Nathan Lustig

The Entrepreneurial Push

Category : Entrepreneurship, Top
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Why do people start startups? To solve a problem or fill a need?  To be their own boss?  To escape the 9-5?   To make gobs of money? The answer is different for everyone, but its probably a combination of a few of these factors.  Lots of people I talk to have great ideas, but don’t end up taking the next step even though they would like to make money, be their own boss and escape their 9-5 job.  How come?

I’ve been talking with other entrepreneurs and doing a bunch of thinking about this question for the past few months, but had not completely put it into words until I read  Paul Graham‘s latest post about why he started Y Combinator, an innovative investment fund that gives techies mentoring, an office and small amounts of funding in exchange for small pieces of equity.

The most common reasons for people not starting their own companies are that they think it will be harder than it actually is, they are risk averse or are worried about capital.  For some people, these are real reasons not to start a business, but for many people who have good ideas, they are more excuses and rationalizations than reasons.  They simply do not know where to start or how to move forward with their plans.

This is not a personal failing on the part of people with good ideas who have not moved forward yet.  It is a failing of high schools and colleges for not teaching them the necessary skills and punishing creativity.  It is the failing of entrepreneurs who have been successful for not showing others the entrepreneurial process and its the failing of a society that makes entrepreneurship seem much more dangerous, risky and hard to do than it really is.  Potential entrepreneurs have to get past objections from family and friends who ask things like “why don’t you work for a real company ” or my personal favorite  “when are you going to get a real job.”

This isn’t to say that starting a company is easy and that everyone should do it.  It’s not easy and some people aren’t cut out to be entrepreneurs.  It takes hard work, perseverance and the ability to motivate yourself even when you run into obstacles, but it’s not as hard as people think.  Here is why Paul Graham started Y Combinator:

The real reason we started Y Combinator is one probably only a hacker would understand. We did it because it seems such a great hack. There are thousands of smart people who could start companies and don’t, and with a relatively small amount of force applied at just the right place, we can spring on the world a stream of new startups that might otherwise not have existed.

In a way this is virtuous, because I think startups are a good thing. But really what motivates us is the completely amoral desire that would motivate any hacker who looked at some complex device and realized that with a tiny tweak he could make it run more efficiently. In this case, the device is the world’s economy, which fortunately happens to be open source.

That “relatively small amount of force applied at just the right place” Graham writes about is the Entrepreneurial Push.

I have been trying to give the Entrepreneurial Push to as many people as possible, without having a name for it.  I think it’s important for people who have started companies to share their experiences with others to set an example that it can be done.  I try to use my blog and consultancy to show people that you can be an entrepreneur without a business degree, tons of startup cash and a team in place.  Whenever someone comes to me with an idea for a business, I try to encourage them to start going down the startup path because once they start to write their business plan, they are much more likely to actually start.

While we all don’t have the wealth of resources (time, money and experience) that Paul Graham and Y Combinator have, I think that entrepreneurs should go out of their way to give as many people the Entrepreneurial Push.   I started Capital Entrepreneurs, a network of young, Madison-based Entrepreneurs, partially in hopes that the group would influence more UW students to start companies while  in school or see it as a viable option after graduation.

What should entrepreneurs do to give others the entrepreneurial push that they need to get started?  Here’s a short list of ideas, but please comment with any other ideas or strategies that you have.

  • Advocate for entrepreneurship to make small business and startups more visible in other places besides California and Boston.
  • Give back by helping others who are just starting out to eliminate the “cloud of apprehension” surrounding entrepreneurship.
  • Join local entrepreneur clubs.
  • Speak in high school and college classes.

These small entrepreneurial pushes help smart people who are thinking about start their own companies actually start. They could create amazing companies that could change their lives or even the world.

Note: If you are an entrepreneur in Madison and are interested in joining Capital Entrepreneurs, shoot me an email.

How To “Stickk” to Your Goals

Category : Personal Thoughts
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Have you ever set a goal that you wanted to accomplish, only to give up after a few days or weeks?  How about a New Years resolution?  If you are like me, your probably set a bunch of different goals each year, but are only successful on attaining a small percentage.

Most of my goals are not huge.  For example, this year, I wanted to make sure that I traveled more frequently, played more soccer, read more books and learned how to cook at least one new dish per month, to name a few.  I have done some of them, but all of them and wanted to try to find ways to give myself incentives to actually complete them.  I was reading the Freakonomics blog the other day and remembered an old post about a new website designed to help you follow through.

