EP 221: Scale Your Vision w/ Danny Warshay

Luke Sherwin and Neil Parikh, founders of Casper, were 2 of my students. First of all, they demonstrate a really key principle that I espouse and I dig into in my teaching and in the book, which I refer to as the benefits of scarce resources. And it's the idea that entrepreneurs are really good at leveraging scarce resources. And in fact, having scarce resources can work to your advantage. And that's counterintuitive. It would seem that if you had more resources, you could do a better job. And the opposite of what— of that principle is the burden of abundant resources. And Casper is a great example of that. I like to say that the only thing that Luke and Neil knew about mattresses when they started this venture was that you sleep on them. They knew nothing about how you're supposed to start a mattress company.

This is the Entrepreneurs United Podcast with your hosts, John St. Pierre and Rich Hoffman. Hey entrepreneurs, we got a special guest for you today, Danny Warshay, who's a professor at Brown University, teaches an award-winning class for entrepreneurs called The Entrepreneurship Process, also is the executive director of the Nelson Center for Entrepreneurship at Brown University. And on top of that, in addition to developing a lot of entrepreneurs and helping companies in their entrepreneurship pathway, Has written a book called See, Solve, Scale. Danny, welcome to the Entrepreneurs United podcast.

Thank you so much. Pleasure to be here.

Danny, I read in your profile that you also yourself, in addition to being a professor about entrepreneurship and helping companies with entrepreneurship, was at your core an entrepreneur yourself, and you had built and sold a few companies in your past. Can you give us a little bit about your entrepreneur background yourself?

Sure, absolutely. I always say that entrepreneurship is a participation sport. So is teaching. A participation sport, and I can't imagine teaching entrepreneurship without doing it. I was a history concentrator at Brown. I'm a big proponent of liberal arts, and I fell into this opportunity to be part of the early leadership team of a software startup that we built up when we were Brown students and we sold to Apple. Uh, and so my entrepreneurship experience came even when I was in school. I don't know that I knew what entrepreneurship was or how to spell it even. But I was doing it and most of my career I've spent doing entrepreneurship, a whole bunch of different startups in different fields. And then it was unexpected that I got a tap on the shoulder to come teach at Brown.

So as a teacher, you obviously have textbooks that you go from. I'm sure that's required as an instructor. What led you to then write your own book? What is it that was not in the textbooks? that you were able to provide some insight on?

Well, actually, we don't use textbooks. I went to Harvard Business School and the way I learned entrepreneurship and business in the classroom was through case studies. It was the only way that HBS teaches anything. They're a little bit obsessed about the way they formulate teaching in the classroom. And so I figured that's the way I learned. That's the way I should teach. And so in the class, Every class we focus on a different case study. And then in teams, students in the class work on a venture that they develop. I'll even take a step backwards and say, when I was asked to teach at Brown, that was, as I say, totally unexpected. I didn't anticipate being asked to teach. I thought I'd never taught Sunday school, but a beloved professor of mine asked me to teach and I couldn't really say no to him. And then I had to really think about. What does it mean to teach entrepreneurship at Brown, which is dominantly a liberal arts environment? Not, we don't even have a business school. So what was missing at Brown for me was any indication of what even entrepreneurship meant in that context. And I talk about that a lot in the book. I define entrepreneurship as a structured process for solving problems. And what I realized was missing in the curriculum of entrepreneurship generally And at Brown in particular was a structured process for helping people learn and get really good at, and then apply this methodology that I've created, see, solve, scale, to solving any consequential problem that they may be approaching. And so my contribution that's different, I think, is that the way I define entrepreneurship is much broader than a narrow scope of a business incubation process. And that's been true at the Nelson Center at Brown since we started 9 years ago. And it's been true in my teaching for almost 20 years. And I've applied that approach to doing workshops and masterclass training all over the world in all sorts of different contexts, governmental, military, big companies, private equity firms, nonprofits, and all focused around this structured process for solving problems.

So Danny, it's the first time I hear that definition. Uh, I want to repeat it again that entrepreneurship is defined by you as a structured process for solving problems.

That's right.

And the title of your book is See, Solve, Scale. And what I gather by that is obviously by the definition, see a problem, solve the problem, and then scale your business. Is that maybe the proper Understanding at all?

