In his new book Think BIGGER: And 39 Other Winning Strategies From Successful Entrepreneurs, TIGER 21 founder, Michael Sonnenfeldt, talks about the challenges, benefits, and evolving landscape of being an entrepreneur today. We spoke to Michael about some of the book's key takeaways.
Q: You work with hundreds of successful entrepreneurs. What have you found to be the most common, valuable traits among them that make them stand out?
MS: Grit and determination. (It is more important than “mere” smarts.) Resilience. And an over-whelming desire to
solve a problem—be it a commercial or societal one.
Q: How do the challenges that entrepreneurs face now, differ from those who started out a decade ago? Or even five years ago?
MS: The vast majority of the challenges remain constant. Can you clearly define the problem you are trying to solve? What are the exact steps you need to take to make your vision a reality? How do you find and hire good people? How will you get funding? What is the most effective response to the competition? Those are issues that never change. What has changed is where they competition is coming from—it is remarkably easy for a business to compete globally today, so you may be trying to fend off someone half a world away. That’s possible, in part because of all the technology advances of the last five years, and certainly the last 10—and large corporations are beginning to take strides to become more entrepreneurial as well.
Q: Most entrepreneurs start out to solve a problem; not to become wealthy. Once they do become wealthy, why do entrepreneurs have trouble exploring the broader meaning of wealth in their lives?
MS: The first problem is most entrepreneurs are not prepared to be wealthy. They have spent virtually all of their time learning about what will make their businesses successful, and that leaves very little to learn about personal finance. And then there is the question you raised which boils down to, “now that I have it, what should I do with my money. Since most of the people in the book come from lower to middle-class backgrounds, and tend to live relatively modestly after they have made it—many of them find the thought of flying first class painful, and certainly would never consider flying on a private jet—they need to figure out where money fits in their lives.
Q: Many believe the myth that life becomes easier after an entrepreneur sells their business, and lives off of the proceeds. Why it is in fact harder to manage wealth in today’s environment than it was to create it?
MS: I don’t think anyone needs to hold a benefit for successful wealth creators. But you are right they do face specific challenges after a liquidity event such as selling their business. For one thing, they need to determine what comes next. For another, they need to figure out how they will invest. If you look at something like the Forbes 400 list, which chronicles wealthy individuals, you will see most of them made their money starting companies. Generating substantial wealth from investments alone is rare.
Q: Many entrepreneurs pass their business down to children and other family members. How can family businesses avoid the “shirtsleeves to shirtsleeves” proverb that suggests wealth can’t survive three generations?
MS: Communication. Communication. Communication. Does the second generation want to be involved in the business? How about the third? If they don’t, but end up working there anyway because of family pressure—or a sense of obligation—things probably won’t go well. If neither the children nor grandchildren wants to be involved, does the family feel a desire to keep the business going as an independent concern, or would a sale be okay. Is the second (and third) generations want to be involved, where should they start? Should it even be in the family business? Might they be better off beginning their careers somewhere else? These are the sort of issues that need to be discuss—early and often.
Q: You dedicate a few chapters of the book to the responsibility of entrepreneurs to use their business and wealth to bettering society. In what surprising ways can wealth be used to leverage philanthropic, political, or family goals and interests?
MS: Let me start with a disclaimer. I would never mandate anyone act in a certain way. A wealth-builder can spend his time and money as he sees fit. If he wants to be Scrooge McDuck, to reference a cartoon from when I was a kid, so be it. (Although I will point out Scrooge McDuck, like Dickens’ Ebenezer Scrooge wasn’t happy.) But I think most of us want to make the world a better place. Perhaps the biggest surprise is that the skills required to build a successful company—identifying a need and bringing the people and other resources necessary to solve it—are transferable.
Q: What’s the best lesson from your book that an entrepreneur could start applying tomorrow morning to “think bigger”?
Read more of Michael's interview about entrepreneurship, by visiting the Think BIGGER web site.