Interview with Steve Mariotti

Steve MariottiSteve Mariotti is the founder of the Network for Teaching Entrepreneurship (NFTE). Before NFTE, Mr. Mariotti was a successful entrepreneur and a teacher in some of New York’s most challenging schools. Because of his innovative methods for teaching business concepts Mariotti was named Teacher of the Year for New York State in 1988. We met with Mr. Mariotti in New York to explore his thoughts on his passion for teaching and entrepreneurship education as an exit strategy from poverty for at-risk youth.

Kaizen: You were mugged in 1981 by three teenagers in New York’s Lower East Side, and that led you to a major career change?

Mariotti: It did. The mugging caught me emotionally off guard, and I had a lot of flashbacks afterward. It got me interested in the question of why some kids would humiliate me over a small amount of money. And I started to think: Had they been able to sell me something or ask me to invest in a business deal, they could have gotten a lot more money and it would have been a win/win situation for everyone. And that really got me interested in a new career path in education, which turned out great.

Kaizen: So you decided to leave the corporate world and become a teacher?

Mariotti: Actually, I had a small business then. I was a manufacturer’s representative for manufacturing firms overseas. And I had been at Ford Motor Company, and I left Ford to start my own business.

Kaizen: That was Mason Import-Export?

Mariotti: Yes. My mother’s name was Mason. Her grandfather was a U.S. Senator from Illinois, William Mason—from 1896 to 1902. I’m very proud of him. His daughter, Winnifred Huck, was the first congresswoman in Illinois’s history, the second woman to serve in Congress—the first was from Wyoming. My grandfather ran the Federal Trade Commission. So the Mason part of my family comes from Illinois.

Kaizen: You grew up in Flint, Michigan?

Mariotti: I was born and raised in Ann Arbor, but I went to high school in Flint. I view myself as being from both communities and have great affection for each of them. I’m very proud of having spent a lot of time in Flint.

Kaizen: What did you major in as an undergraduate at Ann Arbor?

Mariotti: I majored in Business-Economics-Finance.

Kaizen: You went on to receive your MBA from the University of Michigan School of Business. Did you have a concentration there?

Mariotti: I wanted to be a business economist. I wrote my Master’s thesis—you didn’t have to do a thesis for a Master’s but I wrote one anyway for fun—with Paul McCracken as my advisor, and I wrote it on the Austrian School’s theory of the trade cycle. I believe it was the first test of the Austrian School’s theory of the trade cycle ever made.

I was corresponding with Milton Friedman at that time, and he was not an advocate of the Austrian theory of the trade cycle. And I was also in communication with Israel Kirzner and Murray Rothbard, who were against the use of statistics, and thought you couldn’t measure capital and you couldn’t measure the lengthening of the production structure.

So I knew these economists who were all against doing a statistical test of the Austrian trade cycle theory, but I felt that my whole point back then was to find a unity of method between the monetarists and the Austrians, and I was writing a lot of letters to a whole bunch of people, and I just went ahead and did the test, and I was very proud of it. I sent it to Lawrence White, who’s been a lifelong friend, and he loved it and actually footnoted it in his papers when he started to publish in the early ’80s. So I’m trying to be acknowledged as the first person to do a statistical test of the Austrian theory of the trade cycle. My favorite economist now is Mark Skousen, as I think his writings are the clearest in the profession right now.

Kaizen: Was entrepreneurship a part of the curriculum in your MBA program?

Mariotti: I was fascinated by small business and unable for a couple of summers to get jobs in Flint because of the unemployment rate. The union wage rates were so high that it restricted how many people could get hired. So I was an Avon salesman. I was told by my group leader that I was the first Avon salesman in the history of Flint. And I was very proud of that; I hope that’s true. But I did Avon, I had a golf ball resale business, I had a repair service, I had a laundry service. I had about seven businesses from the time that I was eleven ’til I was twenty-one, and was always talking, always thinking about it.

Now in college I only found one class, taught by my dear friend LaRue Hosmer, who was a professor in the business school, and he had a class called “How to Start, Finance, and Manage a Small Business.” I loved that class and I took it over and over again. He let me audit it; he was very kind to me. That was my first exposure to the fact that there were issues in small business that you could talk and think about and study, and that there was a craft to it—I didn’t know that until I was twenty-one.

Kaizen: What would you say was the most valuable thing your MBA program taught you?

Mariotti: I’m a huge fan of reading about business. I learned about double-entry bookkeeping, income statements, and marketing. I had a great teacher who had us do sales calls. I also learned about advertising.

I don’t understand how people do it without reading and thinking and talking about business. I was always intrigued by the education aspect and believed that one cause of poverty was that millions of people go into business without knowing certain basic concepts that you need to know—and as a result lose their savings, go into debt, get into trouble with the local government authorities, and hurt the savings and capital of their family. Unsuccessful business effort, I believe, has been one of the major causes of poverty since the beginning of time.

Also, being unemployed or employed in a job you hate is a leading cause of depression and unhappiness.

I strongly believe that business can be taught. I believe that business and entrepreneurship are just like any other skills that can be refined and coached and helped. A huge issue in society is: How do you make people in business more efficient, so that they can use capital and scarce resources more efficiently, and then have more capital for everyone and solve more problems? And by reading, talking, exchanging ideas, and getting better at teaching people, then business will become more universal and not just be passed down from people who are very talented at teaching ownership skills to their children, creating a class effort in essence. So I’m a huge fan of business education as a way to democratize the process of owning assets.

