- \n
- Yes we can<\/a><\/strong><\/li>\n\n\n\n
- Problem first logic<\/a><\/strong><\/li>\n\n\n\n
- Think narrow not broad<\/a><\/strong><\/li>\n\n\n\n
- Create something that customers don\u2019t even dream that they want or need<\/a><\/strong><\/li>\n\n\n\n
- Ask for the cash and ride the float<\/a><\/strong><\/li>\n\n\n\n
- Borrow the elements you need to start your business<\/a><\/strong><\/li>\n<\/ol>\n\n\n\n
- \n
- Successful alumni<\/a><\/strong><\/li>\n\n\n\n
- What\u2019s the difference between the entrepreneur that succeeds and the one that doesn\u2019t?<\/a><\/strong><\/li>\n\n\n\n
- Entrepreneurs are not good at taking risks\u2014they\u2019re just good at managing them<\/a><\/strong><\/li>\n\n\n\n
- Find an industry that aligns with your interests<\/a><\/strong><\/li>\n<\/ul>\n\n\n
Becoming a professor at the London Business School<\/strong><\/h2>\n\n\n\n
Bex Burn-Callander:<\/strong><\/h3>\n\n\n\n
So why don\u2019t we start with how you got started down this path. Why your interest in helping would-be founders, current founders build better businesses? Where did it all start?<\/p>\n\n\n\n
John Mullins:<\/strong><\/h3>\n\n\n\n
Well, I think it started at midlife. I was in my 40s and I\u2019d been in the retailing industry in the US for 20 years and I felt like I wasn\u2019t learning enough anymore. I was doing the same thing over and over again.<\/p>\n\n\n\n
And so I started to think about, well, maybe should I do something different in the second half of my career? So I got some career counselling to figure out what I might do and came up with 2 ideas actually.<\/p>\n\n\n\n
One of them is to do what you do, which is to be a business journalist, and the other was to be a professor.<\/p>\n\n\n\n
And I said, \u201cWell, I could test the other one, the professor idea.\u201d<\/p>\n\n\n\n
So I called a couple universities in Denver where I was living at the time and said, \u201cCould I teach marketing 101 for you next term?\u201d And it turns out they both said yes.<\/p>\n\n\n\n
So I ended up teaching 2 different groups of students the same material but on 2 different schedules, and that turned out to be great fun. So I said, \u201cOkay, I\u2019m going to do this.\u201d<\/p>\n\n\n\n
And I went and got a PhD at midlife, which is not the time most people do that. And it\u2019s been a fantastic second career. I am so lucky to be able to do what I do.<\/p>\n\n\n\n
Bex Burn-Callander:<\/strong><\/h3>\n\n\n\n
I\u2019m very, very glad you didn\u2019t go for the journalism route because you\u2019d put me out of a job.<\/p>\n\n\n\n
You started with the marketing, but you now teach. Your course seems to cover everything from accounting to go to market strategies. So how did you blossom into a more one-stop shop for the entrepreneur?<\/p>\n\n\n\n
John Mullins:<\/strong><\/h3>\n\n\n\n
I always had a marketing perspective.<\/p>\n\n\n\n
I always had a perspective when I was working in retail about what\u2019s best for the customer, because if you don\u2019t have a customer, as Peter Drucker said, you probably don\u2019t have a business either, so you got to understand the customer and deliver value to that customer.<\/p>\n\n\n\n
So that had always been my perspective. But when I went off to do my PhD, I was going to actually do it in entrepreneurship and a couple of people I trusted said, \u201cOh no, don\u2019t do that. You\u2019ll never get a job.\u201d<\/p>\n\n\n\n
Because back in those days, entrepreneurship was just thought to be war stories and nothing of very much interest. So I said, \u201cOkay, I\u2019ll get a PhD in marketing.\u201d<\/p>\n\n\n\n
But once I got employed, I said, \u201cWhat I really want to do is I want to teach entrepreneurship.\u201d Because I\u2019d spent most of my 20-year career in retail doing that. I worked for the Gap stores when it was small and helped make it bigger. That was highly entrepreneurial.<\/p>\n\n\n\n
And then I did 2 startups, one of which I took public, that one failed so there were lots of lessons there. So I wanted to focus on helping entrepreneurs start and grow their businesses and that\u2019s what I\u2019ve been doing for decades now.<\/p>\n\n\n\n
What are the blind spots for would-be entrepreneurs?<\/strong><\/h2>\n\n\n\n
Bex Burn-Callander:<\/strong><\/h3>\n\n\n\n
And I guess you have this unique perspective because you have been teaching for such a long time. So are there perennial things that come up again and again, gaps, blind spots in would-be entrepreneurs vision that you like to help correct early on and can you tell me about a couple of those?<\/p>\n\n\n\n
John Mullins:<\/strong><\/h3>\n\n\n\n
There are a couple of them. One is the myth that we always hear that entrepreneurship is a solo sport. These Branson-like founders who somehow succeed against all odds.<\/p>\n\n\n\n
But actually, it\u2019s not a solo sport, it\u2019s a team sport when played to win. And I think that\u2019s the first eye-opening message that people running small businesses need to get.<\/p>\n\n\n\n
If you\u2019re going to grow that small business and turn it into a big one, if that\u2019s your ambition, and it\u2019s not the ambition for everybody.<\/p>\n\n\n\n
But if that\u2019s your ambition, then figure out what kind of partner you need who will complement your skills, not a clone of your skills, but who will complement your skills and bring to the party something you don\u2019t bring, and then maybe you\u2019ll get yourself on a better growth path. That\u2019s number one.<\/p>\n\n\n\n
I think the second one is there\u2019s often a focus on competition. How can I beat the competition? But most entrepreneurs with really good ideas actually don\u2019t have a lot of competition because they\u2019ve identified a customer problem that isn\u2019t well satisfied by the current offering.<\/p>\n\n\n\n
