Founded in 1987 as the Young Entrepreneurs Organization (YEO) in the United States, Entrepreneurs’ Organization (EO) is a forum for entrepreneurs to come together, network and learn from their shared experiences. Over the years, the peer-to-peer organisation has expanded its presence to 57 countries with 172 chapters, comprising of over 13,000 members. EO established its Nepal chapter in 2003 and has been expanding ever since.
Verne Harnish, founder of EO, is an influential personality in the entrepreneurial realm. He is also the founder and CEO of Gazelles, a global executive education and coaching company. Holding more than three decades of experience in entrepreneurial education, Harnish shared some of his insights with a rapt crowd assembled at Soaltee Crowne Plaza Hotel to partake in his workshop, ‘Mastering the Rockefeller Habits 2.0’. Sarthak Raj Baral of New Business Age caught up with Harnish and picked his brain on the state of entrepreneurship in Nepal, his take on past and current business icons and his plans for the ever-expanding EO. Excerpts:
John D Rockefeller, the inspiration behind your book, Mastering the Rockefeller Habits, is considered the richest person in modern history. What key attributes would you say he possessed that entrepreneurs of today are lacking?
First, the two most important functions for scaling your enterprise are marketing and accounting. One of the fundamental rules of business is ‘buy low, sell high,’ and we violate that rule every day because we don’t have the required data. But John D Rockefeller kept track of everything, being an accountant by trade; it was no surprise he ran such a disciplined company.
Second, he figured out something early on when he, his brother and three friends launched Standard Oil in Cleveland, Ohio. Owing to the social structure back then, they would walk to work together and back home as well. Rockefeller figured out, during those walks, twice a day, most of the aspects that were critical to scale the business. So when Rockefeller moved to New York City and established Standard Oil headquarters there, he made sure his inner circle stayed close enough that they could walk to work. He also instituted a daily luncheon with his nine directors. Now, those practices are relevant in the modern day as well. Apple, the largest company in terms of market capitalisation on the planet was founded and driven by the late Steve Jobs, who was famous for his ‘walks and talks.' He would invite people to his home and figure things out. Also, he had lunch almost every day with Jonathan Ive, whose design has been at the heart of Apple’s success. So the habits Rockefeller put into place a hundred years ago were replicated by Jobs.
Richard Branson once said, “Never go into business purely to make money, if that’s the motive then you’re better off doing nothing.” Do you agree with his statement?
Let’s go back to Steve Jobs, who was driven by the idea to create a bicycle for the mind. As Jobs said, “The condor is the most efficient animal on the planet, but if you put a man on a bicycle, it will blow the condor away.” It dawned on him that that’s what a computer is, a bicycle for the mind- it can allow anyone to have that superpower. That’s what motivated him and as a result, he made a lot of money but he didn’t do it for the money. I don’t think Elon Musk is doing what he’s doing for the money, considering the mess he’s going through. At some point, you’ll get more money than you can spend. Why is Bill Gates still working three days a week at Microsoft? It’s because he’s not done fulfilling the purpose of Microsoft, which is making technology ubiquitous, making it available to every person on the planet, not just the wealthy. That’s why purpose is so important.
What was the motivation behind starting EO? And now, in the 31st year of its inception, have you achieved what you set out to do?
One of the lines that drove me towards starting the organisation was actually uttered by a friend of mine, Joe Mancuso. He said, "It’s okay to be independent, but there's no reason to be alone." That was one of the challenges, I grew up around entrepreneurs. My grandparents were entrepreneurs, my dad was an entrepreneur and it really is a lonely job. You've got to bear the weight of your employees, the competition and a lot of other factors on your shoulders and there's really nobody except a fellow entrepreneur who appreciates what you're going through. So there needed to be an organisation that allowed you to meet other entrepreneurs in an organised way so you could support each other and not feel alone. Today, EO has 13,000 plus members and we're on the way to 26,000, which is great. Nevertheless, we're barely scratching the surface in terms of the entrepreneurs we could reach on the planet. There is still a long way for us to go. One of the things we talk about is that it takes at least 25 years for you to finally hit the inflexion point and that's started to happen with EO. The first 25 years, it got to 10,000. Now, it's going to get to 25,000 really quick.
What are your thoughts on the state of entrepreneurship in Nepal? What opportunities do you see for budding Nepali entrepreneurs?
