Archive for the ‘Entrepreneurship’ Category

Interview with Lall Singh on Entrepreneurial Finance in England

Wednesday, November 30th, 2016

[This is the full interview with Lall Singh which was published in our Kaizen newsletter.]

Lall Singh on Entrepreneurial Finance in England

Introduction 

Lall Singh is CEO of Capital Instruments based in London, England. Capital Instruments is an investment consulting firm that provides finance, management, and marketing expertise in several European companies as well as projects in Canada and Dubai.  

Education and early career

Kaizen: Where were you born?Singh-Lall-8

Singh: I was born in England in a little town called Solihull back in 1969. That makes me 44 this year.

Kaizen: Where is Solihull?

Singh: It’s near Birmingham, which is the second largest city after London. It’s between there and Manchester  —  there is always a competition Birmingham and Manchester about which is the second largest city. But both are growing cities. Solihull is just on the outskirts of Birmingham, which is located in the west midlands. We aren’t too far from Meriden, which marks the center of England.

Kaizen: Your parents came from India?

Singh: That’s right. They emigrated back in 1960 from Punjab, which is north India, from a little town called Jalandhar.

Kaizen: What brought them here?

Singh: Partly it was the farming communities and partly the attraction of increased income, the ability to work and make a living. And with the prospect of returning to India after retiring, which was the case. My parents did indeed decide to retire early and head back to India. You know, you always heard the old record that once you come here, you’re stuck here. This isn’t the case, of course. There’s nothing stopping them from going back. We suggested that they take an early retirement and go back to India. The funny thing is that they stayed there for about nine months and decided that “home” is where the heart is. They decided that they would spend most of their time here in England and perhaps two or three months a year in India.

Kaizen: What was your schooling like?

Singh: My schooling was predominantly here in England — in and around Birmingham, the major city. You start with nursery here, equivalent to your kindergarten; then junior school, and then secondary education.

Kaizen: By the time you were into secondary education,, did you have some career ideas? Or were your parents nudging you in a direction?

Singh: At that stage, I would say about the age of 11, I wasn’t probably thinking about any career or definite decisions about them. But business in general or some money-making aspect were attracting me. We came from a very poor family here in England — general working class. And, obviously, with my parents being immigrants and starting off on the first rung of the ladder, so to speak. My father worked as a dress welder, as it’s called, for one of the aerospace companies here in England. It was really economizing and watching the pennies. So in those days, I suppose, I was attracted more toward business as a means of making good money and living a lifestyle most people cherish.

Kaizen: Were particular types of businesses attractive?

Singh: Originally I was interested in economics. It was essentially looking at current affairs and looking at the micro and macro perspectives.

Kaizen: This would have been when you were a little older?

Singh: A little older, from age 12 and into my teenage years  —  when you are really trying to decide what it is you really want to do. I suppose the people around me were more interested in the sciences. I was a bit different. I remember that of most of the options that you have when you are about 14, the ones I leaned toward were more of the mathematical type, probably at that stage heading more toward a career in accounting.

Kaizen: You were good at math from a young age?

Singh: That’s right. Yes.

Kaizen: You went to King Edward VI grammar school in Birmingham. What kind of school was that?

Singh: It’s referred to as a select education. So it is endowed with quite generous funds. However, they tend to restrict the number of entrants, and they have an entrance test. In those days, it attracted about 2,000 people, but they could only offer 200 places. So if you were in the top 200, you would get in.

Kaizen: Did you get a good, basic education?

Singh: I was very privileged to have made the place. It was rated something like fourth-top in the U.K. It is still, I believe, one of the top schools in the country.

Kaizen: You went through A-levels, which the equivalent of high school in the U.S.?

Singh: It’s actually the continuation of secondary education, which is referred to here as sixth form college.

Kaizen: College prep years.

Singh: That’s right.

Kaizen: Then you went to Birmingham University. How old were you when you started university?

Singh: About 18.

Kaizen: You mentioned an interest in business and economics in your teens. Did you go in with a firm major in mind?

Singh: I had done economics and accounting at A-level, so at that stage I opted for a broad major in accounting and finance. With the view to perhaps combining with economics at a later stage. But my major was essentially in finance.

Kaizen: Accounting and finance?

Singh: That’s correct.

birmingham university campusKaizen: What was the attraction of accounting?

Singh: At that stage, it was one way to get into looking at businesses from an accounting perspective. It gives you an appreciation for how businesses function. My attraction was more toward management accounting as opposed to accounting in practice. The difference being that accountants in practice tend to compile numbers in order to fulfill statutory obligations of compliance; whereas management accounting has more to do with management decisions, where you are looking at investments, ways to reduce costs, and it is essentially looking at a business and how better it can function in terms of productivity, operations, how it can utilize its own funds better.

Kaizen: So using the accounting as a set of tools for management decisions?

Singh: Accounting as a feedback tool as well as looking at what options are available given to you given the financial restrictions.

Kaizen: The other side was finance. What was the attraction of finance as a major?

Singh: I was interested in capital markets, looking at ways of leveraging different types of gearing ratios, and how businesses can function and grow through the use of finance.

Kaizen: Is “gearing ratio” a technical term?

Singh: It’s the debt-to-equity ratio. You look at your own capital you are putting into the business, or shareholders are putting in, in proportion to what sort of debts the businesses are taking on. And over the years, you find different gearing ratios tend to be better given high interest rates — you want to have high debt with low equity; given low economic times, such as now, you tend to have a high gearing ratio, which is easily at one or two percent.

Kaizen: At university, did you take courses in the science, arts, or humanities? Or was it a more narrow education?

Singh: When you are in England, up until the age of about 14, you take a very broad range of subjects, which tend to cover what is called O-levels, which is the precursor to A-levels. Across those, in fact, I took a lot of the sciences: chemistry, physics, math, English, of course, and geography. After that, with the A-levels you can start specializing. So at A-level I went for more of a math, accounting, economics route. But we also do a general studies course as well at that stage. So that was my combination. I suppose it gave me the platform to look towards specializing further in accounting and finance. At that stage, I chose accounting and finance, but later on I decided to undertake an MBA where I got more interested on the marketing side. And that’s once you actually work for companies, you get an appreciation for it.

Kaizen: What was your first job after graduating from Birmingham?

Singh: My first job was actually for a publishing company. In fact, before then, I did work for an accountancy practice, Coopers and Lybrand, which is now part of PwC (PricewaterhouseCoopers). I had shied away from that, knowing that practice accounting would meant laborious three-year contract, looking at mainly statute reporting. Instead, I looked to publishing as a training accountant, and I specialized in management accounting as opposed to practice accounting.

Kaizen: Then you decided to go for an MBA?

Singh: That’s correct. I worked for a few years and then I opted to go for an MBA at Aston Business School. Given that I had already experienced accounting and finance, I decided — I was self-funding at this stage — I was going to make the most of the whole course and decided to specialize in marketing, which was something I didn’t have that much exposure to. I became particularly interested in market segmentation.

Kaizen: What was interesting about marketing to you?

Singh: I have always felt that accountants are shielded from looking at ways to moving business forward in terms of how to innovate and how to generate more business. Yet they’re more in-tune with costs and how to reduce costs. And I think accountants sometimes get blinkered, but combine it with a marketing approach, where you know it is essential for a company to breathe and grow by looking at different markets, how to nurture them, how to grow them, how to invest money in order to get returns on your capital. I think that’s a skill where you find that any company with corporate governors you have a board, you find that the accountants and the marketers are always at loggerheads given that accountants want to reduce costs and keep everything contained and marketers want to spend more and have a marketing campaign in order to generate business. I think what that gave me was a unique insight into both areas where you could actually have a cross between knowing the accounting function as well as the marketing function.

Kaizen: At this point, still in your twenties, were you thinking that you would be working independently or within existing firms?

Singh: I couldn’t imagine myself, at least at that stage, working independently. I was really trying to build a career and to align myself with better qualifications so I could offer that little bit more in general management for some of the larger corporations.

After my MBA, I ended up working for a conglomerate, which was looking to create companies from the old East European block where, for instance, in Romania they were privatizing a lot of the state-owned assets. Some of them were quite large: pharmaceutical companies, aviation companies, engineering companies, etc. We looked to acquire these companies and put Western-style management in there. For instance, we looked to bring a pharmaceuticals company we bought up to Good Manufacturing Practice (GMP) status. That allowed us to subcontract to some of the majors like SmithKline Beecham, producing some drugs in a very cost-effective way.

Kaizen: What years were you working in Romania?

Singh: That was from about 1998 onward. I worked for a company called Litchfield Continental. Eventually it was reversed into a shell company on NASDAQ, and we floated the whole structure. That gave us access to capital markets and a shareholder structure with institutional investors, which allowed us to expand and continue to the next stage.

Kaizen: At the poSingh-Lall-20int that you were working for the conglomerate, what was your function, in particular in the Romanian operation?

Singh: I originally was the head of finance, but then it became more of a strategic role as the Chief Financial Officer. I oversaw all of the subsidiaries and I was responsible for raising the financing in order to continue to acquire other companies. Also, we were restructuring a lot of those companies in terms of making them more efficient and making sure that we could produce goods, such as aircraft, at a price that was quite competitive.

Kaizen: That requires a number of skills, including finance and management. How did you acquire the management skills?

Singh: With Energy Publishing, once I qualified, I moved as an accountant to general management. That’s when I felt that I needed to sort of prop up my skills with an MBA to get more broad experience in operations. It was after the exposure to a lot of the conglomerates and looking at turning around some of those companies that I actually learned some general management. In fact, I also studied a qualification we have here in England, which is an economic chartered director, which is mainly corporate governance. It was quite a new qualification in those days, but now it is quite popular here in the U.K. as a means of showing that you have the corporate governance skills that is required to govern from a private to a public company. I was one of the first handful of chartered directors in the U.K.

Kaizen: What is a chartered director?

