In 1995, a graphic design teacher named Linda Weinman, who was also an ambitious entrepreneur, decided to create the website Lynda.com. She did this because she needed a sandbox to play in, with the new graphic design tools and digital tools that were being developed at that time: Photoshop, Illustrator, and many others. She needed a place to showcase her students’ work so that everyone could see it. So, she put together this website, and the business started to grow. In 2002, she discovered that it could be much more than that, so she moved all her teaching online. Later, the company was sold to LinkedIn, which renamed it LinkedIn Learning, and it was sold for 1.5 billion US dollars.
Linda is a prominent figure in what I call the unconventional mindsets of entrepreneurs. So today, I want to tell you about these mindsets, and here we go.
First of all, why do I call them unconventional? These six mindsets contradict the best practices, as we call them, that are being done in large companies today. They go against much of what we learn in business school and other business management colleges about strategy, marketing, risks, and much more.
Now, you may ask, “John, what do you mean by ‘mindset’?” The mindset, of course, is here, isn’t it? It’s those things, situations, habits, ideas, and mental inclinations that, when something comes our way, pre-determine the response we make to that thing that comes our way. And these things, as we entrepreneurs call them, are opportunities.
So, I want to tell you about these six mindsets today. The first one, I call it “Yes, We Can.” Now, the B-school strategy 101 says the following: What we are supposed to do in the company is stick to our knitting. We need to know what we are really good at – we call them core competencies – and we need to build on them, invest in them, nurture them, and make them stronger. And if someone comes and says, “Can you do something different, something outside of that?” What are we supposed to say? “No, I’m sorry, we don’t do that here.” Well…
A Brazilian businessman named Arnold Correa built a great business project called Atmo Digital by ignoring those rules. He reinvented his company twice, becoming a major provider of event management and production services when one of his clients said, “As you know, I have 260 stores spread all over Brazil, and I would like to be able to broadcast training and motivational events to the stores in real-time. So, Arnold, can we put TVs in the training room in all my stores, and can we build a satellite link so we can send all these wonderful things to the stores?” So what did he say? He said, “Yes, we can do that,” even though he knew nothing about satellite technology and had never worked outside Sao Paulo, but he accomplished it.
Then, after several years, some other clients, one in particular, Walmart, said, “As you know, we have all these TVs in the back room of the store, but wouldn’t it be great if we put them on the sales floor? Because then, we can run ads, so when the customer walks down the aisle looking for detergents, maybe there’s an ad for Procter & Gamble detergent in that aisle?” And what did Arnold say to this request? “Yes, we can do that.”
Over the years, Arnold reinvented his business fundamentally four times, by saying, when the customer wants something new that falls outside his core competencies, “Yes, we can do that.” The next point I want to tell you about, I call it “Problem Logic First, Not Product Logic First.” In today’s large companies, it’s all about the products. So while I was in the United States, my family and I used Tide for many years to wash our clothes. And we joke sometimes because we can say that the new brand manager has arrived, because what happens, they change the product, right? They take the blue spots out of it and turn them green. And they call it “new and improved.” Is that innovation, folks? I’m not sure about that.
Coca-Cola, what’s up with that? There was Classic Coke, and then there was New Coke. That didn’t work out well. Then there was Diet Coke, Coke Zero, Vanilla Coke, and a lot of Cokes. I don’t think that’s all there is to innovation. But for entrepreneurs, we don’t focus on products, we focus on problems. A man named John Thorn developed a technology that did something very useful. This tool in front of you is called a surgical clamp. It’s the tool that almost every surgeon uses, from all medical specialties, to do their work. But there was a problem with this surgical clamp – it stuck to human tissues. So imagine undergoing a cosmetic surgery, and the plastic surgeon is doing the finishing touches, but the clamp sticks to the tissue. It may not look as good as it was supposed to. And the plastic surgeon might get a little frustrated, and it might take longer to do the work. And Thorn said, “As you know, this is a problem I think I can solve,” with the new silver and nickel alloys he developed. It turned out that the business didn’t grow very fast, focusing on plastic surgeons. So he said, “I wonder if there’s another surgical specialty that has a bigger problem I can solve,” and he found one, which was neurosurgeons. And neurosurgeons work in two places on our bodies, in the spine and in the brain. So I hope I never have brain surgery, and I hope I never perform it, but if they have to remove a small tumor, I hope the clamp doesn’t stick to other tissues, because I want to keep all my brain cells, right? John Thorn built a great business project and sold it after a few years to Stryker. Stryker was very happy, and John and his investors were very happy too. Why? Because John focused on solving problems and not on thinking about products.