Kaizen: It sounds like it was enormously valuable in your own career, and then when you decided to become a teacher all that came together for you?

Mariotti: No, it was actually very valuable to me in everything I’ve done—almost every class helped me. I loved it.

Kaizen: After graduating, you a won a summer scholarship to study economics at the Institute for Humane Studies and had an opportunity to study with F. A. Hayek, the Nobel-Prize-winning economist.

Mariotti: I spent four months in California, at the Institute for Humane Studies as a Liberty Fund fellow, and sat next to Hayek. It was unbelievable that he was there. I had just done my statistical test of the Austrian theory of the trade cycle. He read it and gave me a lot of feedback and I presented the paper at a summer seminar. People didn’t like the use of statistics and I understood that—and still do. But I thought it was kind of cool to present it. In the hypothesis, the way I did the measurement proved accurate, that the money supply would lengthen production in capital goods industries, and then when the money supply would go down, the capital goods industries would go down. It was just like the Austrians predicted.

Kaizen: So you integrated that with a statistical methodology?

Mariotti: Yes, with T-stats and R-squares and other techniques, Then, in ’79, I published a paper in Public Choice—a journal put out by Buchanan and Tullock—I had corresponded with them, as they were two of the top economists in the country. I was writing probably fifteen letters a week to various people and getting a lot of responses—I think some of them considered me a pest, like a little brother—but I am forever grateful that so many took the time to answer, as a lot of my thoughts then were immature and incomplete. I was carrying on all this correspondence and trying to find my voice as an economist.

So there was a tax-expenditure-limitation amendment in Michigan, which I hoped would get passed. I’d been campaigning; I’d go to all the meetings, and as I said, I was reading Public Choice, and on one of the pages it had a sentence that struck me, and I thought: “I could do a statistical test to see how people voted on a tax-expenditure limit.” My hypothesis was that the higher the income, the more they’d vote in favor of it to limit taxes. And the lower-income people had been conditioned to believe that taxes would help them. So it was an interesting paper, and it got published in Public Choice, which at that time was a top journal and it was one of the happiest days of my life when it was accepted. Tullock helped me fix it. I think he was at the University of Arizona by then.

Kaizen: He was originally from Rockford, Illinois, surprisingly enough.

Mariotti: You’re kidding me! He’s one of my favorite economists. I love him. Should have won the Nobel. Buchanan did win the Nobel and deserved it.

Kaizen: After you got your MBA you became a treasury analyst for Ford Motor Company. What did that involve?

Mariotti: I went to Ford Finance Staff, and I walked in there and I couldn’t believe it. I had the best job a young MBA could get. I had been the assistant to the comptroller of the casting division after my first year. I did very well there, and my father was a professor at General Motors Institute and knew a lot of the vice presidents, and so I kind of fought my way into this perfect job as a financial analyst.

Then I realized that I’m in Ford’s foreign policy. Now I’m the analyst for South Africa, Venezuela, Mexico and Ford export division, and I’m doing all the dollar borrowings for Ford—basically for all of Latin America—and that my job is to figure out how to legally bring money home, because we made a lot of money overseas but it was not worth much if you could not get it back to Detroit. So I would protect our investment by doing swaps, where you’d sell dollars forward. For example, you take money in, in dollars, and then you sell the dollar forward against the bolívar to get the money out without risk of devaluation. So it was an unbelievable job. I just basically sat around and read and thought.

And then I was the analyst for the finance subcommittee, and I’d put together the financial books for every month and deliver them to the vice presidents, which allowed me to get to know all the executives. I was on the twelfth floor of World Headquarters when Iacocca was fired. I was actually near his office, about five yards down.

As I said, I was part of the Ford finance staff—I don’t know if you’ve ever read The Whiz Kids—but they were the Whiz Kids: Bob McNamara, Arjay Miller, Ed Lundy—there were ten of them. Whiz Kids is an unbelievable book. They were in the Air Force, and they used statistics to supposedly create modern management. In ’45 they came out as a team and sent a cable to Henry Ford and said, “We’re looking for a company that we can go to work for as a team.” He brought them in and they thought they were going to run the place right away, but a guy named Breech was already there from General Motors. Lundy stayed and McNamara stayed, and became president. It was a very elite unit in American business.

Up until about ten years ago, Ford had produced more CEOs of Fortune 500 firms than any other organization, other than Harvard Business School. The finance staff at Ford Motor Company—a whole lot of famous people came out of there: J. D. Power, Arjay Miller—I can go on and on and on. If you do research on it, you’d be intrigued.

At World Headquarters, they’d bring in twenty young men a year and only expect to keep one, so it was extremely competitive. Then they would bring in twelve at each division. But I leapfrogged over all the divisions and got the most—unbelievably—coveted job in international finance, and I did that for about twenty-nine months.

Kaizen: At Ford you earned the nickname “Stevie Wonder.” How did that come about?

Mariotti: I made Ford some money by cutting costs, and at one of the subcommittee meetings one of the vice presidents referred to me that way—I was so proud although I was really a peon in the scope of things. I had a few insights, and each one seemed minor. One was when I took some coaching from Landon Hilliard at Brown Brothers Harriman (they were my favorite bankers)—Landon has been my friend for thirty-two years and is now the chair of NFTE’s board. So I spent a lot of time talking to them and just learning international finance, and I had a knack for it. We did the first bankers’ acceptances, Brown Brothers Harriman and I, for Ford. Bankers’ acceptances are just a financing strategy where you can borrow at a lower rate, but Ford didn’t know about it. That enabled us to lower Ford’s borrowing rates about an eighth of a point, but on billions of dollars of debt, that’s huge.

