Newton Campos Home Page

This is the last post about the trip I did last year to the Silicon Valley with IE students.

During the last day of the visit we moved to San Francisco and had some different workshops with local professors, organizations that support “wanna-be” entrepreneurs and “wanna-be” entrepreneurs themselves. Just to make it clear, I call “wanna-be” entrepreneurs those people who want to get to the stage to be considered entrepreneurs. Those of you who follow my posts know that I just consider “entrepreneurs” people who exercise their theoretical (or Schumpeterian) function in society of finding new – and innovative – ways of trading something. People who are still trying to get there I call them just as “business people”.

San Francisco

In San Francisco we had the opportunity to meet the businessman Brandan Wallace, co-founder of Identified.com, a tool developed to compete with LinkedIn in a more junior – and facebook-like – job market (among other things, they found out that LinkedIn’s demographics achieves much more the senior profiles). Together with Prof. Blake Winchell of IE Business School, partner of Partner Ventures, and investor in the venture, they developed together some thoughts I not only share with them but would like also to debate with you:

1) In the market, usually, most of the people think that the entrepreneur (or the “wanna-be” entrepreneur, under my perspective) is the passionate guardian of the venture while the investor is “barely” the financial-minded part of the formula. In fact, quite often, the situation is the opposite. Think about it: there are a lot of investors out there with pretty much limited resources (let’s say, few millions). If they will put their money in something, they do have to believe in it, be passionate about it.

I met an investor in Brazil once that built his initial “venture capital” by selling part of the company he helped to build throughout some 15+ years of hard work. Me (and the local market – friends, press, etc) estimated he raised some 10 to 20 million dollars in that operation. He was explaining to me that he had only about 10 “shots” in his gun. So, he wanted ideas from IE students to consider investing on them. Imagine the emotional cost for this guy in believing in those 10 ideas. What if none of them worked? His whole fortune would be gone…

2) The myth of the great idea: Most of the “wanna-be” entrepreneurs think that their key contribution to the project is the “wonderful” great idea they had. I tell you something: the idea is not as important as people think. There are A LOT of hard work, appropriate networking connections and accumulation of positive outcomes from business decisions involved before the original idea become something really hot.

With years of accumulated experience, Prof. Blake estimates that nowadays the idea is responsible for about 5% of the success of a venture while proper execution about 95%. I not only strongly agree with him but also think that the tendency is that this proportion will considerably change in favor of execution as ideas become more and more available worldwide. Ideas will only keep relevance when deeply connected to “hard” intellectual property (patents) such as those for new materials.

3) In fact, “pivot” became the magical word of the moment in California. According to the Wiktionary, the word “pivot” comes from the French and Italian word for a very specific tool, usually made of metal, that allow us “to turn something using the same point of support”, like the base that allow the arm of a LP Player to move around (and reach different ideas):

A way of seeing the "famous" pivot

According to this way of thinking, ventures can turn mediocre ideas into billion-dollar companies. To get more information about this interest trend read Eridc Ries book “The Lean Startup”. I have not read yet it sounds interesting.

I had so may other hints from this last day but I do not want to make this post too long. Let’s get back to these issues soon…

One of the things that annoy me most in our days is this compulsion for economic growth everywhere at any time and cost. I was having lunch with an IE alumnus last week and we entered in those typical talks about career development based on countries’ and market’s growth.

This thing was in the table for discussion because this alumnus was considering moving with his wife to Brazil just like many other current MBA students and alumni worldwide. Why are they considering it? Obviously because of the economic boom the country is facing and foreseeing. Most of them know that whoever gets there first, have an enhanced possibility to succeed professionally in the medium or long term. My argument to question this perception is that Brazil, just like any other country in the world, won’t grow forever (especially when anyone can see that most of the assets are already priced at international levels). The issue of growing or not growing per se couldn’t be sufficient, during these times we live, to make somebody consider living in another country.

But getting back to the issue of growth itself, how people expect the world to be when everybody gets their basic things for living? Japan, Europe and the United States are already starting to face this challenge. How many more cars an American must have to feel happy? How many sofas, beds and TVs? How many more bottles of good wine or luxury bags Europeans need to be happy? When the world population starts to decline by the second half of this century, there will be far more houses than people to live in them. Water is there, food is there, roads are there, schools are there, and almost everything is basically available to large parts of the population in these so-called developed countries (although the concept of “almost everything” obviously changes from region to region and from people to people).

Venus Project: example of a town

But this is not the problem. The problem is to see that there aren’t many people studying real alternatives to this critical dead-end street we are moving toward. Initiatives like the Venus Project are exciting but in my opinion too unrealistic to be implemented in a large scale yet in this century. And we have to hurry up if we don’t want to see Karl Marx‘s predictions on “capitalism consuming itself” to happen. For me, together with Max Weber, Marx was one of the greatest people in “recent” history that really spent time to understand what capitalism was about. Whatever people did in his name afterwards (in Cuba, Russia, China, Venezuela, etc) simply did not represent his thoughts neither valid attempts to put in place improved human social, political and economic structures at all, in my opinion.

I think a more realistic approach for us to start solving this problem is not only via pressures for more sustainable development but mainly through the reconceptualization of overall governance indicators for private and public organizations. A new accounting science has to emerge soon, one that not only measures physical assets but mainly and more important things that are important for people and ecosystems to live in peace.