Singh: It’s a qualification. Anyone can start their own company as director of the company; but to standardize the qualification, they put together the program. We have a well-established institution here in the U.K. called the Institute of Directors. They decided to produce a qualification very much like being a chartered accountant or chartered engineer. To be chartered means you have your own set of by-laws.

Kaizen: This would be like a managing director’s position — acquiring the skills and knowledge to do that?

Singh: Yes. It gives you the whole breadth of skills. There is also a panel interview where they assess whether you have the skills.

Kaizen: How does that compare to being a company president in the United States? Or a CEO?

Singh: A company president or CEO would give you the basic skills in corporate governance required for people management, managing a board, finance, operations, and marketing. This would bring them together in coordinating activities.

Kaizen: To go back to the Romanian operation — in addition to the management and finance skills, there were also cultural issues.

Singh: Yes. Also language barriers.

Kaizen: Also political issues: dealing with people who have been trained under a communist regime and trying to change their culture to be more market-friendly. How did you handle that?

Singh: In fact, we had nuclear scientists who were working on the shop floor because hard currency was hard to get in those days in Romania. We had a surplus of skilled labor. To manage that, we had our own operations people. Most were from London and some of our own people in Bucharest. We had translators to assist with the cultural differences.

In terms of dealing with the politicians, at that stage, Romania wanted to become part of the EU, so it was obligated to privatize a number of their industries. In fact, that is one time where the state was actually trying to help us. [Laughs] They helped us with introducing Western-style management and practices, making the companies competitive, and embracing Europe as an open-market. It was really introducing a capitalistic extension into Romania, which helped the economic circumstances by employing a lot of people.

One of the engineering companies we took over had something like 4,000 employees. It was almost a town in itself with its own little railway station. They made clutch parts for Mercedes-Benz and, obviously, Mercedes-Benz controlled the quality. They rubber-stamped them as Mercedes parts, but they were actually manufactured in Romania. So we were quite impressed with the quality they were bringing out.

It was essentially turning that from a communist regime to where they have the normal more profit-oriented objectives: generating profits, keeping business goals in sight, having a vision of the company in terms of quality, where they position themselves in the market, and looking at values that they deliver and how they are going to deliver that. The people are a huge aspect, and for them it was quite a privilege working for a Western company — and one of the forefront companies, especially in the pharmaceutical buyer’s market. It was one of the more prestigious pharmaceuticals that had been long-established. We also bought Romero, which is part of the aerospace company and that was part of Bucharest Airport at that time. That brought in a lot of joint-ventures. For instance, we had an Israeli company that was interested in importing MiGs from the Russians, putting in an electronic platform, and then selling them off to the Romanian Air Force.

Kaizen: Did you say Russian MiG airplanes?

Singh: Yes. Obviously, putting in a lot more technology. And they sort of bought in to Bucharest Airport and some of the hangars there in order to process the orders.

Kaizen: So the British conglomerate that you are working for is running a number of operations in Romania: pharmaceuticals, some biological enterprises, Mercedes parts, and so forth.

Singh: That’s correct. It was also a U.K. operation that was mainly insurance-oriented. Lloyd’s of London, a subsidiary we bought called McCall’s, and also biotechnology, which was more in Manchester and included looking at different ways to use innovative biotechnology.

Kaizen: And the overall company was Litchfield?

Singh: It was originally Litchfield that bought the assets; but once it was floated, we used a NASDAQ shell, which essentially is a company that was called — in those days — Global. You can buy a shell on NASDAQ where you can actually clean up and then you can get that to take over your company, which was Litchfield. And what Litchfield would do in exchange is to have a convertible debentures over the stock of the company and eventually it buys out. The debenture is converted into stock. So we had a controlling stake in the shell company, which is a little easier to list on NASDAQ than having to go to the traditional IPO structure, which means you have extensive up-front costs in terms of producing the prospectives and complying with all of that.

Kaizen: How many years were you with this organization?

Singh: A good four years.

Kaizen: In the late 1990s?

Singh: That’s correct. Into 2000.

Kaizen: At some point you left there. Is that because the Romanian operations were finished? Did other opportunities come along?

Entrepreneurship  

Singh: There were a lot of opportunities that I was faced with, and a lot of them were smaller projects that got me really interested. Many of my colleagues left to look at financing different projects, and I saw their success mushroom. I thought that I should try a hand at it. So I left that company to move on to Capital Instruments.

Kaizen: In 2001?

Singh: That’s correct.

Kaizen: Is this an entrepreneurial firm?

Singh: Yes. We specialized in raising funds for small-to-medium size companies looking to grow. We have a number of investors that we have who are looking for investing into small-to-medium size enterprises with the prospect of growth. We essentially marry the two.

Kaizen: Who is the “we” early on?

Singh: A network of financiers I work with. They all have their specific expertises. If there is a project, for instance, a biofuel plant or a harbor project or an aviation project, we can assemble a team and relative expertise and look to champion either raising finance or find certain investments.

For example, one of my earlier projects when I started off as a financier was to look at insurance assessors. This was a small-size English company, which had insurance assessors up and down the country who would go out and value your vehicle after you’ve had an accident. This was very early on when we had in England the third party loss-recovery market beginning to take hold. What we did was develop that company and combine it with in-house assessors that the insurance company was wanting to off-load to reduce their costs. So we created a national, insurance assessing business, which in itself was quite innovative in those days.

We could quite easily use IT and technology. Our team had a certain number of people who were more IT-literate. The way we grew the company was the insurance assessors had in those days what would probably be equivalent to an iPad. A gadget with its own cradle in his car. They would do off their report when they would see a vehicle. It was similar to the internet in that the cradle sent a signal through the phone back to the mainframe; it would turn around the reports quite quickly. We combined that for what we called the litigation departments and with the insurance companies as well; so we could actually cover both markets. Before it was bought out, it became a key player in the British insurance market.

Kaizen: At Capital Instruments, you came in as CEO in 2001 and put together financing for small-to-medium size companies. Your value-added is your network of people who have the financing available and how to structure finance for these organizations. In some cases, you implemented the management practices — putting together a team of people to make the company better-financed and better-operated.

Singh: That’s correct.

Kaizen: So it’s actually a combination of financial and management consulting.

Singh-Lall-22Singh: Yes. And the marketing aspect as well because in order to attract investment, investors are really looking to companies that are in the growth phase; they are looking to grow. So it is essentially marrying the two. You have a very good project; you have management in place; you’re overseeing their investment; they are looking to grow their investment. So it was quite a mutually-beneficial relationship that we were brokering.

Kaizen: How would the compensation work? Would it be a percentage of the overall financing deal? Or are you taking investment positions yourself?

Singh: Sometimes a combination. Sometimes we could negotiate a private placement ourselves and sometimes we would get paid in equity as well as cash compensation. And sometimes it was a case that we would see two or three companies in the same field and see ways that we could create synergy by combining the companies. So we would look to approach venture capitalists and banking relationships ourselves to put together a financing package to buy two or three companies. Then we would be the nominees to the board to oversee the company. Once it was where we wanted it, we would spin it off for sale or continue having some sort of a stake in it.

Kaizen: A small-to-medium size company — can you put some numbers to that?

Singh: Anything from a £2 million turnover to £10-15 million.

Those were the initial-sized companies; later on the numbers got a lot bigger. We had hotel developments, such as the Brussels Sheraton. That was getting the investors to finance a purpose-built structure for the likes of Sheraton or the CORE Group, which do InterContinental Hotels, and then lease it back.

Kaizen: How do deals come along? You did insurance-adjusting in Britain and then a hotel in Belgium. How do you find projects as diverse as that?

Singh: Essentially, we built up good relationships with lawyers, bankers, venture capitalists, and private equity. And there were a lot of opportunities — like one of the key developments in Brussels in the Prince Royal area, which was essentially a strategic plot of land; it was a sale on a bankruptcy where we identified the site. It was in the right location where we thought this could actually be built. It was a case of us putting together the deal. This came to us by way of one of the bankers looking to refinance the site because they were struggling. We took the problem away from the bank and made it profitable ourselves.

Kaizen: So through the grapevine?

Singh: Yes. Through the bankers who made the referral to us. In early 2000 a lot of companies had over-expanded and the banks were looking to foreclose; so it gave us opportunities to go in with our management and successful track record. That was quite unusual because while the banks were willing to foreclose on existing proprietors, they were willing to lend to you to make that a success operation. It was really quite interesting in that a lot of deals could be picked up like that.

Kaizen: So the banks are making a judgment about your management and business skills. They don’t think that the existing people can pull it off. Fresh ideas and so on.

Singh: That’s right.

Kaizen: So even though you have no hotel experience per se, it’s the general business experience that is important.

Singh: Yes. Absolutely. Also, certain expertise can be brought in. Like in this case with the hotel experience.

Kaizen: That can be a commodity that you bring in.

Singh: There was a colleague I worked for who was part of a property development company that had already done small-size hotels, so he had the mechanics already in place as an expertise. Once we brought him onto the property, he was looking to create a purpose-built hotel, but the problem was financing. In fact, we got Kuwaiti funds. They were willing to finance the structure of the hotels, then this leads obviously to an operator, in which case he would share in some of that.

Since then we’ve acquired, as well, hotels back in Nottingham, leased to CORE Group, which again has very successful operations. We have other recent developments that are revolving structures — 55-story skyscrapers in Dubai. We also have an Indian company interested in doing something similar in India; that is an exciting type of project.

Kaizen: So the first decade of this century, what other projects were you involved in?

Singh: Some of the larger ones included a biofuels plant in Canada that was producing ethanol from biomass, which is very innovative.

Kaizen: In northern Ontario?

Singh: That’s correct.

Kaizen: How did that one come across your horizon from all the way across the Atlantic?