Then my big thing was—it went all the way to Henry Ford, who read it at a board meeting—I wrote a memo. I was reading a book, The Bankers by Martin Mayer, and on page 53 is a paragraph that talks about the Lombard Rate. When bankers calculate your interest, they use 360 days; all the banks do. So if you borrow for 180 days, they use 360, but there are 365 days in a year. It started several hundred years ago and the bankers never tell you that; it just goes into the computer as 360. I read the book, and I looked up all of the interest-rate calculations and, sure enough, all the banks around the world that dealt with us were using 360. So I wrote a memo saying, “Let’s ask the banks to use a 365-day rate.” And it went all the way to the board and we converted to 365 days, and I believe it saved $480,000 a year when we weren’t borrowing very much. And when we got into trouble, it probably saved $2 or $3 million a year—that calculation, that extra five days. To a large company that is a small amount of money but I was very proud of it.

Then I had an idea that I called the advance warning system. I’d be sitting there, and we’d be bringing money home from places such as Venezuela. And they’d wire-transfer the money and the banks would hold onto the money. So the bank in Caracas would wire-transfer $18 million to Citibank, who would then hold the money for a day, then wire-transfer it to Detroit Bank and Trust or wherever (I’m making up that name), who would then hold it for another day. We wouldn’t get credit for it for two to three days, on a billion dollars. So I came up with an idea that we would have an advance warning system so that the treasurer’s office would let us know—I was in treasury—when the money was going to be transferred, and we would get same-day credit. That saved hundreds of thousands of dollars. And then I had like four or five other little things that helped the company get better.

Kaizen: What led to your leaving Ford?

Mariotti: The big issue was that I was against doing business with the South African government because I felt it was fascist. I started to raise those issues because I was the South African analyst. It wasn’t like I was seeking it out, but issues were coming across my desk and I felt like we should be more aggressive toward liberalizing that regime.

I started writing to Reverend Sullivan, an African-American gentleman on the board of General Motors. He was strip-searched in ’74 in South Africa because he was black. He came back to the U.S. and he wrote The Sullivan Principles. So I started to write him fan letters in ’77, and we began corresponding. He always supported me in my efforts as the analyst for South Africa, and I was raising my concerns about the government. I’m sure Henry Ford would have agreed with me, but I couldn’t exactly go talk to him—there were all these levels.

It was stressful because I said some things about Ford’s foreign policy that raised issues, like: “What could we do to help end apartheid?” Then twenty-five years went by and I see that he’s come out with a new Sullivan Principles list of ethical business practices. So I called him up (this was around 2000) and said, “Do you remember me?” Not only did he remember me, he had my letters, and he came to see me here in New York. He died several years later and I was very sad, as I admired him. He created a large part of the corporate ethics movement overseas. It became really controversial at Ford that I was raising these issues about our relationships with certain governments. It wasn’t the smartest thing to do at that stage of my career.

Kaizen: So it was internal politics?

Mariotti: Yes. I regret it, as I came on too strong in retrospect and was not open to hearing opposing views. At times I was pompous. Essentially I was a good analyst, which is kind of like being a first lieutenant. I was raising policy issues and it was a too much for the system to handle, and I became too high profile, which kills you at Ford.

I ended up getting ousted. I got a year’s severance because they all felt terrible about it. I had made them all this money by lowering costs, but I didn’t generate any revenue. I stayed friends with most everyone, so it turned out okay, but I did have to leave. I had some very strong views and it was too much for the company to handle, and I totally understand it in retrospect.

As it happened, Ford eventually adopted a lot of Sullivan’s recommendations and used all of my financial improvements. Ford is a wonderful company and I’m still very loyal to it.

Kaizen: And that led you to move to New York and go entrepreneurial?

Mariotti: Yes. Within two months I started a new business here. I got an apartment in Brooklyn Heights and I started advertising in overseas Chamber of Commerce newsletters to be a salesperson. If you had a small business in a third-world country, nobody would represent you in the U.S. So I thought, “Gee, that’s an opportunity.”

I got this contract to go down to Jamaica and do research on small businesses. While I was down there, I noticed that they all had these unique products—not all of them, but let’s say out of one hundred that two of them did—that could sell up here, I thought. But they didn’t have anybody to represent them. Don Lavoie was one of my roommates and we were great friends. He became one of the top economists of his generation, getting tenure at George Mason University and doing really important work in the subjectivity of value.

People started answering my telexes and my ads. They would come, and they would stay with me for a month. They would have to pay rent for a month and I’d get seven percent of whatever we sold while they were here. My partner was Charlie Fowler, whose sister my brother ended up marrying. Every month somebody new would come and stay with me. It was great: I learned about all these small businesses around the world, all these interesting people, all with unique products—pistachio nuts, snake skins—I met a lot of people from overseas and I loved it.

Then I did a ton of sales work—figuring out who’s going to buy it, why, how do you get the meetings—very difficult things. It’s as hard as brain surgery; it’s a ton of work, selling, that is. You’ve got to think about the other person and not about yourself. It’s great training.

