38. Wharton professor Karl Ulrich on teaching entrepreneurship and value of MBA in 2023

Usually these are entrepreneurs or podcasters who tell us different lessons that they've learned from their career. But today we have a very special guest that's unlike any other that we had in our podcast. Today we have Karl Ulrich, who is a professor at Wharton. So I'll start I guess with a bit of a backstory. I went to Wharton, I graduated in 2015 with an MBA degree. And I took at least two, maybe three classes by Karl on entrepreneurship and innovation. But I think the

most impact that Karl had on me personally is so Karl started a program called Semester in San Francisco. The main campus of Wharton is in Philadelphia. And typically people go there, study there for two years, then off they go to their new jobs. But semesters in San Francisco, 70 people get to choose if they want to go to SF for four or five months, and study there, go to visit Silicon Valley companies study about entrepreneurship. It's a fascinating, very small group experience that Karl

created. And I assume it's still running to this day. And I was part of that. And it was my highlight of the whole Wharton experience. But that's not all. The thing that delights me pretty much every day in my life is this thing that you those of you who watch us in the video will see now.

It's this thing. It's a kick scooter called GZUTER. And it is a fascinating piece of hardware. It is a scooter made with some Formula One kind of technology, magnesium, aluminum deck. It can go very, very fast. And it is a fascinating thing that I ride at least two or three times a week. And yeah, Karl is a co-inventor of this. So anyway, it was a very, very long intro. Karl, welcome to the show.

male in 1960, two college educated parents in the United States. And I got to tell you, there was a 50, 60 year period where no one was better positioned. People with solid general mental ability, cognitive skills born in the United States with college educated parents, you know, just dominated for 60 years. So that that's the first thing. Dumb luck. I selected my parents. That was the first explanatory factor.

then there's a there's a kind of a curious turn of events. Another important heuristic for me throughout my whole career is I've always, whenever faced with a choice, I've always chosen to do the thing I know least about I've always just liked to learn new things and to do things I'm unqualified for. And I'm totally serious about that. I've always just barged in completely unqualified to some new domain. And I was an undergraduate at MIT, and I studied mechanical engineering. And then I

did my PhD in a lab, where I'm gonna tell you the name of it in just a second. But every time I said where I was doing my PhD, I had to go through this long explanation about what the hell it was. And it was the MIT AI lab. So what's hilarious about that is now it's like a celebrity. I'm a celebrity. I was I started in the AI lab at MIT. And in fact, at the time I was at MIT, in the AI lab, the

very seeds of neural networks were being established. And in fact, I was in the other camp, I used these logic based deep knowledge based models in what was generative AI at the time I my PhD thesis was on was basically building programs that could do design. You know, we reasoned about geometry and what wall thicknesses were and over on the other side of the lab. If I remember correctly, Jeffrey

Newton was actually either we were reading his papers, or maybe he was even a visiting professor at the time, but there was this crazy neural network stuff. And I remember looking at and saying, Look, those are just regression models. What we didn't understand was what happened when you had 100 billion parameters in your regression model that basically you can model every kind of crazy nonlinearity in the universe, and that those things would be incredibly powerful. But anyway, it's quite hilarious, because now I don't have to explain

where I did my PhD and it gives me this little bit of cache, which was completely lost on the world for the first 25 years of my career.

sea clams. Yeah, so that's obviously directly related to AI. And not only that, so that was a thesis basically on heat transfer, if you can imagine, and I would do experiments with, I'd have to drive down to Cape Cod and get these 30 kilo bags of these huge surf clams, which were, you know, maybe 1020 centimeters across, and I take them back to the lab, and we'd run these experiments on thermal processing of these clams. So that was my master's thesis.

i took a design course from a guy named warren syrian professor warren syrian is still there and i might take and he was a roboticist, nb teaching designer to get design class i really like warren we got along well and he said hey what i'm working my lab and i said great so i went and checked out the lab and he was. Working in robotics in the lab and so he had a team of about twelve bhd since a mechanical engineering eleven of them.

