BostInno/Streetwise Media founder Chase Garbarino sold Pogs on the playground and ping pong balls in college; Forbes 30 Under 30’s Tom Coburn had dozens of ideas before founding Jebbit; CampusTap’s Remy Carpinto had an IT installation and services company up and running out of his freshmen dorm room before he had fully unpacked. It seems like every entrepreneur I meet, (and I’ve been lucky to meet tons of them at BC, in the Soaring Startup Circle, and in our awesome Boston ecosystem), has been on an unstoppable trajectory, seemingly born to start businesses. I am always in awe of their talent, perseverance, and will-power. Simultaneously, however, it makes for an interesting moment of introspection. Sure I shoveled some driveways and mowed my neighbors’ lawns but was I ever really like Chase or Tom or Remy? While these guys were starting businesses, what was I doing? Ironically, it is the answer to this question that helps explain my own entrepreneurial streak. Continue reading “How I Learned Entrepreneurship From Playing in Bands”
We’ve reached the last installment in my blog reflections on my MBA classes at Boston College. I have been floored with the reaction (about 600 views as of my writing) and hope that they have provided some value. In addition to the rundown of my classes, I will also include some closing thoughts at the end. If you missed my earlier posts you can find parts one, two, three, four, and five here on my blog.
Second Year: Second Semester
Pricing Policy and Strategy
Another go round with marketing guru Jerry Smith, this class was condensed into three weekends over the course of half of a semester. Similar to his Brand Management class, we walked out with tons of new tools and frameworks to help do pricing. The most poignant take-aways, however, where more thematic:
- It’s not about the feature, it’s about the value of the benefit it enables- We tend to want to charge more for something because it is packed with more features, but do the features add value? Are they the right features? Instead we want to price based on the quantifiable and explainable value of the benefits certain features provide.
- Pricing is a conversation with your customers- Rather than telling your customers what they should pay, or having them tell you what they are willing to pay, the best pricing results from a conversation with customers about what benefits they value and what formulas accurately represent the value of these benefits. Once you have done this, you can strategically construct your pricing having already secured customer buy-in.
- It’s all about setting the right frame of reference- You have to communicate to your customers how they should think about your product because the sphere in which they place your product will determine what they are willing to pay. If you let your customers or worse your competitors determine the frame of reference, you will have to adapt your pricing (and profits) to a different (and generally lower) point.
- Never unitize a fixed cost- Without getting into cost accounting here suffice it to say some costs (fixed costs), like rent, must be paid as a whole regardless of how much or little you do with them, while others (variable costs), like pieces of material, are incremental and directly correlate to the amount of units you produce. To explain all costs, accountants like to spread out the fixed costs across all the units but this is misleading and can lead to poor pricing decisions because it implies linear cost changes where there are none. (I’ve already written more than expected and hardly succeeded in clarifying-if you want to understand further, leave a comment and I’ll reply in detail).
With the second to last installment of my Condensed MBA series, we move on to the second year. If it seems like the posts are heavy on the first year, that’s because the full time MBA tends to skew that way. At BC, we moved from quarters to semesters and from daytime to evening classes. For many, that allowed them to work either full or part time and for others it opened up time for the job search or to participate in extracurriculars such as my pet project the BC Grad Tech Club. Still however, there was a lot of learning that went on and, as always, I have documented my take-aways here. (If you missed my summaries of the first year courses see parts one, two, three, and four or a shortened version of the full first year on Linkedin.
Second Year: First Semester
For most marketing MBAs the end of first year means you never have to take a finance class again. For me, however, I finished first year feeling that I had not yet developed the strength in finance that an MBA ought to exhibit so I enrolled in Corporate Finance. It was certainly the right decision and I left the class with a couple of key take-aways:
- What is a company’s valuation actually supposed to represent? Whether it is the market cap of a public company (aggregate value of outstanding shares) or the estimated valuations that underlie investments in private companies, it is easy to talk about what a company is “worth” without actually being able to clearly articulate what that means. For me, drilling home the concept that the companies value represents the monetary value of its tangible and intangible assets AND the present value of the aggregate amount of money it will generate in the future was revolutionary. Understanding that last factor and what goes into calculating it (risk, discount rate, etc.) helped clarify a concept that had previously seemed rather convoluted.
- In any finance event, over-communicating your reasons is key- Whether it’s buying back shares, taking on debt, or issuing shares every move you make will send a message and if you aren’t clear about the why, investors will infer what they want. In fact they will probably do this regardless, but the more guidance you can give, the better chance you have of preventing misinterpretations. For instance, investors will almost always interpret a new share issuance as an indication that the management thinks the stock is overvalued. If you are going to issue new shares for any other reason you MUST be very clear about the why and even then you will see some drop in share price as not every investor will trust that you do not believe the stock is overvalued.
We’ve passed the halfway point in my six part MBA reflections! If you missed it, here are the links to Part 1, Part 2, and Part 3. I am full time working on my heritage travel startup Radici Travel as part of the 2015 Soaring Startup Circle so the final three installments will likely come once a week.