Then three years went by and all of a sudden I was out jogging in the middle of the afternoon, and these kids embarrassed me over ten dollars, and that really bothered me.

Kaizen: Where was your first teaching job in 1982?

Mariotti: I started teaching in October of ’81 to three kids in the neighborhood where I was living. I taught business subjects on Saturdays for two-and-a-half hours—and really enjoyed it. There was a rec room on 14th Street near where I was living in the East Village. I had three or four kids over, and they would come in and we would talk about selling and business. I found I really liked it. Most important, they became better people and my own self-confidence and ability to listen and empathize increased.

I was still getting the situation worked out mentally, so I decided to read Albert Ellis, the psychologist, and went to get therapy. I was treated by both a male and female psychologist for only $30. They said, “Look, our goal is to get you out of here and get you well”—because I was having these flashbacks—and: “We don’t believe in long-term Freudian therapy.” This was their view.

I had read Ellis’s books, that you could change how you felt by changing the sentence structure in your brain. So you break down your sentence structure: “I looked bad and was humiliated.” And you would take out those words to make the sentence more positive. You’d do it on the board, and then you’d memorize the new sentence.

For me it was, “Kids that look kind of tough.” And this was a bad time in New York, so there were a lot of kids in groups that looked tough to me, and I had this anxiety. I was determined to convince myself to get well, so I said over and over to myself: “I will overcome it by facing up to it repeatedly, until I overcome it.” A Guide to Rational Living was Ellis’s key book, about rational emotive therapy. There was a building on 65th Street called The Albert Ellis Institute and I went two or three times. It really helped me by getting me to think positively and getting me to confront my fears by immersing myself in them.

So the therapist said, “How would you do that?”

I said, “I don’t know.”

He said, “Well, why don’t you go be a teacher?”

That was really an insight. So I thought about how I could get in a situation where I felt I looked bad in front of people and myself, and I could go teach and have it be part of the therapy thing. I’d been doing it three hours a week, but my first full-time job was at Boys and Girls High School in Bed-Stuy in Brooklyn, which I started on March 7, 1982. I had a lot of problems with the class because I didn’t go in to teach entrepreneurship. I hadn’t thought of that yet.

Kaizen: You were teaching the standard curriculum?

Mariotti: Right, and seeing if this would help me with these anxieties I had, and it did. They were gone within an hour and never bothered me after that. I also liked it.

Kaizen: Even though it was going horribly? You didn’t seem to be getting through.

Mariotti: Yes. I had both juxtapositions, you know. That part of my life is not clear in my mind, to be honest with you. I can’t quite remember those months except that I felt constant anxiety about losing control over my class. I just couldn’t control the class, and one day I walked out. I went back in holding my watch and started saying, “How much would you pay for this?” I pointed out its features and began “selling” my watch. The class changed. It was a miracle.

I started to lift things from the private Saturday classes and teach them at Boys and Girls. I developed a class called “How to Start and Operate a Small Business—A Guide for the Urban Entrepreneur.”

Then I was sent up to Jane Addams Vocational High School in the Bronx (in an area nicknamed “Fort Apache”) in 1985. I had this wonderful principal—Pat Black—who I’m still very close friends with. She got me my own class and protected me, and it led to the South Bronx Entrepreneurship Program, which was an anti-dropout class. That led to the founding of the National Foundation for Teaching Entrepreneurship—NFTE. (NFTE has recently been renamed the Network for Teaching Entrepreneurship.)

Kaizen: What was exciting to the kids about business that made their attitudes change?

Mariotti: I think that there’s something in everyone that’s intrigued by money and the value that money represents. I think it comes naturally to us. People are very interested in talking about how to buy things and what they have to do to make the money necessary to buy them—particularly if they’ve never talked about it before.

Kaizen: Was the key issue motivation? Making money was fascinating to kids raised in poverty?

Mariotti: Yes. These were kids who had a lot of issues. They’d be special-education children who had learning issues, attention-span issues, and I had all those issues myself, so I had a bond with them. I had a lot of trouble reading in elementary school as I would often read backwards and never learned to file by category.

I had a very high math aptitude for about a year, when I was seven, off the charts. Somehow, my brain got into that, and then as I got older, I kind of became normal—1200 SAT tests, but not 1600; that kind of thing. But when I was seven, I was home-schooled, and for about a year and a half I had a gift for math. They would take me over to the University of Michigan math department to talk to the Ph.D.’s. I had a real insight. You could give me two numbers, 384 times 796—I actually remember this—and I was able to multiply them almost instantaneously. I did it in front of a graduate class. They would throw numbers at me and I was able to do it—but the ability went away. I don’t know what happened there. But everybody would pay attention to me and I read about topology, which is the study of geometric figures in space. I had an interest in the history of warfare and was studying intensively Edward Creasy’s seminal Fifteen Decisive Battles of the World, and I was reading everything of Winston Churchill’s, and I read the Von Mises-Lange debates on economic calculation when I was eight. I was reading all the time and talking to my mother, who was very interested in discussing ideas, and she was home-schooling me. I didn’t go to school until sixth grade. And I loved it—I wish I had been home schooled my whole life!

Kaizen: So part of it was, because of your experience, you could relate to the kids?

Mariotti: Yes. I just learned this past year the difference between a capital letter and a lower-case letter. They felt a bond with me because I never had handwriting classes, either. I still have a childlike handwriting. People look at it and go, “Oh, someone’s kid’s in the office!” I actually have a second-grade letter book now, and I’m trying to re-create my handwriting doing capital A’s, little a’s, capital B’s—I never knew the little “b” was shaped like that.