We're doing robotics and so i can i got some of that stuff i osmosis and my first summer i worked on robotics but then he said you know i'm kinda curious about whether we're in the say i love what we can do with a is applied to design so i came in essentially with some domain expertise design

and i had to learn the stuff and so i formed a thesis committee that had patrick winston who's the director of the lab and randy davis who was a really famous a researcher so i had these really great mentors in ai and that's how i got connected to ai and then before i knew it i was doing an ai thesis.

I had a family friend who was a professor at Harvard Business School a guy named Kim Clark He later became the Dean of Harvard Business School and Kim said hey Carl why don't you come over to HBS and just give us a talk about what you're working on we're kind of interested in technology and

They had been bringing in a bunch of technologists including Eric Lander who later led the Whitehead Institute and you know Amazing people who who they brought in to Harvard Business School as assistant professors actually and at the time I thought

Man, what kind of talk is this? Are they really just interested? I had this nagging suspicion That I ought to put on a jacket and tie and so I went over there and sure enough That was the culture of the place and I gave my AI job talk to a bunch of business school professors

And they were so polite. They just they listen carefully They asked questions, but it was my engineering job talk and I had to meet like 20 faculty in these 30-minute slots That's kind of strange and I got home in the next day Kim calls me up he says we're gonna offer you a job as an assistant professor at Harvard Business School and I just thought that was a really crazy idea So I I had a friend at the time who is an assistant professor at the MIT Sloan School Charlie fine

This is name still there and I said hey Charlie. What do you think about that? And Charlie said Why didn't we think of that? And so he asked me to give a job talk at Sloan and They offered me a job and I looked at those two offers and I I was For a brief moment seduced by the possibility of having a fireplace in my office

I'm not kidding. They have fireplaces in their office at HBS, but I thought about it and I thought you know If I go to HBS, there's no return I am a business school professor At that point if I go to the Sloan School I could just kind of leave the app this long part off my resume And I was being an MIT professor and I could probably still pivot back into engineering So I mean that that was my exact logic and so I took the job at MIT

I was a assistant professor at MIT for for five years. I had a lab in the AI lab I continued to do work on design But I also started to do some more managerial research and then actually because of family circumstances I ended up moving to Wharton in 1993 and by that time I thought okay

I'm ready to go native and just be a business school professor. And so that's what happened I became a business school professor But to circle back on the second part of your question or not I have actually to this date never had a real job And so I never never worked at a place like Google or anything like that. I have been Serial entrepreneur and I founded six companies and I in total I think I've taken maybe six years away

From academics to be a full-time founder, but I've never worked for the man. I've never had a real job

But like 2010s is probably when lots of people started to go into technology and many wanted to start their own companies. I guess, can you talk a bit about how you saw that entrepreneurship trend evolve over the years at the Wharton School?

Silicon Valley, those tech companies really highly value MBAs. And I think what they value is ambitious, talented, hardworking individual with general analytical and managerial skills. I mean, those people are just really useful to have around. And I think today, I may be wrong about this, but Amazon, for example, I think is in the top five employers at Wharton. The top employer, I think, is still McKinsey, is still consulting. And there's some finance, Goldman Sachs and

others. But the tech companies are now in the top 10, let's say, so there's several tech companies there. And that was a really important trend. And a complementary trend was towards entrepreneurship. And Wharton has founders going way back. This is as long as I have been at Wharton, there have been entrepreneurs. But the macro trend that has really changed the startup world more broadly in society, which is that the tools and infrastructure to start companies have just become much more

accessible and much lower cost. And the fact that there have been so many startup opportunities in areas where young people have particular domain expertise, so social media, apps, software generally, where you don't need necessarily 10,000 hours of experience in semiconductor physics to make a difference, those trends have led to a real boom in opportunities for young people to

