Irving Grousbeck: the farewell speech

Professor Irving Grousbeck End-of-course speech, Stanford Graduate School of Business, December 2001.

It has been a privilege for me to be a small part of your lives this quarter; each of you is, truly, enormously talented and resourceful.

I would like to share two quotations with you. The first is from Lao Tzu, the Chinese philosopher of the sixth century B.C.

A leader is best when people barely know he exists. Not so good when people obey and acclaim him. Worse when they despise him. But of a good leader, who talks little, when his work is done, his aim fulfilled, they will say: "We did it ourselves."

The second is from W. H. Murray, who led the Scottish Himalayan Expedition.

"Until one is committed, there is hesitancy, the chance to draw back, always ineffectiveness. Concerning all acts of initiative (and creation), there is one elementary truth, the ignorance of which kills countless ideas and splendid plans: that the moment one definitely commits oneself, then providence moves too. All sorts of things occur to help one that would never otherwise have occurred. A whole stream of events issues from the decision, raising in one's favor all manner of unforeseen incidents and meetings and material assistance, which no one could have dreamt would have come their way."

I have learned a deep respect for a couplet of Goethe's:

"Whatever you can do, or dream you can, begin it; boldness has genius, power, and magic in it."

What follows are my views, offered for your consideration. This is not a sermon; there is no spirit of "should" or "must," and it comes with my biases. If some of these ideas fit into the fabric of your lives, good, and if not, that's fine too. The course will have accomplished a great deal if you accept entrepreneurship as a reasonable career alternative. Not for everyone, but for anyone who wants to choose it. You don't need to be impulsive, stubborn, flamboyant or eccentric. You don't need operating experience, although it helps; you don't need a business idea and you don't need money. To be an entrepreneur there are no external barriers, only the ones we impose on ourselves internally. So one of the main questions as you chart your career path is: "am I going to be in someone else's company, or in my own?"

Let's examine the risks of being an employee; you know that in this course we always examine the risks of being an entrepreneur. The company that hires you will hopefully challenge you, promote you, pay you well, flatter you and give you buttons to push and more and more people to manage. But it may also, if you're lucky, acclimate you to its culture, envelop you and consume your entrepreneurial energy, your perspective and your capacity for taking risk.

Most executives of large companies are anything but free. How many would like to leave but don't know how, or where to go; they can't afford it and, in many cases, they don't dare. I have rarely met a successful entrepreneur who is unhappy, but I have met many successful executives of large companies, and partners of consulting firms and banks, who are unhappy. Your career should not only be fun; it should be in the service of your life.

In effect, we have just described some of the risks of not following the entrepreneurial path: tilling other people's land in its many locations, creating more value for their shareholders, and when asked, relocating or changing jobs. You run the very real risk that someone else owns you.

In fact, someone else's company versus your own is more than a question of how you will spend your working days; it will reverberate through every aspect of your life. And yet, the decision to be an entrepreneur becomes even harder because each of you carries the weight of the high expectations of your close friends, your family and yourselves. With every success in your career there are more chips on the table. With every win come even greater expectations, and in order not to disappoint others or oneself, one often chooses a safer, more acceptable, lower-risk path.

But now we see that there is no such thing as absolute security, that risk cannot be avoided. Or, as Clint Eastwood said in The Rookie: "You want a guarantee? Buy a toaster!"

There is no longer a "right" career choice, as there was in the past. Most of us understand this in our heads, but we don't accept it in our hearts.

We are like the dachshund in this poem:

"There was a dachshund once, so long he hadn't any notion how long it took to notify his tail of his emotion; and so it happened, while his eyes were filled with woe and sadness, his little tail went wagging on because of previous gladness."

There are risks that in fact must be taken, consciously or not, and so the question that matters is: "which set of risks can I best control?" I embrace the premise that one of our goals in life is to die young as late as possible. So, what are some of the important questions one must ask if one wants to leave the door open to an entrepreneurial career?

1. How would I define my ideal work environment? In terms of partners, ambiguity, risk, peers, status, power, a small or large setting, structured or unstructured, and the importance of money.
2. What skills do I need to complement? And 2(a): do I plan to complement them by recruiting a partner or by preparing myself better to go it alone?
3. About the jobs I am offered today or could get: let's look at the daily routine I would have, the avenues for growth, whether a mentor would be available and two very important things: which doors open or close on my career path if I take this job? That is, what are the natural exits from this job and which are the awkward ones?

The second question, which is particularly critical, is: how do I keep my perspective? How hard will it be to pursue my entrepreneurial dream from this job? I have learned that the easier it is to make a change, generally the less it matters, and that the older we get the harder it is to choose change, which makes it all the more necessary to do so from time to time. Change is a form of hope. To risk change is to believe in tomorrow. Hope is a gift we need. So it serves us to chart a course in which every job change, however hard, brings us closer to our career goal. But the path has to be visualized in advance.

The hardest question for an MBA is: "if I want to be an entrepreneur, how do I get from here to there?" Well, the hardest part of any task, as Plato said, "is the beginning of the work," and that means starting the search and sustaining the search for your own business, whether a startup or a purchase. Sustaining a search is like sustaining religious beliefs: they die if they are not fed. If you don't refresh that searching mindset by reading and staying in touch with other entrepreneurs and other searchers, atrophy will set in, and the search for your own business will be abandoned as "that naive idea I had when I was at Stanford."

