clawing back the bonuses of those who got us here, and teaching people to navigate a world with fewer certainties.

Again, that’s at: Ten principles for a Black Swan-proof world.