be entrepreneurs. And so you put all that together. And it's no surprise, I think, that Wharton students, both undergrad and MBAs, have increasingly participated in entrepreneurship. One other key factor, I think, is there's been a fair bit of hero worship in the last couple decades on entrepreneurs. So Steve Jobs, Zuckerberg, Elon Musk, et cetera. And you no longer have to be ashamed to tell your family, your extended family, what you're doing because they idolize or at least

respect Musk and Jobs and Gates and Zuckerberg and so forth. And so I think you put all that together and it sort of explains why there's been an increased interest in entrepreneurship. When I started at Wharton, the entrepreneurial programs were located in this decrepit part of

an un-renovated building, Vance Hall, on the fourth floor. It was really awful. And if you return to campus today, it's actually my most recent project at Penn, we have a 70,000 square foot, 7,000 square meter, gleaming glass cube at 40th and Sansom that is called Venture Lab. And it's all devoted to student entrepreneurship. It's just a massive activity. Venture Lab touches

about 2,000 students a year on the Penn campus. And so the level of interest and activity in entrepreneurship has just exploded in the time I've been at Wharton.

I remember how like, I didn't want to tell them I had an MBA because like, I had this idea that I lose points for saying this. So I would just say that I had a master's from Penn and my bachelor's was in computer science. So like, I would start with that, that like I'm one of you, but also I had this master's degree and stuff that helped me get the job at Amazon, right. But then I was talking to somebody who was a mentor of mine, Arnab you know him, Rato, he's director of engineering. And I was kind of deciding between doing the engineering management job versus product management job.

Sometime in the middle of my time at Amazon, and he said a very interesting thing. He said that as a product manager, you want to be a business person with understanding of tech, as opposed to being like a techie with a bit of business background. And then it kind of nailed for me that product management, which is where actually many MBA students go to is this kind of business function, where you also need to have a domain expertise. And yeah, then it kind of settled for me, I switched to full time product management afterwards and never looked back. It's become

entrepreneurship trends and your venture lab and all that. How do you teach entrepreneurship? Yeah, it's an open question. I'm curious what you'll have to say.

Come to me all the time, and they don't even know the most basic thing like you need to identify a focal customer, a persona, a beachhead market, understand the job to be done, and figure out alternative ways to do that job. I mean, that basic logic is lost on the average first time entrepreneur who has not had any training. And we can actually teach that. And another example, I'd say many companies fail for lack of an

effective go to market system, the system by which they convert their potential market to satisfied customers, right? Just teaching what is a go to market system? How do you construct it? You know, what's a customer journey? How do you think about the playbook, the transitions customers between those phases? I mean, this is just fairly, I don't want to say wrote, but it's fairly structured content that is really helpful in doing an essential element of starting a company. So I think it's just sort of

helpful that you can't teach those things. Those things are really useful tools to teach. If you look at someone like Paul Graham, co founder of Y Combinator, he'll argue, you can't really learn entrepreneurship in school, because essence of entrepreneurship is getting out and trying something and learning from the actual experience of fielding a solution for your customers. I don't disagree with that. The objection I have to that opinion to that statement is, that's part of

what we teach. And most entrepreneurship courses, at all good universities, entrepreneurship courses are very hands on. So they are real projects, you talk to real customers, you engage with those customers with prototypes, just as you would, in an accelerator, like Y Combinator. So by saying you can teach some elements of entrepreneurship, that doesn't downplay the importance of dealing with the essential uncertainty and entrepreneurship, which leads you to be biased towards experimentation.

And that doesn't mean there aren't things you can't teach, or that doesn't mean there are not things you can teach. That's my first point. The second thing I don't have the study, my colleague, Ethan Moloch has written about it, it might be in his book, which is called the unicorns shadow. But there's actually some very nice empirical evidence that potential entrepreneurs aspiring entrepreneurs that had a single session on a key element of entrepreneurship.

I don't know understanding customer needs or something ended up performing better five years later, in some key entrepreneurial tasks. So there's also empirical evidence that we can teach entrepreneurship.