Singh: We built a lot of relationships in New York, having had a listed company on the NASDAQ exchange. We knew a lot of the banks and consultants there. I also had to be familiar with the federal security laws and the SEC practices. So we came across the project in Canada by way of a referral. At that stage, you in the U.S. had started feeling the pinch in 2006 and 2007. Capital was drying up. So they were looking towards European banks and they saw me as someone they already had a relationship with who had an established relationship with European banks. They signed me on a retainer to say that if I was able to finance this project in Europe, then they would be willing to compensate us. However, we actually felt that the engineering company that had actually designed it wasn’t actually capable of seeing the plans come to fruition.

Kaizen: So Americans were financing this project in Ontario, but American funds were drying up in the lead-up to the financial crisis. So they came to you in Europe.

You mentioned the engineering expertise. You need to get other consultants who have the engineering expertise because you don’t know biofuels personally, right? Although, you can read up on it.

Singh: Absolutely. I was quite fortunate that one of my colleagues had a Ph.D. She was an expert in sustainability. She went on tour for one of the major fuel companies. They were very interested in the project. I have another colleague of mine from a capital fund, who were interested in the project itself given that it was a sustainable project.

We had U.S. and European banks because they saw this as a way of  legislation, because at one stage 10 percent of ethanol formed a part of the fuel pumps — most Americans don’t know that, but they actually pump 10 percent ethanol and they were looking to increase that to 20 percent. So they knew that there was a huge market for it. Corn prices — ethanol being from corn — were going through the roof in the Corn Belt. So that was very unpopular. But here we had innovation and technology, and we had Foster Wheeler at the forefront of developing commercial processes in order to convert biomass into ethanol, which is a tricky process.

Kaizen: What do you mean by “biomass”? Tree bark and whatever is left over from lumbering operations?

Singh: That’s right. Whatever is left from lumbering operations or from natural waste in the forest that needs to be cleaned up. Also some woodchip derivative parts. In Canada there are huge sites accumulated over years and years. We inspected one site that was something like 100 hectares. They were seen as dump sites and they didn’t understand why we were interested in them. [Laughs]

Kaizen: Free raw materials.

Singh: Yes. Free raw materials. That’s one of the reasons the pension funds were interested: we were getting our raw materials free and producing a product.

Kaizen: Were these U.S. or British pension funds?

Singh: Canadian. And we had one of the Netherlands banks.

Kaizen: What dollar value is this operation?

Singh: That was about $320 million (USD).

Kaizen: Much larger. What years were you working on this one?

Singh: 2006.

Kaizen: Was it an R&D project primarily, or was the R&D done and it was more an engineering issue to make it happen?

Singh: The R&D was completed. However, upscaling to mass production was a problem that needed specific expertise. That came from a British company, in fact, Foster Wheeler. Wheeler is known more in the petroleum industry for resolving problems using mass furnaces.

Kaizen: When did this project come to completion?

Singh: It’s still partly financed because we had a project that was taken over by a drawback of Scotland. Things pretty much came to a halt at that stage. Now with financing again becoming more available, we are hoping to move again.

Kaizen: You are working on a project in Ireland involving a port?

Singh: Yes. That’s correct.

Kaizen: How did you hear about this one?

Singh: This came from one of my clients who looked to finance this development and thought that it was far too large for them in Ireland — he’s based in Dublin himself. He asked whether this would interest me; it was a marine project at that stage. While I was in London, I floated the idea to the banks, one of the banks being the European Bank of Reconstruction and Development. It was quite fascinating because it qualified in the European Union grants for an infrastructure project since we were developing a port. But the scale of it didn’t actually allow it to qualify for some of the larger grants; I was told at that stage that it was probably easier to procure larger numbers from European investment as opposed to going for something smaller.

Kaizen: Is this Euros? Sterling?

Singh: Sterling. So instead of trying to finance something for about £25 million, they were asking us to look to upscale the project.

Kaizen: So they can loan you more money. [Laughs]

Singh-Lall-15Singh: That’s right. And here in Europe it qualifies as a sort of private-public partnership, where private money is being matched by public grants and loan financing. This was essentially driven by EU legislation: mandated fishing vessels — mainly Spanish fishing vessels — shipping in the Irish waters have to dock for a certain number of hours after each fishing trip, which meant that they would have to travel all the way back to Spain; but here they could put a facility that was localized. On top of that, we had a wind farm and rigs off-shore, near the facility, without having to go to Dublin or Cork. This would justify having a base there. Also, on the West Coast there is a lot of tourism, which attracts cruise liners and so on. So it mushroomed into a much larger project.

Kaizen: The projects you’ve worked on are quite geographically diverse: Romania, Belgium, Britain, Ireland, and even Canada.

Singh: [Laughs] There are a few developments in France as well.

Kaizen: Fair enough. [Laughs] There doesn’t seem to be a pattern there. It seems it is more of the matter of when and where a deal comes up.

Singh: That’s right.

Kaizen: The projects are also in all sorts of different areas: insurance, hotels, biomass, and so on. Of all of the deals that are possible, what makes one attractive to you? It doesn’t seem to be geography or industry specific. What are the features that interest you?

Singh: I’m quite privileged to receive more projects than I could possibly allocate my time to. The projects that attract my interest … it really is about the people I’m working with. I have a great admiration for our management; it’s really the people who make the projects happen. I tend to pick and choose projects with people I can really work with and see their passion. Also, I even find that even though it’s across different industries, the mechanics of making a project work are quite fundamental. The mechanics distill down to good marketing, good numbers, an eye on the numbers, good productivity, a business plan that is realistic, and so on.

Kaizen: That is more abstract than the particular product or place.

Singh: Yes. I’ve developed those fundamentals having come from a management background, combined with marketing and corporate governance. It’s about how to oversee a project and how to take that “pilot” or strategic view. You can make it happen from start to finish and you have the people and elements in place.

Kaizen: The first thing you mentioned was the people that you get to work with. You deal with a wide range of people in many different countries. It’s not always the same financiers from private equity and venture capitalists. Is it people that you know and you’ve worked with before?

Singh: Actually, you look at the merits of the project and you know your own resources of people. Also, with some projects you look at the existing management already in place. What’s their passion? Where are things going wrong? Where do they lack the skills to do it themselves? And where can we make it a mutually-beneficial relationship? So I’m very interested in who actually spearheads the project itself.

For instance, we were quite fortunate in the Ireland project. We have someone who has 25 years of experience in the industry. He’s built up a family business, which has gone pretty much as far as it can go, because you can’t break the threshold of a family business into a more corporate structure, which takes structured financing and attracting the likes of what we would call “merging capital.” It would be highly capital-intensive and then dealing with a lot of the blue chips to get relationships to make a support development work. It’s beyond their agreement. But you have the people on the ground at the local level who are there and willing to see it through with you at the end of the day.

Kaizen: How much of this can you do from your home office? How much of it requires you to travel — boots on the ground?

Singh: In the early days, I used to travel a lot. But now I try to manage remotely, being a family man. [Laughs] But it is difficult; I’m still traveling.

Kaizen: Do you have more junior people whom you can farm the travel out to in order to do the leg work?

Singh: Yes, we do. We have a lot of junior people who’ve come through the ranks who have worked with us on several projects. Also, technologies such as Skype and so on make it so much easier.

Kaizen: The company is still Capital Instruments?

Singh: It certainly is, yes.

Kaizen: How many people work at Capital Instruments?

Singh: About 25 people.

Kaizen: You’re CEO of the organization?

Singh: Yes.

Kaizen: With 25 people, how many projects in an average year?

Singh: We take on a variety of projects. Some years it may be like 12 projects, which might be fairly small. And some years we may take as little as two or three projects in a year because they take a lot of time and are a lot more involved. It really depends. Some of the companies may be in high-growth fields, like biotechnology, which doesn’t really need too much key-input, but they do want the ability to raise financing. We’re pretty much putting together their business plan and pitching for them to banks and helping them in an almost hand-holding approach that isn’t so resource intensive. Whereas if you are developing a completely new project, like with the port development, for instance, we have to sort of scrap the original plan to look at something far bigger that involves some key players that we have to resource or to incentivize to work with us in order to bring to fruition.

Kaizen: So the 25 people who are part of your staff, how many of those people would be finance? How many would be marketing? How many would be management? Or does that breakdown even make sense?

Singh: Most of us are all-rounders. Either we have a financial background or a marketing background, and sometimes an operations background. We come from a particular industry where we’ve managed either to grow a company or projects within a larger company where we’ve had hands-on experience. We’ve been through the “mill,” as we say, having experienced capital-rationing problems, problems with not having enough resources — human resources and so on. So most of the people are quite experienced.

Kaizen: You mostly hire people who’ve been through the fire.

Singh: Yes.

Kaizen: Do you recruit out of universities for junior people?

Singh: We do recruit from universities. A lot of the younger chaps are post-graduates. Some of the research, especially the desk-based research, we do resort to Ph.D.-level students who we can contract.

Kaizen: Speaking of a Ph.D., you spent some time at Warwick Business School pursuing a Ph.D. while you were also doing your full-time career. What was your motivation for pursuing the Ph.D.?

Singh: I had a professor who was very interested in my MBA dissertation who convinced me that I should develop it more and make a dissertation that would be worthy of a Ph.D.

Kaizen: What was your thesis?

Singh: I was looking at specific market segmentation in the leisure industry. In order to motivate myself, the subject had to be marketing, some aspect of segmentation, and it would also have to involve an area that I really haven’t looked at, but interested me. It ended up being the leisure segment. I went through the academic side of it, but I was still very much working and I was pulled away by certain projects. Unfortunately, that has been shelved for the time being. I would love to go back to that.

Later Career and Advice

Singh-Lall-17Kaizen: So when you have some leisure, you can finish up your Ph.D.

Singh: Yes. That’s right.

Kaizen: You are in a good situation now. You are in your middle 40s; you have a prosperous company; you have more deals in front of you than you can handle, so you can be choosy. What do you see yourself working on for the next few years?

Singh: I think the mix of projects at the moment with the port development, the new, revolving skyscraper …

Kaizen: Yes, we do need to come back to the revolving skyscraper. [Laughs]

Singh: [Laughs] That’s kind of interesting, yes.

