You're listening to Bloomberg Business Week with Carol Messer and Tim Stenebeck on Bloomberg Radio.
What do Josh Hicks, the co founder have plated, Jenny Flies, co founder of Rent the Runway and Guilt Group, and glam Squad founder Alexandra Wilkis Wilson all have in common. They're all entrepreneurs. Of course, they also went to Harvard Business School, but they have something else in common.
Well, and they were once a head of startups that became so much more right. They're also all featured in a new book written by two startup founders and angel investors. The book is called Smart Startups What Every Entrepreneur Needs to Know Advice from eighteen Harvard Business School founders. And we've got the authors of the book here, Katalina Daniels, venture partner at Entrepreneurs Roundtable accelerator, and Jim Sherman, Angel
investor and entrepreneur here, both in our Bloomberg Interactor Broker Studio. Welcome, Welcome, congratulations on the book. My guess is your world you're constantly thinking about the startup community in terms of what you do at Harvard.
Well, in terms of thinking about the community. Yes, because we've both been startup founders ourselves, actually so myself with having launched or exited three different companies, Catalina as well. And we came together, I guess about six years ago. We were classmates at HBS, but we came together to write this book really because we wanted to impart our
own wisdom from having spent time as entrepreneurs. But we also thought it would be super special to write the book including many other HBS founders of companies, and to learn about the collective wisdom that they bring to bear as well.
Well.
Maybe by saying it Harvard, I meant like, what is it about what's the secret sauce? Because we've gone to a lot of business schools, done broadcasts, and there is something about certain environments that are just right for entrepreneurship. Oh is that fair to say that?
Yes? I mean you mean in business school what the secret sauce is? I think it all starts with, uh, you know, admission, the type of people that they admit to the school. Harvard Business School is now doing a great job in terms of entrepreneurship. I mean has a huge number of Unicorn founders, huge number of founders in general to be an entrepreneur. To be a founder, you need to have a certain personality. You need to be resilient, you need to show passion, you need to be willing
to go for it. And I think it all starts with the admission, you know, admitting people that have these traits. That's one thing. But then you know, there's so many courses at business school taught by wonderful professors that probably, well we were studying at the time that there were only two entrepreneurship classes, so we missed up.
We missed out quite a lot.
It's probably a lot.
Yeah, it's it's it doesn't is there really? And you know, wonderful professors. You must know that a business school, the Harvard Business School is based on a case study methods.
We mentioned it all the time, so you know, I mean there is something between recruiting the right people, putting them in front of the right people, talking about the right topics that should inspire.
These people to basically go out do something and become successful.
We're going to talk about those successful people and some of the companies they've started and the commonality. We're going to come back continue talking on smart startups. It's a new book right here on Bloomberg. I want to get back to the authors of a new book, Tim.
Yeah, Katleena Daniels, and James Sherman. They are the co authors of Smart Startups, whatevery entrepreneur, entrepreneur needs to know advice from eighteen Harvard Business School founders. They're here in our Bloomberg Interactive broker's studio, Jams, I want to just ask you the question that I think you probably get a lot which is a lot of entrepreneurs would would sort of scoff at the idea even going to business school. They say, we don't need to go to business school.
I mean, we'll get some of the most prominent entrepreneurs out there today. Mark Zuckerberg dropped out of Harvard, didn't go to graduate school. Bezos did not go to get an MBA.
What would you say to those folks, Well.
I'd say that you certainly can be successful if you don't go to business school. And you mentioned a few great names of people that became huge successes. So you don't have to go to business school to be a successful startup founder. But I think you're going to increase your odds of success if you do, especially these days, at the school where they've got a tremendously robust set of courses around entrepreneurship. So you will learn fundamentals, you will learn frameworks, you will learn.
Case study through the case study method.
Successes and failures, and I think that can only help and improve your odds of success. And by the way, that's very important because the fact is seventy percent of seeded startups are going to fail. Seventy percent, So keep that in mind.
Odds are not with you.
Yeah, exactly, so you improve the odds as best you can.
Yeah.
No, it's interesting that you say that. Come on back in. As you guys worked on putting this book, what was it that kind of stuck out for you or stood out for you in terms of the individuals you profile, the businesses you profile, the entrepreneurs that you profiled.
Well, many things, actually, and we don't have that much time, so I'm not going to mention everything, but a couple of things stood out. For example, there is this myth with within the entrepreneurial ecosystem that you need to have a certain team to start with, not go for it alone, but have two or three co founders, a ceo, CTO, a cmo or I would.
Say, no, no, and no, is that true? Do you need it?
Well, I mean it's you can need it, but you don't have to. What I mean by that is what came out of our research and our interviews is multiple models can work, and it's there is no myth about the twosome or the freesome. We had a we had multiple solo founders. We had a team of five recruited by headhunters or by one headhunter. We had a mom and her son, we had a married couple, we had best friends. So you know, this was a bit of a surprise because as an angel investor, you know you're
in the middle levon these discussions. Should we invest in that team or not? Well, I mean they don't have a CTO, or he or she is alone. Well, I mean look at these cases. It was all over the place. So that's one example. There are multiple examples. I think that's why the book is interesting. You know, Jim and I started with an idea of what we would write about because we've both been entrepreneurs, were angel investors operating the tech ecosystem. But I can assure you that the
result is different than what we had in mind. When we started come.