The kids immediately picked up on that I was a unique learner myself, and that helped me a lot. So my specialty was kids who were having learning problems or emotional problems, because I hated being in school when I was a kid. I felt locked up, like it was a prison. I identified with their problems.

I had a rule that they could leave whenever. If they felt like they had too much anxiety, they could go sit in the back of the class and talk quietly. I had a lot of unique ways to deal with them. Then every day we would have a business lesson and brainstorm about how to make money. And every day we’d work some math into it, and reading, business ethics, sales, and all that. I soon realized the most important parts of the class were the development of the children’s character, attitude, and self-esteem. I found I could teach basic math, reading and writing, and critical thinking by putting it into basic business or monetary terms—it really became a class on human capital development.

Kaizen: Complementing the business skills, what life and character skills did you emphasize?

Mariotti: Trying to tell the absolute truth, both to yourself and to the marketplace. You’ve always got to have a reputation for doing the right thing. I believe in the Golden Rule, to be honest with you. I believe that you make more money by being non-narcissistic. Trying to help other human beings actually leads to business success, in any type of business—in fact it’s the key to any type of success.

Then there is the importance of a vision. I said this in 1988: 90 percent of it is giving kids a vision. They’ve got to see themselves doing something that they want to do, that’s also fun and fits into their life view. You have to find that, and every kid has it. I began to help them think through what they wanted to do with their lives, not what the SAT tests, and so forth, were saying. I would always try to find their unique knowledge.

It was a Hayekian concept, actually, from “The Use of Knowledge in Society.” Friedrich Hayek deserved the Nobel Prize just for that one article, God bless him. The whole point about how every human being has a comparative advantage, unique knowledge, and that somebody can be better than you at some things, but not at everything. They’ll do what their best thing is, and you can do what your best thing is. These kids had never heard or thought that before—and I would write it on the board. Because the school system, tragically, is often hierarchical: “I’m smarter than you”—rather than viewing it as, “Let’s make the pie bigger with each person’s unique abilities.”

Interestingly, when I started off as a special ed teacher, none of the kids wanted to go to the Ivys—in fact they never heard of the top schools or knew what the SAT tests were; they weren’t into that. So I was able to create a whole new way that they viewed themselves and they could have a fresh start. They didn’t have to stay with all this stuff that had been laid on them and where they were defined as being at the bottom of the barrel.

Kaizen: So consequently they tried to learn, and their behavior and skills improved dramatically. Did you have data that would demonstrate to the administration the improvements that were taking place?

Mariotti: Everybody noticed that the classes were improving dramatically. I started to do research in ’86. I created a pre- and post-test. The average kid thought that to have a baby was an extra $300 a year. Now that is in ’86 dollars, but still. I think even back then it was like $8,300. So, before the class, their estimate was $300; after the class they knew it was $8,300.

They learned how to budget more realistically. They could all make a sales call. I made them each open a bank account. They all got business cards.

There’s a movie being done about youth entrepreneurship that’s premiering in October, and I think it will be very successful. It’s called ten9eight and it is the story of nine low-income children who start small businesses. It instantly became my favorite business movie. The story of Rodney Walker, who was raised in foster care and is now president of his class at Morehouse, is my favorite story of someone overcoming obstacles through entrepreneurship.

Kaizen: As your approach began to work with the students, were the other teachers and administrators supportive?

Mariotti: Not really, to be honest. They were friends but I didn’t quite fit in, and that was always a problem. It wasn’t until I got to Jane Addams and Pat Black.

Kaizen: And that was around ’85 or so?

Mariotti: Yes, ’85. She’s an unbelievable human being. Every time I see her, I thank her. I was getting ousted at these schools. They were nice to me and all, but I didn’t fit in, talking about capitalism and voluntary trade. Kids are not supposed to make any money while they’re in school—it’s really a nonmarket system. Although there are so many great teachers, ownership skills get overlooked in our educational community. It was a major culture clash. Individually they were all nice to me and agreed with me, but as a collective, they didn’t see it. These children were at such a disadvantage because they had so little money and had no training in what I call “ownership skills”—they had no experience in owning or acquiring assets. They had been told they were not good people because they were not good at school and did not have money.

Kaizen: All of this led to your being named Best Economics Teacher of the Year in New York State and, by the National Federation of Independent Businesses, America’s Top High School Business Teacher—both in 1988.

Mariotti: Pat Black let me run my own program. I had to leave the previous school—I was in the typing department. I was always given these odd assignments; they’d have a special-ed typing class. It was very hard. My boss would always be someone who had come up as a stenographer or something and wouldn’t really get me. There were a couple of extremely difficult years.

This wonderful principal gave me my own program, and I started winning these awards. My friends—I knew a lot of people in small business, and they would nominate me for things and I would win. And I used that to start to think about how to raise money.

Kaizen: What did it take financially to start NFTE?

Mariotti: I was thinking all the time: How do I get my own organization? Initially, it started as a for-profit. But then whenever I’d go to dinner, someone would say, “You should do this as a nonprofit.” And I don’t know if I made the right decision or not because I don’t own anything here! Which puts me in an ironic situation, where I’m an advocate of ownership, raising the consciousness level of low-income children toward ownership.