Kaizen: So the port project in Ireland, a revolving skyscraper in Dubai, and a project in India, is that right?

Singh: Yes.

Kaizen: Those will keep you busy for a couple of years.

Singh: Yes. Those are the immediate projects. The biofuel project is also coming back on-stream. So those will keep me busy for a while. I’ll have to light a candle to try to fit my Ph.D. in between.

Kaizen: Let’s talk about Dubai, where all kinds of engineering marvels are happening. How did you get involved in this project?

Singh: This was from an old business associate who went out to Dubai. He had been there for a number of years and sold something to the tune of $200-$300 million in property there; so he became quite a significant property dealer there in Dubai. He was involved in Jumeirah Beach Resorts, which is one of the prime lands in Dubai. We had a very good relationship there. He based himself in Dubai and is looking at a way of presenting something at the height of the highest structure in Dubai at the moment, Burj Khalifa.

Dubai was priming itself to be one of the major hubs that you can actually stopover when you are flying from, for example, Birmingham to the East. So when I take a trip to India, I have a chance to stop off in Dubai and have a chance to enjoy a lot of the 5-star and even 6-star and 7-star hotels they have there. As well as some of the water parks — they even have a ski resort there. It is a very exciting place. Obviously, they took a battering during the financial crisis and everything almost came to a halt. My business colleague there is struggling, having had a lot of boom years in property sales.

However, there is still a niche market of those interested in innovative property ideas. He’s working with Atkins Engineering to develop a revolving structure. What became popular is what is called “villas in the sky,” where people buy whole floors of a building in order to have an apartment that stretched across a whole floor.

Kaizen: So the idea for this one is that the entire building rotates?

Singh: It rotates, yes. He got the technology and wants to build on prime land as its first prototype. He approached me for the financing aspect because we have the hotel experience and the type of investors who may be interested being that it is at the forefront of innovation — that’s always a risky venture. He was having a difficult time financing, which is why he approached me.

Kaizen: How much is it to finance this project?

Singh: About $200 million. It’s a 55-story skyscraper.

Kaizen: Part hotel and part villas in the sky?

Singh: His idea initially was to have all residential. We changed to thinking that you are perhaps better off selling the first 15 or 20 floors to a hotel. At the moment we are working with the Core Group, who are quite interested in the first 15 floors.

Kaizen: This project is still relatively early and you are still working on the financing?

Singh: Yes. We have a Swiss group and an Indian group interested. We’ve acquired the land where it is going to be built, so we can put those stages together to satisfy both of the criteria and maybe bridge debt to finance the difference.

Kaizen: The engineering is a “go?”

Singh: Yes. Apparently the technology has been patented as a joint patent between Atkins and my business colleague.

Kaizen: Does the property have a name so we can keep our ears open for it?

Singh: Yes. You can look at the website; it’s Time 55. It’s very exciting. I can very easily imagine somewhere like Las Vegas having a revolving structure like that. It would be quite unique. Perhaps New York as well. In fact, the company itself, Time 55, wants to put a building on each timeline. I think that’s quite ambitious; at this stage we are focusing on getting the initial one off of the ground.

Kaizen: It could serve as a prototype for lots of others.

Singh: That’s right. So we are trying to get the prototype off of the ground, and once we know that’s done, to replicate it will be easier. Right now it’s about getting the prototype financed and workable and to make it a worthwhile hotel — to make it successful by having full sale on the residential as well.

Kaizen: So your major projects currently are a revolving skyscraper in Dubai, the biomass case in Canada, and a large port structure in Ireland. Your plate is quite full.

Singh: Yes. [Laughs] Of course, I’m not the only one working on these. We have a number of people involved.

Kaizen: Yes, a whole team of people. Of your 25 permanent people, are they divided among these three projects? Or is everybody doing a little bit on each?

Singh: They are pretty much divided. Each of them has their expertise.

Kaizen: And there would be a smaller group of you who are in a general oversight position — or perhaps just you?

Singh: The oversight I’m heading on each of those major projects; so I need to coordinate and orchestrate who’s working on those to make sure that we are still on target and things get done.

Kaizen: Over the twenty years or so since you finished schooling, what’s the thing you’ve enjoyed the most about all of the projects you’ve worked on? Is there one element you’ve liked the most?

Singh: The fact of the achievement. You see a very small company that grows. Like Biofarm Conglomerate has grown into something that has become very exciting because we started from a pharmaceutical company and then acquired a whole sequence of opportunistic acquisitions and ended up the life of the group at that stage. It was very fast, in a couple of years. And I enjoyed the bounce in our stock price — we went from $0.20 to $8.00.

Kaizen: Wow. That’s forty times the original price.

Singh: Yes. So the shareholders benefited — it made a lot of money for a lot of people and they were very happy. It was a very exciting time; reflecting back on it is very pleasant. But also seeing some of the smaller projects come to fruition are very good. The insurance assessors — when we became a major player in the market on a very small concern. A $2 million turnover went up to about $40 million. It was quite good. The growth is what I tend to reflect on.

Kaizen: It’s a happy measure.

Singh: That’s right.

Kaizen: Have you had any projects that ended in failure, projects that just didn’t work out?

Singh: Oh yes. I’ve had my fair share of deals that didn’t work out. Sometimes you do reflect on them and think, “Maybe if I had done it differently.” But that is part of the learning process.

Kaizen: Are there any common threads, things you’ve learned from those deals that fall through that inform your decision-making the next time around?

Singh: Sometimes it comes down to negotiations. Sometimes it’s best to try to find a common platform in order to make projects work. I’ve lost out on a fair share of projects where you try to get your shareholders the best deal, but it wasn’t quite right for everyone.

Kaizen: Over-extended? Too pushy?

Singh-Lall-10Singh: Maybe “over-extensive” is more appropriate. [Laughs]

Kaizen: So it has to be win-win. Though, going into negotiations, you’re both in a separate ballpark.

Singh: It’s usually very complicated and difficult to keep all of the connections.

I’ll give you an example. We owned an aviation subsidiary in the Isle of Wight and that was one of three manufacturers of aircraft here in the U.K. What we wanted to do was to take over a small concern in Yorkshire, where they produced single-pilot, two-seater aircraft. So you get these ex-military pilots to buy the fuselage first … this is a very nice plane where you can detach the wings, put them on the back of a trailer and reverse it into your garage. That really interested me.

Given that we had the production line in Romania and the Isle of Wight, we could actually put those into full production. And we had the usual federal licenses and CAA licenses for production. But in negotiations, it meant buying the company outright; we had some very tough negotiations there. Obviously, you are concerned about the risks you are taking. But upon reflection, I often think perhaps that would have come around. And those aircraft are still around, but not manufactured and not as popular if they were in full production, which would have lowered the price quite drastically. At that time we were looking at something like $10 million for the company, which was a lot of money at that time. But I wish we had acquired it at that time. That would have been a different story. So there are always difficult negotiations because you have lawyers there to represent your interests and you are almost negotiating with a whole team across the board. It’s very difficult. You wonder sometimes if maybe you could orchestrate a board that would do a little better. But it depends on timing and a lot of other issues as well.

Kaizen: Juggling a lot of balls.

Singh: And blades at that time, yes. [Laughs]

Kaizen: Thinking about younger people still in school. How important was your formal education was in enabling you to do what you have done? If someone has smarts and ambition but not the formal schooling, can he do what you did? Or is the formal schooling important?

Singh: You know, I think I ride the learning curve a lot faster. Formal education is the way to go. You have to load yourself with the key thinking. I found that originally — and this was having qualified as an accountant — you’ll still find yourself blinkered in the market because you don’t understand the marketing aspects; you don’t understand the operations; you’ll also get pigeon-holed in a specialization that is self-restricted. I broadened my horizons and tried to get better perspectives by looking at other areas and I became interested by accident in marketing; it wasn’t a subject that really appealed to me.

Kaizen: And that wasn’t until your MBA level.

Singh: Right. Nowadays in business to get ahead of the game, you need to be more of a generalist, but see the woods from the trees by having enough knowledge in the various aspects: numbers, accounting, managing operations, managing people, as well as being able to see a vision for the company in terms of goal setting and where you are positioning your company relative to the competition.

Kaizen: Two other things come to mind here. You consistently mentioned knowing people — having people bring things to you and having your own network of people you can call on. What goes into being the kind of person who can be a part of a network like that? Are personality and character important? And can they be taught?

Singh: I think in business your reputation is extremely important as well as your ability to deliver. And more importantly, as we say in England, an old phrase that is, unfortunately, being emptied of meaning: “Your word is your bond.” Integrity. Loyalty to your principles.

Kaizen: Developing a reputation as being someone who can deliver but also being a person who delivers what he says he’s going to deliver.

Singh: That’s correct.

Kaizen: Part of that is the skill- and knowledge-set, and part of that is being smart enough to have the formal schooling.

Singh: Yes.

Kaizen: You mentioned that most of the deals you’ve put together have had common elements — you are able to see certain, abstract patterns. But in each case, since the industries you are so different, you have to plunge into the particulars of that industry. It strikes me that you’d have to be a pretty quick self-starter to learn about biomass, ports, pharmaceuticals, airplanes, and so forth.

Singh: Yes. That’s correct. That’s the interesting aspect. In terms of brokering a deal in order to make something grow, to make it appealing to shareholders, to make it appealing to the people who are going to buy the products, and to any stakeholders who are in the business — putting those elements together. The only term I can think of is cross-functional integration. You have to see the woods from the trees. You make everyone strategically coordinate in the same way. And sometimes it’s like marketing to move the company forward, but then you know the numbers fed back to you to see how you perform. I think I have a good mix of the two.

Kaizen: Some questions about Britain’s business climate and the European climate, more broadly speaking. From your perspective, there are opportunities all over the place.

Singh: There are always opportunities, yes.