I'm glad the title is self-explanatory. Yes. Uh, and each of those steps is really critical. They're discrete. And also, uh, it starts with the idea that you may not know what the problem is and you may not know a lot of nuance about it. And so the C stage is the most critical part of the whole process, starting by finding and validating an unmet need. And often I see people, especially technology people, rush past that process if they do it at all. And they end up being what I call a solution in search of a problem, which is a really dangerous place to be.

I love that. And I'd like to, since case studies are a main part of learning, not only for going to Harvard Business School, but also in the way that you teach, if you don't mind, I'd love to dive to one right now because I think it's relevant is one of your students founded Casper and it's a company that I was just talking to my neighbors about the other day regarding their mattress. They got a Sleep Number mattress not working well. I think they're going to go get a Casper mattress. But if I had to bring it back down to that case study, and I don't know if that student started that in college, much like the company that you worked with started when you were there, but they probably saw a problem in the space of mattress purchasing. They solved the problem and they scaled their business. Can you walk us through maybe just a little bit of that specific case study or just take another one if you'd like? But Casper is one that I think most of our audience would actually have heard of before.

Sure. Luke Sherwin and Neil Parikh, founders of Casper, were 2 of my students. First of all, they demonstrate a really key principle that I espouse and I dig into in my teaching and in the book, which I refer to as the benefits of scarce resources. And it's the idea that entrepreneurs are really good at leveraging scarce resources. And in fact, having scarce resources can work to your advantage. And that's counterintuitive. It would seem that if you had more resources, You could do a better job. And the opposite of what, of that principle is the burden of abundant resources. And Casper is a great example of that. I like to say that the only thing that Luke and Neil knew about mattresses when they started this venture was that you sleep on them. They knew nothing about how you're supposed to start a mattress company. They didn't know much about the industry. All they knew was that there was a problem. Because they went to buy a mattress and they scratched their head thinking, this is the most insane process I've ever seen. You have to go to a showroom, can't order it online. You have to lie down on a mattress to try it out in the middle of this showroom with a commission-based salesperson breathing down your neck to make a decision in about 15 seconds on about a $1,000 purchase. You have to struggle to get it home. You're stuck with it. If you get it home, you don't like it. It wasn't branded in any way that would appeal to millennials. And so they said, there's a real problem here. We're going to dive in to understand it with a little bit more nuance, do the bottom-up research that they learned in my class, the C stage, to find and validate the unmet need. They developed a small-scale solution. They did learn a little bit about how You need to manufacture a mattress. They overhauled the whole process of buying it. You buy it online, you get it delivered like you would anything else compacted in a small compartmentalized box. It's branded in a way that millennials would like. You have a 100-night free trial and they completely changed the whole approach to buying a mattress. That was the solve stage. I also talk a lot in the book about how they scaled. At the time I wrote the book about 2 and a half years ago, they were doing over $400 million in sales. They had become a public company. They had revolutionized the mattress industry. And again, a great example of the benefits of scarce resources, the burden of abundant resources, the incumbent manufacturers of mattresses, you would have imagined would have known more than anybody about how you should build a mattress company. They were stuck on the old model. They couldn't break their mental fixedness to see what the problem was, let alone what a new solution was. And it took people like Luke and Neil who were in their 20s to see that there was a real problem to figure out a small-scale solution and then to scale that solution to be really successful.

What a great story. I love hearing of those. And I also just want to repeat what you said here, which is they benefited from the scarcity of resources.

That's right.

Versus others who are burdened by the abundance of resources. And if I had to think about that, a lot of companies get overbuilt because they have resources, whether it be they're overbuilding their technology, they're overbuilding their team and their capital needs to build this whole machine and engine. If you build it, they will come. And then you have other entrepreneurs, especially specifically happens a lot in collegiate startups, right? If you think back to Facebook, how Facebook started or whatever it may be, they're starting college dorm rooms. They have to really scratch and claw to figure this out because of the scarcity of resources and have to do it a different way, which really benefits them. And if I think about today's landscape here a little bit, Danny, is you have all these AI technology, all these different things where you don't need massive amounts of resources to start a company. In a way, you can build something a lot cheaper than you used to be able to do things and can benefit from that scratching and clawing. Is that what you mean by that?

