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The latest news on Entrepreneurship from Business Insider

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    woman taking notes

    • One the greatest challenges for leaders today is keeping up with the constantly changing business landscape.
    • In this post, serial entrepreneur Faisal Hoque flags the trends that professionals in every field will have to adjust to, and how to do it.
    • Leaders have to think digital, embrace design thinking, and read every day to keep up.

    The modern economy — local, domestic, and global — operates in a state of accelerating change, driven by increasing and changing competition.

    This is due in part to easier market entry created by advances in technology and communications infrastructure, restructuring of product sourcing arrangements, the growing availability and changing costs of global labor pools, the continuous restructuring of capital markets, and the emergence of new economic powers.

    One of the greatest challenges that businesses leaders face is the ability to quickly respond to this constantly accelerating change and to act as the catalyst of organizational adaptation.

    Whether you’re in a leadership role, focused on innovation, running your own business, or all of the above, here are six traits and trends that will impact your work today and for years to come:

    1. Reading a lot will keep you open to change

    Bill Gates, Barack Obama, and Warren Buffett all put ample time on their iPads and/or with physical books and publications, and you should, too.

    Reading can force our minds to attract, retain, and cultivate new knowledge and skills. Success can quickly inflate egos and cause isolation of leadership, but reading can help break down those walls. Leaders who read can get into continuous learning loops that allow them be more empathetic and collaborative, rather than commanding and controlling.

    2. Remove 'end points' around innovation

    When was the last time your cable company introduced a groundbreaking, innovative product? Or your electric company rolled out a pioneering new service? The answer is probably "never," and that’s because competition spawns innovation.

    In the absence of a competitor knocking on customers’ doors, trying to sell them a newer, better, and more efficient product, the drive to innovate dwindles.

    Innovation includes everything—how you take your product to market, how you serve your customer, and how you come up with effective pricing. All of these activities go well beyond the very narrow "cocktail napkin" approach to innovation. By adopting this mindset, companies can become more competitive, customer-friendly, and profitable. The latter is a particularly important point in industries where thin margins and higher levels of competition are challenging firms to find more innovative ways to generate revenues.

    3. Think, act, and do digital

    Technological transformations will continue to reshape the way the business world is organized. As information becomes more plentiful and less centralized, more organizations are likely to decentralize, too, in order to respond swiftly to it all.

    As I wrote in a recent article, we are being inundated by a new wave of challenges and opportunities as the planet becomes increasingly connected.

    Today technologies have wildly different fates:

    • Anything that can be digitized will be
    • Anything that can go wireless will
    • Anything that can get smaller will
    • Information will move more freely

    Digital transformation can be defined as a process whereby an organization shifts their business models, processes, and organizational culture with digital technologies to adapt to changing customer behaviors.

    4. Apply AI and machine learning

    Nebulous and complicated by nature, AI and the movements it fuels all require a highly specialized skill set. For it to work, people must connect the dots between AI and how it can be effectively applied in the private or public sector.

    That’s not always easy to do — and the very notion of it may be scary to some who think that the day when machines "take over" isn’t that far off — but the positive results are already evident.

    As AI and machine learning continue to evolve and mature, it’s time for every company to start experimenting with the many ways these technologies can help organizations work smarter, better, and faster.

    5. Embrace design thinking

    Contrary to the popular belief that design thinking is only used for a new product or service, existing business processes greatly benefit from design thinking. They usually need to be reinvented the most.

    Although there are many models and frameworks available for applying design thinking, let’s establish some basic concepts:

    • Research — Do extensive cross-industry market research, both qualitative and quantitative, to understand current and changing customer behavior.
    • Define — Define the problem that needs solving.
    • Ideate — Consider many options from many perspectives, disciplines, and sources. Design thinking requires multiple iterations of idea generation before picking the ultimate winning idea.
    • Execute — Develop rapid prototypes to gather feedback from stakeholders. Once the final solution is refined and approved, an execution plan is then produced to move forward.

    Design thinking is not just about creativity, as complex problem solving requires a collaborative approach incorporating all parts of an organization — from internal resources, to partners, and customers.

    6. Remember, empathy always pays dividends

    For communication to get through on all sides, we have to be clear about what we want from each other. As a leader, I try especially hard to remain approachable and keep an open dialogue flowing. It’s difficult to keep everyone motivated, asking questions, and sharing their concerns when a lot is changing. But getting it right just means doubling down on the type of empathy leaders love to talk about under much steadier conditions.

    This means not just clearly articulating our message but also listening actively—without bias or judgment and with a real willingness to consider different perspectives. It’s about trading messages respectfully and accurately, not just delivering them.

    Leaders may feel their job is to reassure their teams—to talk more than they’re used to. But I’ve found listening to be even more important. When I’m actively listening, I’ll hear genuine concerns and clear a space for talking level-headedly about how to cope with them together.

    Serial entrepreneur Faisal Hoque is the founder of Shadoka, which enables aspirations to lead, innovate, and transform with its accelerators and solutions. He is the author of "Everything Connects: How to Transform and Lead in the Age of Creativity, Innovation, and Sustainability" (McGraw-Hill) and other books. Copyright (c) 2018 by Faisal Hoque. All rights reserved. Follow him on Twitter @faisal_hoque.

    SEE ALSO: 11 successful entrepreneurs and execs reveal how they use their downtime to be more successful

    Join the conversation about this story »

    NOW WATCH: A diehard Mac user switches to PC


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    BrainzPowerDayintheLife (6 of 19)

    • Andrew Kozlovski, a 21-year-old student at the University of Southern California, runs a business selling cognitive-enhancement supplements through his company, Brainz Power.
    • He says Brainz Power generates $6,000 to $10,000 a month, primarily driven by marketing on Instagram.
    • Kozlovski wakes up at 5 a.m. every day and splits his time between working on the business and attending class. He rarely socializes outside of meals or the gym.

    Unlike most college students, Andrew Kozlovski doesn't leave much time for socializing. He's too busy updating Instagram. Literally.

    Kozlovski, 21, has built a business selling nootropic supplements, primarily by marketing on social media.

    Kozlovski was finishing up his first year at University of Southern California's Marshall School of Business when he heard about students taking Adderall or other drugs intended for people with ADHD to finish their schoolwork. When he found out how dangerous the drugs were, he realized there could be a market for a safer alternative.

    As a star swimmer in high school, Kozlovski had taken all kinds of natural supplements, so he started compiling a list of those said to boost cognitive performance. Then he found a lab near his hometown of Atlanta that was licensed by the Food and Drug Administration and willing to run a small order of pills combining the various supplements; he'd pay using the $500 he had saved up over the year.

    While supplements are legal and many people swear by their effects, evidence about their benefits are murky, and US poison-control centers have received about 275,000 reports of people reacting badly to them over the past two decades. The supplements industry, estimated to be worth as much as $37 billion a year, is not regulated by the FDA.

    But the burgeoning demand for supplements presented an opportunity for Kozlovski, who has built a social-media following selling a supplement called Brainz Power. Today, he has nearly a dozen accounts — with followers in the hundreds of thousands— where he posts aspirational content for budding entrepreneurs, fitness nuts, fellow students, and people who just like looking at pictures of cool cars and California sunrises.

    He told Business Insider that posting and marketing on social media had turned into consistent sales of Brainz Power, generating $6,000 to $10,000 a month. He first uses the money to pay his college tuition and living expenses in downtown Los Angeles; everything else goes back into the business.

    "I realized that if I wanted to be a successful businessman, I needed to start now," Kozlovski said. "I thought I'll learn a lot more from actually running a business while in business school than waiting four years to get started."

    But running a business while attending school isn't easy. Here's what a typical day is like for Kozlovski.

    SEE ALSO: These nomads spend nearly their entire lives at sea — but they could be the last generation to do so

    Kozlovski wakes up at 5 a.m. every day to answer emails and fulfill orders for Brainz Power. The lab and the fulfillment center he works with are in Georgia, so they are already open by the time he wakes up in California.



    After powering through emails, Kozlovski likes to grab a coffee or a smoothie and head to the gym. Usually, a friend will meet him there. "My friends are just as busy as me, so we've learned to use everyday things like the gym to catch up," he said. "The 30 seconds or minute between sets is perfect to catch up on life."



    Kozlovski gets back from the gym around 7 a.m., then films his first vlog of the day. He has an extensive presence on YouTube and Instagram to market Brainz Power and build his brand as a young entrepreneur. He said that before he started marketing on Instagram via his brand pages and ads, nothing was generating sales.



    See the rest of the story at Business Insider

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    seattle washington

    • U.S. News & World Report just released its annual best states ranking.
    • The rate of economic growth, the employment rate, and the rate of new business formation were all taken into account.
    • The list of the best economies in the US is topped by Colorado, Utah, and Washington.


