Unstoppable Entrepreneurs | Lori Rosenkopf

What Makes a Successful Entrepreneur?

Dan Loney: What are the keys to success for an entrepreneur these days? A new book by Wharton’s Lori Rosenkopf delves deeper into this. The book is titled Unstoppable Entrepreneurs: Seven Paths for Unleashing Successful Startups and Getting Value Through Innovation. And she joins us right now. Lori, great to talk to you again. What had you researching this idea in the first place?

Lori Rosenkopf: I just believed that role models matter for entrepreneurship. There’s a media stereotype that’s so pervasive, that’s one way of being an entrepreneur. Drop out of college, get venture funding, build a unicorn. But I was seeing so many different pathways that our students, as well as our alumni, were following, and I wanted to provide some new role models and new ideas and show that there’s no one-size-fits-all path.

Loney: How do you define entrepreneurship at this moment?

Rosenkopf: I take a very broad definition. I define entrepreneurship as value creation through innovation. There are so many ways to create value. Of course, financial value is very prominent, but there’s also social value. Are you impacting society in a healthy way? Emotional value. How does it make you feel to do this sort of innovation? Entrepreneurs are creating value, and they’re doing it by innovating. That innovation might be product, process, business model, service. But it might also be something as simple as figuring out a new routine in your home life or family life. All of those things create value for us, and that starts to make us realize that everyone can be innovative and entrepreneurial. And I hope it will inspire people to be all the more entrepreneurs.

Loney: A lot of the attention goes to the big name, well-known and probably well-funded entrepreneurs who have had incredible levels of success. But, as you alluded to, there are so many other avenues for people to create success through entrepreneurship.

Rosenkopf: Absolutely. Do you know there are 31 million enterprises in the U.S.? Twenty-nine million are sole proprietorship. This might be the person who mows your lawn or who does your nails. But there are many, many people who are doing small business entrepreneurship. We tend to focus on high-growth entrepreneurship, which is in many cases funded by venture or by any sort of debt. But those are less than 20% of all of the entrepreneurial activity. Most activity is actually bootstrapped. Each of these — the disruptor, the bootstrapper, the social entrepreneur — these are all pathways in the book.

Loney: In doing the shows that I have, talking about entrepreneurship, the one thing that still comes up is, it’s a challenge. There is a level of failure. It might not be the first idea that you end up being successful with. It might be the second or third. Is there enough recognition of that right now as part of the process?

Rosenkopf: Well, that’s why my book is called Unstoppable Entrepreneurs. I talk about an entrepreneurial mindset, which has six R’s, and one of them is resilience. Each of the entrepreneurs that are profiled in my book had many, many obstacles and challenges. And part of their ability to succeed was having — some people call it growth mindset. Some people call it grit. But a mindset that allows you to say, “I’m going to need to try a lot of things in order to get to the finish line. I’m going to hear negative feedback, and I’m going to treat that as a learning experience, and then adapt my efforts in order to do better with that. I’m going to deal with crises like COVID or the current economic conditions. And there are many, many ways to solve these sorts of problems.” Each of my entrepreneurs are incredibly resilient. And that’s something that everybody can work on, understanding that feedback is always a gift.

The Different Types of Entrepreneurs

Loney: How many of the group are the so-called disruptor? In general, is there a ratio of disruptors that you expect to see coming from the role of being an entrepreneur?

Rosenkopf: I love that question. Because disruptors are, of course, the people we see all the time in the media, these celebrity entrepreneurs. In many cases, it turns out that disruptors are typically venture backed, because they’re trying to overturn an entire market. Venture-backed entrepreneurship is far less than 1% of all of that enterprise that’s out there, so it’s actually very, very uncommon. But when done well, the returns are enormous. So, they are getting most of the attention.

But most efforts toward disruption fail. There were many, many car sharing services that were attempted. We had one that students were working on at Wharton, way back when. Now, of course, Uber dominates that market. Lyft is a very serious second. And Waymo is automating it completely. But there were hundreds of attempts at car sharing. Most disruptors are not successful, but all the attention goes to the small percentage that are.

Loney: We’re in a time where social issues have become very, very important across the board of how we live our lives right now. Are we seeing a sharp rise in social entrepreneurism as well?

Rosenkopf: Well, I’ve been at work for over 30 years. And certainly 30 years ago, we weren’t seeing a lot of students saying, “I want to be social entrepreneurs.” These days, in our efforts at Venture Lab, we see about one in seven of our students who are doing something entrepreneurial will raise their hand and say, “I’m a social entrepreneur.”

Now, that doesn’t sound like a ton. But if you ask the students a different question — and this is so fascinating to me — if you ask them, “Do you have impact goals in your company?” Meaning, do you have other goals beyond your financial ones? Then, 70% of them will say, “Well, of course, I have impact goals.” More and more, with the emphasis on the U.N. Sustainable Development Goals and all the interest in climate tech and other sorts of community issues, we’re seeing more and more students and more and more alumni build those sorts of aims into their ventures. But they’re a little bit reluctant to claim the label. And I think that’s because some people hear that label and say, “Oh, it’s a nonprofit,” or “It’s not really intending to be as big.” But the social entrepreneur I profile my book is doing incredibly well.