So it\u2019s not about the competition, it\u2019s about satisfying that customer. And so the second one is, don\u2019t worry so much about competition, worry about your customer.<\/p>\n\n\n\n
Serve your customer well you\u2019ll be in good hands.<\/p>\n\n\n\n
Don\u2019t let your competition change what makes your brand unique<\/strong><\/h2>\n\n\n\n
Bex Burn-Callander:<\/strong><\/h3>\n\n\n\n
I often hear that just watching the would-be or supposed competition, it\u2019s just a distraction anyway.<\/p>\n\n\n\n
And if you try and watch what they\u2019re doing and accidentally copy something that they\u2019re doing that might not be the right thing for your business.<\/p>\n\n\n\n
That might\u2019ve been why customers are moving away from them in the first place.<\/p>\n\n\n\n
John Mullins:<\/strong><\/h3>\n\n\n\n
In the last couple of weeks, I\u2019ve been reading about Southwest Airlines in the US, which I flew with yesterday actually. And there\u2019s one of these investors who\u2019s taken a big stake in Southwest because he knows how to run Southwest better than Southwest knows, of course.<\/p>\n\n\n\n
And he thinks Southwest has not kept up with the times and needs to do things that other airlines are doing. Well, Southwest has been the only airline to make money year after year after year when most other airlines don\u2019t make any money.<\/p>\n\n\n\n
So the last thing you want to do is do what the other airlines want to do. You want to continue to be unique, and Southwest has done that.<\/p>\n\n\n\n
Bex Burn-Callander:<\/strong><\/h3>\n\n\n\n
For anyone in Blighty who hasn\u2019t flown Southwest, you want to just tell us a bit about what makes that airline unique? I know a little bit, but as you\u2019ve just flown with them, I\u2019d like to hear your take on it.<\/p>\n\n\n\n
John Mullins:<\/strong><\/h3>\n\n\n\n
Well, number one, it\u2019s fun. All the people they hire are people people. They\u2019re on the plane to have fun themselves and have fun with you.<\/p>\n\n\n\n
And so instead of the boring, perhaps tape recorded, or video recorded presentation you\u2019d get on how to buckle your seatbelt and all that stuff, you might get a rap song about how to do that. It\u2019s just really fun.<\/p>\n\n\n\n
And the people who work at Southwest clearly love their jobs. And in a service industry, if you take really good care of your people and your people love their work, guess what? They\u2019re going to take really good care of the customer.<\/p>\n\n\n\n
Bex Burn-Callander:<\/strong><\/h3>\n\n\n\n
I love that. I\u2019d love to just hear all my safety briefings in the form of rap. That would be perfect for me.<\/p>\n\n\n\n
The best leaders are authentically themselves<\/strong><\/h2>\n\n\n\n
Bex Burn-Callander:<\/strong><\/h3>\n\n\n\n
And your first point, John, was about how entrepreneurship is not a solo sport. And I wanted to talk to you a bit about leadership as a theme because you help people with that.<\/p>\n\n\n\n
You help people become better managers of people, more adept at sharing their vision and their mission.<\/p>\n\n\n\n
And I\u2019d love to hear a bit about what you teach and what you would advise people who are really hoping to get the right on the bus. How do they become better leaders? Is there a mindset they should adopt or is there a particular winning formula to being a great leader?<\/p>\n\n\n\n
John Mullins:<\/strong><\/h3>\n\n\n\n
No. There isn\u2019t a single winning formula. Every leader is different, and the best leaders are authentically themselves. They are who they are. They\u2019re comfortable in their own skin, they know where they want to take the bus, and they\u2019re very good at articulating that vision.<\/p>\n\n\n\n
Here\u2019s where we\u2019re trying to go, and would you like to be a part of this? And if you can do that effectively, you\u2019ll bring on great employees who want to serve that, follow that journey with you.<\/p>\n\n\n\n
You\u2019ll have a better time getting customers on board because customers want to be part of something special as well.<\/p>\n\n\n\n
And often you\u2019ll get better breaks from suppliers because your suppliers say, \u201cWell, yeah, we can sell our stuff to anybody, but let\u2019s sell it to these guys because they\u2019re going to do something really special, and we\u2019ll be part of that journey.\u201d<\/p>\n\n\n\n
And I learned that at Gap when I worked there all those years ago. It makes an enormous difference.<\/p>\n\n\n\n
How Gap became the best place to buy jeans<\/strong><\/h2>\n\n\n\n
Bex Burn-Callander:<\/strong><\/h3>\n\n\n\n
So what happened at Gap then? How did you see that leadership coming to the fore when you were at gap? One of the most recognizable brands of the last 30, 40 years.<\/p>\n\n\n\n
John Mullins:<\/strong><\/h3>\n\n\n\n
So Gap was founded by a guy named Don Fisher. Don is 6 ft 4, really tall guy. He was a real estate developer at the time, which meant that he wore jeans every day on the job.<\/p>\n\n\n\n
But he\u2019d go to a department store to buy jeans, and they would never have his size because he was a big guy. So he said, \u201cThere\u2019s a problem here. Maybe I need to start a business and solve that problem.\u201d<\/p>\n\n\n\n
And in those days, we didn\u2019t have point of sale systems that would tell the store exactly what had been sold every day. We now have those systems, but then we didn\u2019t.<\/p>\n\n\n\n
So what would happen in a department store selling Levi jeans, for example, which is what Gap sold for the first 10 or 15 years of its existence, when the pile of Levi\u2019s on the table got smaller, the store would say, \u201cOkay, we need more Levi\u2019s. Give us the standard size assortment.\u201d And Levi\u2019s would ship it.<\/p>\n\n\n\n
But do you want to guess how many stock keeping units there are in a Levi\u2019s 501 jean? How many different size length waist combinations would you guess there are? Give me a number.<\/p>\n\n\n\n
Bex Burn-Callander:<\/strong><\/h3>\n\n\n\n