    If you're considering a move across the country, you'll definitely want to know where the economy is strongest — and weakest.

    U.S. News & World Report just released its annual best states ranking, and they looked partly at economic factors. Each state was ranked on three economic indicators:

    • Growth: The GDP growth rate, average net migration (people moving into and out of the state) between 2013 and 2016, and growth of the young population between 2013 and 2016.
    • Employment: The annual growth rate of nonfarm jobs between 2013 and 2016, the percentage of state residents age 16 and older who participated in the labor force, and the December 2017 unemployment rate.
    • Business: The rate at which new businesses were formed between 2015 and 2017, total state and local taxes as a percent of total state income, the average number of patents granted between 2014 and 2016 per million residents, the number of top company headquarters per million residents in 2016, and venture capital dollars invested per $1,000 of nominal state gross domestic product in 2016.

    Combining growth (50%), employment (30%), and business (20%), U.S. News & World Report put together their list of the best economies in the US. Colorado took the cake, followed by Utah and Washington.

    Read on for the list of the 19 US states with the best economies — and see how it compares to last year's.

    SEE ALSO: 27 cities around the world where expats say there are more than enough jobs to go around

    DON'T MISS: Silicon Valley is so expensive that people who make $400,000 think they're middle-class — here's what the middle class actually is in the 25 largest US cities

    19. North Dakota

    Population0.76 million

    Growth rank: 20

    Employment rank: 2

    Business environment rank: 42



    18. North Carolina

    Population: 10.15 million

    Growth rank: 15

    Employment rank: 28

    Business environment rank: 21



    17. Iowa

    Population: 3.13 million

    Growth rank: 17

    Employment rank: 8

    Business environment rank: 46



    See the rest of the story at Business Insider

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    advice from women 2_BI Graphics

    • Advice on how to find a job or start a business is thick on the ground. But who knows better than people who have done it?
    • Business Insider asked 20 professional women for their best advice on life and work.
    • Responses included how best to manage time, the importance of a support system, and why it's better to try and fail than never to try at all.

    If you're looking for advice on how to find a job, start a business, or feel better about how much you accomplish every day, you've come to the right place.

    Below, entrepreneurs, execs, and professionals across all levels share the advice they've learned, earned, and want to pass on to people at any stage.

    From Deloitte Consulting CEO Janet Foutty's advice on taking credit for your work, to AUrate New York co-CEO Bouchra Ezzahraoui's thoughts on being unapologetic about your goals, to SoulPowered CEO Sarah Kaler's insights on the importance of authenticity in every aspect of your life, these women know what they're talking about.

    Read on for their best advice.

    SEE ALSO: The 25 business schools in America that are most admired, most selective, and give graduates the biggest step up

    Give yourself credit for your accomplishments.

    "Give yourself credit for your accomplishments, and when someone congratulates you, accept the acknowledgement for the work you did. Too often, I hear my female colleagues say, 'Thanks, it was a team effort,' instead of 'Thanks, I worked hard on this.'

    "It's like we're all Meryl Streep at the Oscars: 'Oh, oh, thank you. I don't deserve this.' Yes, you do, Meryl! You're amazing! If we can't communicate our accomplishments, then we can't advocate for ourselves — for that position, that promotion, that pay-grade. If we see ourselves as leaders, the world will see us that way too."

    —Janet Foutty, chairman and CEO, Deloitte Consulting



    Don't give up your life for a job.

    "You can do an excellent job without giving up all of your spare time and jumping through a million hoops. The idea that the longer you work, the better job you do or the more you deserve a pay rise or promotion, is outdated.

    "Research shows that we work better and produce stronger work when we work less and have regular breaks. Don't give up your life for a job."

    —Danielle Mowbray, Evolved Digital



    First thought, best thought.

    "Women are urged so often to suppress impulses while men are praised for quick, instinctive, decisive actions — whether or not they succeed. I've faced adversity and have also made my share of off-the-cuff errors in judgment.

    "The best advice I could offer any women is 'first thought, best thought,' meaning trust your instincts before fear and doubt can kick in."

    —Ariane Daguin, CEO and cofounder, D’Artagnan



    See the rest of the story at Business Insider

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    Ryan Caldbeck Headshot

    • Silicon Valley CEO Ryan Caldbeck, the author, recently shared a series of charts on Twitter.
    • The charts revealed the most powerful lessons he's learned in his career.
    • The lessons range from the personal to the professional.

     

    Most CEOs would happily give you advice about raising capital, company culture, and personal sanity. I could talk your ear off on these topics, but have instead attempted to consolidated the lessons I've learned as a CEO into a series of x-y graphs. Enjoy. 

    SEE ALSO: This Ukrainian startup has its own Apple museum filled with rare gadgets — and we got a private tour

    The arrogance in VC — especially from the smaller funds — is kind of crazy to me. And offensive. (AuM = Assets under Management or size of fund.)



    If the VC is into you they will email ... right away. Meaning RIGHT away.



    Seeing a huge trend in tech over the past 2-3 years of founders getting profile pieces for themselves to build their personal brand names. Often disconnected with the brand of the company. Basically just a hedge for them for their next job.



    See the rest of the story at Business Insider

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    Jeff Bezos

    • Amazon CEO Jeff Bezos told his parents he was leaving Wall Street to start selling books on the internet in the mid-90s, according to "The Everything Store" by Brad Stone.
    • At first, his parents were skeptical. Soon after, they invested $100,000 in the company.
    • Today, Bezos' parents run the Bezos Family Foundation, a philanthropic organization.


    "What do you mean, you are going to sell books over the internet?"

    That was Mike Bezos' — Jeff Bezos' father — first reaction when Jeff Bezos called to tell his parents about his plans to launch Amazon in the mid-90s.

    Brad Stone describes the situation in his 2013 book, "The Everything Store."

    According to Stone, Mike and Jackie Bezos — Jeff Bezos' mother — had been in Colombia for three years, where Mike was working as a petroleum engineer for Exxon. During that time, they had used a now-defunct online service called Prodigy to keep in touch with family members — meaning they weren't fearful of new technologies.

    Mike Bezos told Stone that their hesitancy was more about Jeff Bezos leaving a cushy gig on Wall Street to pursue something much riskier. (Though perhaps they shouldn't have been surprised, given that Bezos displayed an entrepreneurial bent even in middle school.)

    Stone writes that Jackie Bezos advised Jeff Bezos to work on his new venture on the side. Jeff Bezos reportedly told her, "No, things are changing fast," and, "I need to move quickly."

    It didn't take long for Jeff Bezos to get his parents on board. According to Stone, the couple invested $100,000 in Amazon in 1995 — even though Jeff Bezos had warned them there was a 70% chance they'd never see that money again.

    Mike Bezos told Stone that, even though they'd seen the business plan, they didn't exactly understand it. "As corny as it sounds, we were betting on Jeff," Mike Bezos said.

    Today, Jackie and Mike Bezos are the founders, and the president and vice-president, of the Bezos Family Foundation. According to its website, the foundation focuses on improving education and life outcomes for children.

    SEE ALSO: Jeff Bezos was profiled under a pseudonym at 12 years old — and he was a remarkable kid

    Join the conversation about this story »

    NOW WATCH: Jeff Bezos reportedly just dropped $23 million on the biggest home in Washington, DC — see inside


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    cat leblanc headshot

    • A business plan seems like a given for a successful startup.
    • But entrepreneur Cat LeBlanc started her company without a business plan, and she's convinced that for many people, that's the best way to do it.
    • If you're trying to raise outside funding from investors, however, you're the exception — that's the case in which a business plan is needed.

    Over four years ago I left my highly successful (read: stressful) job in investment banking to start my own coaching business where I help future online business owners find the right business idea, get paying clients quickly, and build a business foundation that scales.

    Eighteen months into the business, I had my first $20,000 month. Since then, the business has earned up to $24,000 a month.

    Little secret: I didn’t make a business plan, and you probably don’t need to, either.

    If you are raising capital for a startup, potential investors will need to see a plan — but if you are aiming not to borrow money, a plan may not provide any advantage at all.

    When I began my business I purposely didn’t start by creating a complex business plan. I knew that in the fast-paced online market I was entering, I would only get a true sense of the numbers once I tested the idea in reality, not on paper.

    Instead of a traditional plan, I took more of an experimental approach and created what I now call ‘a concept to test.’

    A concept to test includes:

    • The idea
    • The value proposition to clients
    • An offer
    • A minimal amount of marketing to test the concept

    This is just enough to put an idea to market and see if it works. No more, no less.

    My initial concept was based on a mix of my talent and people’s needs. I realized that people needed help with business ideas; specifically people who wanted to start online businesses. I saw that they were confused and overwhelmed and didn’t know where to begin. I knew that if I could get some time with them, to guide them through my idea generating process, that I would be able to help.