It's somewhat what I mean, for sure. A couple of other elements are forced to iterate and fail fast, fail cheap, as the saying says. You can't afford to invest a lot of resources in one direction. You have to take tiny steps forward and then iterate and maybe a step backwards. It forces you to attract people with complementary skills because you don't have an abundance of talent on your team and a lot of people on your founding team. So you have to reach out to people who bring different things to the table. If you're in a big company, a big organization, I did a whole bunch of workshops recently for the U.S. military because they said we need a different way to solve problems. Actually, the scary thing they said to me was Both the Air Force and the Army engaged me to do this. And they both said, we're really well prepared to fight the last war and not well prepared to fight the next one. Their burden of abundant resources was an immense amount of training, but it was focused on the last war, not the next one. And you're right. I like the word scrappy that you use. If you are, and it doesn't have to be a student. Sometimes I'm asked to travel to different places around the world that feel disadvantaged. They have limited resources, Kingston, Jamaica, rural China, Ramallah, Palestine. And those places feel like they're not really entitled to be entrepreneurial because they don't have a lot of resources. And when I unveil that Casper case or a few of the others that illustrate the benefits of scarce resources, we find that actually they're really well positioned, at least in the see stage and in the solve stage. Initially to figure out what problem to solve and to solve it on a small scale iteratively, they're really well positioned and their whole body language changes. People, they sit up and they feel a little bit more confident. And when I work with folks in the military, they have to scratch their head and say, whoa, you mean these huge billions and billions of dollars budgets we have, they may work against us? Or that could be in a big company. I just did a workshop at a bank. For their board. And yeah, they, and there's an example of that that I talk about in the book, the Knight Ridder newspaper company. I did a workshop recently for Delta Dental who thought we're a dominant player in this industry. What could possibly make us vulnerable? And those abundant resources are what make them vulnerable because they think narrowly in one direction about perhaps a legacy model. And aren't in a position to break their thinking, to think of a new model.

With your definition of entrepreneurship as a structured process for solving problems, what is it called when someone does not use a structured process?

That's a good question. When I was first tapped on the shoulder unexpectedly by Barrett Hazeltine, an old professor of mine, a lot of people said, oh, when you start teaching at Brown, you're going to teach something like entrepreneurial spirit. And I thought, I don't really know what entrepreneurial spirit means. It sounds attractive, but I don't know what it means. And I certainly don't know what it would mean to teach a spirit, but that's actually what a lot of people were imagining I would teach. You psych the teams up, you'll get them really excited. You'll generate entrepreneurial spirit. And I thought, my faculty position, I'm an engineering faculty member. I'm an engineering professor. I don't know much about engineering. It's just where entrepreneurship is at Brown. And I thought, how crazy would it be if we were asked to teach somebody how to build a bridge? And we said, you know what, just go out there and have the bridge building spirit and throw up a bridge. And if it collapses and the cars and the trucks fall down to earth, then just have some more spirit, be more persistent. And of course that would be insane. We would lose our accreditation. No one would trust us to teach anything. And I realized. No, if you were to teach somebody how to build a bridge, you could distill some fundamental principles that all bridge building has in common, a beginning, a middle, and an end with lots of variation, lots of room for variation, aesthetic variation, operational, functional. No one bridge is exactly like any other. You could teach somebody how to build a bridge. They could get good at it and they could apply those principles to any bridge building. And I thought, Surely entrepreneurship deserves the same amount of rigor and it can't just be about entrepreneurial spirit. And so that's where See, Solve, Scale came from. I thought, what's the problem and how do you teach people how to figure that out? How are you going to teach them to solve it with very few resources initially? And then how are you going to teach them to scale it? And so it's akin to what you would teach any other discipline in engineering.

The structured process for solving problems, and I think the high-level structure is the title of your book, The C-Solve Scale. Can you elaborate on the structure with maybe a few kind of bullet points underneath each so I can really get a feel for how this works?

Sure.