30.<\/p>\n\n\n\n
John Mullins:<\/strong><\/h3>\n\n\n\n
81.<\/p>\n\n\n\n
Bex Burn-Callander:<\/strong><\/h3>\n\n\n\n
Oh, okay. Quite a lot more.<\/p>\n\n\n\n
John Mullins:<\/strong><\/h3>\n\n\n\n
Astonishing. And that\u2019s just one style. And then there are 505s and 517s and so on. So what Don and our team figured out is that we can put in place a system whereby we\u2019ll put 2 price tags on every garment instead of 1.<\/p>\n\n\n\n
And when the customer buys it, we\u2019ll tear that tag off, put it in a cigar box under the cash register, and at night go key the code into a tape-recorded device that would be polled overnight.<\/p>\n\n\n\n
And the distribution centre would say, \u201cAha. The store number 101 sold a pair of Levi 501s in size 32-34. We need to replenish it this week.\u201d<\/p>\n\n\n\n
Not rocket science, but it took thinking out of the box to put in place a system that eventually technology put in place. Now everybody can do that, but at that time it didn\u2019t.<\/p>\n\n\n\n
So we became the Go-to place to buy Levi\u2019s, because guess what? We had your size in stock, and we merchandised the store in those days by size.<\/p>\n\n\n\n
So I would walk into a Gap store, I know my size, 32, 34, and I could walk up right to the part of the pants wall, and there are all the 32, 34s. The denims, the corduroys, the chinos, everything. It\u2019s all right there. That\u2019s my store. I didn\u2019t need the rest of the store.<\/p>\n\n\n\n
So we did some remarkable things. But it was because of Don Fisher\u2019s leadership that we\u2019re going to go be the best place in the world to buy jeans. And we were.<\/p>\n\n\n\n
Bex Burn-Callander:<\/strong><\/h3>\n\n\n\n
That is such a cool example, but my goodness, the horror I felt when you were talking about manually keying in all the numbers from the barcodes and keeping the labels in a cigar box.<\/p>\n\n\n\n
Call progress a pain sometimes, but that\u2019s definitely progress for the greater good that we\u2019ve got automatic systems to do that. Wow, that must\u2019ve taken hours.<\/p>\n\n\n\n
John Mullins:<\/strong><\/h3>\n\n\n\n
Well, Reid Hoffman was quoted recently as saying, \u201cIn order to scale a business at the beginning, you have to do things that don\u2019t scale.\u201d<\/p>\n\n\n\n
That wasn\u2019t a particularly scalable thing to do, keying in all those things one by one, but boy, was it effective.<\/p>\n\n\n\n
Build your confidence one step at a time and measure your success<\/strong><\/h2>\n\n\n\n
Bex Burn-Callander:<\/strong><\/h3>\n\n\n\n
And we\u2019ve got a loose theme on this series of the show about confidence. And I know that you touch on confidence when you talk about the entrepreneurial mindset.<\/p>\n\n\n\n
Can you tell me a bit about how maybe someone who\u2019s earlier on in their journey can start to build confidence?<\/p>\n\n\n\n
Because often that comes with success. It\u2019s a validation and then you become more confident. But how do you build that before you have that validation?<\/p>\n\n\n\n
John Mullins:<\/strong><\/h3>\n\n\n\n
Well, you just said it, Bex. Confidence is built through demonstrated performance. When you\u2019ve done something and you\u2019ve done it effectively, you build a little confidence. Then you do it again and you\u2019re successful again, you build some more confidence.<\/p>\n\n\n\n
So there\u2019s no magic way to say, \u201cAha. I\u2019m going to do something I\u2019ve never done before, but I\u2019m confident about it.\u201d Actually, it\u2019s a pretty open question.<\/p>\n\n\n\n
We know what the prior odds of entrepreneurship are. Most businesses fail and many of them fail very quickly. So the prior odds are tough. You can\u2019t go in and be blindly confident.<\/p>\n\n\n\n
The way you get confident is you take one step at a time, you measure. So metrics become crucially important. You measure the progress.<\/p>\n\n\n\n
And as you begin to see the metrics telling you you\u2019re delivering good value to your customer, then you get confidence. That\u2019s how you build it.<\/p>\n\n\n\n
Bex Burn-Callander:<\/strong><\/h3>\n\n\n\n
So you\u2019ve got to put processes in, I guess, to measure those successes almost on a granular level quite early on, because that\u2019s actually the feedback you\u2019ll get. It will have a bigger impact, I guess, on your ability to perform because you\u2019ll be taking in these little nudges that you\u2019re doing the right thing.<\/p>\n\n\n\n
John Mullins:<\/strong><\/h3>\n\n\n\n
Exactly. And then you have data. And with that data, not only does it build your own confidence that you\u2019re on the right path.<\/p>\n\n\n\n
But it also helps you go to your supplier and say, \u201cLook what we\u2019re doing here. We\u2019re going to grow this. I now need to give terms. You need to give me 30-day terms where I was maybe paying you in advance at the beginning.\u201d<\/p>\n\n\n\n
Or you go to customers, and you show them the progress. These other customers are doing this. Do you want to be a part of this? And with your employees too. The metrics make a big difference. That\u2019s how you build confidence.<\/p>\n\n\n\n
Bex Burn-Callander:<\/strong><\/h3>\n\n\n\n
That\u2019s great advice. And what about in your life? What role has confidence played in your career? Have you ever had to fake it before you make it or come back from a crisis of confidence? Could you share a period of time where confidence was hanging in the balance or not?<\/p>\n\n\n\n
John Mullins:<\/strong><\/h3>\n\n\n\n
Somehow, I grew up being a problem solver. I think it was because my mum and dad let my brothers, and I make our own decisions. They didn\u2019t tell us what to do. We didn\u2019t have helicopter parents.<\/p>\n\n\n\n
So we were pretty lucky that we learned to carve our own paths. And every once in a while, you fail, but a failure isn\u2019t a failure, it\u2019s a lesson, and you move on.<\/p>\n\n\n\n