How does one prepare for an entrepreneurial career? There are several paths:

1. Experience in a specific industry, if you have a clear idea of which industry you want to enter, which is rare.
2. General management experience, operating or line experience; it is desirable and I believe that supervisory experience is broadly transferable. (The key here is managing others.)
3. Taking a lookout position from which you can watch the world of business opportunities go by. That is, being at the intersection of opportunities, capital and management.

Some examples of lookout positions would be consulting to small companies, the workout departments of banks, working for a small regional investment bank, a venture capital or leveraged-buyout fund, and even an accounting firm whose clients are small businesses. These paths are not necessarily mutually exclusive.

One of the really important things is: don't spend five years getting two years of experience.

Although you may be eager to leave Stanford and get going, you will never again have a comparable opportunity to reflect and set goals, work goals. Don't let the urgent crowd out the important in your daily life. Use those goals, move toward them daily and methodically, modify them when necessary, compare your progress from time to time, and remember: choose carefully, because with the talent each of you has, whatever you really want you will probably get.

The next few years are key. You need alternatives to be in a strong position to make good decisions, and you need to see many opportunities to sharpen your judgment. I put on the board these five qualities usually associated with entrepreneurship: creativity, integrity, energy, intelligence and judgment. The only indispensable one on the list is judgment. There are many entrepreneurs who are not creative, who have no integrity, who are not particularly energetic or intelligent, but who somehow made a series of excellent decisions. They developed the ability to exercise good judgment.

What are the risks of the entrepreneurial path? Failure? Perhaps, but if you fail, do you lose your reputation? No. Do you lose your own money? No. Do you lose other people's money? Probably, but they are risk investors. Will no company hire you after a failure? False. The biggest risk is that you become constitutionally unemployable. You may decide that you can't work for anyone else, but since you failed at your own business, you will have to rebuild your credentials and try again.

When are you ready for your own business? Maxwell Maltz, in his book Psycho-Cybernetics, said that "you are ready to do something when you can visualize yourself doing it." But there is a relatively short window of time: it's between your current age and your mid-thirties; it's sooner rather than later. In percentage terms, not many entrepreneurs start or buy their first business after 40, and the vast majority do it before 35. Remember that entrepreneurs are the same as you and me in ability. What they have that is different is vision and conviction. Remember too that that warm feeling that all is well may be only body temperature at the center of the herd.

What are the rewards of the entrepreneurial path? At the top of my list would be freedom: to stretch my capabilities, to put my stamp on a company, to create something, to have an ethical impact on others and to have financial independence. There is a big difference between being rich and having wealth. Being rich is having money. Having wealth is having money and time. Reaching financial independence while still young enough to enjoy it may be something worth working for. It gives you the chance to have a second career and a third, and to be psychologically ready to take a new direction. Thus, if you stay in a successful business you created, you do it by choice, not by necessity. And as you plan how to get in, don't forget to think about your exit strategy. There are many living deaths, where people get trapped and where companies are identified solely with their owners and managers, and are therefore practically unsellable.

As a future entrepreneur it helps to have the ability to read people and predict their behavior. It is important to cover the critical skills of the business you propose to enter, either alone or with a partner. However, the business idea is not necessary, it can be found; and money is not necessary, someone will put it up. In fact, money may get in your way, because if you have some money, you may tend to define the size of the business by that amount. Nowhere is it written that the entrepreneur must put up the capital; they are different functions. So forget about building up your nest egg: build your skills, build your perspective, build your judgment. It helps to have an experienced lawyer. It helps to guard your reputation and keep high ethical standards, because, as you well know, building a reputation takes years and losing it takes only a minute, a single act. And once you tell a lie, everything you say afterward to that person is in doubt. It is important to control anger, to speak more softly the angrier you are. It is desirable to minimize your enemies, because burning bridges is merely self-indulgence.

In life, the ethical and the practical converge, so take the high road: "I press toward the mark for the prize of the high calling." And in your search, stop from time to time to lighten the loads of your fellow travelers; I beg this of you. Any definition of a successful life must include service to others. We have all drunk from wells we did not dig. I reject the prevailing notion that the pursuit of selfishness has displaced the possibility of compassion. I ask you to reject it too. Not just by giving 500 dollars to the local charity, not just by accepting an honorary seat on the board of your community hospital, but by devoting your time and your skills to something worthwhile. Really pulling an oar and making a difference in the areas where you are best prepared to do so.

And now, on a more personal plane, if that is possible, whatever your career path: at this school we teach you many things we know you will soon forget, because we don't know how to teach you the things you will always need to know. Compassion, commitment, concern for others, involvement and love. As you grow, your capacity and your desire to give should grow in the same proportion.

Listen to these lines from an old hymn: "New occasions teach new duties; time makes ancient good uncouth!"

I put it to you that the saddest phrase of middle age is "I wish I had." How much better to be able to say: "With my eyes open I dared, and I have no regrets." It is undeniably harder to create your own opportunity than to be part of someone else's, but I have walked the entrepreneurial path and it offers an excitement without equal. If you choose to take that path, ignore those who say it can't be done, because very likely your only allies will be other entrepreneurs and those who have blind faith in you. So do it, if you so decide. Don't follow where the path leads; go instead where there is no path and leave a trail.

My confidence is in your minds and in your imagination. I believe you will finish on your own the sentences whose endings I cannot see.

These words of Robert Frost: I shall be telling this with a sigh, somewhere ages and ages hence: two roads diverged in a wood, and I... I took the one less traveled by, and that has made all the difference.

I treasure the time we spent together this quarter. To each of you I wish:

• A soft heart to go with your hard mind
• Thoughtful decisions
• Constancy of purpose
• Godspeed

Thank you. Irving Grousbeck