So C is, as I say, starting with Finding and validating an unmet need. And both of those words are important. Finding, because sometimes you don't really know what the problem is. And I share some examples from my P&G training. One was the Tide brand wanted to know what people thought of the cardboard box that the powdered Tide came in. It'd been around for 30 years. By and large, we're told that the cardboard box worked fine. And then they went into people's houses with permission and actually watched consumers interact with the product. And lo and behold, it wasn't fine. They watched this one consumer take a knife and stab the side of the box, bore a little hole, and pour the powder into a measuring cup. And they were horrified. What is this crazy person doing? And the person using the product thought, this is how I always use the product. And they discovered that there really was a problem. So finding the problem is always A big part of the issue. That's been true in all the startups that have come through the Nelson Center. We undertake this very rigorous approach of anthropological, it's empathetic, understanding, watching, observing, listening to understand what the problem is. The second stage of the solve stage is where there's a lot of creativity. I share a very disciplined approach. To figuring out solutions called systematic inventive thinking. It was invented by a friend of mine and it's a structured, rigorous, pattern-based approach to figuring out solutions where you may have identified the problem. There's other solution templates that I have in that part of the book. It's the most fun part of the process, I would say. It asks you to open your mind to new approaches, certainly the The Casper founders did that. Pro— Imperfect Produce, now called Imperfect Foods, is a startup from one of my students, and he did the same thing, figured out a problem. 40% of all foods, all produce grown on U.S. farms is thrown out because it doesn't look right. He discovered that problem by doing the C stage. He iterated some solutions. And again, at the time of the book, I had him write the section of the book, Ben Chesler. It was doing over $200 million in sales. It had 1,500 employees in 48 states. They had raised over $250 million in venture capital. They had saved over 100 million pounds of food. That's that last stage. That's the scale stage where once you figure out what the problem is and initially with some iteration, not getting it perfect the first time. How to solve the problem, then the scale stage is a lot of the business elements that you might see in any other kind of business enterprise. But my definition of entrepreneurship holds that you have to scale in order to qualify as an entrepreneur. You have to have big and very long-term impact to solve the consequential problem that you identified in the C stage.

Systematic inventive thinking, you said, was one of the most fun parts of the process. Let's go there. Tell me, how does that work? And how do we start having some fun when we're doing some innovative thinking?

Systematic inventive thinking is a, it's again, counterintuitive because it seems very structured. Whereas you think creativity, innovation, it's not very structured. In fact, it is. This group of researchers studied 25,000 patents and they looked for patterns of innovation in those pattern, in those patents. And they reverse engineered 5 creativity patterns that you use as the basis for working on a problem. They include things like what they call subtraction, where you make a list of all the components of an existing service or product, and you subtract one of them, one of the really consequential ones, not like the color or the design, but you pull out an example, a consequential, really important component of that product, and you see what you have left. And often that leads to a breakthrough in innovation that yields a solution to the problem that you might not have expected. An opposite of that is multiplication, where you take one of those key components and you create another one and you see what might happen there. An example of the first one, by the way, might be you look at a bank, a service in a bank, and it has a person, a bank teller, and you take the teller out of the equation. What do you have left? You might have an ATM. If you have a pair of glasses and you take the rims off, You might be left with just the parts that could be for a different kind of eyepiece. And so those are 2 patterns, subtraction, multiplication, division is a 3rd. There's 2 others remaining. The point is they are templates, patterns of creativity and innovation that structure your thinking, structure your approach. Again, in ways that's counterintuitive because You might not think that structure would yield breakthrough outcomes, but it turns out that those are really important for doing something I alluded to before, breaking your mental fixedness, because one of the things we get stuck on is seeing a product or a service one way, and these 5 patterns of systematic inventive thinking are a structured way of helping you do that.

Danny, there's a quote that I had heard that I think you just gave a lot of substance behind, which is structure frees creativity. And it was one that I was like, huh, tell me more about that. And you just defined it again, which is if you put structure around things, it actually provides the framework for creative thinking. So.

