“The evangelist of entrepreneurship” (The Economist) reveals the true stories about how a range of entrepreneurs created their successful start-ups: hint, many of them never began with a business plan.
Business schools teach that the most important prerequisite for starting a business is a business plan. Nonsense, says Carl Schramm in Burn the Business Plan, who for a decade headed the most important foundation devoted to entrepreneurship in this country. Microsoft, Apple, Facebook, and Google are just a few of the companies that began without one.
Schramm explains that the importance of a business plan is only one of the many misconceptions about starting a company. Another is the myth of the kid genius—that all entrepreneurs are young software prodigies. In fact, the average entrepreneur is thirty-nine years old and has worked in corporate America for at least a decade. Schramm discusses why people with work experience in corporate America have an advantage as entrepreneurs. For one thing, they often have important contacts in the business world who may be customers for their new service or product. For another, they often have the opportunity to strategize with knowledgeable people and get valuable advice.
Burn the Business Plan tells stories of successful entrepreneurs in a variety of fields. It shows how knowledge, passion, determination, and a willingness to experiment and innovate are vastly more important than financial skill. This is an important, motivating look at true success that dispels the myths and offers invaluable real-world advice on how to achieve your dreams.
Burn the Business Plan Preface How can real, practical information help potential entrepreneurs? I have started companies, managed small and large entities, been a venture investor, consulted with big firms and governments on innovation, and spent time as a professor. For ten years, I was privileged to run the Kauffman Foundation, the “Foundation of Entrepreneurship” in Kansas City. Along the way, I was lucky enough to spend time with many successful entrepreneurs, aspiring entrepreneurs, investors, and business visionaries.
These experiences made me realize that many of the popularly held ideas about how, when, and why people start companies probably are wrong. As an economist, I began to look skeptically at the powerful underlying memes—the largely unexamined but widely accepted ideas that shape our view of the world—especially those applicable to new business success. The entrepreneurship memes seemed to be little more than an assortment of stories and case histories that had crystallized into a rubric.
So, in 2002, I embraced the opportunity to direct the Kauffman Foundation. The Foundation was a nearly $2 billion endowment established by Ewing Marion Kauffman, an innovative Kansas City pharmaceutical company founder, and was the world’s largest philanthropy dedicated to promoting entrepreneurship. This was an irresistible challenge: I knew that a continuing stream of new businesses was critical to society’s growth and advancement, and that what entrepreneurs really do is too important to be described by glittering narratives that are not based on evidence. After all, innovative businesses bring us unimagined products and services, create most of the new jobs in our economy, and are the most important force driving growth and creating expanding welfare. Entrepreneurs are too valuable a national resource to be subjected to a potpourri of unsubstantiated aphorisms dressed up as good business advice.
The Kauffman Foundation provided the platform to recruit a small army of brilliant economists to initiate serious research on how new businesses really get started and grow. The team extended the work of Joseph Schumpeter1 and William Baumol,2 two influential economists who had examined entrepreneurship well before almost anyone knew how to spell it, much less what it meant. Research inside Kauffman and scholarship supported by the Foundation produced a torrent of empirical research on entrepreneurs, which resulted in insights that people now seem to think that we’ve always known. For example, it was not previously well understood that young firms create more than eighty percent of all new jobs in our economy, or that new business formation plays such a significant role in economic expansion. Now, happily, entrepreneurship is embedded in every discussion about economic growth. The Kauffman team was the first to inject intellectual, empirical rigor into research about how new firms are created. Because of this work, we know much more about how businesses are formed and how they grow and what is likely to improve your chances for success.
This book seeks to translate many of these findings, and the experiences of some of the thousands of entrepreneurs whom I’ve met, into practical guidance and lessons. It is intended to illustrate how businesses really start, grow, and prosper. The first four chapters speak to the “what” of business startups, the following four to lessons learned by those who have gone before you, and the last section is devoted to data-derived facts, not myths, and realistic guidance from successful entrepreneurs.
Carl J. Schramm is University Professor at Syracuse University and former president of the Ewing Marion Kauffman Foundation. Schramm has served in major corporate roles and chaired the US Department of Commerce’s Measuring Innovation in the Twenty-First Century Economy Advisory Committee. He was also a member of the President’s National Advisory Council on Innovation and Entrepreneurship. Schramm splits his time between upstate New York and Florida. Visit CarlSchramm.com.
"Mercifully free of Silicon Valley fairy tales. Schramm is interested in real people starting real companies: Readers will find most of his cases gratifyingly unfamiliar and generally relatable. Burn is a solid roundup of the current best thinking on startups, guiding new entrepreneurs in both introspection and execution."
– Leigh Buchanan, Inc.com
“This business book lives up to its billing. . . . [Schramm] sets forth in real, practical, down-to-earth ways his knowledge of everything from debunking myths to identifying actions for success."
– Booklist (starred review)
“New businesses are about great ideas, not great plans. Schramm tells it as it really happens.”
– Mitch Lowe, co-founder of Netflix, founder of MoviePass
"Cerner, now with 25,000 associates, started with conversations over a picnic table in a public park. We never had a business plan. This book tells the real story of why most companies begin. If there is one book that aspiring entrepreneurs should read, this is it!"
– Cliff Illig, co-founder, Cerner Corporation
"Based on data and experience rather than hype, Burn the Business Plan is a timely antidote to the Silicon Valley mythology of startup wonder kids. I found this book deeply inspiring and confidence-building, and think all entrepreneurs, new and experienced, should read it."
– Steve Watkins, founder of Lipomics Technologies and Verso Biosciences
"Required reading for those who want to learn the real entrepreneurial process. It obliterates the useless conventional wisdom urged upon aspiring entrepreneurs of writing business plans and focusing on venture capital. This book, filled with stories of entrepreneurs just like you, is for the 99 percent of people who dream of starting a business but can’t find a practical roadmap."
– Eugene Fitzgerald, Merton C. Flemings-SMA Professor of Engineering, MIT; founder, AmberWave Systems Corporation and The Water Initiative; and co-founder of 4Power and New Silicon Corporation
"Business professors, many of whom never started a business, may hate this book because it overturns their view that writing a business plan is the key to success. Instead, this is a book filled with plain-spoken practical advice from one of the country’s most thoughtful experts on entrepreneurship who is both a scholar and successful entrepreneur."
– Robert Litan, Director of Entrepreneurial Studies, Council on Foreign Relations
"No other book builds its advice for would-be entrepreneurs on such a solid factual basis. Readers can explore how to prepare themselves to become entrepreneurs long before starting a company, the best time in their careers to start, and what it will take to make their companies not just survive but flourish. This is the best book that anyone thinking about starting a business should read."
– Amar Bhide, Thomas Schmidheiny Professor at The Fletcher School of Law & Diplomacy, Tufts University; and author of The Origins and Evolution of New Businesses