So I always had confidence that whatever the problem was, I can solve this problem. And I still feel that way today.<\/p>\n\n\n\n
What are the 6 rules to break for successful entrepreneurship?<\/strong><\/h2>\n\n\n\n
Bex Burn-Callander:<\/strong><\/h3>\n\n\n\n
And I guess it takes confidence to break the rules. And I know that this is the subject of your latest book. So can you talk to me a bit about rule breaking? So which rule should we be breaking? When?<\/p>\n\n\n\n
We\u2019ve got some product placement. Anyone watching on the video, here\u2019s the beautiful book. <\/p>\n\n\n\n
Tell me about how entrepreneurs have rule breaking mindset, and what do you mean by that?<\/p>\n\n\n\n
John Mullins:<\/strong><\/h3>\n\n\n\n
Well, first, let me tell you what I don\u2019t mean. I don\u2019t mean breaking the law.<\/p>\n\n\n\n
But what\u2019s happened over the last you 50 years maybe since business schools began to be really the key developers of top level talent around the world to run organizations of all kinds, not just businesses, but NGOs and parts of government as well. What\u2019s happened is the set of best practices has developed. Here are the things you should do to run a business.<\/p>\n\n\n\n
Well, it turns out that entrepreneurs, many of them, not all of them, but many of them do things that fly in the face of these commonly accepted rules that have kind of developed mostly in big companies over the years.<\/p>\n\n\n\n
And it\u2019s that ability to break those conventional rules. I call these entrepreneurs counter conventional entrepreneurs because they break the conventional rules and that enables them to mitigate risk.<\/p>\n\n\n\n
It enables them to pursue opportunities that a bigger company wouldn\u2019t pursue. And I\u2019d be happy to talk through them if you\u2019d like to do that.<\/p>\n\n\n\n
Bex Burn-Callander:<\/strong><\/h3>\n\n\n\n
Yeah. I need to get some examples of these kinds of rules, and I\u2019m sure our listeners are keen to see how that works in practice.<\/p>\n\n\n\n
1. Yes we can<\/strong><\/h2>\n\n\n\n
John Mullins:<\/strong><\/h3>\n\n\n\n
So the first one comes out of the sense that in a big company, what you\u2019re supposed to do is stick to your knitting.<\/p>\n\n\n\n
You figure out what you\u2019re really good at, that\u2019s what you do. You build a set of what are called core competencies. You make them more robust, you invest in them, you nurture them.<\/p>\n\n\n\n
And if somebody asks you to do something that falls outside of that, you\u2019re supposed to say, \u201cNo, we don\u2019t do that. We stick to our knitting.\u201d<\/p>\n\n\n\n
Well, entrepreneurs don\u2019t like to be bound by that.<\/p>\n\n\n\n
So when Jeff Bezos realized that the physical book business was about to be disrupted and turned digital, he said, \u201cOh my goodness, our physical distribution business is at threat here. We\u2019re going to have to get into the e-book business, and that means we\u2019re going to have to build an e-book reader.\u201d<\/p>\n\n\n\n
Because there wasn\u2019t any good one at the time, and there wasn\u2019t much demand for e-books at the time, but he saw the trend coming. And the result, of course was the Kindle.<\/p>\n\n\n\n
But did Amazon have any ability to build a hardware product? Of course it didn\u2019t. But off they went and did it anyway.<\/p>\n\n\n\n
So I tell some stories in the book about companies that when they see an opportunity presented to them by trends in the marketplace, as was the case for Bezos or by a customer asking for something that\u2019s off the beaten path, you go, \u201cYeah, we could do that.\u201d<\/p>\n\n\n\n
And then you go back to your office, or your kitchen and you go, \u201cOh my God, how the hell am I now going to deliver on what I just said I could do?\u201d<\/p>\n\n\n\n
But entrepreneurs are comfortable doing that. Or maybe not comfortable. They\u2019re challenged by doing it, but they\u2019re problem solvers and off they go.<\/p>\n\n\n\n
So the first rule is what I call, yes, we can. You don\u2019t have to be bound by what you did yesterday. You can do some new things, and that new path may take you to the promised land.<\/p>\n\n\n\n
Imagine what Apple would be today if they had not pivoted from making Macintosh PCs to making the iPod, iTunes, and now the iPhone? Vastly different business today. Well, there are stories about that. So that\u2019s the first rule.<\/p>\n\n\n\n
2. Problem first logic<\/strong><\/h2>\n\n\n\n
John Mullins:<\/h3>\n\n\n\n
Second one is what I call problem first logic. So in most big companies today, think about Coca-Cola, for example. They used to be just Coke, and then there was Diet Coke. That did pretty well. And then they said, \u201cOkay, let\u2019s do New Coke.\u201d<\/p>\n\n\n\n
Oops. That one didn\u2019t work. People wanted the traditional taste of Coca-Cola, not New Coke so that was a bomb.<\/p>\n\n\n\n
But they\u2019ve continued to do all these new Cokes. So we have Diet Coke and Coke Zero, and there was Coke Natural in a green bottle for a little while. That didn\u2019t work either.<\/p>\n\n\n\n
But these are all just little tweaks. Is this innovation Bex? I don\u2019t think so.<\/p>\n\n\n\n
And the same thing with Tide. In the UK we use Ariel, but when I\u2019m in the US we use Procter & Gamble\u2019s Tide. That\u2019s the detergent our family\u2019s used for years.<\/p>\n\n\n\n
And we laugh because we can tell every time the brand manager changes for Tide because they might change the scent from say, mountain fresh to sea breeze, or they take the blue speckles out and they put green speckles in, and they call it new improved.<\/p>\n\n\n\n
Come on. They\u2019re all focused on the product.<\/p>\n\n\n\n
But good entrepreneurs don\u2019t focus on the product, they focus on a problem.<\/p>\n\n\n\n