There's a monastic proverb that I like that's related and it says freedom is found in the context of limitation. Freedom is found in the context of limitation. And it's similar to what I said before about benefits of scarce resources. Those limitations are, or constraints are exactly what lead you to breakthroughs that you might not have considered. And again, I think systematic inventive thinking is a good example of that. I'd say that may be a consistent theme around all of my teaching. Around CSAL scale in general, around what you would learn in the book or in my workshops, which is, again, it's not a spirit that you are embarking on with no guardrails or no structure. It's like you would learn and master and apply anything. If you were to learn how to bake French croissants, you wouldn't just say, hey, just go be really excited and enthusiastic and run into the kitchen and throw whatever ingredients you want on the table and Put them together in whatever kind of format you want and see what you want, what you get out the other end. No, there's a structured process, a very structured process to learning how to bake French croissants. You need the right ingredients. You need to put them together in the right order. You need to preheat the oven at a certain point. You need to bake the croissants at a certain temperature. It's funny that entrepreneurship has a reputation for being anything different. And Rich, I think this was your initial inquiry about, it seems like this is obvious. What would be the alternative? And, and in fact, in a lot of corners of the world, there isn't a structured process for being an entrepreneur. It's funny because a lot of the audience for the book tends, and my teaching tends to be pure beginners. They have never really done anything in entrepreneurship, but a lot of where the book seems to be resonating is with experienced people in other fields. Again, that are blessed perhaps, or maybe cursed. With lots of resources, big companies, boards, as I mentioned, the military, governmental organizations, and also seasoned entrepreneurs who themselves admit they don't really know what process they've been undertaking to do what they do. And the adage that they may be a solution in search of a problem because they rushed past the C stage often applies to people who are in technology fields because they dream up something in a lab or a makerspace. And you mentioned AI before. It's certainly more accessible than ever, but I find the biggest mistake people make is not following the recipe. It isn't to say there isn't room for lots of variation or creativity. There is lots of it. But if you don't have a scaffolding of a process, It's just going to be luck that you stumble onto a solution that matches a problem.

It's funny. I'd actually say, Danny, my question was not steeped in what would it be if it wasn't that, of course, it was actually steeped in, I'm not sure the average person would define entrepreneurship as having much structure. So if that, so it was coming from, okay, so if that's entrepreneurship, What's the other thing called? Because I feel like the street thinking about entrepreneurship is it's very unstructured and it's a little unwieldy. And John, I'm curious with you and the businesses that you're doing coaching with, maybe it's just ones I'm doing coaching with, but there tends to be an unstructured approach and coaching comes in and books come in to help create that structure, but it's not native to entrepreneurship. What's your experience, John?

Yeah, I would agree with that. That, at least in the entrepreneur, a lot of entrepreneurs that I work with, one of the biggest problems they have though, Rich, is they're incredibly unstructured. And as they put structure around their business, they do provide the ability for them to grow and develop. And I'll take it a step further, Danny. I wrote a book called The $100 Million Journey. And part of the reason I wrote this book is I had a business. I started to scale the business and I failed miserably. We were $55 million in global revenues after 15 years and lost Everything because we didn't have some structured elements probably in the right spots and we didn't really scale properly, which is, I want to dive into that in a minute. But I do feel that there's a lot of businesses out there that are, maybe they do lack structure, Rich, but they're probably in the lifestyle size of the business. Because one of the parts that you, one of the things you said, Danny, was to me, entrepreneurship, you got to see a problem, solve a problem, and then scale. And if you're not scaling, maybe you don't fit into that entrepreneurship. vein. So what about the entrepreneurs that have a lifestyle business that maybe aren't looking to scale? What are they called? And so I'm very curious about that whole element of scaling.

Let me admit, first of all, that the book See, Solve, Scale was not my idea. And it relates to what you just asked. Uh, my students in big numbers would come to me and they would say, wow, and it was gratifying. Your course had life-changing impact on us. But they said, you are not doing this 3rd step of the process that you taught us. You are not scaling. And I thought, oh, how interesting when the students become the teacher. And they were right. And I said, but what should I do? And they said, duh, you should write a book. And I thought, how hard could it be to write a book? Just like how hard could it be to teach? I had never taught before. And all of a sudden I was teaching and I'd never written a book before. And All of a sudden I was writing it and I did it and it was hard as from your own experience. And then the book started getting published in, so there was a lot of interest from big publishers. It's published by St. Martin's Press in the US. And then it got picked up and translated with different kinds of publishers around the world, in the UK, in Taiwan. Here's the Taiwan version, the Japan version, and it's coming out in Korea and China and Saudi Arabia. And so then I went and then all these workshops are coming of it. And I went back to those students and I said, okay, so am I doing it? Am I scaling? And they said, yeah, you're on your way. You're starting to scale. And they were right. And so the reason I tie scaling as such an essential part of this is it gets back to the qualities of the problem that I encourage Everybody to address strong and enduring unmet needs. When we have students in the Nelson Center embarking on this process, I want them to focus on problems that the whole world needs a solution to. And Imperfect Foods is a really good example. PreMama was a startup that came out of the Nelson Center that reinvented the way women take prenatal vitamins and other vitamins for their, for their health. Climate change, one of our teams, Perennial, they came in second, actually not even first in our first Brown Venture Prize competition. They just raised $25 million in a Series A financing. Intuscare, a healthcare analytics company, for some of our students, they won the Brown Venture Prize competition a couple of years ago. They just raised a total of $31 million in financing. These are students who are scaling solutions that are addressing a really important consequential problem. Perennial is focused on climate change and optimizing carbon sequestration in farms. So as long as you're going to embark on the challenging process of entrepreneurship, why not do it in a big way that's going to have a real life-changing, world-changing kind of impact. It's not that there's anything wrong with small lifestyle companies. Of course we need them. We need florists. We need local restaurants. We need local convenience stores. The economy wouldn't function without them. I'm not demeaning them. I'm saying at least what I teach and what I want to encourage my students to do is to change the world. And that's a little bit different from lifestyle kinds of businesses, again, which we need, but are not the focus of what I teach.

