Entrepreneurship is Michael Glauser’s calling. Even in high school, “I thought it would be awesome to know how to meet objectives efficiently and create great environments for people to work in,” the Utah State University business school professor says. Now, after starting six successful companies and interviewing more than 100 small-business creators for his book Main Street Entrepreneur — and with a documentary film of the same name to be released this year — Glauser has glimpsed the future of work and, in characteristic entrepreneurial fashion, sees a new world of risks and opportunities.
You’re an entrepreneur and a business school professor. Which came first?
The whole idea of entrepreneurial leadership intrigued me, so I went straight through college, got a Ph.D. and began teaching at the college level. I remember starting to teach my first MBA class. I’d just been awarded my doctorate. I went into the room, wrote “Dr. Glauser” on the board, and knew I had a problem as soon as I turned around: I was the youngest person in the room by at least 10 years. Everyone in the class had been out there for years actually doing what I’d been reading and studying about.
I decided quickly that if I was serious about entrepreneurship, I needed to leave the safe harbor of academia and go build companies. I started six over 20 years, and when I sold one of the larger ones, I decided that it was time to go back to the academic world.
But when I looked at the curriculum that business schools were teaching about entrepreneurship, it didn’t resemble anything like what I’d just done.
What were the differences?
The structure of business schools was organized around preparing people to work in large corporations. The few classes in entrepreneurship were pet projects of a few professors and they were very theoretical, very research-oriented. They just weren’t relevant to what entrepreneurs actually do.
So, I became an entrepreneurial anthropologist and did a lot of field work to see what successful entrepreneurs actually do in practice. That resulted in my 45-day bike ride across America, interviewing small-town entrepreneurs for what became Main Street Entrepreneur.
Is it easier or harder to be an entrepreneur now than it was 20 or 30 years ago?
It’s far easier. First, the same very sophisticated technology once available only to large corporations is now available to anybody — mobile phones, desktop publishing, databases and data storage. We as individuals can do things now that only large corporations could do 20 years ago.
Second, the value of companies now is much more based on a brand than on physical assets. Thirty years ago, a company’s value was based on land, machinery and physical inventory; today, some of the most valuable companies in the world — Facebook, eBay, Google — have very few physical assets but are valued in the tens or hundreds of billions of dollars. Their gross margin is 80 percent to 90 percent where it used to be 30 percent or 40 percent for companies manufacturing goods.
Third, the internet lets anyone sell internationally; you’re no longer limited to a localized geographic market.
Fourth, there’s more money available now than there are good ideas. Thirty years ago, you had to take what I call the “Harvard approach”: You’d write a 40- or 50-page business plan, use it to try to get funding through equity or debt, then you’d jack up the plan and see if you could build a real company underneath it. Now it’s so much easier to create a quick prototype and test it. You have access to all the tools.
Also, there’s crowdsourcing. In the past, you had to prove out your product, concept or business model by getting into the market and seeing if anyone would buy it. Now you can say, “I’m going to produce this; will you fund me?” So, then you build it only if people say they’ll buy it.
Your crowdfunding campaign also becomes your market study.
That’s right. You don’t have to raise a lot of money, create a prototype and then spend a lot of money hoping and praying that someone will buy it. I just met with a company called Power Practical. It raised $1.5 million through five or six crowdfunding campaigns. It has 24,000 backers now who’ve agreed to purchase products before they’re built. The customer actually becomes part of the product-development process.
When we finished the bike ride across America, we were convinced the ideas we heard about are things that anybody can do. Entrepreneurship isn’t in your DNA. It’s a set of practices. We believe strongly that people can learn those practices to build companies.
At the Jon M. Huntsman School of Business at Utah State, we offer a six-course minor in entrepreneurship that any student can take — music majors, psychology majors, engineers. The courses lead them through the process of taking an idea and turning it into a real business.
What is the dominant trend impacting businesses and entrepreneurs today?
The biggest trend impacting jobs, employment and how people work is the acceleration of technology in almost every industry.
Wendy’s has announced that it will automate 6,000 stores so there won’t be any interaction between employees and customers. You’ll order at a kiosk. This will eliminate 60,000 jobs. Hardee’s and other fast-food restaurants are doing the same thing. At a chain in California, you order at a cubby, your order is delivered and you pay with a plastic card. The whole retail world is seeing major changes.