So I tell the story in the book of Nike whose founders said the running shoes are made for sprinters. The running shoes back then at the origins of Nike, were made for sprinters.<\/p>\n\n\n\n
They weren\u2019t made for distance runners. And distance runners don\u2019t train by running around tracks. Where do they train? They run on dirt roads and paths, and they\u2019re always stepping on rocks and sticks, maybe some rodent holes.<\/p>\n\n\n\n
They get a lot of sprained ankles, and they get shin splints, so we need a better cushioned shoe, and we need a shoe with more lateral stability so when you step on a rock, you don\u2019t twist your ankle.<\/p>\n\n\n\n
Well, that\u2019s not rocket science.<\/p>\n\n\n\n
But that thinking about the target market\u2019s problem is what led them to create the first running shoes.<\/p>\n\n\n\n
And it took Phil Knight 5 years selling shoes out of his station wagon at track meets in the Pacific Northwest in the US until people started winning gold medals at the Olympics wearing Nike shoes.<\/p>\n\n\n\n
And then guess what? Other runners said, \u201cOh, maybe we need to wear Nikes.\u201d And that was a really small target market, which I\u2019ll come to in a minute.<\/p>\n\n\n\n
But once they had solved that problem of making a better shoe for distance runners, elite distance runners. That was the target market.<\/p>\n\n\n\n
Then it\u2019s pretty easy to call John McEnroe and say, \u201cDo you want to do tennis?\u201d Or call Michael Jordan and say, \u201cShould we do basketball?\u201d<\/p>\n\n\n\n
And of course, we know what Nike is today. It\u2019s become the far and away leader in the category. But they did that not by tweaking the product, they did it by focusing on the customer\u2019s problems.<\/p>\n\n\n\n
3. Think narrow not broad<\/strong><\/h2>\n\n\n\n
John Mullins:<\/h3>\n\n\n\n
And the other thing they did well is the third rule that I think good entrepreneurs often break, and that\u2019s thinking narrow, not broad.<\/p>\n\n\n\n
So in a big company, you can\u2019t do something new unless it moves the needle. Big companies don\u2019t want to mess around with some little thing. If it\u2019s not big enough, they\u2019re not going to bother.<\/p>\n\n\n\n
But the target market for those running shoes in Nike\u2019s early days was elite distance runners. That is people who could run nearly a 4-minute mile. How big is that target market? It\u2019s tiny.<\/p>\n\n\n\n
But again, once you solve the problem for the initial target market, however small, and because you define that market very narrowly, it\u2019s got some unique needs like distance runners had that weren\u2019t being satisfied.<\/p>\n\n\n\n
Once you solve those needs, you learn a whole lot of stuff that can then take you elsewhere.<\/p>\n\n\n\n
So Nike learned how to design shoes. It learned how to import shoes from Asia. It learned how to get athletes to endorse those shoes and so on.<\/p>\n\n\n\n
Well, once they put all those lessons to work, it was straightforward to do tennis, basketball and more.<\/p>\n\n\n\n
Bex Burn-Callander:<\/strong><\/h3>\n\n\n\n
And thus a global juggernaut is born.<\/p>\n\n\n\n
John Mullins:<\/strong><\/h3>\n\n\n\n
Yeah. Exactly. And there\u2019s a fantastic book called Shoe Dog that Phil Knight, the founder of Nike, wrote. It\u2019s a great read. It\u2019s a hilarious read. Some of your viewers might enjoy it. It\u2019s a great story about an iconic entrepreneur.<\/p>\n\n\n\n
4. Create something that customers don\u2019t even dream that they want or need<\/strong><\/h2>\n\n\n\n
Bex Burn-Callander:<\/strong><\/h3>\n\n\n\n
I\u2019ve got another rule that\u2019s broken by entrepreneurs. I\u2019ve just thought of one where the accepted wisdom is always, give the customer what they want, and the customer is always right.<\/p>\n\n\n\n
But some of the great brands that you\u2019ve already referenced, someone like Apple, no one would\u2019ve thought, I want the iPhone. They just want the next iteration of the available technology.<\/p>\n\n\n\n
But you create something that customers don\u2019t even dream that they want or need, and then that becomes the thing that captures the imagination of the world.<\/p>\n\n\n\n
John Mullins:<\/strong><\/h3>\n\n\n\n
Great point. As Henry Ford said, people wanted a better horse, right?<\/p>\n\n\n\n
Bex Burn-Callander:<\/strong><\/h3>\n\n\n\n
Yes. And you gave them the motorcar.<\/p>\n\n\n\n
5. Ask for the cash and ride the float<\/strong><\/h2>\n\n\n\n
John Mullins:<\/strong><\/h3>\n\n\n\n
So let\u2019s see, that\u2019s 4 of them.<\/p>\n\n\n\n
The fifth one is what I call ask for the cash and ride the float. So in a big company, there\u2019s this whole focus and process around return on investment.<\/p>\n\n\n\n
So if somebody wants to do something new, what they have to do is figure out how much you\u2019re going to invest, and then you figure out what the cash flows are going to be going forward.<\/p>\n\n\n\n
And you run some maths, and you say, \u201cOkay. Is the return on that investment sufficient for the company to approve the project?\u201d And then you get to go forward or not.<\/p>\n\n\n\n
Well, entrepreneurs don\u2019t think in ROI terms. They think about, \u201cWell, gee, can I get the cash from the customer so I don\u2019t have to make an investment?\u201d<\/p>\n\n\n\n
So think of Tesla. Probably most people aren\u2019t familiar with the early origins of Tesla. Musk was not on the founding team, but he joined the founding team early on and he said, \u201cGuys, let\u2019s go see if we can sell some cars.\u201d<\/p>\n\n\n\n
They hadn\u2019t built any yet. And so they did a road show in California, and in 3 weeks they sold 100 Tesla Roadsters, none of which had yet been built for $100,000 (CAD$136,382) each, cash tonight. Do the math.<\/p>\n\n\n\n
Bex Burn-Callander:<\/strong><\/h3>\n\n\n\n
Who was buying these cars sight unseen?<\/p>\n\n\n\n
John Mullins:<\/strong><\/h3>\n\n\n\n