The next point I want to tell you about, I call it “Think Narrow, Not Wide.” Like John Thorn, a businessman I’ll tell you about who focused on a problem but thought very narrowly in the targeted market. But the wisdom of large companies doesn’t want narrow targeted markets, they want large targeted markets, right? Because you have to move the needle. Why mess with something small? Like John Thorn, Philip Knight and Bill Bowerman, when they founded Nike, a company we all know well today, identified a problem, but it was a problem faced by a very narrow targeted market. Phil Knight was a runner, a long-distance runner, and he could run about four minutes, and Bill Bowerman was his track coach. There was a problem with their shoes because running shoes, in those days, were really made for runners. And when runners train, they run around the track. It’s a beautiful, smooth track. But long-distance runners don’t run around tracks. Where do they run? In the countryside tracks and dirt roads, and they always step on sticks and rocks, and they get ankle sprains. And they run mile after mile after mile, and they get shin splints. Well, Knight and Bowerman said, “We need better shoes, shoes made specifically for distance runners, especially elite distance runners who train a lot. So we’re going to build a better shoe with better lateral stability and a wider footbed. And it will have more cushioning for protection against shin splints – and by the way, if it’s a little lighter, or a few ounces lighter, it doubles every step in running a mile, or two miles, or a marathon, so it will make race times faster too.” So we know what happened with Nike, right? Once they developed the necessary skills to design shoes specifically for the targeted market, a narrow market, and once they learned how to import those shoes from Asia, and once they learned how to convince athletes to adopt those shoes, what did they do? Well, they came up with the Model 3 a few years ago, nearly half a million consumers deposited $1,000 each. Do the math. Half a million consumers, $1,000 each – half a billion dollars in the bank, cash, to start engineering, build tools, set up the factory, and more. Isn’t this the kind of business model you want to build using these mindsets?
The next point I want to tell you about, I call it “Beg, Borrow, but Please, Please Don’t Steal.” In B-school finance, we teach our students how to analyze whether the project is feasible or not. So you discover how much investment you need to make, then you find out what the cash flow will be, from now on, year after year, for five years, or 10 years, or anything else. Then you ask yourself, “Well, is the return on this investment sufficient?” And if the return on investment is good, you do the project. That’s the idea. But for Tristram and Rebecca Mayhew, who founded a great business in the UK called Go Ape, they didn’t think this way at all. They wanted to build a treetop adventure company in the UK. They saw one in France, liked it on vacation. “So where can we get some trees?” Well…
Who has trees in the UK? It turned out that the Forestry Commission in the UK has trees in the UK, a lot of them, in all these forest commission sites, and the Forestry Commission was very interested in increasing their visitor numbers. “Well, how can we increase their visitor numbers by getting a Go Ape treetop adventure course on their land?” So what Tristram and Becky basically did was go to the Forestry Commission and say, “Look, if you give us a chance to build five of them and show you that they work, we want an exclusive license for the rest, for 25 years.” The deal was made. There are now over 30 Go Ape adventure locations all over the UK, and there’s a whole set of them in the US, and how did that happen? Because they borrowed most of the assets they needed. They borrowed the trees, they borrowed the rope, they borrowed the parking spaces, all those things. All they had to do was put their tools on the trees. Fantastic.
Today, entrepreneurs and permission are somewhat like oil and water. If you’re an entrepreneur, you know that somewhat, right? But in a large company today, if you want to accomplish something new, something innovative, something that might be a little different from the norm, you have to pass it by the lawyers first. Because there are a lot of regulations everywhere, and you don’t want to do something that could lead to the imprisonment of a top executive. So it’s really hard to get a “yes” to do something new and innovative, and it takes a long time. But it’s very easy to get a “no.” But for entrepreneurs like Elon Musk and the Tesla team, cash is the lifeblood of the entrepreneurial project. So when Musk joined the Tesla team, he said, “What’s the plan here?” And this team had a plan, which was to build a really luxurious sports car, make a lot of money from it, and use that money to build a slightly cheaper car, and make some money from that car, and then build a car with a large market that more people can afford. And by doing that, they would make a real impact on the emissions problem created by the global automotive industry. Well, what Musk said was, “Let’s see if we can sell some cars.” So they sold 100 Tesla Roadsters for $100,000 each, cash on the barrelhead, and they paid that night. How much was the amount? Do the math. How much money did they have to start building Roadsters? $10 million in the bank, cash, before they built Roadster number one. This principle has carried Tesla throughout its journey. So when they presented Model 3 a few years ago, nearly half a million consumers deposited $1,000 each. Do the math. Half a million consumers, $1,000 each – half a billion dollars in the bank, cash, to start engineering, build tools, set up the factory, and more. Don’t you want to build your entrepreneurial project using this kind of business model?
I want to conclude with four questions for you. The first question: Which of these mindsets is embodied in you today – maybe one or two of them already? The second question: Which of the others can you learn? Are these learnable? I think they are. The third question: Can you teach them to someone you work with, who has some challenges that these mindsets might help? And most importantly today: Is there a challenge you face today that one of these mindsets, or two of them, might help you overcome the barriers you face with this challenge? Well, let’s get started. Six unconventional mindsets that break the rules can help anyone, maybe you, change the world.