Kaizen: Do you get the sense that Britain now has an entrepreneurial culture? In one sense, Britain is the birthplace of modern economics and has a strong entrepreneurial history. Is the climate healthy? In decline?

Singh: I think the entrepreneurial spirit in Britain has always been quite strong. It’s weathered the recessions and the booms that we experience here. We have a very good entrepreneurial structure here where people are given the freedom to look at developing and incubating new businesses. We are probably more risk-averse than the Americans are. When you are in New York and pitching a road show and people are buying your stock — the Americans are more risk-seekers. Obviously, you have to speculate to accumulate, but the British tend to be more conservative. We see that through venture capitalists.

The recessions and so on tend to polarize people. You get those who are looking for opportunities and are more risk-seeking, and you have some people looking at the austerity measures going on at the moment and are risk-averse. They draw their funds in more and securitize them in gold and silver and not be willing to invest at this stage. But there is still an entrepreneurial culture that has weathered the differences in available financing.

Kaizen: Britain traditionally has strong ties with North America and more broadly the Commonwealth. But also, due to geography, close connections with Europe. Are the American connections more important now, or the European?

Singh: The American relationship has always been great. For Britain, I think, that is a huge market that is readily available. The European market is a little more fragmented; it’s always been a little more difficult because it has essential differences all across Europe. But, again, it’s an open market, which will continue despite differences in the currencies or whether the Euro dies or whatever.

Kaizen: Europe’s temporary troubles. Britain is in some ways part of the European Union, but it does have its independent currency and it guards its sovereignty. To what extent do current troubles with the Euro affect business in Britain?

Singh: The Euro is a fluctuating market at the moment with the economic climate. But the British Pound is still really relatively strong. Although, for exports, it makes your price a bit more expensive across the continent.

Kaizen: Zeroing in on the so-called “PIGS countries” [Portugal, Italy, Greece, Spain], there is a current instability. Does that impact your decision-making about whether you take on investments there?

Singh: We certainly do because of the political instability. I would certainly be an advocate, but if all the debt was actually liquidated, it would be a lot easier to get the next generation to have it fall on their shoulders the burden to liquidate this debt bubble. Inflating each time isn’t the solution. 

Kaizen: So solve the problem now?

Singh: I certainly would. In some ways it will come to the crunch because Greece is a recurring problem. You saw the problem with Cyprus, which is the first time 30 percent was just wiped off of accounts. It may well be that at this stage that Germany is not willing to further inflate and dilute their own currency, the Euro. This would create a domino effect where Portugal, Italy, Ireland, Spain, and Greece are all impacted, which might be the best thing that’s ever happened to Europe. But I think the most likely scenario is that they will hop-along. The austerity measures will be quite drawn out. I mean, we are having riots and so on in the various countries about this, including the U.K. We are, obviously, not sheltered from it here. It’s quite unfair. A lot of assets are being depreciated due to this bubble. And business perceptions are impacted. It’s a shame that it has to come to this. But this is the result if you want these cycles — and quantitative easing is actually adding to the problem and deferring the solution as opposed to offering a long-term solution.

Kaizen: Younger people. What advice would you give to those starting out in business? Do they need to work on personality issues? Character? Or acquiring formal knowledge? You also mentioned being able to see the forest through the trees, so cultivating a big-picture, abstract ability? Understanding markets? Politics?

Singh: I think people in college now have a lot more opportunities these days, especially with the information age where we have the internet.

Kaizen: Research costs are way down.

Singh: Absolutely. And we have readily available information through the internet. Researching opportunities and social networks are developing and have changed marketing in of itself. And communication can happen almost instantly across the globe. And we can almost travel anywhere in the world. I think it is a very exciting time for someone in college.

Kaizen: What from your college experience has stood the test of time?

Singh: I would certainly invest in knowledge-development by gearing yourself up through formal education. Also by looking at the common denominators of what make businesses work.

Kaizen: So lots of case studies.

Singh: A lot of case studies, which are, again, readily available. It’s almost gaining experience through someone else’s eyes without actually doing it. Because the best experience, I always say, is experience.

Kaizen: Also learning from failure cases?

Singh: Absolutely. Failure cases as well as successful cases. One of the big things I enjoyed in my MBA looking at was real companies that either got it right or wrong. And even some live cases. Or even simulations where you are designing a product  —  I think that is a very good way of learning. In those days we competed against each other in a marketing simulation and we had a product that was the equivalent of, let’s say, a 3D gadget like a navigation device. It gives you a good taste of business given that you can never have perfect information; you’ve got to make guesses sometimes. The other thing that you do learn is to follow reason through  —  everything has a cause and effect. To understand that and to build your character in terms of experiencing all the virtues we derive from reason.

Kaizen: So lots of experience whether through case studies or simulations, and getting internships and actual jobs as you can. Then combining that with high-level knowledge and judgment skills as well.

Singh: Yes.

Kaizen: The internet is a boon in making tons of information available, but one still must sort through that information and say what counts and what doesn’t and then exercise good judgment.

Singh: Yes. You have to be able to make that meaningful to your own goals. The other aspect, which is very essential in the earlier part, is combining your personal goals with the goals of your organization. And self-development is something that you really have to invest in from the outset. Putting time aside to look at your weaknesses and how you can improve them. There is  a lot of talk about positive thinking, but I always promote what I call “negative thinking.”

Kaizen: Objective self-evaluation is part of the process.

Singh: Yes. In terms of constructive negative thinking. With negatives, sometimes we have to overcome them. The positive things look after themselves.

Kaizen: When you were younger and your family was poor and working class, a big part of your motivation for going into business was to earn money. Now you are comfortable financially and wouldn’t have to work anymore if you didn’t want to. So the money is part of your motivation, but what also is motivating you to continue to work hard?

Singh: I think it gives you the emotional fuel in terms of knowing that you are valuable, that you can contribute and make a difference. I’m happy to grow businesses  —  to see our starting position and where we could make a contribution towards that business and make it grow. And if anything is attractive, it is probably the achievement from having done it — moving companies and making a difference. That excites me.

Sometimes you have a project that gets me thinking about how we could do it. I always find that if there are complicated financial project, many people don’t want to get into the messy details of finding a solution. But I’m wired in the way that it gets me excited to find a solution to it. From an early age, I tend to think about how I can make things work. Perhaps I can get certain investors or banks interested and maybe partly venture-capital financed. If I can break that project down to phases, then …

Kaizen: So you enjoy the process of problem-solving, seeing the problem solved and watching as the business grows.

Singh: Well, not always is it growing! [Laughs] Sometimes it is something you didn’t envisage and I think, “Why didn’t I think of that at the time!” But it is all part of the learning curve. You get better as you experience more.

This interview was conducted for Kaizen by Stephen Hicks.

 

O que podemos aprender do empreendedorismo [PDF]

Saturday, August 20th, 2016

Stephen Hicks’s article “What Entrepreneurship Can Teach Us About Life” was published in English by The Wall Street Journal. The article has since been translated into Portuguese and can be found at Libertarianismo.org.

A PDF of the article is available here as well.

Stephen Hicks’s article published in The Wall Street Journal

Monday, May 2nd, 2016

wsj logoStephen Hicks’s article “What Entrepreneurs Can Teach Us All About Life” has been published by The Wall Street Journal. Here is a snippet:

“We often think of entrepreneurs as larger-than-life characters. They take big risks. They make their own rules. They innovate and experiment, questioning things everybody else takes for granted.

“It can almost seem like entrepreneurs are a breed apart. But they’re not. All of us are born with the ability to take risks, think creatively and challenge the everyday way of doing things. And as hokey as this can sound, we would all do well to tap into those traits in both our lives and our careers, whether we work for ourselves or not …”

Read the article at their site here.

 

Stephen Hicks’s article to be published in The Wall Street Journal

Wednesday, April 27th, 2016

wsj logoOn May 2, The Wall Street Journal will publish Stephen Hicks’s article “What Entrepreneurs Can Teach Us All About Life.” Here is the opening snippet:

“We often think of entrepreneurs as larger-than-life characters. They take big risks. They make their own rules. They innovate and experiment, questioning things everybody else takes for granted.

“It can almost seem like entrepreneurs are a breed apart. But they’re not. All of us are born with the ability to take risks, think creatively and challenge the everyday way of doing things. And as hokey as this can sound, we would all do well to tap into those traits in both our lives and our careers, whether we work for ourselves or not …”

We will post more when the article is published on Monday, May 2.

Terry Noel on The Virtuous Entrepreneur — transcript

Saturday, April 16th, 2016

Interview conducted at Rockford University by Stephen Hicks and sponsored by the Center for Ethics and Entrepreneurship.

Hicks:  I am Stephen Hicks. Our guest today is Professor Terry Noel, who teaches Entrepreneurship and Management at Illinois State. Here today at Rockford College speaking on the theme of the virtuous entrepreneur. Interesting title, but your broader context is the newer entrepreneurial economy that we live in and that you think is accelerating, particularly for younger people. What do you mean by this, new and accelerating entrepreneurial economy?noelterry

Noel: Well, I think we’ve seen a change in the last 30 years certainly, in about 1980, we started to see a big shift in the economy from one which was driven largely by Fortune 500 companies. In 1980, we had about one in five people were employed by a Fortune 500 company. Now, a little less than 20 years later, in about 1998, that had dropped to one in fourteen.

Hicks: I have seen that number, yes.

Noel: And so we really became more of a small business and entrepreneurship economy than a large-company economy. Now, since 1998, we’ve had many more changes. The pace of change ha really accelerated, because, if you recall, the Internet was really established as a commercially viable entity only in 1994, in January. When we take that shift that was already happening and then add a radical transformation of how information is handled, and who has access to it, and we start to see a great deal of turmoil in the economy. So, in my view, I think that we will continue, in some cases, to see large companies, but by and large, I think we are going to see an economy where we have more startups dealing with new technological issues, and we are going to see such rapid change that the idea of a large organization staying in place for decades, I think, it’s going to become more rare.