So that's, I think, another key factor in why going to business school or grad school can be useful for entrepreneurs. And let me leave it at that. So I think there's a lot of evidence that there are things that can be taught, and that being in business school does enhance performance for entrepreneurs. Another myth people have is that there are particular personality types or characteristics of entrepreneurs that there aren't really, you know, it's not like extroverts make better entrepreneurs or anything like that. I think

Yeah, general mental mental ability correlates with success, tenacity, persistence, grit, those kinds of things correlate with success. But if you just assume those are present in the entrepreneur, then clearly know how is going to be an essential element. And how else do you get know how you either have to get it the hard way, or you can get it in a more structured way in an educational setting.

model pricing, I know how to think about the kind of segmenting all of that stuff that you might as well learn at school. Basically, I did it through apprenticeship at Amazon. And yeah, you teach it as a theory and hands on projects.

uncertainty. What do you think about teaching creativity and teaching risk tolerance? Can that be taught?

we have a Scotch Club, Scotch Whisky Club, there is a community for virtually everything, including entrepreneurship. It's pretty good for exposing you to others who have either been entrepreneurs or are on the similar journey. And you can get that in hubs of entrepreneurship as well. So if you're in Silicon Valley, you can get that just by hanging out. It would be harder if you were, you know, in a less entrepreneurial community. So if you were in Atlanta, you might be better off in business school to be exposed to that.

Culture, you know, one of the lessons I think of LLM's and generative AI is that what we perceive as this black box of creativity is sort of recombination of existing knowledge plus autocomplete. And so I actually think that you can demystify a lot of what comprises creativity and describe a process that is a little more rote than most people think of to exhibit what we would call creative problems

solving. You know, I've spent my whole career teaching concept generation and how to be creative in it. There is quite a bit of process that you can apply there. And those who learn that process can just perform at a higher level. I don't doubt that there are some pretty hardwired elements of performance there. But you could take any given individual and elevate their performance through the application of some skills.

have a tournament structure. And in innovation, innovation tournaments are particularly valuable. And they're valuable for three reasons. The first reason is that in innovation, all the value is driven by an exceptional few candidates. So if you look at the distributions of outcomes of innovation projects, or of startups, or of new products are highly skewed, so that most of the value is the result of a couple percent of the

candidates. So that's the first property is value is driven by the exceptional few, and the exceptional few are worth sometimes 1000s of times more than the average. So that's the first property. The second property is you can't pick the winners from the outset. Okay, so it's just too much uncertainty to on day one, when you're looking at a raw candidate for a startup, a venture, you know, a startup venture, a new product, even a job applicant, you really can't predict very

well, which ones are going to be those outliers, there's just too much uncertainty. But fortunately, there's a third property of the problem. And that is that in almost all settings, you can reveal a lot of information with a small investment. And what that means is you can stage investments so that you can make small investments in learning in resolving uncertainty across a large number of opportunities. And then once that information about those opportunities is revealed, you can

update your assessment of the opportunities. And you can devote further resources to just a small fraction of those. So just give a simple example, if you look at an accelerator incubator, like Y combinator, they get 30,000 applications, 10,000 applications to each class, but they can use an interview, or they can use the review of an application to sort those applications to sort those candidates. And they can invest further exploration and say the top

10%. And by applying such logic through successive phases, you can reveal the exceptional few without going out of business by having to spend too much on uncertainty resolution. So that's the big idea behind tournaments.

In the pharmaceutical industry, there's a lot of tournaments used in drug discovery. On average, a new commercial drug is a one in 10,000 outcome. You had to consider 10,000 candidates for every successful drug. It costs about a billion dollars to reveal all of the uncertainty about a compound. If you were to know everything you need to know about a compound, you have to spend about a billion dollars, including is it safe in a large sample of humans? Is it effective?