    I fleshed out this concept by clarifying exactly who my client was, created the messaging that would speak to them (my value proposition) and designed offers that would appeal to their needs.

    To test this concept I first posted in a Facebook Group full of my ideal clients to gauge interest. Immediately I got my first US$197 sale. I was then able to grow my business very quickly from there.

    What I learned from this experience was that starting your business, or launching a new product, does not have to be as complicated as we tend to think. It can, in fact, be really simple. All that matters is that:

    1. You get in front of the people who need your help, and
    2.  They can see the value in your help.

    Now, whenever I want to create a new product or service, I take the same approach. I design a concept to test and see how the market reacts. In the case that it doesn’t sell at first, I am able to make adjustments relatively easily and test again. Doing this means I can stay flexible and launch products at low cost rather than going through a complex planning and build procedure each time.

    This year I tested a new iteration of a product that hadn’t landed in the past: a program now called ‘Ramp Up.’ I didn’t invest months of my time, thousands of dollars, or do a gigantic product launch. Instead, I reached out to a few people I thought might be interested in it.

    I sent them some basic marketing material to see if they would like to sign up. They did. I got the first few people into the program. I then created the first months of material and just started growing from there.

    In this way I was able to build the revenue stream flexibly and there was close to zero loss when the first version didn’t work.

    No complex business plan in sight.

    It turns out that there is research to back up this no-plan approach.

    Julian Lange, Entrepreneurship Professor at Babson College, with his colleagues studied 457 new ventures to find out the effectiveness of business plans.

    The conclusion? "There is no difference in the operating performance of businesses started with or without written business plans," Lange found.

    This doesn’t mean that there’s no value in planning. Planning can help with the thought process and can help you consider different aspects of the business. But planning in advance doesn’t appear to help once you are up and running and dealing with the mechanics of your business in the real world.

    I believe this is because, when you create a business plan before you’ve opened your business, most of your data is hypothetical. You truly don’t know how many units you will sell or exactly what your costs will be until you have made the sales and have delivered.

    Once you have the business or revenue stream up and running, you have a much truer sense of the numbers and can then plan and make projections accordingly.

    Cat LeBlanc helps future online business owners find the right business idea, get paying clients quickly and build a business foundation that scales. You can watch her free Zero To Paying Clients Masterclass to get more details on the testing process. Follow her on Twitter:@catjleblanc.

    SEE ALSO: I built an online business that earns up to $24,000 a month — here's the best advice I can give you

    Join the conversation about this story »

    NOW WATCH: HGTV stars who went from renovating houses to running a multimedia empire explain the keys to a great business plan


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    Mandela Schumacher-Hodge Dixon, founder and CEO of Founder Gym

    • Mandela Schumacher-Hodge Dixon succeeded in Silicon Valley despite not knowing anything about the tech industry before she moved to the area — and despite being a biracial woman.
    • But Dixon recognizes she was lucky; entrepreneurs who are women or people of color have struggled to gain a footing in the valley.
    • Hoping to use the lessons she's learned and pass them on, Dixon's founded a new startup that offers training courses designed for non-traditional entrepreneurs like herself.


    When Mandela Schumacher-Hodge Dixon launched her first startup, DemoLesson, seven years ago, you likely wouldn't have given her much of a chance of succeeding in the tech industry.

    At the time, Dixon didn't live in the Bay Area, didn't know anyone in the industry, and knew little about how to fundraise or how Silicon Valley worked. She's wasn't a coder or an engineer; instead, she had been a middle-school teacher and working on a PhD — in education. What's more, she's a biracial woman with an African-American dad and launched up her company at a time when there were few women or people of color founding startups.

    "My experience in this space was really isolated," she said. She continued: "I didn't know what i was doing most of the time."

    But Dixon succeeded even so. During an event sponsored by Startup Weekend, she connected with other founders and investors. That helped her secure venture funding for her company, a kind of LinkedIn for teachers, from famed tech investor Mitch Kapor.

    When her startup didn't pan out, the connections she'd made led to a job at Startup Weekend helping organize events for entrepreneurs in the education technology space. After Startup Weekend transferred her program to another organization, Dixon eventually went to work for Kapor's Kapor Capital, helping mentor other startup founders funded by the venture firm.

    And now she's got a new startup, this time focusing on helping other women and people of color succeed in the industry. Dubbed Founder Gym, the new organization offers a four-week training course for entrepreneurs from underrepresented groups that are intended to give them the knowledge and connections they'll need.

    Dixon's experiences in the industry have given her a view of it and insights into it that many women and people of color don't have, she said. Her decision to start Founder Gym was also fueled by being the child of civil rights attorneys and her experience as a former teacher.

    "I've navigated spaces and been in rooms with people most people never have access to," Dixon said. "I actually feel like it's my duty to share this information that I'm getting and spread forth this message."

    Founder Gym's program is structured like an online course

    Given Dixon's background, it may be no surprise that Founder Gym's program, which costs $400, is structured like a class, albeit an online one. Students have a curriculum and weekly coursework. The program features weekly video presentations from professional investors. And students collaborate with each other and critique each other's work.

    mitch-kaporAfter launching Founder Gym in November, Dixon trained her first group of 26 founders early this year. A second group of 44 entrepreneurs recently completed the program, and a third group of about 50 will start soon.

    The entrepreneurs come from a variety of backgrounds. Some had already raised venture funding. Others hadn't. Many live outside Silicon Valley. All are either women or representatives of groups that are underrepresented in tech.

    Dixon has tapped people in her network including Kapor, Ellen Pao, and Charles Hudson, who is one of the few African-American venture partners, to serve as visiting lecturers and mentors. She intentionally brought in people who were comfortable, willing, and able to have frank discussions with the founders about issues of race and gender — the kinds of conversations they couldn't have elsewhere.

    "When you go to Y-Combinator's startup school, those things aren't being addressed," Dixon said, referring to one of Silicon Valley's most well-known incubators for new tech firms.

    The program helps connect founders with others like them

    But for many students, the best part of the program is being able to meet and share experiences with other founders who come from similar backgrounds.

    Sunny Washington, the founder of Because Learning, an education startup based in Salt Lake City"When you're building your startup, it's a pretty lonely experience at times," said Sunny Washington, a Korean-American woman who was a member of the first Founder Gym group.

    "The reality is that if you are a person of color or female, you don't fit in this cookie-cutter mode. Your experience could be different," added Washington, whose three-year-old startup, Because Learning, sells software and hardware kits to schools that are designed to interest kids in science, technology, and math.

    Founder Gym's initial sessions have all focused on fundraising so far. That's on purpose, Dixon said, because having sufficient funding is crucial to a startup's success. And how to play the venture funding game is a skill that many founders, particularly those who aren't from Silicon Valley or don't have a background in the industry, just don't have.

    "There's no precedent for teaching underrepresented founders how to fundraise," Dixon said. "We are literally creating the textbook for this."

    She plans to eventually offer a whole curriculum for founders that includes a range of topics. Those will be inspired both by the questions entrepreneurs raise, but also by the topics investors affiliated with the program think founders need to be familiar with, she said.

    "We have both sides of the equation," she said. She continued: "We're bridge-building between these two worlds that don't really know each other."

    The tech industry has a big diversity problem

    Dixon's identified a real problem in the tech industry. Even though the Bay Area — Ground Zero for the industry — has a liberal bent, women and people of color, particularly Latinos and African-Americans, have long been underrepresented at tech companies. Despite public pressure in recent years from the Rev. Jesse Jackson and the #MeToo movement, the situation hasn't gotten a whole lot better, as the diversity reports from companies including Apple and Google can attest.

    But the problem is particularly acute among tech startups. Only 17% of venture-backed startup firms launched last year had at least one female founder, according to PitchBook. Just 1% of startups had an African-American founder in 2010, the last year CB Insights made such data public.

    U.S. civil rights activist Jesse Jackson speaks to reporters in Havana September 29, 2013.  REUTERS/Desmond Boylan And the lack of diversity is a self-reinforcing problem, say critics inside and outside the industry and researchers who have studied the issue. Much of venture capital investing stems from what they call pattern matching.

    VCs often base their investment decisions on the pictures they have in their minds of what successful entrepreneurs look like, researchers and critics say. More often than not, that archetypal startup founder is white and male and has a degree from — or at least attended — a prestigious university such as Stanford or Harvard. That's largely due to the fact venture partners are overwhelmingly white and male and attended those kinds of schools — and because the startups they've funded in the past were founded by people just like them, researchers say.

    For founders who are women or people of color, "it's harder to raise money," said Fern Mandelbaum, a lecturer at Stanford's Graduate School of Business and a partner at Vista Venture Partners. "We know it still is."