First Year: Fourth Quarter
Global Capitalism, Culture, and Ethics
This class was case-based and examined a number of ethical issues related to globalization. Because of the way scheduling worked, everyone had to take this class but the two sections were essentially divided into marketing people and finance people. A couple of times I had to go to the alternate section for one reason or another and the general sentiment was often markedly different. For me, there are a couple of lasting impressions:
- The banana industry is brutal! We must have read 3 or 4 cases about it, including the aptly titled Blood Bananas, and the issues ranged from spurious propaganda, to inciting military coups, to tax fraud, to human rights abuses. Chiquita has actually changed its name multiple times to try to hide its own brutal past.
- Most people are afraid to take a stand- One thing that really surprised me was how unwilling many people were to take a firm stand on an issue, both the actors within the cases but also students in the class. It often seemed like people would make serious leaps to attempt to provide a justifiable reason for something in the case because of the economic upside. After what we have seen, however, this kind of bending and stretching can lead to ruin and good ethical business tends to pay dividends in the long run. If you are looking for a simple, doable way to set yourself apart in the business world, take a stand on ethics…you’ll be glad you did!
- Unintended consequences are always there- Understanding this allows you to anticipate and mitigate some of them, but more importantly, you need to equip your people with a framework for dealing with the unknown when it inevitably comes. This framework should include your company’s ethical code and a chain of command for making these calls.
First Year: Third Quarter
MBA courses are, by nature, often discussion based. While I generally like this format, at times it can be unclear whether we are really on the right track or just blowing smoke. With Professor Mary Tripsas at the helm, this was never the case. She had no problem calling out vague or unsupported comments and really forced us to elevate our game and exploration of the topic at hand. This challenge was energizing and is what really made the class stand out. Other than Tripsas leaving a normally quick witted classmate speechless after calling him out for yawning in class, what do I still remember?
- Who made that toilet? The first case we read was about Japanese luxury toilet company Toto and it’s challenge to American Standard. To this day, I cannot use a bathroom without noting who made the toilet. For the record mine is a Toto.
- You can make a two by two matrix for just about anything (and it will probably help)- By the end of class we had seen so many of these that it almost seemed cliche and yet they really are a great framework for analyzing and organizing complex ideas or markets. To demonstrate just how versatile they can be, here is one I like for Game of Thrones characters
- Porter’s Five Forces- We were all doing an MBA and Prof Tripsas used to work for Monitor…needless to say, we got so much Michael Porter that it had to stick, if for no other reason than the amount of jokes and five forces parities we made.
- Two-Sided Markets- Before going on to win the Business Plan Competition (spoiler alert), 5/6 of the Geck Squad did a routine presentation on Uber and two-sided markets. We wound up getting really excited about it and putting in a lot more work than necessary but ended with a final presentation that we were really proud of and that I could probably still give today.
With my Canadian vacation behind me, it’s time for Part 2 of my 6 part “Condensed MBA” series. (Click here if you missed Part 1) Read on to hear about first semester, quarter 2.
First Year: Second Quarter
Like Accounting, the biggest challenge for me was my general lack of familiarity with the vocabulary. Getting used to a definition of “coupon” that didn’t include cutting something out of a circular was a bit of an adjustment but having Bob Taggart at the helm meant I had an understanding professor who was always available and ready to help. So what stuck?
- Time Value of Money- A dollar today is worth more than a dollar in the future. Understanding the basic concept and how to approach calculating it is crucial. While I am still a little shaky on the calculation part, I have a strong enough understanding of the basic concept to know if I need to bring in help with the calculations.
- Helping each other is what sets BC MBAs from the rest- Despite hard work throughout the quarter, I was still pretty shaky heading into the exam. One of my classmates came in super early on exam day and spent hours with a few of us to ensure we fully understood without asking anything in return…that’s community!
Warren Buffett is famous for saying that he does not invest in Tech companies because he doesn’t understand them and cannot predict what they will do in ten years. He may be a whiz with stocks and insurance companies, but can a Techie like myself really learn a lot of value from him? Recently, I had the opportunity to attend the Warren Buffett Experience with a group of MBAs from BC and five other schools. I met the Oracle himself and we had a 2 hour Q&A (with a tasty chicken parm thereafter). It turns out the answer to my question is a resounding YES! Buffett spoke very little about investing in particular and more about general business and life lessons as applicable to Tech as they are to Textiles (the business from which his Berkshire-Hathaway holding company gets its name). I have pages upon pages of notes but will do my best to summarize some of the highlights here.
The Biggest Mistake You Can Make Is Not Using Your Skills And Talents To Their Full Potential
Buffett spent a lot of time highlighting the fact that we had all won the ovarian lottery just by virtue of having the minds, opportunities, families, etc. that allowed us to be in that room. In light of this, he told us he never really worries about mistakes–that it would be a mistake to complain about anything when you’ve already won on 80:1 odds at birth. He highlighted a failure to use your skills and talents to their full potential as one of the few real mistakes you can make. In today’s tech world especially, there are almost limitless free resources out there to make any idea a reality. Likewise, we have developed a culture that encourages trying, failing, and learning, over the safer routes. With opportunities like this, the biggest mistake we can make is not following our passions and starting a company, joining a startup, or otherwise following our passion. Buffett suggested taking the job you would choose if money were not a concern–for many of us, that means the startup world.