It's about a billion dollar problem. So you can't spend a billion dollars on 10,000 compounds. That would be $10 trillion to know everything you need to know about those 10,000 compounds. However, you can apply filters in a sequence such that you can find the exceptional few for a tiny fraction of $10 trillion. So for example, for $1,000 per compound, you can discern whether that compound binds to a protein in the human body.

If it doesn't bind to a protein, it probably is not going to be a successful drug. Now that's not an ironclad rule, but it's a pretty good heuristic. So now I can spend $10 million on 10,000 compounds to answer the question, which of the 10,000 bind to proteins? And then I eliminate everything that doesn't bind to a protein. And now for $10 million, I've eliminated 90% of the compounds.

So that's the big idea is that filter is not perfect, but it's good enough that you can direct further investment in the more promising candidates. You just put that together over three or four filters and you end up with a system like Y Combinator, for example, that basically produces unicorns.

equity and inclusion of the organization. You know, you really want that to infuse the whole organization, you don't want to put it in its own unit. I mean, maybe such units could be useful as consultants are training and other kinds of things. But similarly, in innovation, I don't think you'd want that unit to be responsible for making the average part of the organization a little more creative or something like that. I think that's probably not the way to do it. However, central resources can be really important and really valuable.

And a way to think about it is to first recognize that it's useful to think about innovation in three categories. And Christian, Turvish and I wrote the innovation tournaments book, we use a so called three horizon framework. And horizon one is improvements, extensions, cost reductions, horizon two are adjacent opportunities, either bringing existing solutions to new customers or taking existing customers and bringing them new solutions. And horizon three is

some combination of a new to the world market or a new to the world solution. It's kind of way out there. And at Wharton in my unit, we applied a strategy that said horizon one belongs in the operating units. We have no business telling the graduate division how to improve course scheduling or something. It's within their unit, it's an improvement extension cost reduction, something they're already doing that belongs in the operating units. You could think of it almost as

process improvement. And that really has to be done. They're close to the front line, they see the data, they have to live with the solution, but it doesn't require massive new skills like it should happen in the operating units. And then horizon three, in most cases, I think organizations have to just let go of that and let little startups do that. I don't think I think they're ill suited. DHL would be very ill suited to pioneer drone delivery, in my opinion, it's just not the in their wheelhouse, you'd be better off

having some startup figure that out and then acquire that startup or partner with that startup. But horizon two is something that large organizations have to do. It's where growth comes from. And the operating units are usually not very good at it, because it requires that you allocate resources to something that's risky 25% chance of success, something like that, that may take three or four years to pay out. And so for horizon to a central unit can be really valuable. It can provide some slack

resources to explore those opportunities. It allows the organization to aggregate the opportunities so that they can be considered as a portfolio. And you can make relative comparisons across those opportunities. And it can bring a particular skill set to exploring those opportunities. So for horizon two, I do think central units are actually pretty important in most organizations.

Three of the people were outsiders and they brought a new skill set. So I think that can be useful, but I do think at least some of the people have to be kind of grizzled old timers in order to be effective.

had I not had posed a credible threat and had a lot of respect in the organization, it probably would have been killed. But because they were pretty sure I was going to get it done one way or the other, they decided, oh, we better get on board.

It's a bit of a high wire act it can go if it goes wrong You can get a cultural contagion that can just make the year terrible and so they're really risk-averse I totally understand that but I think that's true of most organizations like hey we got a lot to do here and we need to do the job we were hired to do and

Anything else is a distraction. Yeah, you know, that's the usual problem So that that's again another good reason for a central innovation unit because you can say hey We're gonna bring two-thirds of the resources required to get this going we do need some participation From your organization so we don't do it wrong, but we're bringing resources to the table. Yeah

And I have to say this on the record because I hope some of you MBA students will be listening to this. The semester in San Francisco program was absolutely the highlight of my Wharton experience, even though like academically I took as few classes as I could to maintain my immigration status. I had a two year old. It was like city of my dream, San Francisco. So basically I had like four out of seven days in a week free and they just like explore the city, you know, drove around.

