Does an entrepreneur make money or something else?
By Ken Charman
In 2010, I was a postgraduate MSc student at Oxford University Said Business School. At 54 I was older than the professors, but I embraced the whole student thing. I even entered the university writing competition. The judges asked if they could read out a section at the prize giving as they had never thought of autobiography as a form of comic fiction before. Vanity persuaded me to agree, but it wasn’t fiction. It was true and so is everything below.
As I am going to write about my personal entrepreneurial purpose, I will call upon Schumpeter to define what that purpose is. He said it was:
1. The desire to be a founder, to become independent and build a private kingdom, perhaps a lasting dynasty.
2. The ambition to beat the competition, favouring the fighting spirit to prevail over incumbents with existing solutions and fending off new entrants.
3. The joy of creating, of getting things done, or simply exercising one's energy and ingenuity.
Yeah. Cool. That’s me. Right there.
You will notice Schumpeter didn’t mention money as a motivation.
Money is nice, I like it and I have quite a lot of it, but it’s not my purpose. Let’s explore this with a story. Judge for yourself if it is comical, but it is not fictional.
The story begins on a golf course, very early on a Saturday morning about 35 years ago. I was playing golf on my own, exploring those hidden rewilded features of the course nobody else gets to see, when I noticed the player in front had stopped. He was waiting for me. When I reached him, he suggested we play together. I agreed and regretted it. I now believe he did not exist and that he was a supernatural presence sent to save me. We could call him Clarence. He wanted to talk. I was thirty-one, he was ten or fifteen years older. As we walked to the next hole, he told me.
“I’m a millionaire – but I’m not happy.”
I gritted my teeth. Unlike him I was not a millionaire. I was two years into a startup, and it was passing through a pain point I am now very familiar with. It was running out of money. I had borrowed, re-mortgaged, sold my car and taken on night-work to keep it going and, on this day, it had 24 hours to go to a live or die event.
“I’m not unhappy” he said, as I teed up my ball, took an almighty swing and missed. I pretended it was a practice. It didn’t matter, he wasn’t watching.
“It’s just that I am not … you know… happy.”
Smack. This time it flew straight for about one hundred yards before swerving 180 degrees to the right. No matter. That was part of the plan. That’s why I aim 180 degrees to the left. This is unsettling for people on other fairways who think I am aiming at them but, thanks to my slice they have nothing to worry about – usually. When it goes straight, they scatter, and things get socially awkward.
He put his ball down and continued.
“I thought it would be different to this.”
He took an easy, relaxed swing and clipped the ball in a lazy flight straight to the green, where it settled next to the hole. That’s when I should have realised; he was my Guardian Angel. Instead, all I knew was that he was really, really… hacking me off.
He continued. “I made my money out of importing non-standard ring binders. I don’t sell to the public. I sell to business, mainly American companies in Europe. They use them for their training materials. We have very big customers, Hewlett-Packard, Boeing, IBM… The mark-up is 400%. But it’s not … I don’t know, it’s not satisfying. And, then there’s the money. When you don’t have money, you don’t have to worry about it. But when you do you have to be always worrying it. I could spend it, but I’ve got the things I want.. you know .. the car.. the boat.. the house.. kids in private school. Now, I have to worry about investing it. And, another thing, people treat you differently. They think I can solve their problems, just because I am, you know, rich.”
I hadn’t said a word. We reached my ball, 30yds short, sitting in a divot. If I had been on my own, I would have moved it, but I felt compelled to play it as it lay. Whump. The club dug into the ground. A carpet of mud rose up and splattered down exactly where it started from with my ball still on it.
And so, it continued. If Clarence was a real person and not a Guardian Angel, I hope I helped by listening and not killing him. I think that’s what he needed (listening to). And that’s what I gave him. We never met again. But he has haunted me a lot since then. Was he sent by a mystery force – God? – to make me reflect on my purpose. Did God want me to abandon this punishing pursuit of money? If so, God hadn’t read his Schumpeter. I wasn’t pursuing money I was pursuing something else but anyway, I eventually made money and got: the big car, the big house, the kids in private school, (I didn’t want a boat, but I thought about a helicopter), and I noticed Clarence was right. People were treating me differently. I was being pestered to solve their problems and - I wasn’t happy. I wasn’t unhappy but far from reducing the pressures of life, financial success had multiplied them. If I set up Millionaires Anonymous this will definitely be one of our discussion topics.
On that day, my business was down to its last £20k. Back then that was enough to pay the staff a month’s wages and close it down. We were technically insolvent. This last £20k had been loaned by my parents who were ordinary people living in a semi-detached house and this was their lifetime savings. They said I could use it on whatever I wanted and repay them when (or if) I could – but it was all they had. There was no more.
So, armed with entrepreneurial purpose what did I do?
The business was a computer training company. Back in 1988 personal computing was word processing done by admin. We taught new computer users how to use spreadsheets and databases, but we were a bit early to the game. Demand was slow.