Robots are being used in health care, security, and in more and more areas. We’re outsourcing jobs to China to take advantage of cheap labor, but in May, the biggest factory in China that makes iPhones and products for Samsung announced that it has replaced 60,000 employees with robots. I visited a company that builds robots for Tesla Motors. A robot on an automobile assembly line used to cost $200,000. Now it costs half of that or less and $4 an hour to operate. Each of the machines I saw being built will displace about 20 employees.
Entry- to middle-level jobs are going away. A recent study from Oxford University looked at 700 occupations and projected their future trajectories with new technologies entering those work areas. The study concluded that 47 percent of today’s jobs will be gone within a decade.
The Associated Press did a follow-up study to that and projected that people entering the workforce today will have four or five periods of unemployment lasting one year or longer because technology will create, transform and destroy jobs so quickly. The best thinking among many economists and analysts now is that jobs will be part-time or short-term. There will be far fewer opportunities for long-term employment with benefits and a reliable salary.
Some people say we’ll hit 50 percent unemployment. I think we’ll adjust because t
hat’s been our history. In 1850, more than 70 percent of the population worked in farming and food production; now only 2 percent of us do. After World War II, about a third of us worked in manufacturing; now that’s down to 10 percent.
We’ll figure this out, but technology is accelerating so fast that there will be a gap. We haven’t created all the technologies and industries yet for the people who’ll need work. But we will.
How will people avoid those long periods of unemployment and keep themselves relevant to the workforce?
If you want to be an employee for an existing company, clearly the best jobs will be in technology — software and hardware development, robotics, security and managing big data. So your first solution is to gain a set of skills that will be needed in that workplace.
Also, more of us will have to create our own jobs and businesses. We think that will happen in smaller communities. It’ll almost be a throwback to 100 years ago. Then, you didn’t grow up thinking that someone would give you a job and benefits for your whole life; you figured out something to do of value in your own community. Some of us will have to do that out of necessity. About 40 percent of adults in Peru are starting their own businesses because there just aren’t any jobs.
An entrepreneurial economy is the opposite of one dominated by national chains of big-box stores. Are we returning to a more old-fashioned “Main Street” economy?
If you look at consumer surveys, just about everyone would rather shop at a local business if it has the right products available at the right prices. We’re rebalancing from high-tech toward “high touch.” There’s a very strong preference for supporting local business owners who know you and give you personal service, and there’s also a backlash against big boxes. San Francisco has adopted zoning laws that ban chain stores inside the city.
I did some work for a large co-op buying organization for co-op groceries. Some of its stores were going out of business, and this organization starting buying these stores. After a while, it had 25 or 30. The organization brought in a consultant to tell them what to do with these stores and he said, “Let’s turn them into a chain to compete with the other chains.” We were hired to do research in those communities to see what they wanted, and they made it clear they didn’t want a chain. They wanted the same local store to still feel like that local store where they knew the owners, and that the store supports the local soccer team and the high-school band. That desire to patronize local businesses is to the advantage of the entrepreneur.
We interviewed Christin Evans, co-owner of The Booksmith in San Francisco. She got an MBA from the University of Michigan and worked as a strategy consultant for years for big tech companies. She decided she was tired of that and she saw an opportunity in the independent bookstore. She knows that people can go to Amazon and buy any book quickly, but people also still want to browse, meet authors and go to readings. She’s building on that need for lots of interaction between people. She now operates two independent bookstores and is doing very well.
Are there jobs other than technology in which people might weather this economic transformation better than others?
Machines and technology are good at doing repetitive tasks fast, but they can’t innovate or create. Every industry requires innovation for the next generation of products, services and machines. Any work that requires creativity will remain in demand, as will any kind of work that involves problem-solving. If you’re not innovating or solving problems, a machine will probably take your job.
Will certain countries or regions of the world fare better than others?
This technological wave is impacting all developed countries right now. Developing nations a decade or two behind, they’ll face the exact same issues later on. The problems and opportunity niches will be the same around the world in our global economy.
So no one will be spared. But you also sound optimistic about people’s ability to adapt.
Yes, if we’re aware of what’s happening and gain the skills we need.
Also, you need to look at yourself as M.E., LLC. That’s you being your own enterprise; “M.E.” stands for “my enterprise” and you set it up as a limited liability corporation or LLC because that gives you the liability protection of a corporation but the tax structure of a sole proprietorship.
You have to develop a skill set, have open ears, constantly absorb new information and adjust your skills accordingly. You have to look at yourself as your own unique brand. TJ