Loney: You also bring up the component of the intrapreneur, which maybe doesn’t get as much conversation. That’s somebody working at a company who comes up with a great idea and works with their company to develop this new idea. How common is that these days?

Rosenkopf: I’m so glad you asked, Dan. Seventy percent of all innovations that are developed are developed in established companies. There are tons of opportunities for people to be entrepreneurial in their companies, on their employer’s resources, and devoting their time to the development of new businesses.

Some companies try to embrace that in their culture and will devise all sorts of structures and processes to encourage that. The example that gets thrown around these days is Google gives 20% time to employees to work on something of their own choosing. That, of course, is an outgrowth of 3M’s “15% time” that’s been around for decades.

Many companies that have enough resources will create a separate part of the organization where people can experiment in ways that might conflict with what’s going on in the core business. And that separation is incredibly important, until something new happens. Other companies use hackathons and the like to get people exploring ideas. But there are quite a few people who come up with a new idea in an organization, and find that they can’t get enough support, and wind up leaving and developing it somewhere else.

How to Develop the Entrepreneurial Mindset

Loney: Is the entrepreneurial mindset organic, or is it something that can be developed?

Rosenkopf: It can definitely be developed. While there are some people who will tell you the story — and this is about half the entrepreneurs in my book – they will say, “I always knew I wanted to be an entrepreneur. I was selling candy in middle school and the principal suspended me,” and tell those kinds of stories. The other half are people who were doing the more standard path and started to see, over time, opportunities to create value, and then went on their own to do it.

These people can be trained to do that. Among the R’s in my entrepreneurial mindset is recombination. What I mean by that is taking your knowledge and experience from different places — you’ve worked in different companies, you’ve taken different courses in school and certifications, you’ve lived in different places. Everyone has a unique set of experiences. And mixing and matching all of that knowledge is what gives you the opportunity to identify a unique opportunity.

When you can do that, that’s the root of innovation. And all of us have the capacity to look back at what we’ve accomplished and try to think about those combinations. As I’m advising people to look forward, I always say, “What can you do that will allow you to think differently?” If you’re a college student, can you take a minor in something different? Or if you’re [older], should you take a certification? Or could you take some sort of a trip? Or could you take an art class? Whatever it might be. That’s what starts to give people the chance to see those unique opportunities.

Loney: One of the other R’s that you bring up is relationships. That’s so important in business in general, but especially for somebody who’s starting out trying a new idea, to be able to have the relationships that are going to help you build to success.

Rosenkopf: Absolutely. Relationships are giving you an opportunity to access knowledge and resources and talents. You need people to help you assess whether your idea is addressing a big enough pain point, help you understand the bigger market, so you’re not just solving your own problem and hoping people will come to you, but that the market is desperate for it. You need those relationships to get funding, in many cases, once you get to that point. And that gives you access. And you need the talent that people can provide to you. You want to be working in the space that gives you the most joy. Your genius zone, some people call it. You want to be able to attract talent that’s going to complement your skill set as your organization grows.

Loney: You talk with a lot of great entrepreneurs in here. If I can highlight one who is somebody that I know, and I’ve talked with her a few times over the years at Wharton doing interviews — Katlyn Grasso, with GenHERation and the idea of networking and thinking about it through the process of what women are experiencing right now. I told Katlyn that when my daughters get old enough, they’re going to go with her on a tour. Talk a little bit about what she has done and what she has brought to the table.

Rosenkopf: I’m so glad you asked me to do that, rather than asking me to pick my favorite subject of all of them, because I love them all equally. But Katlyn is a great example of so many of the things we’ve been talking about. Since a young age, she always wanted to do things for young girls and was doing it all throughout her Wharton career here. She graduated in 2015. She was one of the first people I met when I became vice dean of undergrad in 2013, because she came bounding into my very first office hours. Because she is a fabulous — the best networker that I know.

With the support of some Penn awards after she graduated, she built out GenHERation to take girls on bus tours to learn about opportunities that would help to further their careers. This was chugging along nicely, and then COVID happened. Talk about resilience. You can’t take a bus tour. She had to convert everything to virtual. This winds up being the seed that’s led her business to explode. Because once she was virtual, she realized she was in edtech. And now she’s building curriculum that she can sell to educational institutions, to corporations. She has lots of girls that are subscribing, and the company is incredibly profitable. She calls herself a social entrepreneur, but she has a very strong profit motive as well. She has 10 employees. She’s doing fabulously.

Loney: Having written this book, what are you most excited for the future of being an entrepreneur?

Rosenkopf: I think we’re going to see all the more entrepreneurship. Right now, we’re obviously in a period where there’s a fair amount of job dislocation. People are saying, “How can I apply my talents in a way where I have a little bit more control and can take care of my needs for income and security and the like?” I think we’re going to see a lot more people looking for ways to participate. I also think at this moment, with all that’s going on with AI, this is an important moment for everybody to be training themselves on the tools, because you want to operate as efficiently as possible. But there’s also a lot of opportunity for those high-growth-oriented entrepreneurs to start building in this new AI ecosystem. So, I think it’s a big moment for entrepreneurship.