On in well as Catolina was beginning to give you just one exit example of some surprises that we had not expected, I mean, another one, if I were to think of it would be how creative people were invalidating the demand for their service before raising money or anything material in terms of fundraising. And that was really impressive with how creative they were in coming up with ways to validate that consumers or businesses would be interested in
their product or service. So, for example, rent the Runway, which everyone knows today a very successful company, public company rental of dresses. The way they began to prove that
model was not even putting up a website. They actually did pop up stores at several college campuses to demonstrate that women were interested, not only interested in renting the dresses, but were passionate with this opportunity, and they videotaped it further so that they could document that passion, which was very impressive when they then presented those findings to venture capitalists later. So, these kinds of creative methods to validate the demand was something that really surprised me.
I do forgive me, but I have to push back a little bit with a couple of the examples in the book, just because you know, sometimes they enter their life as a public company and things don't necessarily go totally as planned. Shares of Rent the Runway have plummeted this year. It's been tough since the IPO Blue Apron. I mean I was there at the New York Stock Exchange when the company went public. It's a shadow of its former self today. I mean it's you got an
eighty three million dollar market cap. Talk to me a little bit about how things are still. There's still speed bumps after you know, quote unquote successful exit.
I mean, to be fair, we don't cover what happened after the exits for the companies. We don't get into that because when there's the exit, we do analyze whether we think it might have been successful or not right. If it was a fire sale exit and investors didn't get their money back, that's one scenario. If there's an exit where everyone did get a return, that's something else. But we we actually don't attempt to cover what happened years later after going public in this case.
But I do wonder it's like venture capitalists when you guys are looking at you know, offers or ideas that are out there. An entrepreneur comes to you.
Can you tell the difference.
Between something that may have some legs, may go public, but you don't know if it'll be a longer, longer, longer term play versus something you're like, okay, this is transformative. Do you know as a venture capitalist and I know you guys play at a different part well of the spectrum and a lot of ideas go out there.
Yeah, So just to be clear, we're we're angels, which is just very very you know, so you really don't know basically, I mean, but you need to look at a couple of things which you're willing to throw right, because it's not always a ton of money, right, but willing to invest in a bunch, yeah, because they're always startup. But so the model is, or you know, the way you think about it is, is this a team that has some of the traits we talked about two minutes ago,
you know, the passion, the resilience, et cetera. As as a founder, I mean, there are a lot of things you don't control. So the very first thing is you invest in a team.
How can I tell that about a team?
Though?
Just by meeting people I feel like it's like when you so tough.
I don't know if you ever like I had to try out to be an ra and they actually had to do like this team dynamic and that was such a big part of the interview. You see how we interacted.
Who was the body.
But I'm wondering how you guys do it well.
I mean, you know, I don't know if we've got the answer. But basically, you look at.
Do you invest if you don't like them, I.
Don't invest if well maybe sometimes that's that's that's that's something else. I mean, you know, you don't need to be best friends with the I don't have.
To like my doctor. But if I know they're good, I'm good exactly.
But but there is something within the investory community where you know that some investors have nose for a good startups, et cetera. And we talk about that in the book. There is this set the dominos thing. I mean, if you find a good investor that invest in you, maybe other ones will funnel. They might not be in love with you as a person, but they might look at somebody else that has done very good investments in the
past and think, okay, this is a good opportunity. You know, I'm not in love with the person or the people pushing the opportunity, but it's a good opportunity. It's the good time, a good time to get what they're trying to say, a set of good investors, you know, and you could do it, I think, Jim, did you could?
Did you go ahead? Jim? No, no. I was just going to add that.
No?
I think a lot of times people as an angel investors or vcs talk about founder fit. Are they a right fit for the opportunity, And you have to be very careful as well about founders who are a practical and charismatic and can sell a vision and a story.
Because by the way, they have to.
They are the chief sales officer, but not just in closing sales, in terms of hiring in her getting partners, getting suppliers. They're constantly out there selling the vision and moving things along. It has to be part of the job, right that as part and parcel of the job. But they can't be delusional as well. They can't be delusional and you know, because investors can sniff that, and they can't be annoying because if people are going to have
to want to work for this founder. So that's really I've seen many things.
You wonder about. I was just like, we're running out of time, but you make you know, you wonder about these individuals who attract a ton of investor money really quickly, just quickly.
Yes, you know, like the Adam Newman's of the world.
Number the eighteen founders that we interviewed raised one point seven billion dollars at time of writing. So yeah, so they obviously like, so you know, whatever measure you used, many made it.
Many made it and some didn't. And we talk about both.
Well, it's very interesting. It's called Smart Startups. What Every Entrepreneur Needs to Know Advice from eighteen Harvard Business School founders Katalena and Daniels and Jim Sherman. They are the co authors