New Venture Lab: Equipping Christian Entrepreneurs

Question

I have truly enjoyed your Venture Academy series during the past year. It was an incredible investment value. Your personal stories on how you honed your entrepreneurial talents were most interesting. 

With your experience and understanding, would you suggest apprenticeships, or reading books or a combination -- developing talents from example and discussion -- as the most effective method of successfully forging dividend-paying business talents and to think more like an entrepreneur?  

Answer

I'm glad to hear you have benefitted from the videos. 

I would recommend both apprenticeships and reading. In terms of reading, I would recommend becoming a serious student of entrepreneurship and read about lots of creative deals, read about how entrepreneurs came up with their ideas and how they launched their businesses. And read about how tricky problems were solved. This will sharpen your thinking and the stories will act as powerful analogs that will serve you well when you bump into circumstances that are similar to what you've already read about and studied. 

For example, I will never forget reading a Wall Street Journal article nearly twenty years ago about the brilliant move Blockbuster made when they wanted to increase customer satisfaction and revenue by increasing their stock of rentable videos on their shelves. Historically they had always tried to manage their cost by limited the number of VHS cassettes they "bought" from the major film distributors because of the steep prices they paid to carry a rental cassette on their store shelves. This in turn meant they often badly misjudged the inventory needed (almost always missing on the low end due to the costs associated with carrying a higher inventory). Many, many customers came in to rent a new release on Friday or Saturday night only to be disappointed and settling for something else. Everyone lost. 

Blockbuster's brilliant move was to go to the distributors and cut a deal where Blockbuster loaded up on the videos at little to no cost since the only real cost to the distributors was the cost of the cassette and some recording cost, which was only a few dollars per VHS cassette. In exchange, Blockbuster gave the distributors a revenue share, which would result in more upside for them if there were more rentals. This lowered Blockbuster's risk, increased Blockbuster's revenue, increased the film distributor's revenue, and increased customer satisfaction because Blockbuster could then make the promise of "never running out of new releases" and the videos flew off the shelves. They literally had stacks and stacks of new releases vs. only half a dozen. It was a huge win-win for everyone. No one lost in the deal. 

It was a real "ah ha" moment for me and I have used that analog many times when negotiating strategic alliances with larger partners. The idea is to share enough meaningful information with a partner about how to win together while reducing the risk and increasing customer satisfaction and revenue.