Just like the Women’s Liberation movement, or any community—raising the consciousness level is the key. And asking people who don’t own: Who owns and why, how did they get to own, what are the cost/benefits of it, what do you want to own? You don’t have to own; some people don’t want to own, and some people don’t want to own subconsciously. A lot of poverty is subconscious—the anxiety over ownership.

When I was trying to start NFTE, I wrote to people on the Forbes 400 richest in America list to raise money, and one guy called me at school, got me out of class—Ray Chambers, a wonderful man—and he said, “Come see me.” So the day before Thanksgiving in 1987 I went out there and showed him a ten-minute video.

At Jane Addams, every kid had to start a business and we’d always start a group business. You could see it in the film: Kids were learning and talking about money, making money and learning basic math and having their self-confidence go up right before our eyes. He loved it. He said, “I’ll fund this.” I said, “Would you go $200,000?” and he said, “Yes.” And thank heavens he did.

That was the beginning of my transition. By June, I had found some other funders and honed my curriculum a bit more, and we got a contract with the Wharton School at the University of Pennsylvania to do summer programs and a contract to do a program with the Boys and Girls Clubs of Newark.

Kaizen: So you started with a few colleges and universities and Boys and Girls Clubs, outside of the public school system.

Mariotti: Yes. Always with the one theme of how to teach low-income kids to start their own businesses.

Kaizen: NFTE’s programs are now much more comprehensive, including textbooks and other supplemental materials.

Mariotti: Yes. Videos, online programs, and we’re on the 11th edition of our curriculum textbook.

Kaizen: How did you initially go about getting your program adopted in schools?

Mariotti: Well, now we make friends with the mayor and the chancellor and then we go present to schools that are in low-income areas. That’s how we did it in Chicago, and we’re in a ton of schools in Chicago. So we start at the top and go down. I didn’t know that back then, but we’ve learned how to do it much better.

Kaizen: You also use successful business professionals as mentors in the program?

Mariotti: Yes. I believe we have 5,000 mentors worldwide who help us. We only do group mentoring, not individual mentoring, because of liability issues. NFTE kids only meet with adults in groups. So they help them with their business plans and do judging, and that kind of thing.

Kaizen: The program has been described as a mini-MBA curriculum with a strong emphasis on actually doing. Is that right?

Mariotti: Yes. Experiential. All the lesson plans are supposed to be experiential. We do the best we can. I believe in different learning styles; I even believe in lecturing sometimes. But only with visual aids.

Kaizen: For students who flourish in NFTE programs, is there follow-up support—for example, mentoring—connecting them with funding sources, continuing education?

Mariotti: We do the best we can. We have about 5,000 kids who are active in our alumni programs, out of 300,000 graduates. We were not effective with it until about ten years ago, and every year we’ve gotten a little bit better. So now our newsletter goes to all the graduates and we have an alumni website; we have two full-time people who work on alumni issues. But it’s hard, because we lose track of them. It’s just like your school: Some kids stay involved, some kids don’t.

Kaizen: To measure NFTE’s success, you did one study with Heller School at Brandeis University, and a little later there was a nationwide study funded by the Koch Foundation that compared NFTE graduates with their peers. What were the key results?

Mariotti: Good question. The first research was with Andy Hahn [Professor Andrew Hahn of the Heller School]. We did the first and—to my knowledge—only random assignment ever done on entrepreneurial education. We actually took two groups of kids and randomly assigned them, put them in two groups and then measured how well they did on business knowledge and business-formation rates. I think it’s on the website. But the rate of business formation was thirty times higher for the NFTE kids. And the rate of business learning was twenty times higher than the control group. The results were so outstanding—they were much better than I thought we’d get.

How many foundations, schools, corporations, product surveys, consultants—any group that makes self-evaluations—use random assignment? Just about none. We are one of the very few organizations that have taken a realistic look at themselves. The big thing with the Koch research was that 99% of NFTE grads six years out would recommend the program to their best friend. That to me is the highest praise a program or any product can have.

We’ve always been pretty good at teaching business knowledge and getting business start-up rates higher, which I think is important. Where the research is still out is: Can you really raise a child’s multiple-choice test scores in math, reading, or writing through teaching entrepreneurship? Right now I would say no, tragically. I wish we could, because then we’d be integrated into every school in the world, because that’s what they care about. And that’s NFTE’s vision—that every low-income child learn about ownership through entrepreneurial education and thereby find a way to control their future time and their thoughts, which to me is the ultimate prosperity.

Kaizen: You don’t think that it happens? Or that it’s not yet measurable?

Mariotti: I don’t think it’s measurable by multiple-choice tests. When you watch ten9eight, you’ll notice a lot of footage where you can see the kids getting better. But how do you measure it through a multiple-choice test? My view is that our research should be done as video research and we just film the kids pre and post. And we’re actually doing that in October, with fifteen kids who are going to be in our program, versus fifteen who aren’t, selected randomly. Then outside people can look for themselves and decide if we’re having an effect.

Kaizen: Those earlier studies were done in the 1990s. Now that NFTE is over two decades old, what do you think is the best measure of its impact?

Mariotti: I think that the number one thing is attitude. Attitude is often pooh-poohed, but getting kids excited about their future and that they can control their future makes a huge difference. If they have an appreciation of voluntary trade, and they can calculate the “economics of one unit,” and raise their consciousness level on who owns, why they own, and if they want to own, as well, and what they have to do to own—then I view that as a huge success. And that’s the goal of our research, to see if that’s happening.

