When you started working as a journalist at Inc. Magazine in the early 1980s, you were at the right time and, arguably, at one of the best places to witness a monumental shift in entrepreneurship. Together with technological advances such as computers and the internet, it gave birth to a new type of economy. In retrospect, it’s easy for us to connect the dots. But how did it look and feel back then?
Burlingham:
Exciting. There were things happening in the economy that were being ignored by almost everyone. Things like a small company from Mountain View, California, that was working on something with computers and chose a fruit as its company name. No one would have guessed that Apple would become one of the most valuable companies in the world. It was simply inconceivable. It also was not just about computers or the internet. We saw the early stages of companies such as Patagonia or Ben & Jerry’s. And when we really started to look for them, we found thousands of exciting new companies being founded at that time. We had no doubt that the world was changing. We did not know how exactly it was going to be, but it was going to be a different world, and we felt excited to be at the forefront of that change.
We had no doubt the world was changing. We did not know how exactly it was going to be, but it was going to be a different world.
Back to the future: Steve Jobs as a visionary of a different world.
Illustration made using Midjourney.
In 2005 you published ‘Small Giants’. Essentially, it is a collection of case studies that dive into the hearts and minds of business leaders that turned down growth opportunities and decided to go for something greater than just getting bigger. In fact, your main purpose with the book was to help entrepreneurs understand that they have a choice: to not scale revenues, not go for geographic expansion, not invite outside investors. It seems that, as long as we accept a culture that defines success as getting rich instead of getting happy, our society will be obsessed with economic growth. How do you think we will look back on the ‘unicorn’ hype 20 years from now?
Burlingham:
The unicorn was born in Silicon Valley and, together with its creed of ‘getting as big as possible as fast as possible’, is quite symptomatic of what is happening down there. In order to explain this phenomenon, we have to understand the motive of the people pushing those ideas. In 2021 in the US alone, a staggering $400B was raised in private equity funds, mostly from institutional investors such as banks, insurance companies, pension funds or family offices, all looking to get the best return over a short period of time. This amount of money and impatience puts a lot of pressure on the investment market to find enough exceptional opportunities. This, in turn, shapes the mindset of entrepreneurs presenting their idea or company to these investors. Finally, the entire world seems to have adopted a lot of concepts from Silicon Valley and accepted them as universal truths.
The entire world seems to have adopted a lot of concepts from Silicon Valley and accepted them as universal truths.
Unicorn stampede wreaking havoc in the stock market.
Illustration made using Midjourney.
When we try to control business growth in practice, an important value to consider is authenticity. Once you replicate something, by definition it loses authenticity. Yet some business leaders you’ve met in your life have managed to infuse a unique soul into distinct projects. One of the entrepreneurs you’ve interviewed described their different businesses like, I quote, ‘kids, each with their own personality, but you’d never doubt they were members of the same family’. How would you describe their approach in creating such a larger family of small businesses?
Burlingham:
It all comes down from the founders. The founders need to set the record for the values and ways of working. To do that, they first need to have very strong ideas about what a good business is. Then they need to be able to explain those ideas clearly to the people they work with. If their coworkers then like these ideas and they truly feel appreciated at work, they will adopt them and take them further, even in other projects and businesses. For instance, Danny Meyer, the founder of Union Square Hospitality Group, had a very clear picture in his mind of what a good hospitality experience is all about. As he and his team opened up many different bars and restaurants in New York City, even with different styles and cuisines, the underlying experience for the customer was the same. They were only able to do this by building this strong culture of what they ended up calling ‘enlightened hospitality’ and by hiring and nurturing the right people.
It is clear that there is no single formula that makes a ‘small giant’, but there are some key characteristics such as real passion for the product, great workplaces where people feel valued and free, sound business models, open-book management, worker-owned organizations, and incredibly strong communities built on intimate relationships between the company and their customers, suppliers, and the place in which they do business. Many times, the founders of these companies went against conventional wisdom or business practices they were familiar with. I wonder if some of these entrepreneurs almost felt like they were setting up some kind of social experiment. What do you think?
Burlingham:
I don’t think these entrepreneurs were really thinking along the lines of a social experiment. I talked to a very diverse group of entrepreneurs across many different industries and whatever alternative ideas about business they developed, they developed them more or less in isolation. That being said, as we mentioned earlier, businesses are building blocks of society. Work is a place where people spend much of their lives. Most people spend more time at work than with their families. So the values people pick up at work are bound to change their perspective on the world. And when some businesses go out of their way to support the place and local community in which they operate, they are capable of having an even bigger impact. Sadly, the contrary is also true. When businesses behave badly, they actively contribute to a hostile society.
Businesses are building blocks of society. The values people pick up at work are bound to change their perspective on the world.
Successful entrepreneur sitting alone on piles of cash.
Illustration made using Midjourney.
In 2014 you published ‘Finish Big’ as a guide for entrepreneurs on how to prepare their exit from the company they have founded. Indeed, every journey must come to an end, yet a lot of entrepreneurs are too busy running their business to craft an exit strategy tailored not just to their needs, but also the needs of the company and co-workers. On top of that, market statistics demonstrate that finding a suitable buyer is not easy, especially for small to medium-sized businesses. Selling the business to co-workers can sometimes be an interesting strategy. How would you consider and prepare for such a particular exit as an entrepreneur?
Burlingham:
Selling your company for a lot of money is nice, but it doesn’t mean you will be happy afterwards. In my research, I encountered an incredible amount of entrepreneurs that were unhappy after they had sold their business. So the big question is, how do you go through the entire process and be happy in the end? The first step is to think clearly about who you are as a person, what you have been doing so far in your life and, most importantly, why. Understanding why is critical because otherwise you will end up doing what other people say you should do. Yet it seems that a lot of entrepreneurs never really gave that much thought to why they are doing what they are doing. Selling your business to your employees is just one of different options, of course. It might not get you the biggest financial return, but it could grant you the benefit of peace of mind that you cared for your workers or assurance that the legacy will continue.
Selling your company for a lot of money is nice, but it doesn’t mean you will be happy afterwards.