Who knows why, (Clarence was it you?) I contacted the Sunday Times and asked how much it cost to buy an advert on the front page of the Business Section. The salesperson said £25,000. I offered him twenty. He agreed and the deal was done. My idea was to advertise a totally original course: “Lotus 123 Introduction for Directors, taught by your peers with relevant Director level case studies and attended only by other Directors”. We had no such course, but I was confident we could knock one up. My sense was that Directors had the power to buy and were probably paranoid about falling behind on this new skill, so you know… let’s roll the dice.
That was the Friday. Playing golf on Saturday I was a day away from knowing. Let me describe what that does to your sleep. You DON’T. You lay awake worrying and regretting. Your imagination concocts vivid screenplays of bailiffs, bankruptcy hearings, angry employees unable to pay their bills and worst of all – the humiliation of public failure. The crushing humiliation. The knowledge that everyone you know – friends, family and enemies will see that you tried and failed. That is entrepreneur hell. That’s what Schumpeter syndrome does for you.
So, what happened?
In those days newspaper adverts contained a freephone number for people to call and ask for information. Back at base you had an answerphone. This had a cassette tape and a little LED message counter. The counter showed how many messages had been left while you were away.
Sunday came and I bought my copy of the Sunday Times. My stomach heaved. Sure enough, there it was. I really had spent every last penny on an advert. It looked ok. Credible even. But it marked a binary moment. Thirty years later I can still remember every detail of that lonely drive to work, entering the empty office and taking the lift, listening to the beep of the alarm as I punched in the door code for what could be my last moments as a respectable and solvent businessperson.
The lock clicked. The door seemed heavier than normal. I leant on it, and it swung open. The digital readout on the tape machine was visible within a couple of steps. Much as I wanted to look away my eyes were drawn to it. The display that held my future in its digits was clearly visible, and … there was no number. It was just flashing. Crushed. I knew what that meant. The machine had malfunctioned. I probably hadn’t loaded the cassette and there was no space for messages. All that money wasted. “You loser. You total loser. You should die in shame. How could you mess that up?” I shuffled up to the machine, in tiny bits, a completely broken man. I entered the error code and waited for it to say what was wrong. Then I heard the words.
“You have fifty-four messages. Replace tape and reset.”
What...?
Fifty-four messages. It was full! Message after message asking for details, requesting a place on the course, asking when the earliest course was, asking how much extra it would be for a private course. Fate had dropped me to my lowest emotion and elevated me to my highest in the exact same moment in time (give or take a second) and in that exact moment I knew we were saved. And, that flood – a flood of life sustaining money didn’t stop for two years. Individuals, Top 100 company directors, whole departments from Marks & Spencer, Xerox, Hewlett Packard, Thames Water, Natwest Bank flowed through that course. Way back in 1988 I was working 20 days a month personally generating £2,000 net profit a day and so were two colleagues also giving the same course. We wiped our debt in months. The land of plenty. A rich harvest of money.
Although my money and my gamble had saved the business, I had two partners. All decisions were argued through to a unanimous vote. This worked until I felt we should reinvest our winnings to expand. My partners had no interest in this. They had already made their “life-changing” amount of money. That’s the amount of money that transports you (personally) from your current life to another. They had no desire to go any further. They outvoted me. I left.
I had other ambitions. As a real entrepreneur. I had a greater purpose – and this is important. Remember Schumpeter? For me money wasn’t my prime motivator. Money was a measure of success not the goal. My goal was to make a big successful business that was respected for following the right values. It was a personal mission. Being from a humble background, my purpose was to make all the posh people who looked down on me when I was young – eat dirt. Lots of it. (It doesn’t matter what motivates you as long as it is powerful). If the only way to do that was to make a lot of money (something they worshipped) so, be it. I wanted my wealth to cause pain to the snobs who turned me away from tennis clubs, cricket clubs and golf clubs and other places because of how I spoke and where I came from. I would show them who had the real class. My class would create a business that was fair and generous to employees, customers, and suppliers. And, on reflection, that’s what Clarence the moaning millionaire was missing. He had the money, but he wasn’t an entrepreneur. His business just made money. He could still have been my Guardian angel. Maybe he was. I dunno. It was weird.
Footnote: Two years later I bought my partners out. Without my manic purpose the business had shrivelled up. When I came back it grew again. Then it won a huge government contract to provide Windows and Office 2000 training for all the employees of the VAT, Inland Revenue and Customs and Excise. This fulfilled its purpose, and I sold it to a listed company. By then I was involved in something else, but that’s another story.
Ken Charman is a serial entrepreneur with four trade sales, one IPO and an orderly winding up behind him. He started UK and European operations of emerging enterprise software companies in financial consolidation and reporting sytems. They went on to be bought by Hyperion, Cognos, Business Objects, IBM and Sungard.
From 2006 he was CEO of a spinout from the Dept of War Studies, KCL, that designed corporate wargames to test business strategy, which we sold to Deloitte in 2010.
He then advised major IT projects, one of which developed the first digital Employee Total Reward system, which led to his appointment as CEO of UFlexReward, a tech spinout owned and funded by Unilever.