Kaizen: Entrepreneurship has material benefits—but you also think its psychological benefits, such as the sense of empowerment, are crucial as well.

Mariotti: It’s more important, I think.

Kaizen: Are there other psychological benefits?

Mariotti: That life doesn’t have to be viewed in a hierarchy—social, financial, a power structure. You don’t have to view life like everybody is in one silo and I’m here and you’re here. People start to question these assumptions of hierarchy and they start asking questions about ownership and power, and that is very healthy.

There is a scene in the movie ten9eight. A kid who makes guitars by hand says: “Yeah, you know, if I really fail in life, I’ll just end up being a doctor.” He’s capturing the whole psychic freedom. He doesn’t care that you feel he should become a doctor to begin with. He’s going to do what he really wants to do, which is to make guitars.

A lot of people would be saying, “Oh, he’s not going to get his MBA or law degree,” or whatever. All the values that we get from what other people want us to do. But those things are not for everybody. And everybody should know that they’re choosing that, not just that they’re in this assembly line. It’s like a Henry David Thoreau thing. His biggest accomplishment was the idea that you have to follow your inner voice, and having a vision that you believe in, not one that somebody else is putting on you. That’s liberating to a lot of people. And exposing low-income youth to the idea that entrepreneurship can be a means for them to self-actualize.

And it’s consciousness-raising, because a lot of people haven’t thought about ownership, that there’s a craft of ownership, and that owners have enormous power in the world. Whether that’s good or bad is a different issue. But people who are in poverty are not thinking about who owns the store next to them, the building next to them. They are not taught about ownership as an achievable craft. Ultimately, we are all always in business for ourselves, with our primary asset being our future time, and how we spend it.

My central thesis is that raising the consciousness level of low-income people about the craft of ownership is a valuable end in itself.

Kaizen: And it has great power to help large numbers of people lift themselves out of poverty.

Mariotti: Right. If they so choose. You can’t force it on them. I have never felt that I should say, “You need to make more money.” I’ve felt that my role should be to raise the issue of how do you make more money and how do you accumulate capital so your productivity can improve and you can get more done? And then you can control the future hours of your life, meaning you control your time going forward. But I’m not going to judge somebody on how much money they make. If they want to go be a Buddhist monk, I’m fine with that.

Kaizen: They have to have a vision for their own life, including how much money they want to make?

Mariotti: Exactly. Money is a tactic. It’s a means to an end; it’s not the end.

Kaizen: You’ve written many books on these themes. Which one do you recommend as best for educators and parents interested in entrepreneurship education for their kids?

Mariotti: The just-released 11th edition of our curriculum high school text, Entrepreneurship: Owning Your Future, which I wrote with Tony Towle.

Kaizen: What do you see as the biggest obstacles to getting people out of poverty right now?

Mariotti: That young people in poverty are not exposed to market ideas and how wealth is created. That’s by far the biggest issue. The second issue is that some “youth work” makes the youth that are worked with feel like victims and encourages the belief that they cannot get out of poverty, so why even try?

Also, I think the tax code is corrupt. It’s so complicated that no one understands it. When I last looked at it, it was 96,000 pages. One of my favorite articles is from a 1994 Inc. magazine, entitled “End of the American Dream.” This is the best piece I’ve ever read on what the tax code has done to low-income people. I could never explain it better than that writer. But tactically, getting people to feel comfortable enough so that they can deal with tax issues is really important; they shouldn’t feel they have to hide their success.

Also, the inability or unwillingness of so many celebrities and other successful people, and politicians, to talk about the issue of ownership and entrepreneurial spirit—the very things that got them where they are. Frankly, I don’t see how people can talk about poverty without talking about ownership and entrepreneurship and how to create the skills to make opportunities for owning more widely available. It reminds me of a story that has always struck me as key, ever since it happened to me many years ago.

I met with one of the country’s top venture capitalists and I asked him, “You know, you’re doing so much for education by putting deserving students in private schools, but why don’t you spend some of that money by also teaching them how to start businesses—how to create and own assets, how to be owners?” And he looked at me and said, “But, Steve, then who would do the work?”

And last is the subconscious fear of wealth-creation that many people have, a lot of people don’t want to, I truly believe—they feel nervous about owning assets and having others own them.

Kaizen: Looking back on everything you’ve done so far, is there one thing that stands out as the most satisfying personally?

Mariotti: Recently, BusinessWeek picked the top 25 young entrepreneurs in America, and two of them were NFTE grads. We outperformed the Ivy League! That’s hard to do. So I was very proud of that.

There have been so many moments; I’ve had the best career. I wouldn’t trade it for anything. I’m glad I went into education; I’m glad I found my niche of ownership education—which is what I now call it—for low-income youth.

Kaizen: You’ve had success in the corporate world, as an entrepreneur, as a teacher, and as founder of an international nonprofit. That’s a wide range of successes, each requiring great energy and dynamism. Where does it all come from?

Mariotti: Thank you; I’m very flattered. I am living within myself, so I don’t see myself that way, but I appreciate it. I think I’ve always had a desire to put in the hours. I do work eighty hours every week. I work every Sunday. I’m not saying it’s healthy or right. But I don’t feel I’ve ever been the smartest person in the world. I’m not the best-looking person. I’m pretty much normal.

