Paul Brown is a professor in the Department of Entrepreneurship & Strategy Department at the University of Utah’s David Eccles School of Business while serving as the James Lee Sorenson Presidential Chair and senior director at the Sorenson Impact Center. Outside of the classroom, Brown boasts experience in many fields: he previously was a partner of the Kirkland & Ellis law firm in Chicago, founded corporate venture capital funds for organizations like Blue Cross and Sandbox Industries, and now serves on the boards of multiple startup companies, while working with teams in the non-profit, healthcare and religious sectors alike. Though Brown has many research interests, his real passion is teaching students, particularly those who aren’t initially attracted to entrepreneurship, to be honest, resilient and innovative.
What are highlights from your background?
Probably my proudest professional accomplishment was the formation of the Blue Cross venture funds, which turned out to be a very powerful model for corporate venture capital. I’ve met with over 1,000 startups, led investments in many of them and continue to be a consultative venture capitalist in addition to my teaching, now with a new venture capital firm. I’ve served as an advisor to or director for more than two dozen startups. I’m also an active angel investor. So I think my unique experience as a teacher is that I’ve seen and worked directly with a lot of early-stage companies, so I understand the challenges they face. The practical experiences, I hope, enrich my teaching.
What are you passionate about?
I’m really passionate about the idea that entrepreneurship is a skill – and a way of thinking – that can be accessed by anyone. I love seeing the excitement when my students realize that they can be entrepreneurs, even if that doesn’t necessarily mean they’ll be involved with a startup. I’m also just really passionate about teaching in general. I really love working with young people. Finally, I’m passionate about the concept of social entrepreneurship, the idea that social problems can be solved by using business tools. That’s much of the work of the Sorenson Impact Center, where I’m also engaged. I love taking students to the developing world as we work with and assist entrepreneurs in those areas.
What do you define as an “entrepreneur,” and what’s their purpose?
Anyone who operates under conditions of extreme uncertainty. It’s Eric Ries’s definition, and I really like it. It’s more about the problem you’re working on than the setting in which you’re working. An entrepreneur can be a startup founder, someone in a large corporation, a nonprofit, a family business or even in government. My personal entrepreneurial journey began as an executive in a large, non-innovative company. So, you don’t have to only work in a startup, as much as I love working with startups. Entrepreneurship is value creation through innovation.
Why should students study entrepreneurship?
Our world is changing really quickly. Innovation cycles are compacting. Students should appreciate that and be prepared to be more innovative and entrepreneurial. I think it’s extremely exciting. There’s never been a better time in human history to be alive. Don’t miss out!
There’s something else I love about entrepreneurship. It calls on skills from all other business disciplines. You have know some accounting, finance, management, technology, marketing and more.
It’s often said that when it comes to entrepreneurship, practical experience is best. What’s the advantage of an academic background in entrepreneurship?
I like to think that I blend these two approaches for my students. I’ve run three venture capital funds, I’ve been a founder of a startup, I’m an angel investor, and I’m really committed to teaching both the practical and theoretical sides of entrepreneurship. I like the combination. I hope my students do.
What is your favorite course to teach? Why?
This might sound a little strange, but my favorite students to teach are the ones who are least inclined toward entrepreneurship, where I can see the “light” switch on as they learn about it. That’s really fun as a teacher, so the more general classes tend to be my favorites.
What’s your favorite book about entrepreneurship and why?
Eric Ries’s “The Lean Startup.” This book has had a tremendous impact on how we think about entrepreneurship. Ries’s great insight is that critical hypotheses underlie all entrepreneurial endeavors. These need to be identified and tested as quickly and as cheaply as possible, before you run out of money and time. He brings a scientific rigor to entrepreneurship that is really powerful. Before Ries and the lean startup movement, it was all about grit, will power and ideas. Those things are important, but not sufficient.
Is there a mistake or misstep that many entrepreneurs and entrepreneurial students consistently make? If so, how can it be avoided?
I think all of us make a lot of mistakes in entrepreneurship. It’s very hard. There’s too much emphasis on ideation – coming up with a killer idea. The longer I’m involved with entrepreneurship, the less in love with startup ideas I become. Most ideas are bad. And even the good ones require entrepreneurial execution, which is less exciting than ideas, but more important.