Love it. So Danny, if an entrepreneur is listening to this right now and goes, okay, this is fantastic. Great structure around the seeing and the solving and the scaling. How can Danny help my current business? I do want to scale. I have a current business. I've been in business for 10 to 15 years. I want to take the next step and grow my business. And you do some workshops, you work with businesses. Can you talk about, can you talk to that entrepreneur specifically? who already has a company, they're already in a specific industry, vertical, whatever it may be, how can you and your book help them scale their business?

Sure. I think it goes back to this structured process and it goes back to the very first step. Whenever I, and I do work with established businesses, Delta Dental was one of them as an example. Their CEO said, I need you to come focus our board on our need to change our business completely because they don't know it, even though we have record profits and what are perceived to be big barriers to entry, I think we're going to be extinct in just a few years. And so I worked with their board. I did a case study that's depicted in the book, the Knight Ridder case, newspaper company that thinks it's invulnerable. And along comes this thing called the internet. I always say, go back to the first step, go do some bottom-up research, go observe and listen. To people in your industry's environment, your customers, like the Tide example, the Dawn dishwashing example I have in the book was where they wanted to watch people wash dishes. And they were very surprised to see that a lot of their Dawn dishwashing consumers were using Dawn to wash fruits and vegetables. And that gave an insight that led to a completely new product line called Fit. Whose purpose was to wash fruits and vegetables. There's no shortcut here. And if you're in an existing business, definitely go back, learn the C stage that I talk about in the book, or there's some video online that I share on my website and elsewhere. And it will teach you how to do what the Tide and the Dawn dishwashing liquid people did, which was to As objectively as you can, observe and listen. You may not know exactly what you're observing, but you'll see things that are surprising. And if you pay attention, I did a workshop for PwC, PricewaterhouseCoopers, for the group that deals with M&A. And they realized they're in their clients all day long during a finite process. And they needed some training to learn how to do the C stage. And it was the biggest workshop I'd ever done. It was during COVID It was 2,400 participants. We had 300 breakout rooms. And it changed the way that they embark on expanding their client relationships, figuring out how to identify, identify more problems and to figure out more solutions. All of those places could also benefit from the systematic inventive thinking solve techniques that I teach in my workshops and also in the book. And then the workshop I just led for this bank board was all about scaling. And that may finally get to your question, which is that there's a technique I teach that was inspired by a colleague of mine periodically, Bob Johnston, called the landscape metaphor exercise. It's depicted in the scale stage of the book. I do workshops on it and it asks you to envision the world 30, maybe even longer years into the future, and then do some right brain work that's again, fun and creative, and then invent a solution backwards. And again, one of the things it does is it causes you to get out of your own way, to break your mental fixedness, as I've said before. Change what's in your brain as the constraint for the way you think you have to operate and open your mind to new ways. That's just frankly hard to do if you're working on a company. The adage, and I'll stop in a sec, the adage that I again borrow from my friend Bob Johnston is the 2 things a CEO of an existing company needs to do every day is Secure the fortress and invent the future. You have to do both. And yet you spend so much of your time and effort and resources securing the fortress, operating the business day to day, that it's really hard to invent the future, to find time to do that. It's another example of the burden of abundant resources. The competitors to you don't have a legacy business that they have to protect. That's one of the lessons of the Knight Ridder newspaper case that's in the book and that I teach.