$10 million (CAD$13,382 million), unseen. So who was buying them? People with a lot of money in California who were environmentally conscious and who thought it would be pretty cool to have the next big thing parked in front of their house.<\/p>\n\n\n\n
So they sold literally 100 Tesla Roadsters for a $100,000 (CAD$136,382) each. That\u2019s $10 million (CAD$13,382 million) you now have to go out and do the engineering, begin production, and eventually deliver the cars.<\/p>\n\n\n\n
Well, people think that Tesla is a venture capital-backed company, and they did raise some money in the early years, though most of it was Musk\u2019s money that had made it PayPal.<\/p>\n\n\n\n
But most of the money that has grown Tesla has been from the deposits we pay. So when they introduced the model 3, half a million people wanted to be customers. But there were no model 3\u2019s yet.<\/p>\n\n\n\n
Half a million model 3 customers put down $1,000 (CAD$1,3600) each, do the math there. Half a billion dollars in the bank with which to now design the model 3, tool it up and let some cards roll off the assembly line.<\/p>\n\n\n\n
So asking for the cash and riding the float lets you do all the other things you have to do in the business with the customer\u2019s money, not with investment.<\/p>\n\n\n\n
So again, big companies don\u2019t think that way. They have so much cash they don\u2019t have to think that way. Entrepreneurs have to think that way because they don\u2019t have any cash.<\/p>\n\n\n\n
6. Borrow the elements you need to start your business<\/strong><\/h2>\n\n\n\n
Bex Burn-Callander:<\/strong><\/h3>\n\n\n\n
Although that comes back to confidence, because my goodness, you have to be confident to go and pitch and sell something that you have absolutely no physical creation of yet.<\/p>\n\n\n\n
It\u2019s just a literal idea sketched on the back of a piece of paper. And to take $100,000 (CAD$136,382) off someone for that, you need to have some serious chutzpah.<\/p>\n\n\n\n
John Mullins:<\/strong><\/h3>\n\n\n\n
You do. That\u2019s what it takes. It\u2019s another place where confidence comes to play.<\/p>\n\n\n\n
And then the last one, the sixth one, it\u2019s what I call beg, borrow, but don\u2019t steal. So it\u2019s a similar idea to asking for the cash.<\/p>\n\n\n\n
But instead of asking for the cash here, you\u2019re saying, \u201cWell, what do I need to start this business? Maybe I can borrow what I need instead of investing in what I need.\u201d<\/p>\n\n\n\n
So there\u2019s a wonderful business in the UK called Go Ape. They run 30 some fantastic outdoor adventure courses.<\/p>\n\n\n\n
Bex Burn-Callander:<\/strong><\/h3>\n\n\n\n
I know Tristram Mayhew. It is a great business, isn\u2019t it?<\/p>\n\n\n\n
John Mullins:<\/strong><\/h3>\n\n\n\n
It\u2019s a fantastic business. But the existing adventure zip line courses and stuff were all built with telephone poles.<\/p>\n\n\n\n
Well, he and his wife, Bex, came across a forest adventure business on a vacation in France and said, \u201cOh, we could do this in the UK.\u201d<\/p>\n\n\n\n
So they went to the Forestry commission that controls a lot of the woodlands in the UK and said, \u201cWe\u2019ve got an idea that might bring more people to the woodlands,\u201d which of course is what they\u2019re interested in.<\/p>\n\n\n\n
And they said, \u201cThis is the great idea that we didn\u2019t know we were looking for.\u201d<\/p>\n\n\n\n
And so essentially Tris and Bex were borrowing the parking lots. They were borrowing the trees, they were borrowing the loos. They didn\u2019t have to build any of that stuff. All they had to do is put their kit on the trees.<\/p>\n\n\n\n
And that business today is a wonderful business that enables people to live life adventurously as they like to talk about it. But again, they got their start by borrowing the things they needed rather than investing in what they needed.<\/p>\n\n\n\n
So those are the six mindsets. They run counter to what we teach in business schools like mine, they fly in the face of what big companies do, but these are the mindsets that enable Bezos and Musk and Tristram Mayhew to do what they do.<\/p>\n\n\n\n
Bex Burn-Callander:<\/strong><\/h3>\n\n\n\n
Although presumably you are now teaching these mindsets at the London Business School, so perhaps you are tweaking the syllabus a bit.<\/p>\n\n\n\n
John Mullins:<\/strong><\/h3>\n\n\n\n
Well, people can choose to take entrepreneurship courses, or they can choose to go the traditional route. But interestingly, as many as a third of our students at London Business School today come explicitly because of our strength in entrepreneurship. They used to come just for finance and career changes.<\/p>\n\n\n\n
Now they come to be an entrepreneur. They think they\u2019ll find an idea, they\u2019ll find a business partner, and they\u2019ll probably find some money. It\u2019s a great way to start, actually.<\/p>\n\n\n\n
Bex Burn-Callander:<\/strong><\/h3>\n\n\n\n
And I\u2019m fascinated by all these case studies. <\/p>\n\n\n\n
I imagine that you must spend so much time trawling through newspapers and online reportage about businesses to see what\u2019s working for these really successful companies, what strategies they\u2019re using, because it feels like you\u2019re literally tugging down all these threads to weave together a blueprint, I guess.<\/p>\n\n\n\n
John Mullins:<\/strong><\/h3>\n\n\n\n
That\u2019s exactly what I do. But it\u2019s the most rewarding part. Well, maybe the second most rewarding part. The most rewarding part of my life as a professor is being in a classroom with 50 or 60 entrepreneurs. <\/p>\n\n\n\n
What could be possibly more fun than that?<\/p>\n\n\n\n
But the second most is finding these really interesting, messy, difficult, challenging stories of real entrepreneurs who have somehow pushed the bricks out of the road and circumvented the obstacles and built fantastic businesses and finding them and then writing about them.<\/p>\n\n\n\n