    The venture funding process is stuck in a "feedback loop"

    Because white male founders get a disproportionate amount of venture funding, a greater number of them are likely to be successful. Those entrepreneurs are then often targeted by venture capital firms looking for new partners. Once they fill those positions, the cycle repeats itself in a kind of "feedback loop," said Y-Vonne Hutchinson, the founder and CEO of ReadySet, a consulting firm that helps other organization improve their diversity.

    "This is how power, money, wealth, and opportunity gets concentrated in the hands of the few and excludes the many," she said.

    That's obviously bad for women and people of color. But it's not good for the tech industry. Researchers have shown that companies with more diverse teams tend to perform better than those without them. Companies with leaders that come from a variety of backgrounds can recognize trends and customers bases that more monolithic firms might miss.

    Thanks in part to the #MeToo movement, in Silicon Valley there's starting to be "a recognition that diversity is going to translate into better outcomes," said Dana Kanze, a doctoral fellow at Columbia Business School who has focused on gender discrimination issues in the tech industry.

    Non-traditional tech founders have few role models

    The flip side of the funding problem is women and people of color have relatively few role models or examples they can point to for how people like them can succeed in tech. Many may not realize that becoming a tech entrepreneur is a possibility as a career.

    ellen paoThose who do generally have few people like themselves who can guide them on how to navigate the industry. And because they often don't know anyone else who has gone through the process of building a tech startup, many just don't have the knowledge they need to succeed, whether that's about how to pitch a venture capitalist or even just how to get a meeting with one.

    That's the part of the diversity problem that Dixon designed Founder Gym to address.

    "There are all sorts of ways in which gaps get created in knowledge and preparation" between the traditional white male entrepreneurs and those who are women or people of color, said Kapor. "What Mandela is doing is, in an intensive way, helping close some of those gaps."

    Dixon is hoping to pass on what she's learned about the industry

    Dixon knows first-hand about some of those knowledge gaps and lack of preparation. While she successfully launched and attracted funding for her startup, she says she was lucky.

    She had no idea how to pitch a venture firm, but she gave her presentation to Kapor and his wife, who have placed a premium on diversity and made a point of backing founders who come from underrepresented groups. They overlooked the fact that she gave a non-traditional presentation and decided to back her startup anyway. Once they were on board, she was able to lure other investors.

    "I just stumbled into it," she said. She continued: "I'm not sure I would have been been welcomed in this industry if I hadn't gone through that door."

    Unfortunately, there are lots more founders who are women or people of color than the Kapor's small firm can back. So, not everyone can be as fortunate as Dixon was; other investors typically aren't as receptive to pitches that veer from the standard script. Dixon's trying to make sure other entrepreneurs are better prepared than she was — and hoping to help them succeed.

    "We need case studies" for what a successful woman- or minority-run startup looks like, she said. "I understand my privilege and the doors that have been opened for me.

    "I want to throw a rope down and help other people climb up."

    SEE ALSO: This Stanford grad went from living in motels to working in VC — here's his unusual path and how he wants to help others like him

    SEE ALSO: Silicon Valley's MeToo moment is changing the venture capital industry — but many wonder if it will last

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    Mandela Schumacher-Hodge Dixon, CEO of Founder Gym, on February 21, 2018 in San Francisco

    • Mandela Dixon, a longtime mentor of entrepreneurs, has a new startup that trains non-traditional tech founders on how to succeed in the industry.
    • One of the most important lessons she teaches is a concept she calls the "cosign," which is related to networking.
    • With her own startup, Dixon was fortunate when it came to getting a cosign, but many other non-traditional founders have a tougher time with it.


    It's a cliché that whom you know is more important than what you know — but that doesn't make it any less true.

    Mandela Schumacher-Hodge Dixon found that out in her journey from being a school teacher to a startup founder. And now it's one of the key lessons she tries to impart at Founder Gym, her new company that trains women and people of color in the basics of tech entrepreneurship.

    Dixon's got a catchy name for the lesson. She calls it the "cosign."

    "It's one of the most important things in this industry," she said.

    The tech industry in general and the venture capital business in particular are fairly insulated and driven by networks of connections. If you're new to the industry or to Silicon Valley, it can be hard to break in.

    That's where the cosign comes in. If you're looking to raise money from a particular investor, one of the best way to get a meeting with the investor is to have someone who knows the investor introduce you, Dixon said. It's even better if the person who introduces you is a fellow founder in whom the investor already invested.

    "You need someone in the industry to validate you to who you're trying to get to," Dixon said.

    In her case, Dixon, a biracial woman, says she lucked out with her cosign. Her first company was an education startup. But at the time, she was based in Los Angeles and was completely new to the tech industry, so she didn't know anyone in Silicon Valley or in tech.

    But at an event organized by Startup Weekend, she met a bunch of different founders and investors. One of those founders introduced her to Mitch Kapor, a legendary investor who, along with his wife, has made a point of supporting startups founded by non-traditional entrepreneurs. Kapor and his wife ended up the first investors in Dixon's startup, which led to investments from other firms.

    "I had no idea who Mitch was until I met him," Dixon said. "We were so lucky. We really, really were."

    Networking is particularly important for non-traditional founders

    The cosign lesson is a crucial one for the types of entrepreneurs Founder Gym is focusing on, she said. After she closed down her startup, Dixon helped mentor other entrepreneurs, first at Startup Weekend and then at Kapor Capital. In that role, she saw firsthand the stark difference between the typical startup founders and the non-traditional ones.

    The typical founders were white, male, and affluent. And they generally had previous experience in the tech industry or knew or were related to someone who was in it. In other words, they already had networks in place and people who could cosign for them with investors.

    Al Nolan, founder of Notearise, which offers a note-taking app designed for students"They already have a huge advantage in this playbook," Dixon said.

    Not so the non-traditional investors, who might be women or people of color or people for whom English was their second language. It's those founders whom Dixon is trying to help with Founder Gym.

    In her courses, she not only tries to pass on what she's learned about the industry, but she gives her entrepreneurs the chance to network with founders like themselves and learn from each other. They also get a chance to meet and talk with investors such as the Kapors and Ellen Pao who are willing to invest in non-traditional founders and understand the challenges they face.

    Al Nolan, who was in Founder Gym's first group of trainees earlier this year, said it was great to be able to use the program to build out his network. Nolan, a black entrepreneur who created a note-taking app for students called Note Arise, loved being able to meet other founders like himself and some top investors in the space. He's already capitalized on what he's learned to get as many meetings with investors as he had all last year.

    "That's where I want to be as a founder, knowing who to talk to and what to bring them," he said. "Those are tools I just didn't have before."

    SEE ALSO: This female founder went from teaching middle schoolers to mentoring tech entrepreneurs — here's her unusual path and how she plans to help others succeed in Silicon Valley

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    Barbara Corcoran

    • Barbara Corcoran has appeared on "Shark Tank" for years, and has invested in many startups through the show.
    • She is a successful entrepreneur in her own right: In 2001, she sold her real-estate company, The Corcoran Group, for about $66 million.
    • Speaking with host Farnoosh Torabi on an episode of podcast "So Money," Corcoran said the most successful companies in her portfolio are run by "partnerships" — two people instead of one.

    Barbara Corcoran started her real-estate business, The Corcoran Group, with a $1,000 loan, and built it into a behemoth that sold for $66 million.

    Then, she became a "Shark" on ABC's hit business show "Shark Tank," evaluating and investing in startups looking for funding over the course of nine seasons.

    So you could say she knows what she's talking about.

    On an episode of podcast "So Money," Corcoran spoke with host Farnoosh Torabi about money, from her childhood lessons to her present-day investments.

    Torabi pointed out that Corcoran's fellow Shark, Kevin O'Leary, has said in the past that he sees a commonality among his most successful companies: They tend to be run by women.

    Asked by Torabi if she sees the same, Corcoran said she hasn't observed that pattern, but she has found another one. The most successful companies in which she's invested tend to be led by "partnerships" — as Corcoran puts it, "two people for the price of one."

    In fact, among her own investments, she finds those led by two men have been the most successful so far. "Isn't that weird?" she asked Torabi. "I'm going to have to trade businesses with [O'Leary]. I'd much rather be working with the girls and the guys."

    Corcoran didn't name the startups she's talking about, but she's told Business Insider in the past that her most profitable investments from "Shark Tank" have included online cake company Daisy Cakes, women's apparel company Grace and Lace, gourmet popcorn company Pipsnacks, women's swimwear company Raising Wild, and food truck company Cousins Maine Lobster

    Out of the admittedly small sample size, Cousins Maine Lobster is the only one run by two men, cousins from Maine who moved to California. Corcoran told Torabi the cofounders "are like dream entrepreneurs."