The classes were very kind of easy because I took the easy classes. I didn't take the hard ones. But then I also realized that I don't want to live in San Francisco full time, which is a good testing ground.

entirely on a fly in basis, the way we do our executive MBA in San Francisco. So faculty member flies in from Philadelphia, usually teaches six hours over two consecutive days. And then what we're able to do is because we have complete control over that cohort, the schedule doesn't require interoperability with other parts of the university, we own the experience for those 60 to 80 students. As a result, we can construct a highly idiosyncratic schedule. So we can

just get out the calendar and say, Okay, we're going to put this class on this Wednesday, Thursday, and then two weeks later, we're going to do another chunk or whatever. So we construct a schedule that way. So what's interesting about that is, in the early years, I think either Ilya's year or a year after, the students figured out that the total time required to do the academic requirements was pretty small, you know, maybe 12 hours a week. And when they're in Philadelphia, we

didn't have classes. What was happening is, their schedule was really inefficient, because you'd have blocks in the day where you didn't have classes, because you need this interoperability with the rest of the university and the course schedules. But with semester in San Francisco, they had these big blocks, like entire days each week, which were not did not have classes in them. And secondly, they didn't have the social environment that you have in Philadelphia, where you have a happy hour every night, or you've got a party and you got all these amazing, tempting club activities

that are fun, but are not academics. So what we discovered was that in about year three, some huge fraction of the students went out and got jobs. And so they were doing a full academic load, but they had jobs. And they loved that. That just turned out to be a really valuable part of the experience. I mean, I call them jobs. I mean, these were typically internships of some kind, that let them explore a couple companies get a sense of what Silicon Valley was about, try different job roles.

While also being in school. And so that was something we didn't anticipate. It was a revelation as a result of the program. And I think it suggests other models for how degree programs might be structured, if you have full control over the schedule.

So I'm curious from your perspective, if somebody is already in tech, let's say they work as a product manager, but maybe not in big tech, how do they think about getting into the MBA program? Like, should they should they not like what's the what's the framework they could apply?

this academic content. It's no surprise that is not perceived as the primary benefit to most students, but you do have to do that. I mean, it is called business school after all, so you have to do some school, but that is we just learned from the semester in San Francisco can be done at about 25% of the time they are, they're allocated into this program. And for that matter, it can be done on Wikipedia or Khan Academy or Udacity or

one of those platforms as well. So that isn't the primary benefit, but it is one of the benefits. Second, they get access to a low friction pathway to attractive jobs. So my son worked at a startup. He had gone to a small abroad school, Haverford college. Most people never heard of it in Silicon Valley. He could probably not walk into a product manager job at Google, but he now is, he's an AI consultant at Google. That job, he only

had access to that job via Wharton really. So because the MBA, at least at elite MBA programs does give you a well-oiled path to high quality jobs in high quality employers. That's another key benefit. A third key benefit is it's branding and credentials. So you have Haverford college stamped on your forehead. That is really useful to some people going to medical school, to a few people in the Philadelphia area, but in Silicon Valley,

that means nothing really. But if you have Wharton stamped on your forehead, that is a credential that most people find valuable in their lives and maybe to their families and all that. I don't know what I'm up to now. Let's see the fourth benefit is you are constructing a professional network and that will serve you the rest of your life. And part of that is you are being exposed to highly ambitious people who have either already a

achieved things or on their way to achieving big things. So again, for my son, he is ambitious guy, but his graduating class of whatever, 300 people at Haverford college was very different from the 900 people he was exposed to at Wharton. He came out of Wharton just having much higher goals in terms of what he thought he could achieve. So just being exposed to that peer

group is super valuable. And then the last benefit is I mentioned earlier, graduate school is a socially sanctioned two year period, fully acceptable to your family typically that allows you pretty much unfettered exploration of what you want to do with yourself. And you know, again, for my son, that was super valuable. He didn't really know what he wanted to do. And he got to spend two years kind of just poking around thinking about that.

