Faster and bolder: Managers, entrepreneurs - don’t give up! | Richard Patton

Part five in a series by the Katz Graduate School of Business

What is the most important lesson that a venture capitalist and a university professor would give to start-up entrepreneurs across Central and Eastern Europe? - “Don’t give up.” Richard Patton, who is a Clinical Associate Professor of Business Administration with the Katz Graduate School of Business at the University of Pittsburgh, is also a successful financial investor. In this position, he compares success of mature venture capital markets like the US with the definition of success on other markets. It is more difficult to succeed in a market that hasn’t built the infrastructure to support entrepreneurship yet, Patton says. However, the impulse must come from entrepreneurs themselves: the more success they attract, the bigger the impact on their local economy. Yet, to succeed you must be ready to face difficult time, learn from those who are a few steps ahead, and never succumb to adversity. In time, this will truly pay off, he says.

Richard PattonQ: You are an investor and a professor of investments. Do you also consider yourself an entrepreneur?

A: No. For someone to be an entrepreneur they have to feel truly passionate about the opportunity they are pursuing and understand in their mind that they will succeed regardless of any obstacles. I’ve never felt passionate enough about a business idea to leave teaching, to leave my investing and to give the full-time concentration that it takes to succeed in a new venture. What I do find I am good at is advising and mentoring people because I do have a wide base of experience from the investments and the teaching that I have done. I am also a great admirer of people that truly have the passion, dedication and the commitment to take the risks that are necessary to start their own business and I hope that through education and in some ways as a financer I can help them succeed.

Q: When you decide to invest, what role does passion play into your final decision to put your money into a certain company?

A: When you evaluate investment opportunities at a very high level you look at three things: the entrepreneur or the entrepreneurial team, the characteristics of the opportunity that they are pursuing and their ability to put together the necessary resources – financial resources, mentoring resources, technology and business resources. All three of these are critical to an investment decision. If any one of them is missing it won’t be a sound investment. Having said that, the very common wisdom is that, of those three, the entrepreneur is first among equals. No matter how good the idea, no matter how much money or other resources they can put together—if they don’t have the experience, the track record, if they haven’t served the apprenticeship, if they don’t have the passion to pursue that opportunity, it is not going to work. If it were that easy, all managers could do it because we have a lot of very good managers in this world. Yet, just because you are a competent manager it doesn’t mean you have the dedication and the motivation to pursue an idea and make it work in spite of the inevitable obstacles and succeed in an entrepreneurial venture.

Q: To what extent do you think an entrepreneur or a manager can learn that dedication at school?

A: That is a really excellent question. I have a 17-year-old son. He was raised in an entrepreneurial family; his mother’s family runs several businesses. When I look at him, he is a young entrepreneur already. And when I see that, I say it clearly comes from his family background and the exposure that he has had. But I also believe that I have contributed to his understanding because he has come to my classes, because we talk about business, because he asks me about entrepreneurial financing. And I love to have a young person with that energy wanting to know what it is that I am doing. So I really think it is a combination of the two.

Q: How about entrepreneurs who don’t come from a family with such tradition?

A: There are substantial differences around the world in how students perceive the entrepreneurial opportunity. We have very many excellent Asian students in the University of Pittsburgh’s Business School. We have become known as an excellent source for many students, particularly Indian students. They have a real passion for entrepreneurship. There are other areas of the world where the measure of success is being a significant member of
a large corporation not running their own business. Tell somebody in the US that you are a successful entrepreneur or a successful venture capitalist: they’ll likely nod their head with a little smile and say, “This is good.” Tell somebody in the UK that you are a venture capitalist or an entrepreneur and they will not be nearly as impressed as if you tell them you are on the board of managers of a large public company. That is success in the UK. There is nothing wrong with that. It is different perspectives, different cultures.

Q: How about Central and Eastern Europe? Many start-up entrepreneurs here emerge in a vacuum of positive models and tools for learning. What challenges do you see ahead of these young people?

A: My suspicion would be the people you are referring to are largely starting what I would call smaller lifestyle businesses. They are not going to be the next Microsoft or a really significant large business because somebody without experience or without a track record is going to face difficulty attracting the very considerable resources necessary to start a high potential business. If my ambition is to start a small retail shop, I can probably do so with
minimal capital outlay. If I am going to start a high-potential company with a significant technology orientation, that is something that takes millions of dollars to do. And you do not acquire millions of dollars without either having a personal track record and experience, or if you don’t personally have the experience and credibility, finding somebody to join your team that does have that credibility. When you look at the amount of money that goes into
a Facebook or a LinkedIn, it is literally hundreds of millions of dollars to get that company to the point where it can go public and be a commercial success. You don’t do that without having the people with the relevant experience on your team.

Q: Are you saying that we can’t see the next Facebook or LinkedIn in Central and Eastern Europe?