We also have a hard time transitioning from the “vision” behind an entrepreneurial idea to validating the hypotheses underlying it. Everyone wants to stay in the dreamy land of ideation too long. You’ve got to move back and forth from vision to rigorous testing.
Another thing we do is avoid the harsh truth of entrepreneurship. It’s easier, for instance, for an entrepreneur to tinker with the website than really confront the reality that the business model might suck. This sounds harsh, but we should kill bad businesses sooner.
Finally, I think entrepreneurs chronically underprice. They’re understandably desperate to get customers and build revenue, but this creates a very strong incentive to underprice in order to make sales, especially early-on. Other than Walmart, I’m not really aware of any entrepreneurs who have built sustainable, profitable businesses by being the low-price alternative. (And, even Walmart only achieved that by having the best logistics and supply chain operations in the world, their real competitive advantage!) Underpricing is dangerous because it sends entrepreneurs a bunch of false signals.
Why is the University of Utah or Utah, in general, a good place for entrepreneurship?
The U has built a wonderful entrepreneurial ecosystem. The Lassonde Institute is world-class. I’m constantly amazed by what executive director Troy D’Ambrosio and the rest of the Lassonde leaders are doing with Lassonde Studios and beyond. The rest of us are just trying to keep up with Troy! I also love the new graduate program we’re starting. On the social side of entrepreneurship, the Sorenson Impact Center, is equally fantastic. The Sorenson Impact Center is regarded as one of the top five campus-based impact centers in the world, right up there with Harvard and Oxford. Students at the U view entrepreneurship as a viable and real career path. The U administration will try things. As university administrators, they’re quite open-minded and progressive.
Beyond our campus-based ecosystem, there’s just a really helpful can-do attitude and culture in Utah about entrepreneurship. People like to be innovative and want to own and operate businesses. The Silicon Slopes movement has been terrific. State government is generally helpful. The angel and venture capital communities are getting better. We’ve got something really special here in Utah.
What are the risks associated with entrepreneurship? What struggles did you face that you may not have expected?
Failure. But it’s not that big of a deal. When I was in the private sector, I founded an innovation consulting practice that ultimately failed. I learned a lot.
Risk is a funny thing, too. It’s sort of in the eye of the beholder. Sometimes doing what we think is the “safe” thing is actually quite risky. Taking a so-called “safe” job because you want to avoid the ambiguity of entrepreneurship may put you in the position of becoming obsolete as innovation disrupts incumbent companies. A job at Kodak, GE or IBM probably seemed pretty safe 30 years ago! Now, all those companies are either shadows of their former selves, or in real trouble. I really don’t think entrepreneurship is as risky as a lot of people seem to believe.
What does success look like for entrepreneurs? Is it quantitative?
This is a great question, and it’s provocative. Sometimes I think we’re too focused on the venture capital-based model of entrepreneurship, where a founder raises outside capital from professional investors. That model represents a tiny slice of the entrepreneurial pie, but it gets all the attention. I think success looks like this: having an innovative successful business enterprise that meets your financial goals. You can bootstrap it. It can be a family or lifestyle business. You can be innovative inside a large incumbent company. Or you can raise a bajillion dollars in venture capital from Silicon Valley and try for a huge exit. It’s up to you.
How should entrepreneurs test their ideas? How do you know if they’re good?
Get out of the world of ideas and get real products in front of real customers as soon as possible. Resist the temptation of perfectionism. Once real customers have contact with your product, get their honest feedback. Improve. Iterate. Pivot. Kill it if it’s bad, and move on. If it’s good, make it better.
What was the most important entrepreneurial skill that someone taught you? Why?
One of my former venture capital partners taught me the value of brutal honesty. It’s so important with entrepreneurship. Another venture partner taught me the notion of being “slow to judge.” Sometimes those ideas are in tension, but they’re powerful.
One of the things that drives some people crazy about entrepreneurship is the contradictory advice. One advisor will tell an entrepreneur one thing, and another will offer advice that is the exact opposite. It’s okay. Figure it out. Entrepreneurs need to have a very high tolerance for ambiguity.