StickK.com, a website founded by Freakonomics contributor by Ian Ayres and two of his Yale collegues, allows you to set a goal, a completion date and puts some teeth behind failing to complete your goal.  They came up with a “commitment contract” to help make sure that you follow through on your goal.  From their site:

Entirely unique to each person, a Commitment Contract obliges you to achieve your goal within a particular time-frame. Not only are you challenging yourself by saying “Hey, I can do this,” you’re also putting your reputation at stake. If you are unsuccessful, we’ll let your friends know about it.

Oh but wait, there’s more…

Sometimes losing face with your friends might not be enough to keep you on track. So, what is the one thing no one can stand to part with? You guessed it! Cold hard cash.

As a true test of your commitment, stickK will let you put your money on the line for any Commitment Contract. Achieve your goal and you don´t pay a thing (and you´re much happier than before, aren´t you?).

But if you aren’t successful, you forfeit your money to a charity, an anti-charity or even that neighbor who keeps stealing your newspaper.

Adding money into the situation is a really interesting idea, but the idea of an “anti-charity” is what makes this website unique and innovative.  For example, if you are a hardcore Republican and you want to lose 15 pounds, you can make your contract say that you will donate $100 to a gun control advocacy if you do not achieve your goal.  The anti-charity adds so much added motivation for you to complete your goal.  If you fail, you are not only letting yourself down and spending money, but you are helping a cause that you do not like.

I decided to try it out today to see if it works and set up an account.  They only have a few anti-charities, so I used the “friend or foe” option.  Since I am a proud UW grad and a huge Badger sports fan, if I do not achieve my goal, I will donate $200 to the University of Michigan Athletic Department.  I will keep you updated if I accomplish my goal or if the University of Michigan Athletic Department will get $200 of my hard earned money.

Do you think StickK is a good idea?  What anti-charity would you donate to?

Travelogue: London

Category : Travel
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Note: I took a two week trip to Ireland, the Netherlands and England.  This is the third and final post in a short series about where I went, along with observations about how Europe and the UK compare to the US.  The first post is here and the second is here.

One of the main purposes of my trip was to visit my friend Beata who I met in the dorms my freshman year at Wisconsin.  After she graduated, she decided she wanted to see the world.  Instead of doing what most people would do, taking a trip for a few weeks or a month, Beata decided to live different places around the world, while getting jobs in each country.  Her first stop was London, where she got a flat and found two jobs, one as a tour guide and one as bartender at her local pub.  It takes guts to leave your friends and family behind and move to a new country where you do not know anyone.  I can’t put into words how much I admire her for deciding to make the move (and giving me a free place to stay when I want to travel!) and gives me inspiration to have the guts to try something similar some day.

Pat and I took the train from Amsterdam to London, traveling through The Hauge, Brussels, Lille and Calais before taking the chunnel to England.  It was amazing how quickly we were through the chunnel.  All of the sudden it got dark and then it seemed like 10 minutes later, it was light again and we were on the other side, off the continent.  The entire ride took a little under four hours on the high speed train.

We met Beata at her pub, right down the street from her flat and got to meet some of her friends and a few of the regulars.  Everyone was incredibly nice and we met people from South Africa, China, Ireland and of course England.  The most interesting conversation was with a guy from China who was living in London working for a large investment bank.  We talked about all sorts of things, but what struck me was how similar his attitudes were to my own, even on politics.  He said that he hoped that China would have a democracy at some point, but he did not think he could change anything, so why fight the system.  He also talked about the pressure that children in China face to be successful.  Because of the one child policy, he said that only children are under intense pressure to succeed because the parents only have one chance to see a successful child.  Obviously, since not every child can be successful, the kids that do not do as well have lots of problems adjusting to adulthood.

Over the next three days, Pat and I went on all of Beata’s walking tours of London and saw most of the touristy parts of the city.   We got to meet all of Beata’s friends from all over the world and everyone was incredibly nice to us.  We went to Abbey Road and took the obligatory picture walking across the crosswalk, Camden and walked all over north London.  We saw Oliver the last night we were there and ate incredible Indian food.  My favorite place was Brick Lane, an older area with lots of Indian restaurants, or curry shops to Londoners, pubs, bars and coffee shops.  On Sunday, there was a market with every type of cuisine from around the world packed with locals.  It turned out that it was Peruvian Independence Day, so there was a live Peruvian band playing outside of one bar.  We spent the day wandering around and seeing the city.  All in all, it was a relaxing end to a great trip.