But I fell by accident into a niche that I fell in love with, and then I was always able to put in extra time. And then it kind of compounded and became a global movement. But I’m not a billionaire, I’m not—blah, blah, blah. But I’ve been happy in my work and happy with myself, so I appreciate your saying I’m successful.

Kaizen: You teach your kids to find that vision. You’ve found that vision for yourself.

Mariotti: I’ve found my own vision by helping other people find theirs.

Kaizen: I really like the quotation from one of your program’s graduates: “My dream is not to die in poverty, but to have poverty die in me.”

Mariotti: Michelle Araujo. I love that comment. What a great young woman.

Kaizen: In closing, what is the most important advice you would give to entrepreneurial educators and teachers just starting out in their careers?

Mariotti: Start talking to young people about how to think about the needs of others, and how to satisfy those needs through voluntary trade. Point out businesses. Point out what the entrepreneur is trying to solve in that community. When you see a store, discuss it. Point out prices. Point out quality. Raise the consciousness of ownership. Who owns that building? What would that building sell for? How could we get money to buy that building? What problems does our community have?

All these are philosophical questions around: How do you solve problems? And the beauty of talking about that is that you get people in the habit of thinking that problems can be solved, and you can start to talk about how to solve problems through markets and voluntary trade. I think if teachers and community leaders did that ten or fifteen minutes a day and just worked it into the conversation, it would have a tremendously positive impact on local communities.

And then, I think living within your means is one of the most ethical things you can do. I think it’s very important to talk to kids about that, and how important character is. You’ve got to force yourself to say the truth, do the right thing, always be polite and kind to people. A lot of character is destiny, so that’s how I look at it.

This interview was conducted for Kaizen by Stephen Hicks. To learn more about Steve Mariotti and NFTE, please visit

© 2013 Stephen R. C. Hicks and Steve Mariotti. All rights reserved.

Be Sociable, Share!

13 Responses to “Interview with Steve Mariotti”

  1. Interview with Steve Mariotti | Pest Control & Exterminator News Says:

    […] from: Interview with Steve Mariotti Tags: austrian, class, entrepreneurship, money, nfte, school, steve-mariotti, university, […]

  2. “You want more good jobs, spawn more Steve Jobs” » Center for Ethics and Entrepreneurship Says:

    […] entrepreneurial rather than playing the blame game with bankers. By contrast, Friedman praises Kaizen interviewee Steve Mariotti’s NFTE as an example of an organization doing excellent work with young […]

  3. Stephen Hicks, Ph.D. » Ten9Eight on BET this Sunday Says:

    […] an recent issue of Kaizen, I interviewed the excellent Steve Mariotti, founder and CEO of Network for Teaching […]

  4. Watch TEN9EIGHT on BET this Sunday! » Center for Ethics and Entrepreneurship Says:

    […] low-income communities as they compete in the Network for Teaching Entrepreneurship’s [founded by Kaizen interviewee Steve Mariotti] national business plan competition. What they learn along the way profoundly changes their lives […]

  5. NFTE Wins Award for Best Math Curriculum » Center for Ethics and Entrepreneurship Says:

    […] and goal setting.” We interviewed Mr. Mariotti for the August 2009 issue of Kaizen (PDF). Read the full-length interview here. Share and […]

  6. Interview with Mary Mazzio » Center for Ethics and Entrepreneurship Says:

    […] Today devoted a cover story—there was a screening at Babson College and a fellow by the name of Steve Mariotti was there. He came up and he had tears in his eyes and he said, ‘I loved this movie!’ He said, […]

  7. Steve Mariotti on Teaching Capitalism in the USSR » Center for Ethics and Entrepreneurship Says:

    […] a Kaizen interviewee, is the founder of the Network for Teaching Entrepreneurship (NFTE). Before NFTE, […]

  8. Steve Mariotti Gives Tips for Young Business People » Center for Ethics and Entrepreneurship Says:

    […] Mariotti, Founder of the Network for Teaching Entrepreneurship and former Kaizen interviewee, gives his suggestions for budding entrepreneurs in “24 Concepts Every Young Person Should […]

  9. Youth Entrepreneurship in China » Center for Ethics and Entrepreneurship Says:

    […] Mariotti, Kaizen interviewee and founder of the Network for Teaching Entrepreneurship (NFTE), wrote in the Huffington Post about […]

  10. The High School Entrepreneurship Education Movement » Center for Ethics and Entrepreneurship Says:

    […] Mariotti is the founder of the Network for Teaching Entrepreneurship (NFTE) and the subject of a featured interview in our Kaizen newsletter. At the Huffington Post, he writes about NFTE’s decision in 1988 […]

  11. NFTE Celebrates its 25th Year » Center for Ethics and Entrepreneurship Says:

    […] Read our extended interview with Mr. Mariotti here. Share and Enjoy: […]

  12. Kaizen Weekly Review » Center for Ethics and Entrepreneurship Says:

    […] The Network for Teaching Entrepreneurship Celebrates 25 Years On April 23, Steve Mariotti’s NFTE celebrates 25 years of programs that inspire young people from low-income communities to stay in school, to recognize business opportunities, and to plan for successful futures. For more information about the gala event, click here. Read CEE’s interview with Mariotti. […]

  13. Educating for Entrepreneurship — working paper | Stephen Hicks, Ph.D. Says:

    […] Mariotti, Steve. 2009. “Entrepreneurship and Education.” Kaizen 9. […]

Leave a Reply