I've been in this country for only two days. So I haven't quite grasped the situation here fully. But what I do know in general is that because of the internet, because of people wanting to be more independent, the rate at which people are becoming entrepreneurs has really gone through the roof the world over. For example, the situation of contract labour that you see with Uber or Airbnb allows you to be in business on your own through a large network, and it’s growing. When you look around a place like Nepal or India, there is an entrepreneur in every stall along the road. This is a country of entrepreneurs or small business people. Their problem is about scaling. We have 11,000 startups popping up every hour in the world but not enough are scaling, and that's what we're trying to teach.
What do you think are the major challenges facing entrepreneurship in Nepal and in other developing countries?
The number one problem is infrastructure, just the basic ability to reach a meeting on time. We were losing power in the hotel today. It was going on and off right in the middle of me working on something. So, first and foremost, reliable infrastructure is essential.
Secondly, real law and order. Business is based on honouring contracts and it is critical for the judicial system to run well. By the way, it doesn't in the United States and it’s one of the things that hampers our ability to be more successful as a country. Another thing is a well-trained workforce.
By all accounts, Rockefeller was a charitable man, but he was also known for his ruthless streak. Ron Chernow, his biographer, has said, “His good side was every bit as good as his bad side was bad.” More recently, Steve Jobs has been described by some as demanding, and difficult to work for. Is it important to be ruthless to succeed in business?
I think ruthless is the wrong answer, it's interpreted as ruthlessness. But, one of the things we talk about is that, as an entrepreneur, you want the equivalent of a monopoly and governments will always try to keep you from getting that, and that's the essential tension of a strong capitalistic system. What you're trying to do in business is find an advantage, patent something, have resources that others don't have access to, control something which is critical. One of the things Rockefeller discovered was that the constraint wasn't the oil, it was gushing out of the ground. The constraint, early on, was barrels to hold the oil. So he figured out that there's only one company that makes them as it was a difficult technology back then and he bought that company. Now, many saw that as ruthless, but that's just a smart business decision.
Entrepreneur’s Organisation already has 179 chapters in 57 countries. Are there plans in motion to further expand it ?
We've always kind of been the entrepreneurial equivalent of Young Presidents' Organisation (YPO) which has 450 chapters in 130 countries. So we've got a long way to go just to catch up with them.
In a recent New York Times interview Elon Musk revealed he had slept in the factory manufacturing the Tesla Model 3 to boost production. He is involved in every aspect of production and it’s taking a toll on him. What would you suggest to entrepreneurs who are striving to find that perfect work-life balance?
God, what an amazing interview that was! But there is no such thing as balance. All you can do is try to find a blend and there are going to be good times and bad times. I remember there were times I had 80-hour work weeks working for 7 days a week, having no life apart from the work because that's what's necessary when you're trying to pioneer new things. What you hope is you finally figure out a point where you can back-off and have a normal life. I thought it was interesting Arianna Huffington wrote a piece right after the New York Times piece. She posted a letter to Musk and said, "Look Elon, you're a smart guy, you believe in data. And the data is clear. If you don't get enough sleep, it is the equivalent of being drunk. Would you want any drunk running your company?" She used Franklin Delano Roosevelt's actions during the great depression as an example. He was criticised for taking some time off but he came back with what is considered one of the most amazing decisions that turned things around in our country. Once you get tired, you start making mistakes, which means you have more problems to fix, which means you get less sleep, it really is a doomed loop.
EO has a plethora of members. Some are self-made, some have inherited their business. What do those that have inherited their business need to do to establish their own identity and conversely, what should be the line of thought of those attempting to become self-made successes?
The one thing I think people don't realise in a family business is that you're under a lot more pressure than if you're a self-made entrepreneur. Because if you're a self-made, you started with nothing, and if you fail and end up with nothing, you're right back to where you started. Nothing more, nothing less. When you take over the family business, you're starting with something and the pressure to maintain and grow the business is immense because it's the livelihood of your parents and maybe their parents. That weight is tremendous. Everyone thinks it's a great opportunity to be born into wealth but it's also a huge burden, because of the pressure.
For those starting out on their own, hyperfocus is crucial. You want to be really great at something very narrow. By going after something very narrow, you've got a chance to be great at it. Because trying to be everything to everyone is impossible. Take IKEA as an example. The Netherlands-based furniture and home appliances company has Euro 30 billion in revenue with only 6.9 percent market share. That's because they focus on a very narrow niche of flat-pack furniture, which is a very small segment of all the furniture that's sold around the planet. But they're able to dominate it and that's the key. So pick a small niche that you can dominate and you could do as well as IKEA.