Hicks: And this is going to impact younger people. Fewer of them will be working in organizations that are traditional large corporations. They will be working in smaller organizations, or more entrepreneurial organizations, and many more of them themselves will become entrepreneurs. And so that means a different kind of set of character traits are going to be more important, right, for younger people and this takes us to the virtue part of your talk. Now, before you plunge into entrepreneurial virtues per se, you made a distinction between positive ethics and negative ethics. Say something about that.

Noel: Well, usually when we talk about ethics in the context of business, we are largely talking about refraining from certain types of behaviors. Don’t cook the books, don’t misrepresent your product. Don’t sell things under false pretenses or things that are dangerous.

Hicks: OK, so they’re all don’ts.

And there is nothing wrong with that, it’s just that that’s really only one half of the view of business ethics. I think it’s important also to recognize that there are positive virtues. I would put on the list things like, say, courage, the ability to try something new. If we are going to live in an economy where new ideas and innovation are kind of the mainstay of growth, then it requires people who are willing to take a chance and to do something brave. Ethics is not simply about refraining from doing damage to other people or lying to them in various ways, but actually doing positive and creating value in the world. Then, we need to shift ethics away from simply not doing to a focus on the positive.

Noel: Oh, I think so, absolutely.

Hicks: Right, and then you connected that to the entrepreneurship discussion, because, if we are to be more entrepreneurial, or outright entrepreneurs, then what are the character traits that go into being an entrepreneur or being entrepreneurial? Now, you have mentioned being courageous, being creative, right, and so forth. What other key virtues do you think are critical to success?

Noel: I think the top one I would put at the very top of the list, independence of mind. I think that, in order for someone to succeed as an entrepreneur, he or she has to be willing to trust that his or her convictions are sound. That doesn’t mean you get it right every time, and doesn’t mean being mule-headed about things. It just means having the confidence to think that I am in the minority on this idea, and I am OK with that. And I can survive in that kind of climate. And that is not a virtue that we talk about a lot. Much of virtue it seems to me is founded in a sense on conformity. So, I think independence of mind hits the top of the list.

Hicks: OK, closely related would creativity of mind be, you mentioned that a little earlier.

Noel: I think creativity is with some qualifications. I think creativity is often emphasized in entrepreneurial ventures, and that is good. And because almost, by definition, an entrepreneurial venture is creative in the sense that it kind of disrupts normal routines. But, creativity can be overrated. Very often, successful businesses we know are not those that are necessarily radically creative, but they often put an interesting tweak or twist on an existing idea. So, I think creativity makes a difference, but not for its own sake.

Hicks: This distinction between incremental innovation or incremental creation vs. disruptive innovation and so on.

Noel: And both can be valuable.

Hicks: Fair enough. And then you mentioned courage. So, what else would be high in your list of traits?

Noel: I think resilience, absolutely, has to be near the top of the list. Because, the simple fact of the matter is most entrepreneurs fail, they just fail marvelously. Failure is a virtue, but not if we fail for reasons of being careless, or not doing our homework, not paying attention to reality. But, sometimes we can do our homework, do all the “quote” right things and still fail. I think probably the biggest factor that separates successful entrepreneurs from those that die on the vine is that they just decide they will do it, no matter what. Now, they may have to change their approach to an idea, but they have to be resilient enough to get up, dust themselves off and go at it again.

Hicks: All right, so that’s four so far. Five is a nice rounded number. So, one more.

Noel: You know, I am going to put on the list that I’ve just being thinking about recently. And so, I think compassion. One has to remember what the real root of entrepreneurial activity is. And that is, I want to achieve something for myself, and that is noble motive. It may be to satisfy a drive to create something beautiful or useful, and we can do that, say, as an artist or as a performer, and not really think in a business context. When we are entrepreneurs, though, we are creating a value that can be enjoyed by other people, for which we receive an honest trade in exchange. Value for value exchange. Without some type of compassion, that is, the sense of understanding what other people need and how to make their lives better, it’s very hard to be a successful entrepreneur. So, compassion not in the sense that we usually think of it in just charitable causes and things like that. But being able to understand and empathize with people and how to make their lives better.

Hicks: So, it’s not necessarily understanding what people themselves think they want, or being just doing your market research and being tuned, but being able to understand and feel for how people could live.

Noel: Yeah, I think Steve Jobs is a great example. Because, at the time, if you had asked, me and most other people, do you need a computer in your home?Steve_Jobs_Headshot_2010-CROP

Hicks: This being in the 70s or earlier, actually?

Noel: We’d have looked at you, like what? But Steve Jobs recognized what we needed and what the world needed before any of us did. Now, interestingly, and this is why I think there is no contradiction between self-interest and the service of others entrepreneurially, Steve Jobs says a marvelous quote in which he says: “We didn’t create this to everybody else. We created this for us. We wanted to create the neatest computer that had ever been invented.”  Now, you think about that. He is saying outright we didn’t do it for everybody else, yet millions benefited. So, I think sometimes we have a convoluted view of what is good for us and what is good for others.

Hicks: The win, win is natural and normal, if you are an entrepreneurial value creator.

Noel: Absolutely.

Hicks: Not to put words in your mouth.

Noel: No, no. That’s a very good way of putting it, in fact.

Hicks: Now, this list of traits, this takes us to the issue of why some people, and it seems to be a minority, are successful as entrepreneurs, other people fail as entrepreneurs, but a lot of people also just aren’t interested in it or frightened by entrepreneurship. Are entrepreneurs made or are they born? From your talk, I got the impression that you think that they are made, or that at least we can train ourselves to become more entrepreneurial. So, how does one do that?

Noel: Well, I think the first thing we need to remember is we view holding a job for our adult working lives as the norm. When, in reality, that about 100 years ago and before, that was not the norm at all. More than half of people were employed in their own businesses. We had shopkeepers and artisans and so forth. And then, as we learned of the value of large organizations, efficiencies of scale and things like that, we came to have lots of people that found it a better life for themselves to have the predictability and security of a job. There is nothing wrong with that. I think we are probably seeing the end of that era for reasons we talked about a moment ago. And that means that, as we have less of our working lives dictated by an organization, and the goals of management and owners, we have to make up our own minds of what we want to do and the value that we want to create. And that’s a bit different. That’s not a set of virtues about fitting in to the corporate climate, but it’s developing virtues like independence of thought and courage.

Hicks: Does it mean a shift in parenting styles, a shift in education, lower education, higher education?

Noel: Heaven love them, our parents, what do our parents want for us? So we have kids, right, and what we want? We don’t want them to experience all the pain that we experienced. Now, we may say we want you to go out, be adventurous and do these things and be true to yourself. But, in reality, we remember all the lumps and bruises we took, and we think for heaven’s sake, I hope they don’t have to go through that. And I think sometimes, unconsciously, we encourage our kids to be too safe. We encourage them to get a good job with benefits, and then we don’t have to worry that they won’t be able to pay the bills. Instead of teaching them to go out and try micro-businesses, to encourage them to go out and take fifty dollars, invest in something, go resell something, see if you can make some money. Or instead of getting that part-time job while you are going to school and getting paid minimum wage, why don’t you start a micro-business that will support you through college? I think we don’t tend to do that quite enough. So I think parenting does have a lot to do with it.

Hicks: For people who are older adults, and who want to cultivate entrepreneurism in themselves, what kind of advice do you have for them?

Noel: Well, a couple of things. One, as you’ve probably already without realizing it, developed a lot of the virtues that are necessary for being an entrepreneur. Because most people, in their adult working lives, have faced situations where they’ve had to be courageous and maybe even to a certain extent in certain companies innovative. I think the biggest thing, if I were to encourage adult entrepreneurs, say, people that are near retirement age, but they are worried they won’t be able to live well through retirement, is to develop just some fundamental business skills, things that, you know, basic accounting skills, basic marketing skills. I am not talking about going back and getting a college business degree, but just developing those skills. As far as the virtues, I think you just have to take assessment of what your experiences have been like. If you have been in a company that encouraged innovation and risk-taking, it’s probably pretty natural.

Hicks: So, just build on those consciously.

Noel: Build on those. If you’ve been in an environment that has been very staid and very predictable, you set to be honest about that and ask yourself. Are there areas in my life where I have been innovative and being a risk-taker and how can I parlay that into an entrepreneurial venture.

Hicks: All right, so ongoing character training for oneself.

Noel: Exactly, a little step at a time.

Hicks: Whatever age level.

Noel: Exactly.

Hicks: Thanks for being with us today.

Noel: Thank you for having me.

[The original interview with Professor Noel follows.]

Video Interview with Professor Arielle John — Transcript

Tuesday, February 2nd, 2016

Interview conducted at Rockford University by Stephen Hicks and sponsored by the Center for Ethics and Entrepreneurship.

Hicks: I’m Stephen Hicks. Our guest today is professor Arielle John, who is teaching fellow in the Department of Economics at Beloit College. Professor John was here to speak with us on culture and entrepreneurship with special reference to Trinidad, her native country. arielle-john-500-px

In your talk you gave us some striking statistics about the relationship between culture and entrepreneurship. You started with a breakdown by ethnicity, or the various segments of Trinidadian society. And, to contrast to that, with the participation in self-employment and entrepreneurship. What were those numbers like?

John: Trinidad is an interesting country ethnically. The two majority segments of the population are Indians, who are descendants from Indian indentured servants; they comprise 40% of the population. African Trinidadians comprise about 37%, so they are about equal. Beyond that, about a fifth of the country, or 21% of Trinidadians, report themselves to be mixed; usually that implies they are a mix between Indian and African. And there is a small minority of individuals who are European descendants, also Chinese and Syrian-Lebanese and they comprise two percent of the population. They are the smallest group in the population.