    Cofounder Jim Tselikis told Business Insider's Richard Feloni that some of the best advice Corcoran ever gave them was, "Everything that comes your way isn't a good opportunity."

    Corcoran has also told Business Insider in the past that her most successful entrepreneurs tend to be people who are "street smart" and who take responsibility for their own failures. "When they're slammed they don't feel sorry for themselves," she said on an episode of Business Insider's podcast, "Success! How I Did It." She continued: "Every one of my successful businesses are run by entrepreneurs who are so good at taking a hit and getting back up."

    Listen to the full episode of So Money »

    SEE ALSO: After getting a brutal rejection, Barbara Corcoran spent 8 minutes writing a powerful email defending herself — and it changed the next 9 years of her life

    DON'T MISS: 3 of the 6 'Shark Tank' investors are dyslexic — and they credit it for their success as entrepreneurs

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    susie moore

    • Starting a business can be an intimidating task, with hesitations like funding, resources, and uncertainty holding you back.
    • It can be hard to set your business apart from existing competition, although there are a few things you can do to gain success, fast.
    • Here are five unconventional things I did to grow my coaching business.

     

    When someone says they’re a life coach, they probably fall into one of two boxes. They’re either leveraged and running an online, scalable component to their business, or they’re struggling to find 1:1 clients (hey — it’s hard out there).

    Like most industries, there’s a lot of noise in the coaching space. It can be hard to stand out and set yourself apart from your competition.

    I understood this from day one and did a few things – fast! – that got me inbound clients, a strong reputation as a coach, and a steadily increasing income stream.

    1. Start calling yourself a coach immediately

    I started calling myself a coach pretty much overnight. I signed up for coaching classes at NYU, and on day one of training, I looked around the room of 12 people and thought, “probably 2-3 of us — MAX — will make this happen.”

    I wanted to be one of them. So, instantly, I introduced myself as a coach to everyone I met, changed my social media (apart from LinkedIn) to Susie the coach, and announced to all my friends that I was ready to start accepting clients (at a bargain rate) while I built up my “practice” — a term I picked up in class.

    I had my first three paying clients within just a few days — because nothing beats action.

    2. I didn’t get a coaching certification — and I still don’t have one

    It’s upsetting that many talented and brilliant people can get stuck in the loop of gaining certification after certification. I’m still not certified as a coach on paper — and it doesn’t matter one bit. Just as an artist becomes an artist by creating, a coach becomes a coach by coaching. This doesn’t apply to every field, of course. But for something like coaching, it’s the creating, doing, being, and serving others that counts.

    3. Talk it up

    In my enthusiasm to attract new clients, I speak passionately about how self-development is the foundation of everything great. Sometimes people need a nudge in the right direction, so I use my social circles and social media to encourage people to get the help, advice, and support they need.

    Books, online workshops, and meet-ups count, too! In fact, that’s why I created a free workshop — Side Hustle Prep School— because as people saw me slowly transition out of my 9-5 into a full-time business owner via my side hustle, they wanted to follow suit. With so many people who hate or feel stuck in their jobs, this is no surprise.

    4. Meet other coaches

    I know we’re all busy as heck, but there’s tremendous value in meeting other people in your field who are a little bit ahead of you. Seeing other people live the life you want not only inspires you, but it also affirms that it’s actually possible for you to achieve success.

    Meeting other coaches and being intentional about meeting entrepreneurs – Facebook groups are a great place to start – is often what separates the amateurs from the pros, especially over time. You want to be around as many people like you as possible – the idea sharing, bigger picture thinking, and encouragement are truly worth it.

    5. Share life-advice online

    I used to read MindBodyGreen, a health and wellness website, at my corporate job when I was bored as hell and day dreaming about working in the personal development space. One day I thought, maybe I could write for them! And so I did.

    I submitted 550 words and two weeks later, there I was — in print! I’ve kept going ever since. And it’s been the single biggest factor in exploding my business and brand. I’m still astonished more people don’t do it.

    Because instead of getting “out there” and hustling for clients, you can type away in the comfort of your bed and share your life advice online, and let the right people find you.

    So instead of thinking – Where’s my next client coming from? How will I get people to know about me? I’m spinning gold, where are my fans?Copy me. And let ‘em find you.

    Susie Moore is a high-performance coach, consultant and author in New York City. She’s been featured on the Today show, Forbes, Oprah.com and more! If you’re ready to skyrocket your reputation, grow your client base exponentially, or become the go to expert in your space, sign up for her free workshop here.

    SEE ALSO: 10 things I wish I'd known before I quit my job to work for myself

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    Sam Yagan

    • Sam Yagan is a lifelong entrepreneur and exec.
    • He is the cofounder of OkCupid, and was head of the dating site conglomerate the Match Group for seven years. His first company was SparkNotes, which he founded while at Harvard.
    • Yagan told Business Insider that when SparkNotes first launched, the team got a flood of hate mail, but it was "the best kind of hate mail to get."

    Sam Yagan cofounded his first company when he was an undergrad at Harvard.

    That company was SparkNotes, the book summary site beloved by time-crunched students across the US. 

    Yagan had been recruiting for consulting firms when his roommate and friend, Chris Coyne, pitched him the idea of a humor site called The Spark, and a study guide site called SparkNotes. In the spring of Yagan's senior year, they set the site live ... to a flood of hate mail.

    But the nasty messages weren't what you might expect.

    "People were pissed," Yagan said on an episode of our podcast, "Success! How I Did It."

    And why?

    "Because we didn't have the SparkNote they needed!" Yagan said. "Because we only had 10, and they wanted 'Romeo and Juliet.' Or they wanted 'Hamlet.' Or they wanted whatever book we didn't have. And it was, like, really real anger, because they're, like, 'Oh we found this site with free study guides,' and then they're scrolling and they don't see what they want."

    But as Yagan said, "that's the best kind of hate mail to get, is we need more product. And so we spent that summer, we hired a couple of editors, and their foil was to get a hundred SparkNotes up by the fall, and the rest is history."

    Before the launch (and hate mail) Yagan and Coyne had turned to the most convenient workforce: other college students. "One of the nice things about being in a school, a liberal-arts school with a good English program, is we had all these friends who were just getting done paying a hundred grand to a school to allow them to write papers, and so we went with this great offer: 'We'll pay you 400 bucks to write a paper,'" Yagan said.

    "And their heads exploded. They're, like, 'Wait a minute. You're going to pay me to write a paper? This is amazing.' And so I remember it was, like, we had spring break late in March that year, and we went to people right before their spring breaks and said, 'Hey, can you spend your spring break writing this paper?'"

    By the end of spring break, they had their first 10 papers — enough for a site, but just the beginning.

    SEE ALSO: The cofounder of OKCupid says 3 lucky moments led him to run a multi-billion-dollar company

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    Sam Yagan

    • Sam Yagan was born in the United States after his parents immigrated from Syria.
    • Yagan cofounded SparkNotes and OKCupid, was the previous CEO of Match.com, and is the current CEO of ShopRunner, a shopping service and Amazon Prime competitor. 
    • "I think that immigration is the ultimate entrepreneurship, in many ways," Yagan said.

    Being the son of Syrian immigrants gave Sam Yagan a certain amount of motivation — the kind of motivation that leads to creating and running billion-dollar companies.

    Before graduating from Harvard University, Yagan and his friends started SparkNotes, a study-guide website. Later, Yagan cofounded OKCupid and became the CEO of Match.com. Now, Yagan is the CEO of ShopRunner, a shopping service competing with Amazon Prime.

    Born in the United States and growing up in Illinois, Yagan described his young self as "super nerdy" on an episode of Business Insider's podcast, "Success! How I Did It." He said his parents made huge efforts to "Americanize" Yagan the best they could after immigrating from Syria.

    While attending Harvard University, Yagan met his future business partners and cofounders, but he said he ultimately got a great education in entrepreneurship from his parents. "I think that immigration is the ultimate entrepreneurship, in many ways," Yagan said.

    Yagan said entrepreneurs give up a sense of certainty, like a job, income, a career, or money, for a speculative long-term goal that they think will be successful but realistically don't know what the outcome will be. 

    "And that idea of being super, super comfortable with uncertainty, being super comfortable with the unknown, this idea that, just never give up, this relentlessness, were all attributes that I realize my parents have been imbuing in me, had been teaching me or demonstrating not to be an entrepreneur, but just because that's how they lived," said Yagan. 

    Yagan said he realized how lucky he was when the Syrian war broke out. Virtually his entire family remained in Syria until the war and most became displaced after it began. 

    "'The things they think about when they wake up in the morning and the things I think about when I wake up in the morning, I've got Champagne problems,'" he said. "It's, like, when I was at Match, or now at ShopRunner, it's, like, 'Oh, how do we compete with Amazon Prime on this? How do we build this product?' I'm, like, 'That's a great problem to be thinking about.' Because I'm not thinking about survival."

