The New Builders: Face to Face with the True Future of Business
Seth Levine and Elizabeth MacBride
Wiley (May 2001)
How and why the next generation of entrepreneurs will determine the future of business in the U.S.
Each of what are now the Fortune 500 companies was once a startup. Keep that thought in mind as you work your way through Seth Levine and Elizabeth MacBride’s lively and eloquent narrative. The founders of those companies were entrepreneurs, among “the bedrock of American business since before our country was founded, and entrepreneurship is deeply rooted in our country’s history. Entrepreneurs were the women and men who explored and settled the vastness of the United States, and who built the infrastructure that stitched it all together — from rail, to industry, to the internet, to the goods and services needed for our everyday lives.”
What are the defining characteristics of an entrepreneur?
However different they may be in most respects, what do Benjamin Franklin, Thomas Edison, Henry Ford, Ray Kroc, Sam Walton, Steve Jobs, Jeff Bezos, and Elon Musk have in common? These characteristics immediately come to mind: driven by a compelling vision of what Jim Collins describes as a BHAG, a “Big Hairy Audacious Goal.” Also, they outworked and out-thought everyone else. They were brilliant gamblers, knowing when to “hold ’em, when to fold ’em, when to walk away, and when to run” as well as “knowin’ what to throw away/And knowin’ what to keep.” The last point suggests that the most successful entrepreneurs throughout history were frugal investors of their resources. In a word they were resilient.
They respected uncertainty, reduced or eliminated debt, avoided leverage, and were wary of expenses. They never fixated on sort-term gains or beating benchmarks, placing greater emphasis on becoming shock resistant, avoiding ruin, and “staying in the game.” They were suspicious of overconfidence and avoided complacency. And finally, they were at all times keenly aware of exposure to risk and whenever possible created a margin of safety.
Just as these and other Old Builders challenged — and defeated — the terms and conditions of the given status quo, Levine and MacBride say this about the New Builders whom they examine in this book. Although a diverse group to be sure, “they share one trait: they don’t fit the mold of corporate success. In a business world that increasingly values conformity, New Builders defy it.” In this instance, I am reminded of an observation by Sir John Templeton: “It is impossible to produce superior performance unless you do something quite different from the majority.”
Levine and MacBride focus on “the urgent need for those with power in our society to change their thinking and their actions” insofar as the New Builders are concerned. “We all benefit by creating a more robust society where a greater number of people have access to the capital and know-how necessary to create and grow businesses.”
Levine and MacBride hope to reassure as many people as possible that the next generation of entrepreneurs will bring the same level of passion, dedication, and grit that earlier entrepreneurs did. Yes, all of the current Fortune 500 companies were once a startup. Their founders/co-founders share much more in common with the New Builders than they do with the current CEOs who lead those same companies now.
I conclude this brief commentary with a response by Jack Welch at one of GE’s annual meetings when its then chairman and CEO was asked why he so highly admired the kind of companies that the New Builders are now struggling to create:
“For one, they communicate better. Without the din and prattle of bureaucracy, people listen as well as talk; and since there are fewer of them they generally know and understand each other. Second, small companies move faster. They know the penalties for hesitation in the marketplace. Third, in small companies, with fewer layers and less camouflage, the leaders show up very clearly on the screen. Their performance and its impact are clear to everyone. And, finally, smaller companies waste less. They spend less time in endless reviews and approvals and politics and paper drills. They have fewer people; therefore they can only do the important things. Their people are free to direct their energy and attention toward the marketplace rather than fighting bureaucracy.”
One final point: New Builders launch new companies but they can also transform old departments as well as old divisions and even transform old companies. In this brilliant book, Seth Levine and Elizabeth MacBride thoroughly explain HOW. They also explain why it is imperative to provide whatever resources these entrepreneurs need. New building require need and [begin italics] better [end italics] thinking.
Otherwise, the future may become hostage to what James O’Toole so aptly characterizes as “the ideology of comfort and the tyranny of custom.” We certainly cannot allow that to happen, can we?