Back to the journalism piece. A big part of what I do is I write, and I\u2019ve written 50 some case studies now, and they are the basis on which I was able to think about and then write Break The Rules.<\/p>\n\n\n\n
Successful alumni<\/strong><\/h2>\n\n\n\n
Bex Burn-Callander:<\/strong><\/h3>\n\n\n\n
And I have to ask, looking back at your alumni, you\u2019ve taught so many students, have any of them gone on to become mega successful billionaires? Can you tell us about them or would that be a breaking confidentiality?<\/p>\n\n\n\n
John Mullins:<\/strong><\/h3>\n\n\n\n
Yeah, I can tell you a couple.<\/p>\n\n\n\n
But successful billionaires is not always the goal. Keep in mind that\u2019s what some people want. Other people want to build just a very nice lifestyle business that\u2019s going to make them and their family comfortable and all of that.<\/p>\n\n\n\n
So there\u2019s no rule that says, well, you have to be on a glide path to the moon. You don\u2019t have to do that. But there\u2019s one in particular, a guy who was in our MBA class back in 2009 who\u2019d worked for the UN. He was a Somali native.<\/p>\n\n\n\n
And he was aware of the fact that there was a huge remittance industry where African expats would go to London, or other places and they\u2019d make money, and they\u2019d send it back to their families. Huge business that was being done manually at the time.<\/p>\n\n\n\n
He said, \u201cThis is way too expensive to be taking these fees. It\u2019s a digital world today. Can we start a business to make that more efficient?\u201d<\/p>\n\n\n\n
And in my class, he conceived this idea that is today called WorldRemit, that helps people. It\u2019s not the only such digital remits business around today, but it\u2019s worth some number of billions of dollars.<\/p>\n\n\n\n
But it happened again because he saw a problem. He saw a problem and he said, \u201cWe can solve this problem. We can do it much better than going to a store, taking some cash, paying an agent, and then at the other end, the same thing. We can solve that problem much better.\u201d<\/p>\n\n\n\n
So that\u2019s maybe the biggest one that\u2019s come out of London Business School. But there are tons of them. And we do something called Entrepreneurship Summer School every year.<\/p>\n\n\n\n
It\u2019s a 2-year program, and in the summer, most MBA students go get an internship at Goldman Sachs or McKinsey or somewhere. But those who want to be entrepreneurs can do the Entrepreneurship Summer School.<\/p>\n\n\n\n
And we take only 60 of them every summer, and they figure out whether the idea they have is actually a good enough one to take them forward. I developed and taught that course for many years. I don\u2019t teach it anymore.<\/p>\n\n\n\n
But the data at the end of when I did that, we did a survey to see what the success rate had been. Of all the startups that there had been to that date, which was hundreds of them, 84% were still in business. Staggering number.<\/p>\n\n\n\n
Bex Burn-Callander:<\/strong><\/h3>\n\n\n\n
That\u2019s fantastic.<\/p>\n\n\n\n
John Mullins:<\/strong><\/h3>\n\n\n\n
They weren\u2019t all unicorns. They didn\u2019t all want to be unicorns. But they were successful.<\/p>\n\n\n\n
But the really cool data point was after going through this summer process of developing a feasibility study based on my first book, The New Business Road Test, two-thirds of them chose not to pursue the business they studied in summer school.<\/p>\n\n\n\n
So they went out, did the homework and said, \u201cYeah. I want to be an entrepreneur. This feels really good. But not with that idea. I\u2019m going to tweak it or I\u2019m going to abandon it and do something very different.\u201d<\/p>\n\n\n\n
So I think that\u2019s a powerful lesson. The plan A idea you have is maybe not how you\u2019re going to get to the stars.<\/p>\n\n\n\n
What\u2019s the difference between the entrepreneur that succeeds and the one that doesn\u2019t?<\/strong><\/h2>\n\n\n\n
Bex Burn-Callander:<\/strong><\/h3>\n\n\n\n
And on that theme, you must have heard so many phenomenal business ideas. A lot of great ideas coming through. And then seeing how many fell by the wayside versus the people that were really able to execute and build on that idea.<\/p>\n\n\n\n
What would you say is the fundamental difference between those two types of entrepreneur? Who was it? They both had great ideas at the start, but what was the difference between them that meant one got there and the other one didn\u2019t?<\/p>\n\n\n\n
John Mullins:<\/strong><\/h3>\n\n\n\n
I think there are a lot of differences. <\/p>\n\n\n\n
In the book I just mentioned, The New Business Road Test, I argue that you need to understand the market that you\u2019re going to serve and determine is that really an attractive enough market? You need to look at the industry in which you\u2019re going to compete.<\/p>\n\n\n\n
Do I actually want to be in this industry, airlines, big pharma, whatever it is? And third, look at your team. Do I have the right team? Have I assembled the right team that can actually deliver on the critical success factors that are required in that particular industry?<\/p>\n\n\n\n
So I think the successful ones are pursuing opportunities that tick most of those boxes. You\u2019re never going to find a perfect opportunity, but you want one that\u2019s going to give you at least a fighting chance for success. So I think that\u2019s one thing.<\/p>\n\n\n\n
I think the second thing is persistence, tenacity, whatever noun you want to use to describe that. It\u2019s really hard being an entrepreneur. <\/p>\n\n\n\n
Given the prior odds no person in their right mind would choose to set out on that path, and yet large numbers do it every day because it\u2019s incredibly rewarding psychologically, as well as sometimes monetarily if you get there.<\/p>\n\n\n\n