The only part of London that I did not like was the ubiquitous use of CCTV, or Closed Circuit Television, that covers pretty much all of London.  Before I had gone to London, I could not completely relate to books and movies like 1984, Brave New World, Children of Men and V for Vendetta because the US does not have much CCTV, traffic cameras or nearly as many do not enter signs.  It was amazing to see how many places were “protected” by CCTV: the tube and tube stations, pubs, restaurants, sidewalks, roads and many other places.  Apparently, the average Londoner is captured on CCTV over 300 times per day.  While I never felt like I was any less free than in the US because of the use of CCTV, it was a little unsettling to have all of my movement recorded during my stay in London.  I can see how authors (and British citizens) in the UK could relate to surveillance themes in their books and movies.  I am happy that the US does not have as many cameras, but it seems that we are moving in that direction.  Chicago and its suburbs have tons of red light cameras, as does Phoenix.  These cameras record anyone who runs red lights and sends tickets in the mail.  We are still a long way off from being recorded 300 times per day, but it could be a slippery slope.  All in all, London was a fantastic end to a great trip to end the summer.

Nobody Voted for President Pelosi

Category : Political Science & Economics
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That is a subheading from the August 1st Economist article called Crunch Time: A difficult Summer for the White House and it sums up how I feel about the Obama Administration so far.  I did not vote for him (or McCain), but I had hoped that he would live up to his “post-partisan” rhetoric during his campaign and rise above the political fray.  I thought there was a chance that he would be able to stop the “gotcha political culture” and really focus on big problems.  So far, the Democrats’ plans have not lived up to their billing.  The Economist explains it well:

Worse, the plans have usually ended up running away from tough decisions. With the stimulus bill the flaws were forgivable: there was an urgent need to give the economy a boost. But the House of Representatives has produced a cap-and-trade bill that is protectionist, riddled with exemptions and which gives away the permits that are supposed to force carbon-emitters to change their ways. There is a growing danger that this bill will not be passed through the Senate and reconciled with the House version in time for the Copenhagen summit on climate change in December.

With health care, Mr Obama’s preference for vague statements of principle rather than detailed specification has led to a House proposal that loads taxes onto the rich, sets up a state-run insurance scheme that many fear will put private-sector providers out of business and fails to contain, let alone reverse, the escalating costs of treatment while adding an expensive requirement that everyone have health insurance, with large subsidies where needed. Barely any Republicans could support this proposal as it stands. Frantic efforts to save the reform effort are under way in the Senate, but it is distinctly odd to note that the president’s signature policy is now being devised for him by a gang of six senators. Financial regulation is also stuck.

President Obama has allowed the Democrats in Congress, especially the House, to run the country, outsourcing the details, and arguably the Presidency, to Nancy Pelosi and Harry Reid.  This is not what most centrists and even some Democrats voted for.  Right now, Obama is risking his Presidency by allowing the rest of his party to trot him out to support poorly thought out, unpopular legislation.

On health care, Obama has allowed the Democrats in Congress to take the easy way out (and protect their supporters): soaking the rich, refusing to touch tort reform (trial lawyers) and ruling out taxing health benefits (unions).  He has made deals with Big Pharma and the insurance companies that do not address the rising costs of health care.  These plans only try to bring the uninsured into the current system.  While a noble goal, it could well bankrupt the country.  Instead of truly trying to rise above partisan politics and making touch decisions to both cover all Americans and stem the rising costs of health care, Obama has outsourced his responsibilities and is risking his presidency.  Until yesterday, Obama was silent when Democrats bashed real concerns about the competing plans voiced by Americans, causing his approval ratings to sink.

The Republicans are no better and possibly worse.  Instead of trying to reach across the aisle or propose any solutions of their own, they are simply saying “no.”  Its almost like the end of Rome when out of touch, rich, elites did everything they could to stay in power at the expense of the rest of the population.  Both sides seem out of touch and angry whenever there is disagreement.  Obama would be well served to tell Pelosi and Reid who’s boss and come forward with a detail oriented, innovative plan that cuts across constituencies and addresses both cutting costs and covering everyone.

What do you think?  Do you agree that Obama has outsourced the tough decision to Congress?  Should he confront Pelosi/Reid?