And if you think about that, you're working in some job, you know, you have some immediately adjacent job opportunities, but you very rarely get a chance to take a reset and think carefully and deliberately plan what you want to do. Now you put that together, that's a really compelling value proposition, at least I think it is. And so you know, if you graduate from Stanford Computer Science, and you're working in Google, I don't particularly think

you need an MBA to get some of those benefits. I mean, you don't need a credential, and you don't need access to the employers. But you could use two years to figure out what you want to do, you could use the exposure to that professional network, very diverse professional network. So that's why I say I think it's very personal. But for most people, that set of benefits is really compelling, which is why there's still 8000 people applying for 800 slots.

retailer of environmental offsets. So Terrapass offsets the environmental impact of personal activities like driving or flying by mitigating greenhouse gas emissions by through investments in alternative energy, landfill gas projects, other kinds of things. So that's Terrapass.

Third is Belvi Kitchen, which is a kitchen products company. Our most successful product is an ice cream scoop, if you can imagine. The only thing I will brag about on the ice cream scoop is that it is the preferred scoop of Jerry, as in Ben and Jerry. And he buys about 200 a year of our scoop. So it's in the MoMA as well. The SF MoMA. Okay, it's the gift shop, but still, it's the SF MoMA gift shop. That's Belvi Kitchen.

And then the fourth is my current focus is a business called Maker Stock. And it's really arcane what we do. Geez, it's even hard to explain. Okay, we basically we sell pre cut plywood and acrylic sheets, mostly to university maker labs for use in their laser cutting machines. It's a really

nichey focused business, B2B, just the kind of business I've learned to love in my old age because we have very limited competition, we solve a pain point for a customer that we can identify and count their noses. And we can find those customers, we have a go to market system that works. And it was not a massive capital investment to get it going. So that's called Maker Stock. That's my current focus. So Zutor, Terrapass, Belvi, Maker Stock.

I founded a company called Nexride, which makes bicycle components not terribly successful. I mean, sort of, you know, living dead, marginally successful. And maybe it's five, it'll come to me what maybe some of the others are. I have founded others, but those are the ones that operate successfully and have put a few dollars in my pocket.

I just thought that was not right. I had an upcoming sabbatical and I deliberately set out to start a company with the goal of just starting a company. It wasn't mission-driven at all. It was just, hey, I want to do something. The selection criteria where I wanted to do something that could be essentially self-financed – I had a small team. I had some partners so that we could finance it ourselves. I could get it up and running in about a year, which is how much time I had on my sabbatical.

We wanted to do something fun and we wanted to do something that we could sell direct. The internet was just getting going. I identified literally about 200 business opportunities. That exercise was actually the roots of the innovation tournaments work because it was the start of an innovation tournament essentially. We eventually converged on an adult kick scooter. The reason we converted – the key moment was I was reading an article in Fortune Magazine about Pixar Animation Studios.

As part of that article, they showed the inside of Pixar, which had a bunch of hipsters, young tech and creative professionals riding kid scooters around. That was how they were getting around in the building. I thought, that's really interesting. There's a job to be done there. They don't have a particularly good solution for that. What if we designed a scooter for Pixar? That was the origin story.

Honestly, we kind of lost our way because we then decided the beachhead market would be college students and that proved to be wrong. Ironically, our largest single customer for Zooter scooters ended up being Pixar Animation Studios. Just completely dumb luck randomly, John Lasseter, who was the creative director at Pixar, ordered a scooter online and I saw jlasseter at Pixar.com.

I looked at every order that came in in those early days and I literally said, I can't believe that because John Lasseter, that's where this idea came from. I sent an email, cold email to John Lasseter and I explained the whole story. He said, I won't get this right. I have like six kids and those scooters at Pixar, those were all my kid scooters. I brought them in. I love scooters. We ended up talking on the phone. We talked about doing a project with a Toy Story branded scooter and all this.