    SEE ALSO: These 15 immigrants became millionaires and billionaires after coming to the US

    SEE ALSO: Immigrants founded and co-founded half of all the billion-dollar startups in 2016, creating over 33,000 jobs

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    Kathryn Minshew

    • Coffee Meets Bagel cofounder Dawoon Kang and The Muse CEO Kathryn Minshew have similar takes on entrepreneurial confidence.
    • Both said they have to live with some amount of self-doubt, and that entrepreneurs don't always know what they're doing.
    • Research backs them up: Relatively low self-confidence can sometimes motivate people to work harder.


    Kathryn Minshew used to call herself the "Asker in Chief."

    The 32-year-old is the cofounder and CEO of job-search and career-advice platform The Muse. But she told me that she didn't start the company in 2011 because she had answers to people's questions. She started the company because, for years, she'd needed those answers herself.

    In the early days of building a business, Minshew said, she got involved with the local tech community in San Francisco and learned about some common startup traps to avoid. More importantly though, she learned that "entrepreneurs aren't magicians."

    She said: "It's easy to look at people on stage who have been building a business for five or, in some cases, 10 years and think to yourself, 'Wow. They're a hero. They're a magician. They have something intangible and magic that I don't.'"

    Eventually, Minshew was able to spend time with those entrepreneurs "behind the scenes."

    And often, she said, she learned that "yes, they're incredibly impressive and they've worked incredibly hard and they had a really brilliant idea at a great time, but underneath all of that, they're still just a person who doesn't always know what they're doing."

    This realization proved to be the wake-up call Minshew needed to get The Muse up and running. So far, according to Entrepreneur, the company has helped over 50 million people find the right jobs for them.

    Even the most successful entrepreneurs will never be completely confident in their decisions

    coffee meets bagel dawoon kangMinshew's moment of realization is similar to Dawoon Kang's. Kang is the cofounder as well as the COO and head of marketing of dating app Coffee Meets Bagel.

    Kang told me that in the early days of her Coffee Meets Bagel career, she "was of the mindset of, 'Oh, if people who are really experienced and know a lot more tell me that this is the right thing, then I guess they're right.'"

    Eventually, her mindset shifted: "No one has the right answer. My job is to investigate as much as I can, put together and learn as much as I can, but ultimately, I have to make my own decision."

    She put that new mindset into play when she and her cofounders declined a $30 million offer from Mark Cuban on "Shark Tank" because they thought the company was worth more. She did it again when she refused to simply copy Tinder, the way several investors had advised her and her cofounders to do.

    That doesn't mean, however, that Kang didn't feel conflicted about her choices in the moment. She told me that she'll never be as confident as she'd like to be in any decision that she makes as an entrepreneur.

    "You're doing something people have never done," she said. "I don't think you ever reach 100% conviction that this is the right thing to do. There's always a sliver of doubt."

    There's research behind Minshew's and Kang's observations about self-doubt. According to psychologist Tomas Chamorro-Premuzic, writing in The Harvard Business Review, relatively low self-confidence can sometimes be beneficial. That's because it prompts you to work hard to master a task.

    As for Minshew, once she got to see some entrepreneurs in the wild, fumbling through their attempts to build companies, she realized, "Absolutely. I can do this too."

    SEE ALSO: Many successful people are driven by a quality no one likes to admit

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    Andrew Josuweit Student Loan Hero

    • Student Loan Hero, a personal finance site, was acquired for $60 million this week.
    • That milestone never would have happened if CEO Andy Josuweit stuck with his original idea for a company.
    • Josuweit says learning from failure is key to finding success as an entrepreneur.


    Part of being a successful entrepreneur is knowing when to give up on a bad idea.

    Andy Josuweit learned that on the fly when he founded Student Loan Hero, a personal finance site dedicated to helping people manage their student loan debt.

    This week, Student Loan Hero was acquired by LendingTree for $60 million. But that milestone never would have taken place if Josuweit stuck to his original idea for the company.

    In 2012, Josuweit and his business partners won a $40,000 grant from the incubator Startup Chile for their idea for a service called Toolbox. As Josuweit told Business Insider, Toolbox was to be an online space where professionals could build profiles around the products and equipment they use for their jobs. Users would be able to compare the products recommended by people they follow, and they would earn commission from purchases made through their profiles.

    But Toolbox never came to fruition. A few weeks into the incubator program, Josuweit realized he had an even better idea, one that addressed an issue that hit close to home. 

    "We were playing with that idea and we saw some fundamental issues with it. We wrote down all our problems on a piece of paper in a spreadsheet and talked to advisers," Josuweit told Business Insider.

    "At that point, my student loans were growing from $74,000 to a little over $100,000," he said. "I thought, 'Hey, this is my cancer, I'm bleeding right now. I need to solve this problem. And there are a lot of people like me out there.'"

    Josuweit and his partners put Toolbox on hold and came up with an idea that eventually would become Student Loan Hero. The service provides financial comparison tools for student-loan holders and gives users personalized advice on paying off their debt. 

    Launching Student Loan Hero wasn't quite so simple — it took a week for Josuweit and his partners to convince their Startup Chile advisers to allow him to go forward with the new idea, he said.

    But once it was approved, the new project quickly became personal for Josuweit. He said that as his student loans mounted, he began to feel pressure from his family to succeed. His parents had cosigned on some of his loans, and his failure to pay off the loans was starting to affect their credit.

    "It created a lot of stress and pressure in my family," he told Business Insider. "There was almost a year where I didn't talk to my dad, and it was pretty traumatic."

    He continued: "That's what created pressure, like, 'Hey, we have to make this work. We don't have a choice.' When you have a gun to your head, your have to push and you have to fight."

    LendingTree's acquisition of Student Loan Hero not only validates the early financial struggles for Josuweit, it reaffirms his decision in 2012 to completely change courses after finding a new idea.

    "You're going to fall on your face a few times, you're going to screw up and fail. You're going to learn from the failures. It takes time," he said. "But if you are willing, have the determination, have the grit, ultimately it's inevitable you will succeed."

    SEE ALSO: Experts say too many people suffer from a 'delusional belief' about their careers that doesn't do them any favors

    DON'T MISS: A 'Shark Tank' entrepreneur who won $300,000 realized previous contestants were doomed by the same type of question

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    Elon Musk

    • Starting a business isn't as exhilarating as it can seem, experts say.
    • The rise of "entrepreneurship porn" is luring many ambitious young Americans into launching their own companies, when they might be better off joining a more established organization.
    • If they do decide to found a company, these entrepreneurs should at least be adequately prepared, instead of simply diving in headfirst. Entrepreneurship isn't just about risk-taking and passion.


    Tomas Chamorro-Premuzic has been teaching MBA students for more than 15 years.

    When he first started teaching, all his students wanted to work for corporate giants like Goldman Sachs, IBM, and Unilever.

    A decade later, Google, Facebook, Apple and Amazon were the big draws.

    "Now," he told me when we spoke by phone in July, "the vast majority tell me, 'You know, I'm going to be a startup guy. I'm launching something. I'm going to create the next big X, Y, Z."

    "Who are we to crush their spirits?" Chamorro-Premuzic said. "But I think we have a responsibility to inform people that the probability of attaining that is really, really, really low, and that to actually attain it, they're going have to sacrifice so many things."

    Today, Chamorro-Premuzic is a psychology professor at Columbia University and the chief talent scientist at Manpower. In one of the opening chapters to his 2017 book, "The Talent Delusion," he explains why many ambitious young Americans today would be better off working for an established company than trying to build their own business.

    And yet many of these young Americans are hypnotized by stories of entrepreneurs who, against the odds, made it big. Even if they're not prepared — personally or professionally — to launch a business, they forge ahead anyway.

    "People feel like, 'Oh, I have an idea. I don't like the idea of having a boss. I'm going to be the next Elon Musk,'" Chamorro-Premuzic said. "It's not that easy."

    Telling people you're an entrepreneur is 'sexy'

    The rate of new-company failure in the US is unclear. In 2017, USA Today highlighted data from the Bureau of Labor Statistics, showing that about 20% of new businesses survive longer than one year. In fact, according to BLS data, that number hasn't budged since 1995.

    But "entrepreneurship" is notoriously hard to define. Do mom-and-pop businesses count? Or is it just high-potential ventures? "Failure" is even harder to define: What if a startup pivots or downsizes?

    Mark ZuckerbergStill, Chamorro-Premuzic's observations about entrepreneurial overeagerness are echoed by academics and business people alike.

    Morra Aarons-Mele, the founder of Women Online and The Mission List, appears to have coined the term "entrepreneurship porn" in a 2014 Harvard Business Review article, to describe "an airbrushed reality in which all work is always meaningful and running your own business is a way to achieve better work/life harmony."