Now, when we look at self-employment statistics we find that within that minority group [European, Chinese, and Syrian-Lebanese descendants], about 35%-36% of those individuals are self-employed — they are business owners. The next group with the biggest category of business owners are the Indians. About 25% of those individuals are considered self-employed. Mixed individuals, perhaps about 20% of that group are self-employed, and blacks in Trinidad have a below average self-employed rate at about 16%. So that’s the breakdown.

Hicks: So, your area of investigation is the effects of ethnic culture, and possibly racial culture, on the widely varying self-employed entrepreneurial ranges.

You also spoke about entrepreneurship and entrepreneurship is complicated in some respects, but you broke it down into two basic moments that you call the Kirznerian moment or the Schumpeterian moment. What are those?

John: Obviously, the decision to become an entrepreneur involves many factors over time and place. For Israel Kirzner, the defining moment of being an entrepreneur is the moment when you discover an opportunity, and usually that happens in a surprise fashion. You are going about your way, and suddenly you realize there are needs that people want met and you know exactly how to do that. So for Kirzner the defining moment is identifying the opportunity.

Hicks: He is emphasizing the cognitive elements in entrepreneurship.

John: Absolutely. For Joseph Schumpeter, what defines an entrepreneur is the doing. For Schumpeter, exploiting the opportunity and actually bringing a product to market or changing how a supply chain works or changing some aspect of production — that is what makes you an entrepreneur. So, in doing something creative, destroying the old way of doing things, the doing aspect of entrepreneurship is what Schumpeter focuses on. So there appears to be two moments of entrepreneurship, the moment when you identify the opportunity and the moment when you actually exploit the opportunity.

Hicks: Okay, so the next question is about culture and those two moments of entrepreneurship. So, in trying to figure out how well or not well a culture fosters the identification of opportunities and the exploiting, right, of those opportunities. joseph_schumpeter You also had a definition of culture earlier, an explication of what culture is. What is culture?

John: Culture is one of those words that is ambiguous and hard to make concrete because it’s so abstract. But I think there is a very good definition of culture from the anthropologist Clifford Geertz. He refers to culture as an historically transmitted pattern of meanings, a system of inherited conceptions. So culture is essentially defined as the shared meanings individuals have about the objects and about the people and about the actions in their lives. They share meanings together, and those differ from culture to culture.

Hicks: So one then asks what meaning, so to speak, entrepreneurship has within a group of people, and to what extent there is a history; those will be connections that we want to make.

Coming to Trinidad in particular, you had three hypothesis about the intersection. One was about Kirznerian entrepreneurship — the identification of opportunities and how that is in Trinidadian culture. What is your hypothesis there?

John: Well, my hypothesis there is that Trinidadians across all of the ethnic cultures are fairly prolific in identifying opportunities. I confirm this by doing interviews with Trinidadians, and I sat them down and asked them: Tell me about your job, or your dream job, and instead of people identifying opportunities to be technicians, to be doctors, to be educators, people identified specific entrepreneurial activities. So they saw themselves as being self-employed one day, and not only did they know that they wanted to own trucks and rent trucks, or start restaurants, or start hairstyling businesses, they had actual plans for how they were going to achieve these businesses. They had a diverse number of reasons, but what really struck me was that they were good at discovering gaps where consumers had demands that were not being met. They were very good at identifying opportunities.

Hicks: And that was across all of the different ethnic cultures that you identified earlier?

John: Yes.

Hicks: With respect to Schumpeterian moment in entrepreneurship, what is your hypothesis there for Trinidad?

John: Well, clearly according to the statistics I mentioned earlier, the ethnic cultures are not equal exploiters? According to the data, the white, Chinese, and Syrian-Lebanese Trinidadians are the best exploiters, and the blacks are not necessarily good exploiters. Indians are seen as the emergent business class.

Now there can be several cultural reasons for that. When I looked at the history of the different groups, I realized that there could be some historical, cultural reasons for these disparities. White, Chinese, and Syrian-Lebanese, to some extent, brought their cultures with them, from where they came from, e.g., from China, from Syria. They brought with them their entrepreneurial attitudes.

Not only that, once they arrived in Trinidad they kept close kinship ties and they formed business associations. So, an individual who belongs to that ethnic group has a support system, has a group of people who are aware of what it takes to be a good exploiter. They have technical advice, they keep their kinship network close, and that’s fairly true for Indian Trinidadians as well. But when it comes to black Trinidadians, they don’t have those close kinship ties. They never developed them across their history.

Hicks: Is that because they were largely brought in as slaves?

John: They were.

Hicks: And that destroys kinship connections?

John: That destroys kinship connections. Over the years blacks, as opposed to Indians and Chinese, have given different meanings to certain jobs. Public service, education jobs, and professional jobs are highly valued in the African culture in Trinidad. So an individual who is trying to climb the social ladder or make something out of himself, you know, chases prestige, is not likely to use business to exploit those dreams. They are likely to become more educated and avoid business altogether.

Hicks: Professional jobs in established institutions. You also mentioned some dimensions of dependence versus independence in post-colonial history of Trinidad. Trinidad became a country, you mentioned, in 1962. So this is within a couple of generations that we have a new culture, but nonetheless, dependence and independence are not equally distributed. What are the issues there?

John: I believe that coming out of colonialism, more people started to see business opportunities as something that they could do, they could take charge, they could aspire to be anything they wanted to be, which is why, I think, across cultures, Trinidadians are opportunity identifiers. But they are not necessarily, in terms of the ethnic groups, all equal opportunity exploiters, for these dependence reasons. So blacks and Indians coming out of independence were more dependent on the state, even after Trinidad was not a colony anymore.

There were social programs to try to get them to become businessmen, to take care of them, and I think that decreased their incentive to try to make it on their own. Within those families, living with your family well into adulthood and relying on your parents for money, that is still seem as normal in those ethnic groups. And so, again, that diminishes the incentive to become an entrepreneur and to make one’s own way through life. So, these cultures’ dependence transmits across generations and determine who actually, even though they may have ideas, feels a sort of real need to exploit the opportunities. And those who are more dependent don’t feel that need strongly.

Hicks: They are striking — the statistics on differences in entrepreneurship participation across ethnic groups and racial groups. Also, according to the degree of education.

You also had to break down by sex, and there is a marked difference in the participation between males and females in all ethnic groups and all levels of education. What are your thoughts on the gender or sex differentiation stats?Flag_of_Trinidad_and_Tobago.svg

John: There are gender differences in employment across cultures, across nations, across time, and across jobs, right, so not just self-employed versus employed. Most fields, right, you see that choice gap. And I am not clear what the reason is, but I do think sometimes men have different goals. Sometimes women have more family goals, whereas men may aspire to be businessmen or to be very involved in their jobs. And I think there is a fundamental difference when it comes to the actual choices men and women decide to make on their own.

Hicks: The male/female rates in Trinidad aren’t different from male/female rates in other cultures and places?

John: I don’t think that they are, even here in the USA, I don’t think that they are. Well, there may be a higher percentage of women becoming entrepreneurs in the USA, but women here also generally are more self-sufficient and have a higher income.

Hicks: Okay. Toward the end of your talk, after emphasizing various elements of culture, you said your research shows an importance of institutions of certain sorts in fostering or squelching entrepreneurial participation rates. What do you mean by institutions in the Trinidad context? How does that fit in to your research?

John: When I talk about institutions, I am talking about the formal rules of the game within a society. The rules that tell you what you are allowed to do, where you are allowed to participate and not allowed to participate. I am not really talking about informal rules. I am talking about formal, official rules within Trinidadian society.

Hicks: Would informal rules be on the cultural side? And formal rules would be institutions?

John: Yes, informal rules refer to norms. The formal rules, the institutions operating in Trinidad, certainly apply to everyone. Of all ethnic groups in Trinidad, these are rules that are on the books. They don’t apply to blacks any more than they apply to whites or Indians. So there are institutions in Trinidad and Tobago that I believe, and that I think economic theory would predict, that are beneficial to entrepreneurial identification and exploitation in the first place. In Trinidad and Tobago, private property rights are respected and enforced, so if an individual decides they see an opportunity and they want to follow through with it, they can purchase the piece of land, they can purchase the building, and they don’t have to worry about it being confiscated. Private property rights are perhaps not as strong as in more developed nations, but, still, if individuals want to own properties, they could. Also, in Trinidad, I think the rule of law is respected, so individuals aren’t treated differentially. And so I think in Trinidad, as economic theory predicts, this incentivizes people to be comfortable with coming up with business ideas and going after these ideas because they know that, if they do the face the law in any point in their business dealings, they won’t be treated unfairly or differentially,

Hicks: So the law is noble and consistent, and so people can factor that in and that encourages entrepreneurship?

John: Definitely.

Hicks: All right, a fascinating set of issues. Thanks for being with us today.

John: Thank you, thank you very much. It was great to talk at Rockford University.

[The original video interview with Professor John follows.]

Robert Salvino on entrepreneurship and public policy — transcript of video interview

Wednesday, December 30th, 2015

Interview conducted at Rockford University by Stephen Hicks and sponsored by the Center for Ethics and Entrepreneurship.

Hicks: Hi. I’m Stephen Hicks. Our guest today is Professor Robert Salvino, who teaches Economics and Entrepreneurship at Coastal Carolina University in South Carolina. He spoke with us today on entrepreneurship and public policy. robert-salvino

One of your initial themes was the importance of entrepreneurship as a driver of the economy. Innovation, business startups, employment, and so forth. And you were pointing out what we actually do know about entrepreneurship. What are the traits that go into entrepreneurial success?

Salvino: Right. When we think about entrepreneurship, we think of a very positive-oriented type of person’s behavior, somebody who is a problem-solver, who sees obstacles and is already thinking about ways to get around those obstacles and accomplish things in spite of barriers that might seem to be very big for the rest of us.

Hicks: Right. And then the question then is: if we want to encourage entrepreneurial behavior, what kind of institutional framework is going to make that happen — or retard it? In your lecture, you made a distinction between a more active approach to public policy, when government is trying to foster entrepreneurship by picking winners and losers, so to speak, and a more indirect approach, where the government sets very general conditions within which entrepreneurship can flourish. What is the difference between these two approaches?