And then I don't know if you remember this, but the pinnacle for me was that the Zooter scooter was the way that Steve Jobs got around at Pixar in their new headquarters. His office, which is revealed in the Monsters Inc DVD extras, if you ever look at it, shows a photo of Steve's office. It has three objects in it. It has a Noguchi coffee table, an Eames plywood chair and a Zooter scooter. Those three objects in it.

And it's like, I can't, that story is unbelievable because that's where we started was designing a scooter for Pixar. And that's actually what happened.

My insight at the time I believed that you could get something going in a few weeks and so, you know, I think we ran like a six week launch campaign where we did demos and promotions and various things on campus and Now I know no you really need like three years to get something going in a you guess

I mean to diffuse in a market and I just didn't know how long it takes to get things going So it's possible that we quit early because we quit after about six weeks But I think the other thing we strongly underestimated is that college students are at a particularly vulnerable

Personal moment in their lives where the last thing they want to do is be seen as doing something wacky Especially, you know undergraduates and so it was accepted culturally in California to ride a skateboard And it was accepted culturally to ride a bicycle Riding a scooter was at the time not something you did

the looks weird problem and there's a lot of friction there and it takes a long time. We just didn't know that and so fortunately what happened was we had a whole other market segment that sort of took off after that launch failed at Stanford and it was the urban hipsters working in Silicon Valley and more specifically downtown San Francisco and they were already establishing

their careers. They weren't too worried about their image and they had a need and so they started buying the scooter so that's what happened but the initial market didn't work.

one over diameter. So bigger wheels, always better. And then it's the what's called the coefficient of restitution, essentially the hysteresis, the frictional losses in the compression and decompression of the rubber. We chose the biggest wheel we thought we could get away with, which was I think 180 millimeters, which is two X the size of a Razor scooter

wheel. So that's the first order effect. And then we worked really, really hard on urethane formulation to get a really low hysteresis rubber, urethane rubber and put those things together. That's what makes your scooter frictionless. The bearing is completely irrelevant.

So fall of 1999 I got an email from a guy named Uwe in Austria with a photo of him in the alps with goggles on a scooter and the email was, Karl, you know the züter will go 60 kilometers per hour. He's riding it down this alpine road. So it will go at least 60 kilometers an hour.

first thought. But then the second thing, the second success factor is just show up every day with enthusiasm and optimism. And before you know it, you've done some stuff. And I think that's a pretty good rule to live by.

It's just a delight to observe it as a social scene. And they often have some smart things to say. So I like all in. And I really like odd lots. If you're all interested in financial markets, odd lots is fantastic. How this pilot ODD lots L OTS. So that it's a Bloomberg podcast, but they are their financial reporters. They just do really smart content on the economy and interview really good people on the economy. So I like those. Yeah, cool. Is there a book?

Truck full of money I think or truckloads of money and he also has a fantastic biography of Paul Farmer who's the founder of Partners in Health called Mountains Beyond Mountains. So anything by Tracy Kidder is fantastic. I loved the biography of the Wright brothers by I think it's McCullough biography really interesting. And of course the Isaacson biographies are you know the one of Jobs. He was such a despicable human being you know it's just like stunning.

Revelation of how somebody who's made that kind of contributions to society could be that kind of human. It just makes you reveals a lot about the world and about people. I haven't yet read the Musk biography. I'll probably read it. I've heard it's a little disappointing, but I'm sure I'll read it.

reach the midlife crisis and they're like, I'm too old to start a company. But your example clearly shows that no, life just begins at that age.

stressful thing to do. Whenever I've been a CEO, every single night, as I go to sleep, some awful breakeven calculation is going on in my head. And it's just really stressful. It's not for everyone. I'll tell you that. So I think it is a young person's game. But on the other hand, wisdom and knowledge is pre valuable. So that probably that sweet spot is yeah, 40 ish is probably the sweet spot.