This week’s Misfit Entrepreneur is Eric B. Schultz. Eric is the author one of my new favorite books, Innovation on Tap, Stories of Entrepreneurship from the Cotton Gin to Broadway’s Hamilton. As a lover of history and entrepreneurship, this book was made for me.
Aside from the book, Eric has spent his career in entrepreneurial and leadership roles, including senior vice president of Midwest operations for American Cablesystems, co-founder and president of Atlantic Ventures, and chairman and CEO of Sensitech, a venture-backed business twice named to the Inc. 500 before being acquired by Carrier Corporation. He has also served as a CEO and partner with Ascent Ventures, executive chairman of HubCast, on the board of advisors of multiple other companies, and as a mentor for student start-up teams in the Brown University B-Lab.
Eric’s not only written an incredible book that I think every entrepreneur should read, but he has a wealth of experience and wisdom we can all learn from to help us on our journey.
LinkedIn – Eric B. Schultz
Eric has a degree in history and liberal arts background. He then went on to get an MBA in 1983. He then made the decision to go into entrepreneurship which wasn’t the thing it is today. His path took him through a number of entrepreneurial pursuits. His last position was at Sensitech where he helped move the company into a digital company and develop a data strategy. Eventually, they were acquired by Carrier Corp and he started doing some consulting. It also gave him some time to write. He had written a few books, but really wanted to write a book about entrepreneurship. In doing a further consulting engagement for Carrier and UTX, he found inspiration in the founders’ stories.
His goal with Innovation on Tap was to write a history of innovation for America across 3 centuries. It was almost overwhelming. He found his inspiration in an afterhours event from a venture firm’s pitch session. The idea was to bring all of these incredible entrepreneurs together in “a bar” and have them tell their stories. Just like the stories being told at afterhours events he had attended.
Who is Steve Dodge and why is the book dedicated to him?
- If Eric had a mentor, it would have been Steve.
- Steve passed away unexpectedly before his time.
- Steve was the guy who gave him his first managerial role.
- Steve also advised in his first CEO role and helped him.
- He taught him to build credibility with the board, investors, and gave him specific advice of “Make your numbers.” Which really means do what you say you will.
Define Innovation as you see it in today’s world…
- Eric used Austrian economist, Joseph Schumpeter as “the bouncer” for the bar in making his definition of Innovation the key to what got an entrepreneur through history in.
- He said the most important thing for capitalism is for it to continue to grow. The way it can grow is by an agent called an entrepreneur.
- An entrepreneur has two functions.
- They have to put together a novel combination.
- They have to disrupt an economic flow.
- The new combinations are innovations.
What advice can give entrepreneurs on how to better develop their skill of innovation?
- Think about how we define innovation.
- We focus on too much technological innovation when there are many major innovation opportunities outside of it.
- Get out of the technology box and think as broadly as you can about innovation.
At the 21 min mark, Eric tell us about the 6 themes of entrepreneurship…
- Mechanization – Taking something done by human labor and automate it with machinery. Eli Whitney and the cotton gin is good example of mechanization.
- Mass Production – Once things are mechanized, things can scale. An example of this would be King Gillette and razor blades.
- Consumerism – Continuing to create customer demand for increased supply. Alfred Sloan and GM is a great example of this.
- Sustainability – How do we make sure that we don’t ruin our ecosystem while remaining good capitalists.
- Digitization – How do we use digital platforms to change the way we innovate and use products/services.
- Social/Cultural - At any given time, there are people that conform to traditional things. The play Hamilton is good example of this.
At the 26 min mark, we have a great discussion on Consumerism being one of the biggest shifts in entrepreneurship.
“Consumerism is a fundamental change where America went from a land of sober and frugal citizens defined by what they produced, to a land of ravenous consumers defined by what they purchased.”
What are the 3 lessons of entrepreneurship?
- Entrepreneurs are given 3 gifts.
- First is your talent.
- Second is your community or your network.
- Third is your business model. This is where the rubber meats the road. You can still win without much talent or community if you have a great business model.
- You work on your talent and your community/network long before you get to your business model.
What are the elements of a great business model?
- Using Eli Whitney as example.
- Whitney was around at a time where the south was hurting and needed a solid crop. This crop became short, stable cotton. But it had a challenge in getting the cotton to a usable state that was very laborious and time consuming.
- Whitney created a machine that could “gin” 50x the cotton in one day than the standard that was happening.
- He then created business model where he told people to bring the cotton to him, he would “gin” it and then keep some for himself.
- His biggest issue was that they had not created enough machines to keep up with the supply coming from the fields.
- Instead of pivoting his model to building and selling machines. He kept it to themselves and didn’t deliver. This caused people to steal his machine and make their own. This resulted in years of litigation on patents.
- You can see what even technological innovation that big needed the right business model to go with it.
- The model is not about the product as much as it fits into the customer needs. Think about that.
- Figure out how you can focus on best fulfilling the customer need.
- Don’t fall in love with the product.
What lessons didn’t make the list of Top 3?
- It’s OK to think small.
- You have choice over how you think.
- It’s very hard to predict the future. If you can improve the lives of the people around you today, that is the best place to focus.
Not everything you learn today is not necessarily applicable today. Sample information widely. You never know when the information will make itself useful to you.
Which entrepreneur is your favorite and why?
- Alfred Sloan, founder of GM.
- Eric would say he was the greatest entrepreneur of them all.
- When Sloan takes over GM, Ford has 45-50% market share. When Sloan retires, GM has the 50% market share. H
- e was very effective and a great competitor.
Best Quote: Not everything you learn today is not necessarily applicable today. Sample information widely. You never know when the information will make itself useful to you.
Eric's Misfit 3:
- Don’t be fooled by the dominant narrative. There are always other ways to succeed.
- It’s OK to start small and solve a problem that’s right in front of you and helps those around you.
- Be kind. It is a huge personal competitive advantage.
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