So having the persistence and the tenacity to keep going in the face of adversity and to have a dream, a clear vision of where you want to go and why you want to get there.<\/p>\n\n\n\n
My daughter, Heather makes jewellery out of recycled skis, and her passion is keeping stuff out of the waste steam. She also builds furniture out of recycled stuff.<\/p>\n\n\n\n
But she gets these skis at the end of the ski season, rental skis that are at the end of their life, she\u2019s given them, so she has no cost of goods.<\/p>\n\n\n\n
She slices them into little slivers, and it\u2019s called Apr\u00e8s Ski Jewellery because the ski now has a second life as a piece of jewellery.<\/p>\n\n\n\n
She doesn\u2019t want to build a rocket ship to the moon, but she\u2019s able to support herself very nicely selling jewellery made out of skis. And she\u2019s doing not just to do that, but she\u2019s keeping all this stuff out of the waste stream.<\/p>\n\n\n\n
Entrepreneurs are not good at taking risks\u2014they\u2019re just good at managing them<\/strong><\/h2>\n\n\n\n
Bex Burn-Callander:<\/strong><\/h3>\n\n\n\n
It is interesting that you say that because I was going to ask you about appetite for risk, but in your example with Heather, that is a pretty low risk business because you\u2019re not spending anything on the upfront cost.<\/p>\n\n\n\n
That is definitely not a high-risk business, yet we always associate the idea of entrepreneurship with that ability to take risks, albeit calculated risks. So do you think that\u2019s a myth?<\/p>\n\n\n\n
John Mullins:<\/strong><\/h3>\n\n\n\n
That\u2019s a big-time myth. What entrepreneurs are good at is not taking risk, but managing risk and finding ways to mitigate it or pass it off to somebody else. And that\u2019s actually what the six mindsets do.<\/p>\n\n\n\n
So if you\u2019re going to beg or borrow the assets you need to get started, that takes away the financial risk. If you\u2019re going to have a really narrow target market that you really understand, that\u2019s going to take a lot of the market risk away.<\/p>\n\n\n\n
So that\u2019s really what the six mindsets do is they mitigate risk and give you a much better chance to be successful.<\/p>\n\n\n\n
Find an industry that aligns with your interests<\/strong><\/h2>\n\n\n\n
Bex Burn-Callander:<\/strong><\/h3>\n\n\n\n
And John, I\u2019m just going to ask you a personal question to finish, which is if you could go back and change anything in your career, a wrong turn, I know you said earlier that there\u2019s no such thing as a mistake, there\u2019s only a learning opportunity, but if you could go back and change 1 thing, what would it be?<\/p>\n\n\n\n
John Mullins:<\/strong><\/h3>\n\n\n\n
I knew you were going to ask me that question Bex, and I thought about it. And I think what I would\u2019ve done differently is when I finished business school at Stanford a long time ago, I met some people in the retailing industry on a job interview on campus, and I said, \u201cThose seem like really fun guys who really like their work and they\u2019re getting responsibility really quickly because you have a bottom line to manage very quickly in retailing if it\u2019s a store or a part of a store.\u201d<\/p>\n\n\n\n
And I said, \u201cI think I\u2019ll go be a retailer.\u201d And that\u2019s what I did. And I did it for 20 years.<\/p>\n\n\n\n
In hindsight, I\u2019m not a person who likes to shop. I\u2019m not particularly materialistic. I\u2019m not fashion oriented.<\/p>\n\n\n\n
Why was I in that industry? I have no idea. Did it serve me well? Yes, it served me very well.<\/p>\n\n\n\n
I learned a ton there that I now can apply in my teaching, and the fact that I have done what I teach makes me unique among most entrepreneurship teachers. I\u2019ve not only studied it, but I\u2019ve done it.<\/p>\n\n\n\n
So it served me well, but retail isn\u2019t the best industry. It\u2019s long hours and nights and weekends and all that stuff. I probably could have chosen a better industry to start my career, but no regrets.<\/p>\n\n\n\n
Bex Burn-Callander:<\/strong><\/h3>\n\n\n\n
What would it have been though? What is an industry that you feel deep engagement or you really delights you? What could it have been if it had been a different job interview, what would the industry have been?<\/p>\n\n\n\n
John Mullins:<\/strong><\/h3>\n\n\n\n
I haven\u2019t thought about it, but I\u2019m an outdoor person. I hike, I ski, I love the mountains. Maybe it would\u2019ve been something there. North Face or something more outdoor oriented.<\/p>\n\n\n\n
Bex Burn-Callander:<\/strong><\/h3>\n\n\n\n
I can see you in a chalet at the top of a mountain and you are the guide, and you take them through the Sitka pine forest. I think that would be epic.<\/p>\n\n\n\n
John Mullins:<\/strong><\/h3>\n\n\n\n
That sounds like fun. Sounds like great fun.<\/p>\n\n\n\n
Bex Burn-Callander:<\/strong><\/h3>\n\n\n\n
Still time. Still time, John.<\/p>\n\n\n\n
John Mullins:<\/strong><\/h3>\n\n\n\n
Maybe in my next lifetime, Bex, that\u2019s what I\u2019ll do.<\/p>\n\n\n\n
Inspired by this business story?<\/h2>\n\n\n\n
Wherever you\u2019re listening or watching, subscribe to Sound Advice on Apple iTunes<\/a> here.<\/p>\n\n\n\n
We are also on Spotify<\/a> and anywhere else you get your podcasts.<\/p>\n\n\n\n
Join our community to share your insights and stories on X @Sage_Canada<\/a> using the hashtag #SoundAdvicePodcast, on Instagram @SageOfficial<\/a> or in the comments below!<\/p>\n\n\n\n
Want to know more about John and the London Business School?<\/h3>\n\n\n\n
You can find out more about John here <\/a>or on his LinkedIn<\/a>. <\/p>\n\n\n\n
- What\u2019s the difference between the entrepreneur that succeeds and the one that doesn\u2019t?<\/a><\/strong><\/li>\n\n\n\n
- Problem first logic<\/a><\/strong><\/li>\n\n\n\n
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