A: I’m saying that it would be very difficult. You get a little bit of the chicken and the egg problem. How do I develop that expertise and credibility without starting a business? How do I start the business without having the credibility to gain the resources? And there is no good answer except to say if you are truly a dedicated entrepreneur you will find a way to do it. That is the hallmark of the entrepreneur: I don’t care if I have enough - I will beg, borrow or steal to get to the point that I can accomplish what I want to do.

Q: So young entrepreneurs from CEE should take their idea to a mature market like the US if they want to succeed?

A: No. I wouldn’t say that. I would say the odds of acquiring the necessary resources are better in the US. We have a 60 year history of modern venture capital - it was basically started in 1950 or so - compared to the Czech Republic that has a 20-year history of open markets. We have a very well developed series of support industries – accountants, attorneys that specialize in early stage investing. We have a wide array of government programs available to support entrepreneurs. These are advantages we have that somebody will not likely have in the Czech Republic at this point in time. So it is probably easier in that respect to start in the US. That doesn’t mean I can’t do it here. But what it means is I have to give a real significant thought to how I prepare myself to do that. I am not likely to come right out of school and do it. I have to say to myself: what apprenticeship should I serve? Who is there in the Czech Republic that is doing the sorts of things that I want to do? How do I get to meet those people
and learn from those people? Maybe what I should do is to take my first job not with a large corporation but with a smaller, more entrepreneurial corporation and learn how they are doing it. Over time I will develop the credibility and the experience that it takes to convince somebody that I am worthwhile investing in. But until I have that it is very difficult to get the resources to become the next Steve Jobs.

Q: Many young entrepreneurs or many managers come to an MBA program like the Katz Graduate School of Business with a hope to know-how. Is it realistic from them to expect they would also gain the credibility and reputation to be able to acquire such resources and build a global vision?

A: It is in part. To be a successful entrepreneur you really need skill in two critical areas. You have to have the managerial know-how and experience that it takes to understand the industry and be able to implement a business plan. At the same time you have to have the innovative skills, creativity and drive to recognize and pursue an opportunity. When you get those two skills together, then you find the potential for really successful entrepreneurs. So it is business training that we can provide combined with the passion, the drive, the ability to recognize an opportunity. When you get those skills in combination then you find the potential for really successful entrepreneurs. Some people are more creative than others. Some people are more driven than others. We can certainly improve managerial skills. We can certainly help to expose students with the right entrepreneurial situation and help them develop the right contacts. But ultimately if they don’t have the drive, determination, energy and commitment to really pursue the opportunity, there is very little we can do about that.

Q: What would be your message for the CEE entrepreneurs who think about facing their fear and going out on their own to launch a business?

A: Three simple words: Don’t give up. Because it won’t be easy. You don’t have the resources and the support at this time that we find in other places. But if you don’t try, nobody is going to succeed. Ultimately, success breeds success. There is no better role model than looking at an entrepreneur who has succeeded and seeing that you can do the same thing because you are willing to work just as hard and you are just as intelligent as he or she is. In spite of the difficulties, don’t give up. It will get better. If the Czech economy wants to continue to grow, it must find ways to support entrepreneurs to develop the infrastructure, to get the mentoring networks together, and slowly over time the appropriate financial vehicles, the venture capitalists and the others will continue to grow. But it is only going to happen if there are successes. The more successful entrepreneurs, the more people will want to move into the Czech market and support them. So if you are a true entrepreneur, you won’t know what the word “quit” means and you won’t give up. You’ll keep trying and ultimately you will succeed.

Katz faculty are internationally respected for their industry consulting work and academic research. For the EMBA Worldwide Program, they've created a management-focused curriculum that encompasses the business concepts and analytical tools used by senior executives around the world. Katz professors fly from the United States to Prague to deliver every study module in person. Learn more


This article was part four in a series.

Professor John C. CamillusPart 1: Faster and Bolder: Today we must learn from the future.
An interview with Professor John C. Camillus
Martin SauerPart 2: Faster and Bolder: MBA in 1993 was a tremendous competitive advantage
An interview with Martin Sauer, RBS
Professor Audrey J. MurellPart 3: Faster and Bolder: Give leadership roles only to people you would trust with your children
An interview with Professor Audrey J. Murell
Ivana GoossenPart 4: Faster and Bolder: Seeing Women in Leadership as a Natural Reality
An interview with Ivana Goossen
Richard PattonPart 5: Faster and bolder: Managers, entrepreneurs - don’t give up!
An interview with Richard Patton

The James Joyce Irish Pub

Best Irish Pub in Prague

Ristorante Casa de Carli

Authentic Italian cuisine in Prague

Legans Law Office s.r.o.

We help you to master Czech bureaucracy.

World Fusion Writing and...

Writing and Editing service in Prague

Sněmovní 7

A Hub for co-working and events, with a Heart and Soul

TrimmTax s.r.o.

Making your business and life easier

Prague’s # 1 source for Czech news in English…

Digital lifestyle magazine platform promoting life in Prague.