Thoughts On Entrepreneurship

Summer is winding down. School is ready to start. A change in leadership, which seems to be really good, an unexpected loss of a colleague, starting of new programs, and revising old ones, all point to a very interesting, and difficult, year.

Christine Tokonitz, a faculty member, friend, and colleague, died suddenly yesterday. She was the brains behind our Health Care Administration program, and the heart of our department. She will be missed. Dr. Reginald Nichols is my new boss, and if my meetings with him over the last few weeks are any indication of his leadership skills, I am a happy camper. He is an incredible leader who will help our school rise to its potential.

I am looking forward to the many improvements I have devised for my classes this year. However, the one I want to focus on this morning is the Capstone course for the Social Entrepreneurship major. I don’t want our program to end up like the Moxie Center for Student Entrepreneurship at the University of California. It closed at the end of the June, “having finally run out of other people’s money.” I read about this during my morning reading time.

It appears that a San Diego philanthropist named Irwin Moxie donated $1 million to fund student start-ups. According to Ken Kuang “UCSD no doubt sees the Moxie Center’s 2 ½ year run as a great success.” It helped many young entrepreneurs bring their ideas to implementation. The only problem was the Center did not sustain itself. “The Moxie Center, while promoting the entrepreneurial spirit was run like a charity, in that it didn’t seek any returns on its investments in student’s enterprise.” When I read this, I felt like I awoke out of a deep sleep. Wow, this makes total sense.

Ken Kuang illustrated this failure by noting how the Center was not teaching the students about win-win. “Win-win means that both parties in a transaction come out of it feeling satisfied that they got a fair shake.” What this means is the school should have been investing in these students with the expectation of a return. However, Kuang pointed out some other deficiencies.

It appears that the center was not emphasizing the right things related to running a strong business. Things like profit-and-loss statements, “covering payroll taxes, worker’s compensation, and other basic costs.” There also seemed some issues with understanding overhead costs and how much to pay one’s self. As I read this editorial I pondered what to do with our Social Entrepreneurship program?

Ken’s comments about growing up in China really got me thinking. “Too many U.S. business schools are focused on producing future leaders for big corporations and Wall Street firms – not equipping people to venture out on their own.” I think this makes sense. However, it has been my experience that most students don’t want to venture out on their own.

Ken stated that business schools in China are focused on “the basics of running a small business and how to create a profitable company. They want to pull as many people out of poverty in as short a time as possible, and they know the rising tide will lift the most boats is the small business community.” This is why I think our Social Entrepreneurship program is so important.

Mr. Kuang is doing something about this need in San Diego. He and a few other entrepreneurs are creating internships for budding entrepreneurs. His actions have me thinking. Any entrepreneurial program should involve action learning not just theoretical discussions. I also think the connecting of entrepreneurs with mentors is critical. However, I also think the practice of gift giving is not a good thing. I think a program needs to teach the student about dealing with investors.

I have already made changes to the Capstone project for this year, that I think will improve the process, and now I am planning to do more, which I am sure I will write about over the next few weeks. I am very excited the Social Entrepreneurship program, and I know it will be even better this year. I guarantee it.

And that is my thought for the day!

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A Conservative Heart: Almost

I admit it. I love to read. I just purchased Arthur Brook’s new book “The Conservative Heart: How to Build A Fairer, Happier, And More Prosperous America.” I read some quotes from the book, and decided it deserves a look. Brooks creates an argument that the solution to poverty involves “meritocratic fairness.” I like meritocracy, but I do think there are some system issues that need to be addressed so meritocracy can flourish.

I just watched a YouTube explanation of how the Prison-Industrial Complex is being used to maintain the unfair status quo of our social class system. The Prison-Industrial Complex is a “job-creator” and uses “inmate labor to do provide services, thus creating a huge profitmaking endeavor for those that privately own the prisons. The Prison-Industrial System builds fat bank accounts on the backs of inmates for individuals “who are motivated by making profit rather than solely by punishing or rehabilitating criminals or reducing crime rates. Several social activist groups believe this profit making has led to the huge increase in the prison industry and the number of people incarcerated. Most of these folks come from poor inner city situations that continue to exacerbate the problem of poverty in our inner cities. Thus, I agree with what William Galston proposal in today’s paper to create a different debate around this subject of income inequality.

Galston began by describing various solutions for income inequality. “The liberals want to use the government to promote greater financial equality for its own sake; conservatives believe that rewards should follow hard work and merit.” In my opinion truth usually lies somewhere between two extremes, and in this case the truth is in the middle.

First of all, what are the facts? We have been fighting poverty for 50+ years, and what do we have to show for it? Have people’s economic condition improved? The Pew Charitable Trust did a study to see what is happening to people in our country? Are they socially mobile? The study published in 2012 noted that 43% of individuals raised in the bottom income 20% stay there. It also showed, according to Galston, that 70% are stuck below the middle. “By contrast, 40% of those raised at the top stay there, and 63% stay above the middle.” About 4% of people studied actually rose to the top from the bottom. These statistics look at our overall society, what about Blacks?

Galston describes the results as follows, “For African-Americans, the odds of rising are even worse. Fifty-five percent of them born at the bottom stay there, and fully 75% fail to make it into middle class.” The study also shows that 65% of Blacks are born into the bottom income quintile, while only 11% of white Americans are born there.

Income statistics, according to Galston are also very interesting. Men who are born into the bottom quintile will probably earn $34,000 per year, while men born in the top 20% can expect a paycheck of around $105,000 per year. Women have a similar pay gap from $41,000 to about $118,000.

As interesting as those numbers are, the set of numbers that really caught my attention involved single mothers. Richard Reeves was quoted as showing that “50% of children born at the bottom of the income ladder to single mothers end up there as adults, versus only 17% of children born poor but raised by married parents.” 27% of those children raised by a single mother made it to middle class or higher, “compared with 59% of those raised by married parents.”

These numbers are interesting, but, as Arthur Brooks points out, when you set up a system where all of the poor are located in one geographical area, and the families are all led by single mothers, “you compound the disadvantage.” Look at reservations today, the living conditions are atrocious, but we don’t do anything about it.

I go back to my original conclusion there needs to be a partnership between business, government, and the community to create opportunities. I agree with Galston’s comment “Equal opportunity in the U.S. is an aspiration, not a fact.” Therefore, we need to work together to create a level playing field for all to earn their way up the ladder. The community needs to help families be strong, but to do this poor families need resources, which involves the government. But for people to climb the ladder there needs to be jobs. Businesses need to stop looking for cheap labor overseas and recreate living wage jobs here so people can earn a better life.

I don’t believe anyone wants to be given social mobility. I think people want to be able to achieve it through their own labor but it does seem to be a bit more difficult in this day and age.

As President Obama noted, “The American people’s frustration… is rooted in their own daily battles to make ends meet…. The nagging sense that no matter how hard they work, the deck is stacked against them…the fear that their kids won’t be better off than they were… and lack of upward mobility that has jeopardized middle class America’s basic bargain: that if you work hard, you have a chance to get ahead.”

So as Galston ends his editorial, “Conservatives are right to say that if families were stronger, government would be less necessary. But when families are weak and lack resources, either government steps in or children don’t have a fair chance to succeed.” There are many examples across the United States that demonstrates how a partnership between Business, Government, and the Community can work. So instead of fighting lets get in done.

And that is my thought for the day!