    In the article, she makes the point that entrepreneurship is hardly as liberating as it can seem: "Starting a company doesn't mean being freed from the grind; it means that the buck stops with you, always, even if it's Sunday morning or Friday night."

    When Aarons-Mele launched her companies, "I just wanted to make a living," she told me, and she knew that "I just never wanted to go an office again for 10 hours a day." But a couple years in, something changed.

    "I drank the Kool Aid," Aarons-Mele said, "of being not just an entrepreneur, but a woman entrepreneur. It was sexy." She started going to conferences and speaking at events for founders.

    "It was only after I realized that I did not want to scale, that really becoming this sort of entrepreneur with a capital 'E' would make me have to live a lifestyle that I didn't want, that I became a happy small business owner instead."

    Aarons-Mele knows firsthand that the word "entrepreneur" can sound infinitely more appealing than "small-business owner." She suspects that can play a big role in people's desire to scale their company, and quickly. That is to say, entrepreneurship can be as much about the founder's ego as anything else.

    "It's a very American thing to be an entrepreneur," Aarons-Mele said. "'Small business' implies small. It's a lot of what ambitious people might even want to escape versus create."

    Too many aspiring founders think entrepreneurship is about 'diving in'

    Then there's the problematic notion that starting a business is all about taking risks.

    "There's something a little bit inherent in a lot of founders' psyches of, 'You've just got to dive in,' that it's the type of thing that you can't go and learn about before you do it," said Noam Wasserman. The common misconception is that "you have to fail, learn from that, pick yourself back up."

    Wasserman is the founding director of the Founder Central Initiative at the University of Southern California's Marshall School of Business. When we spoke by phone in June, he told me that this myth "heads off at the pass any of that inclination to go and learn before you go and dive in."

    Wasserman's observations recall those of Wharton professor Adam Grant. In his 2016 book, "Originals," Grant wrote that, contrary to popular belief, the most successful entrepreneurs don't quit their day job to start a company. One University of Wisconsin study found that entrepreneurs who kept their day jobs were 33% less likely to fail than those who don't.

    Recent research also reveals just how important it is to wait until you have enough experience before building a company.

    An MIT study found the average age of a successful startup founder is 45. The study authors found that work experience explains much of the age advantage. They write in the Harvard Business Review,"Relative to founders with no relevant experience, those with at least three years of prior work experience in the same narrow industry as their startup were 85% more likely to launch a highly successful startup."

    Indeed, Chamorro-Premuzic said that technical expertise in the area where you're founding a company is one of the most "underrated" attributes of a successful entrepreneur.

    'It's your baby, your everything'

    I asked a few entrepreneurs to tell me about their experiences, about how entrepreneurship porn had (or hadn't) influenced their decision to launch a company.

    away jen rubioSophie Kahn took a relatively cautious approach: As she told Business Insider's Libby Kane, she kept her job at Marc Jacobs while developing the plans for AUrate New York, the jewelry company she cofounded with Bouchra Ezzahraoui and that's raised $2.6 million. Entrepreneurship, she learned, was both harder and easier than she'd anticipated.

    "Harder, because it's truly all-consuming and you never ever have a day off. It's your baby, your everything, and always with you," she wrote in an email.

    And "easier, because it doesn't feel like work in the sense that it's your passion and you want to work on it, and of course since you're free to make your own choices and set your own schedule."

    Jen Rubio left her job at Warby Parker a few years before cofounding direct-to-consumer luggage company Away, which has raised a total of $81 million. But Rubio says she and her cofounder, Steph Korey, another Warby Parker alum, learned a lot from their experience there: "Being on the ground floor of an early-stage startup with that mentality allowed us both to build something entirely new every day," Rubio wrote in an email.

    Rubio's best advice for anyone considering starting a business is "to be really specific about why you're doing it and what problems you'll be able to solve in a meaningful way for your customers; don't start a business just because you think you have have a great idea."

    'Passion can become your peril'

    Another persistent myth about entrepreneurship is that, once you've got the product and financing in place, the people stuff will come naturally. Many entrepreneurs, Wasserman said, are completely oblivious to the importance of the people side — i.e. who you hire and how you manage your company.

    For example, some entrepreneurs figure that they're already best friends with their cofounder, so everything should be fine. "Unfortunately, those happen to be the least stable of founding teams," Wasserman said.

    But perhaps the most destructive misconception around entrepreneurship is the importance of passion.

    At the start of every semester, Wasserman asks his students: How important is passion for the "entrepreneurial magic?"

    "We get a resounding, 'Passion is critical. Passion is going to be the main ingredient that is going to enable me to go and succeed as a founder,'" Wasserman said. Then he presents them with a case study "that drives home to them that passion can become your peril."

    Specifically, Wasserman said, passion can mislead you into thinking you're readier to start a company than you are, or make you believe that your idea is more valuable than it is. "You have to really go and grab the founders by the lapels and have them think deeper about these people issues," Wasserman said, "where the person that they're dealing with is themselves."

    SEE ALSO: The 32-year-old CEO of The Muse who quit a job at McKinsey to start her own company shows there are 2 ways to launch a business — and one gives you a much better chance of success

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    500 Startups CEO Christine Tsai

    • Christine Tsai has worked with hundreds of entrepreneurs since founding 500 Startups eight years ago, giving her some unique insights into what leads to success.
    • She said successful founders tend to have two traits: They listen to feedback, and they move quickly.
    • To succeed, prospective entrepreneurs also have to be aware of the difficulty of the task ahead, she said. 

    Christine Tsai has a lot of experience working with startups, and that has given her some pretty good insights into what makes entrepreneurs successful.

    Tsai is the cofounder of 500 Startups, the famed Silicon Valley venture firm and startup accelerator. Since last August, she's also been its CEO, following the departure of Dave McClure, her fellow cofounder who left amid accusations of sexual harassment— accusations she has declined to discuss in much detail.

    Launched in 2010, 500 Startups has helped incubate hundreds of companies and invested in more than 2,000 total, including Twilio, which went public in 2016. In that time, Tsai has gotten a close-up look at lots of startup founders and seen what works and what doesn't, as well as what it's like to be an entrepreneur.

    Successful founders, she told Business Insider in an interview this week, tend to have two key traits: They're coachable, and they move fast.

    Listening is one of the keys to success

    Christine Tsai, right, with the team from online clothing stylist BombfellTsai said people have this image of the successful entrepreneur as someone like the former Apple CEO Steve Jobs — the "don't listen to anybody, I'm always right" type of founder.

    But those types of founders usually aren't successful, she said.

    "I feel like those people who are like that, they succeeded despite being that way, not because they were that way," she said.

    That doesn't mean successful entrepreneurs need to be ultra-congenial or acquiesce to every suggestion, Tsai said. But they do need to be open to suggestions.

    "They do listen," she said. "They do take the feedback from customers, from employees, from investors."

    Moving fast is also crucial

    Successful startup founders also move quickly, Tsai said, whether it's launching new products or putting new strategies in place — or learning from mistakes.

    500 Startups meets frequently with the founders of companies in its portfolio to check in about how their companies are doing and how things like fundraising are going, she said.

    "It's always a bad sign if they say they're going to do something and then a week later, two weeks later, they still haven't done it," she said.

    Successful entrepreneurs have to be careful not to be rash or reckless, she said. But they also have to avoid stalling and overthinking things.

    "It's a very fine balance, of course," Tsai said.

    But founders who succeed have a very acute understanding that they have to move as quickly as possible.

    "You have a very limited runway either in terms of time or cash," she said.

    It's important to be clear-eyed about the task ahead

    twilio ipoTsai also offered some advice for prospective entrepreneurs: understand what you're getting into.

    TV shows and news reports tend to romanticize the life of startup founders, particularly the super-successful ones. But founding and running a startup is usually anything but glamorous, she said.

    Most startups fail. Many entrepreneurs are trading a stable, high-paying job for an uncertain, lonely, and stressful existence.

    And the payoff — if there is any — usually comes only after years and years of hard work.

    "It's really sucky ... It's really hard," she said. "I definitely do warn [entrepreneurs] about that."

    SEE ALSO: A new study shows that tech CEOs are optimistic about the future, even if they still don't understand millennials

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    david casarez headshot

    • Entrepreneur David Casarez quit his job as a web developer at General Motors to launch his own tech startup.
    • However, he ran out of money and was already living out of his van.
    • So Casarez stood on the highway and handed out copies of his résumé. A driver passing by tweeted a photo and Casarez's story went viral. He's received job offers from Google and other tech giants.
    • Casarez said he wants to try his hand at entrepreneurship again, at some point in the future.


    David Casarez quit his job as a web developer at General Motors just months shy of his 26th birthday.

