By Charmaine N Clarke
Have you ever thought about whether you’ll have enough to get by if you live long past your retirement? Howard Stevenson did. He taught CEIBS European President Professor Pedro Nueno entrepreneurship at Harvard and now lives comfortably from the return on his investments in more than 80 start-ups. It’s called an entrepreneurial pension plan.
But before you sink your savings into any venture, you need to ensure that you have a solid portfolio that’s managed by professionals, it should be international, it should of course be legal and it’s better if you invest as part of a team – your network – so you can diversity your risk. That’s some of the advice Prof Nueno gave the audience during the January 14 launch of his new book Emails to a young entrepreneur.
Whether you're a young MBA grad trying to build up the courage to become your own boss, the owner of a company that needs a capital injection to grow, or you’re wondering how you're going to survive on your pension after you retire, you would have enjoyed his presentation. A serial entrepreneur and angel investor, Prof Nueno is also a globally esteemed professor of entrepreneurship. He’s also known in business school circles as a member of the team that established CEIBS after years of accumulated experience with similar educational ventures. Among the many feathers in his cap: the four VC funds he’s launched to help business school students access capital for their entrepreneurial hopes. The funds, Prof Nueno says, have led to the launch of 40 companies that created 3,000 jobs – and he’s thinking of launching another.
Prof Nueno has pulled together his wealth of knowledge on the topic of entrepreneurship – his favourite – in his new book. It was during the launch of the Chinese edition of Emails to a young entrepreneur, in mid-January, that he delighted his audience with very solid advice presented through a mixture of great photos and catchy music.
China’s New Silk Road initiative, Prof Nueno noted, which will span Asia, Africa and Europe at the very least, will be a treasure trove of opportunities which entrepreneurs can transform into reality – like Geely’s acquisition of Volvo in 2010, which generated 10,000 jobs in Europe alone. Those who are able to spot opportunities (a task that can be harder than it looks), will then need the right management to lead the right team while being guided by a solid set of values, said Prof Nueno. “You need to be ethical because that is the very basis of doing business. And also because confidentiality does not exist,” he urged the audience of CEIBS students and alumni. There are no secrets anymore, he warned, citing examples of past high profile cases such as the Enron scandal and Martha Stewart’s stock trading misstep. He also spoke about the importance of diversification, having a long-term view, being humble and respectful, of knowing the basics or teaming up with someone who does. And, he said, it is crucial to have a business plan. “A business plan is unforgettable,” he told the crowd as the soothing sound of Nat King Cole crooning the popular song filled the room.
Start-up capital is often a pain point for many entrepreneurs, so Prof Nueno also had very good advice about the various ways in which they can access funds – from venture capitalists to business angels and entrepreneurial pension plans.
CEIBS, itself an entrepreneurial venture, is increasingly expanding its focus on entrepreneurship in and outside of the classroom. Entrepreneurship is now officially an academic discipline in the MBA programme, the MBA eLab was launched last year, and the EMBA Shenzhen Class includes entrepreneurship and innovation courses. “We hope our students, especially our MBAs, will have entrepreneurship in their blood and once they graduate they will make entrepreneurship and innovation part of their DNA,” said CEIBS Vice President and Co-Dean Prof Zhang Weijiong during the book launch. “There will be more forums and events like this where we hope to see an exchange of business ideas between our students and alumni.”
Take 3: Prof Pedro Nueno
TheLINK had 3 questions for Prof Nueno ahead of his book launch.
1. What is the main point you make in your book?
The main point is to try to help potential entrepreneurs do things correctly, to do things well, to succeed. I think that after many years of teaching entrepreneurship, it’s important to see what are the key messages. Also, times change – with technological progress, as the world becomes global – so these lessons have to be collected in one way or another and transformed into messages for potential entrepreneurs. And this is why the title is Emails to a young entrepreneur. By the way, many entrepreneurs are young but we can also find some people who have an idea and find an opportunity when they are in their sixties, and it’s perfectly okay for them to pursue that.
2. What advice do you have for anyone who wants to become an entrepreneur?
First of all, don't start anything if you don't see a good opportunity. There has to be an opportunity. Then, prepare a good business plan. Then with this business plan, you need to know how much money you are going to need, how this money will be spent, how many people you will hire, what responsibilities you will give them. All these things have to be planned. You cannot just take some money and use it and then lose it and then say, “What do I do now?” It's better to follow a path that has been carefully studied and carefully discussed and carefully negotiated with the people that are going to help you in one way or another.
If you have found a good opportunity, you better transform that into a business quickly, in the correct way, in a professional way. Otherwise the opportunity will disappear. Today we live in the information age and any new idea is an opportunity only for a short period of time.
The other thing is: sometimes it's better to organise an entrepreneurial team.
When I started, many people talked about the genetics of the entrepreneur, as if some people were entrepreneurs and others could not be. My feeling is that anybody can be an entrepreneur. There is no entrepreneurship gene, so anybody can be an entrepreneur. But sometimes a team is much better than one person. Because if somebody is a fantastic bio technologist and has a brilliant idea but he has no idea about what a cash flow, or an income statement or a balance sheet is about; if he has a good friend that has an MBA and does not know too much about bio technology but knows a lot about accounting, finance, the team can be a fantastic thing. And if one is Chinese and the other is American, maybe they can help launch the thing simultaneously in China and United States and [that’s] much better.
3. Who, in your opinion, is the most successful entrepreneur and why?
An entrepreneur, of course, can become rich – that's one thing. But an entrepreneur can also create lots of jobs. An entrepreneur can also pay lots of taxes that, in one way or another, can help finance many things in a society. An entrepreneur can stimulate others to follow their path so in this sense it's difficult [to identify one person as the most successful entrepreneur]. But clearly there are people who have contributed a lot in all of these areas. And this is the important thing.
For example I created venture capital funds to help my students finance start-ups. And I discovered that, mostly in the years of the [financial] crisis, through these funds – and they didn’t use a lot of money, just around $12 or $14 million – about 40 companies were created from start-up money. And these companies directly created more than 3,000 jobs.
So in a country like China, for instance, the potential of creating jobs in the future, of entrepreneurship, is huge and probably is the biggest potential for the future. If you look back at history, at Harvard Business School at this moment there is an exhibition of documents, books and papers from the archives of the business school and the person that is being presented there is Georges Doriot. Georges Doriot is the person who invented venture capital. So can you imagine how many millions and millions of jobs venture capital has created in the history of mankind – in Europe, in America, in China? And this was the invention of a professor who created a company called American Research and Development. This was the first venture capital company.
So you have to look not only at entrepreneurs who made a lot of money themselves, but there are also people who facilitated [entrepreneurship] and made it a reality for example by teaching it, as in the case of Georges Doriot, or in inventing venture capital as it also was in his case. Or like what happened in the UK where the government, after the Second World War, launched another venture capital company called 3i to help create small companies that would have not been financed by the banking system.
So the contribution of an entrepreneur is an important combination of things.
WATCH: Prof Pedro Nueno's lessons on entrepreneurship