Salvino: An active public policy approach would be literal programs, if you will, that would maybe subsidize start-ups. If you start a small business, there will be credits that will be given to you or job training will be provided, or these types of things, trying to get people to start things. A passive approach to public policy would simply just to allow things to happen. So, have a very favorable business climate in the first place without somebody having to check the regulations and licenses and requirements and see what kind of things they could do. And maybe if you are in this type of industry, you can get better subsidies or things, so, taking that away and letting things just kind of run their course.

Hicks: So the argument there is: you take away particular types of policies, and you create an environment in which entrepreneurship will flourish. Whereas the other is to have that plus particular programs directed to stimulate entrepreneurship. In your talk you also in passing contrasted some regimes around the world that seem actively to discourage entrepreneurship. North Korea is an example. And then the example of cellphones was very striking. What was that?

Salvino: Just a few years ago, Eric Schmidt with Google and, I believe, Josh Cohen went to over to North Korea. They’ve got a book coming out that talks about technology and its role in the spread of prosperity and the changing of oppressive regimes. Just a few years ago, you were not allowed to have a cellphone in North Korea without some sort of authorization. The majority of population did not have a cellphone. Then, they later allowed a million people in a very large country to have a cellphone, but it was a controlled cellphone.

Hicks: If we try to evaluate, then, the two entrepreneurship-friendly approaches, where we assume that entrepreneurship is a good thing and we want to foster it, how do we evaluate whether a more active hands-on government fostering of entrepreneurship works better than a more relaxed government approach?

Here you took us through some history, asking us to look at some of the great entrepreneurial success stories, Google, Apple, AT&T earlier, Standard Oil, and so forth. What is the lesson that we learn from those examples, on your reading?Steve_Jobs_Headshot_2010-CROP

Salvino: Right. Those companies, those technologies — nobody would ever predicted the emergence of these new industries. Ford Motor Company, you would not have been able to identify a group of people whom might have been more likely to be successful. Try to take a group of people from MIT and put them in a room and say: ‘create the next big thing’. People like Steve Jobs and Bill Gates — nobody would have ever identified them as people likely to create the things that they did.

Hicks: So the argument there is just having a culture in which creative, innovative people can do what they want to do, you’re going to get entrepreneurship. And then on the negative side, you had examples like Solyndra, where active public policy trying to promote certain kinds of entrepreneurship blows up in our faces with a huge price. Stay more with that one.

Salvino: Solyndra was, I believe, awarded about $500 million in subsidies through the federal government because they were in a favored industry working in green technologies. And Solyndra went bankrupt within, I believe, a couple of years of forming. If the company, a start-up, had able to get private investors to back them to the tune of $500 million, it’s very unlikely they would have gone bankrupt in two years. So, the difference is between what went into the development of a company like Solyndra versus a company like Apple.

Hicks: Okay. Are we able to step back and cite statistics and say that here is the more relaxed, entrepreneurial-friendly environment, and in that environment, you get a certain number of entrepreneurial successes — Apple, Google, and so forth — but that we’re also going to have a whole lot of failures?

Salvino: Sure.

Hicks: Contrasting that with a government that is more hands-on and tries to pick entrepreneurial winners and losers, they are going to have a lot of failures, but they also have some winners. Are you able to quantify the relative success rate of those two approaches?

Salvino: I haven’t looked at that in my research, but I think if you look at it just from a theoretical perspective and think about resources that are invested in any and each of those, certainly you are going to have many, many failures in the private market with experimentation. But the difference would be the amount of leverage of that investment and the people who suffered as a result of that. If it truly is a market process, the spread of failure is not going to have the negative impact on all of society that something like many Solyndra-type things would.

Hicks: Okay, so we have one 500 million dollar failure that has to be put against then 500 one-million dollar failures, and so forth.

Salvino: Exactly. It is spread throughout the whole system.

Hicks: Now, you also had one particular example of public policy that seemed more indirect, and that was health insurance, where this is not directly intended to have an impact on entrepreneurship or not. But for various other reasons health insurance is a desirable goal, so the government wants to encourage the greater provision of entrepreneurship. But, nonetheless, indirectly it has an impact on entrepreneurship as the example you presented. How does that work?

Salvino: Okay, if we talk of a different types of entrepreneurs, a self-employed individual as one type. So, employer-provided health care as it emerged over time took years and years to grow and become kind of cemented into our culture as an expectation of a good job were good benefits. And so the rate of self-employment just seems to, over the same period of time, been about cut in half. And so, there is a real cost to acquiring Barack Obama, Chris Gronethealth insurance on your own in this independent market versus when you are with a large company. When you are with a large company that provides the benefit, there are direct policies that make it easier for a large company to provide the benefit to the employee. And so there is a hurdle that is created there, whether it was intended or not.

Hicks: Okay, so the way this works then is health insurance is a desirable thing for individuals. Government creates a policy that encourages employers to provide health insurance for employees. That makes employment with a company that’s providing health insurance more attractive than self-employment, so self-employment rates go down.

Salvino: Right. That’s kind of the idea that I have looked at and to see if there is a causal relationship between the two. Certainly, we can see at least anecdotally this idea that we place a very high premium on benefits. There was a survey done a couple of years ago throughout the world asking adolescents what do they want when they become adults. And most of them said they want a good job with good benefits. So this has been cemented into our culture.

Hicks: Okay, then public policy responds to that directly.

Salvino: And public policy responds and, in some cases, has helped propel that idea, that expectation.

Hicks: Scaling out then: your proposal was that we should have the more indirect, passive approach to public policy by creating general conditions within which entrepreneurs are free to innovate and experiment. What are those general conditions that you think work best?

Salvino: So, for example, just a sound monetary system that allows us to make long-term contracts and have an idea or expectation of what interest rates are going to be, what the rate of inflation might be, and how that affect us. Property rights, so that when we go into an organization, we form a corporation, we conduct business, we know that our rights are protected and that there is a judicial system that is going to help us solve disagreements and such things. Contract enforcement is another example of an institution that helps. When contracts are not going to be enforced, individuals, investors, or entrepreneurs may be very leery of forming partnerships with people that they may not know very well.

Hicks: You gave the example of China, part way through, as a very striking example. One of things we’re interested in is wealth creation. And wealth creation certainly is an important value if we are already comfortable. Nonetheless, we would like to be more prosperous and make sure our kids are more prosperous.

But wealth creation is important when we think about poverty and places in the world that are still ridden with poverty. You mentioned China as a very striking example. In the last generation, something happened that has never happened before in human history, namely, half a billion people were lifted out of dire poverty into a basic minimum standard of living. Can you track China’s success in doing so to public policy changes in China? And if so, what do you think those were?

Salvino: Right. If you go to China a generation ago, we think of China as a communist country. And still today people associate China with communist regime. But it is going in a different direction than many developed countries in the world. It is kind of backing down from that and going from a completely communist institution to state capitalism. Maybe it’s state-directed capitalism with capital ownership, but still it’s a step in the opposite direction, towards allowing markets to flourish more than previously had. And if we think about it from the perspective of our country, many American businesses over the past generation have put operations in China. And over the period of a generation it has become easier for these businesses to operate in China, to maintain their own property rights.

An individual came and spoke to a group of business leaders in South Carolina a couple of years ago and talked about an operation when they first went into China. In order to start their company they had to give away majority ownership of this subsidiary in China, so they were very leery to do that. And over the past few years, that went away to where they were not any longer required to give away that type of ownership of their company. And as more companies have been able to go into China, not having to give up certain of those property rights, more companies will go in there and conduct business. So there are jobs created in China by American companies and other companies throughout the world. And over a generation that has been one factor, I would say, that has helped to alleviate some of their problems.

Hicks: So China is moving in the right direction?

Salvino: Right, they are moving in the right direction.

Hicks: Thank you for being with us today. Interesting material.

Salvino: Thank you.

[The original video interview with Dr. Salvino follows.]

William Kline on entrepreneurship and liberty

Friday, November 20th, 2015

University of Illinois, Springfield Professor William Kline’s 14-minute video lecture on “Entrepreneurship and Liberty.” Professor Kline discusses the relationship between liberty and entrepreneurship. He explains how laws, culture, and economic regulation can infringe upon the freedom of entrepreneurs and inhibit their abilities to be innovative. He stresses the importance of economic liberty in particular in providing the right environment for entrepreneurship to flourish.

Professor Kline’s lecture is part of the ongoing Entrepreneurship and Values series, recorded and produced by the Center for Ethics and Entrepreneurship. Other lecturers in the six-part series include Alexei Marcoux, Stephen Hicks, Terry Noel, and Robert Salvino.

Robert Salvino on entrepreneurship and public policy

Friday, November 6th, 2015

Coastal Carolina University Professor Robert Salvino’s 15-minute video lecture on “Entrepreneurship and Public Policy.” Professor Salvino discusses public policy and its effect on entrepreneurship. He contrasts active public policy methods (e.g., subsidies) and passive public policy methods (e.g., lowering taxes) and hypothesizes that passive approaches to public policy often result in more innovation and entrepreneurship.

Professor Salvino’s lecture is part of the ongoing Entrepreneurship and Values series, recorded and produced by the Center for Ethics and Entrepreneurship. Other lecturers in the six-part series include Alexei Marcoux, Stephen Hicks, William Kline, and Terry Noel.

Steve Mariotti’s new book

Wednesday, September 23rd, 2015

BookCover_AnEntrepreneursManifesto-234x300Steve Mariotti, founder of the Network for Teaching Entrepreneurship (NFTE), has published a new book. An Entrepreneur’s Manifesto makes a convincing case for the power of democracy, ownership, and free markets to combat poverty, terrorism, and totalitarianism.  “There is no more revolutionary act,” Mariotti writes, “than starting a business.” Learn more about Steve’s new book at his website. Also, you can find our interview with him at our website.