    Years earlier, he'd made a pact with himself, that by the time he turned 26, he'd start his own business.

    So Casarez cashed out his 401(k) and packed his bags for the San Francisco Bay Area, where he planned to launch a tech startup. He described it to me as a multi-sided platform covering the food industry, picking up where services like Blue Apron had left off.

    Casarez's family thought he was crazy to leave a stable gig, especially since he wouldn't have money to cover the cost of rent in California and would have to live out of his van.

    Fast-forward one year and Casarez' story is going viral, after a driver passed him handing out résumés on the highway and tweeted a photo. (Kron4 first reported the story.)

    Casarez had run out of money for his startup and was homeless. Now he's received hundreds of job offers, including one from Google, he told The New York Post.

    I spoke with Casarez by phone and he told me that he'd like to return to the corporate or startup world for now, but he "absolutely" plans to try entrepreneurship again. "I don't think I'll ever give up on pursuing that dream," he said. "It is a dream of mine to be able to build something that's going to help society."

    At one point after he ran out of money, his vehicle was repossessed. "I just felt down in the gutter," Casarez said. "I just completely went off the grid for a bit. It was a very depressing period. But I wasn't going to let that hold me down."

    When he came up with the idea of passing out résumés on the highway, he thought, "Let me give this one last shot."

    Casarez isn't discouraged by his failure to launch his tech startup

    Casarez isn't especially disappointed at the way things turned out with his startup. "Sometimes you have a lot of failures before you have success," he said.

    I asked Casarez if he was at all influenced by "entrepreneurship porn," a term coined by Morra Aarons-Mele to describe stories about the supposedly glamorous lifestyle of company founders.

    "I did my research," he said. That's why he practiced living out of a van even when he was in Austin, Texas, working for GM.

    Despite the notoriously poor odds of startup success, "I told myself, would I rather be on my deathbed knowing I didn't take the risk or knowing that I did? That's what really pushed me to leave the comfort of working at GM," Casarez said.

    His advice for other people who want to strike out on their own? "Never give up. If you have a dream, pursue it. Take a risk, because you never know what the end result will be." As for the tumultuous past year of his life, Casarez said, "All I feel is it's a bump in the road."

    SEE ALSO: 'Entrepreneurship porn' lures young people with a pretty picture of startup life, but it glosses over the most dangerous parts

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    bethenny frankel

    • Bethenny Frankel is the CEO of Skinnygirl, a brand empire she built through her role on the reality show "Real Housewives of New York City."
    • Frankel said she did not want to be on "Real Housewives" at first, but she ended up profiting off of it.
    • Frankel said she only had $8,000 in the bank when she was cast on the reality show.

    When Bethenny Frankel signed on to do "The Real Housewives of New York," she accepted a contract for less than what she had in the bank, she said on an episode of Business Insider's podcast "This Is Success" (formerly "Success! How I Did It").

    Frankel, now the CEO of Skinnygirl, wanted to be a natural-food chef, she said, and fought for a chance to be on Martha Stewart's season of "The Apprentice" in 2005.

    "I wanted [that show] so badly and I took [it] so seriously. And I was broke; I needed the job," she said.

    In the years following "The Apprentice," Frankel kept "hustling" and was eventually approached to star in Bravo's "The Real Housewives of New York," but she wasn't thrilled with the offer, she said.

    "I didn't want to be on the show. I thought it was going to be a bunch of drunk people acting crazy and a disaster," Frankel said. "It was, and I ended up making money off of that, those drunk people." Frankel said she was offered $7,250 for the entire first season (which aired in 2008), including makeup, wardrobe, location fees, etc, she said.

    She continued: "I wasn't close to having any money — I had $8,000 to my name," Frankel said. "They met me, and they wanted me. It was so funny because I was nothing like any of the other women and nothing like any of the mandate for who to cast. They pursued me; I said no."

    Eventually Frankel agreed to the contract, with one exception. "I remember crossing out where it said that I would give any part of any of my business. The only thing I said was 'I'm not giving any of my business,'" Frankel said. This became known as the Bethenny Clause.

    Frankel said she didn't plan to use the show as a platform to sell her products. But since then, her name and career have skyrocketed. Today, Frankel runs Skinnygirl Cocktails, which she sold to Beam Global in 2011 for $100 million while retaining the name rights, and B Strong, a charity for hurricane disaster relief in Puerto Rico.

    "There's the brand of Bethenny. There's the B brand. There's the brand of me just being a woman and a mother and an entrepreneur," Frankel said. "It could be called anything. In this case, I own 100% of it. It's a great feeling."

    SEE ALSO: Skinnygirl CEO Bethenny Frankel explains how she used 'Real Housewives' to build a brand worth $100 million

    DON'T MISS: Reality TV star and Skinnygirl founder Bethenny Frankel shares her best negotiation tactic

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    Mark Zuckerberg

    • Starting a business and keeping it small is less appealing to many Americans than launching a startup and scaling it big.
    • Morra Aarons-Mele coined the term "entrepreneurship porn" to describe the unrealistic glamorization of the entrepreneurial lifestyle. It's the latest in a series of myths, she said, about what success looks like.
    • Aarons-Mele said entrepreneurship porn lures many ambitious young Americans into entrepreneurship as opposed to small business ownership, even if that might not be the best choice for them.


    "The first word in 'small business' is 'small,'" said Morra Aarons-Mele. It's a descriptor that few Americans aspire to.

    "We spend a lot of time telling ambitious people not to think small," Aarons-Mele added. That's why she thinks the prospect of entrepreneurship — and the desire to be the next Elon Musk or Mark Zuckerberg — is especially powerful in the US. "It's a very American thing to be an entrepreneur."

    Aarons-Mele is the founder of Women Online and The Mission List. She appears to have coined the term "entrepreneurship porn" in a 2014 Harvard Business Review article, to describe "an airbrushed reality in which all work is always meaningful and running your own business is a way to achieve better work/life harmony."

    Unfortunately, the realities of entrepreneurship don't always match the fantasy, according to Aarons-Mele and other experts. For one thing, many startups ultimately fail, sometimes due to the founders' ignorance and sometimes due to market factors.

    Entrepreneurs typically have grander ambitions than small business owners — but that comes with risk

    While entrepreneurship and small-business ownership overlap, there are important differences between them. Specifically, entrepreneurs typically focus on scaling their business, while small-business owners don't necessarily.

    Rates of entrepreneurship and small-business ownership in the US can vary, depending on the data source. A report from the Kauffman Foundation shows that the rate of business owners stayed roughly the same between 2011 and 2015, but the current level of business ownership is lower than in decades past.

    However, another report from the Kauffman Foundation shows that high-growth entrepreneurship has rebounded from the financial crisis and is now increasing. High-growth entrepreneurship refers to how quickly startups grew in their first five years, the share of firms reaching beyond 50 employees by their 10th year of operation, and the prevalence of firms with at least 20% annualized growth over three years and at least $2 million in annual revenue.

    It's not clear that being an entrepreneur is preferable to being a small business owner, or vice versa. To be sure, it depends on the individual.

    Whether you're an entrepreneur or a small business owner, you'll have to make some lifestyle sacrifices

    To help disillusion aspiring founders, Aarons-Mele drew a line between the lifestyle of a successful entrepreneur and a successful small business owner in The Wall Street Journal: "Small-business owners who don't grow beyond their community, or don't devote their time to promoting themselves online, will not get accolades. You won't be featured in magazines nor invited to give keynote speeches for enjoying your life and getting plenty of sleep."

    Interestingly, Gene Marks, an author who runs a 10-person consulting firm, wrote in Forbes that "many of the entrepreneurs I know prefer passion over profits." He added that legendary entrepreneurs like Zuckerberg and Jeff Bezos are "out to change the world." While they might not mind the money, they "love what they do and would do it for much, much less."

    Small business owners, on the other hand, "don't necessarily love what they do, but are still happy doing it because it means they're not doing it for someone else.  Business owners, more so than entrepreneurs, are doing it for the money."

    Aarons-Mele sees "entrepreneurship porn" as the "latest in a string of myths that we [Americans] tell ourselves" around success, starting with the rags-to-riches tales of Horatio Alger. When it comes to starting a small business, she told me, "it's a lot of what I think ambitious people might even want to escape versus create."

    As for her own career, Aarons-Mele has called herself a "hermit entrepreneur." She told Lifehacker: "Over the last decade, I've built a life that allows me to earn enough money and find just enough recognition without driving myself crazy and sacrificing my homebody self."

    She admitted that's meant "less success than some peers, and a slower path." Still, she told Lifehacker, "it's my version of success, and I love it." 

    SEE ALSO: 'Entrepreneurship porn' lures young people with a pretty picture of startup life, but it glosses over the most dangerous parts

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