Love it. That makes a lot of sense. And you're right. A lot of companies, including the ones that I work with and have, we were so busy securing the current business and not enough time on that future and seeing solving future problems.

So can I mention 2 other quick principles that are general concepts in the book that I wouldn't want to ignore? You may be getting to those, but one we glossed over earlier was the critical elements of entrepreneurship team formation. And this is maybe one of those things as well that would be useful for some of your listeners who are operating existing companies to think about, and certainly important for people who are thinking about creating from scratch a new venture. The team sweet spot is a diverse team that represents all kinds of diversity, certainly gender and race, as we talk about a lot. But points of view, skill sets, where they come from, maybe their type. I talk a lot in the book about the critical importance of engaging both extroverts who are prototypically what we think of as entrepreneurs, but also introverts. Introverts actually add disproportionate kind of insight and impact to the entrepreneurial process in ways that You may find surprising. There's a woman named Susan Cain who wrote a great book about this called Quiet, and I cite her work in the book. Team formation around diverse teams is really important, but the really surprising part about that is just diverse teams who are not inclusive teams and just draw on where all their team members overlap actually underperform homogeneous teams who by definition engage everything that everybody's bringing to the table because they all look alike. And so the real secret to how to create a breakthrough entrepreneurship team is both diversity and inclusion. Inclusion means where you engage everybody and everything that everybody potentially could bring to the table. You create a trusting environment where It's okay to disagree. Creative abrasion is the phrase that I use. It comes from Linda Hill at Harvard Business School. And again, the surprising thing is just diverse teams that aren't inclusive underperform homogeneous teams. The real breakthrough teams are both diverse and inclusive. It's like diversity is being invited to the dance. Inclusion is being asked to dance. And so we spend a lot of time in our class Putting together teams that are diverse. They often don't have any background with each other at all. And we also spend a lot of time helping them to be inclusive so everybody can bring everything they potentially could bring to the table.

Love that diversity plus inclusion equals trusting environment. Love, love that. Great way to close off this conversation. Danny, if people want to learn more, how can they get more information from you or Best way to view your work.

Dannywarshay.com. There's a whole section about the book. There's a section about some of the training that I've done and very happy clients who've had me in to do that. It is part of my own mission about changing the world. There's a principle that I teach called ikigai, which is this Japanese word that means living a life of meaning or of purpose. You've probably heard about it. There's a whole section in the book about this. Thanks to my daughter, my youngest daughter, who nudged me to include that because you can learn, you can master, and you can try to apply the CSOLVE scale academically, but you're not going to be successful unless you engage it around ikigai, which means do something you love, do something you're really good at, do something that's going to add value or purpose to the world, and do something that's going to pay you fairly. For the value you're adding. And so I want to make sure that in my own work and what somebody can read about on my website is helpful to them in the way that I think about my mission in life. And also on LinkedIn, I'm certainly on LinkedIn, but there's also a readers group that's growing of readers of See, Solve, Scale that anybody who's reading, or I also narrated the audiobook, who listened to it. is welcome to join because that's part of my own mission of creating a diverse and inclusive community around the book. So I hope those are 2 straightforward ways, dannywarshay.com and LinkedIn, either my personal profile or the See, Solve, Scale network on LinkedIn.

Awesome. Danny, thank you for your time today. Very much appreciate it.

A real pleasure to be with both of you. I can see your own passion in what you're doing, and thank you for all that you're adding to the world of entrepreneurship.

Stay tuned as John and Rich unpack today's conversation.

John, right where we ended with Danny on the Icky Guy, do you remember when I said that Shelby and I were gonna go grab a cabin this summer and we were gonna figure out what we wanted to do? Uh, since I was in transition, moving from a 15-year employer over to doing something entrepreneurial myself. And do you remember ikigai was one of the things that we used?

I do.

Yeah. So it was interesting for that to come back around full circle and the looking at living a life of love. What are you good at? What do you add value to and how do you make money at it? That's very close to what you used on your sabbatical of the hedgehog concept.

Yeah.

Yeah.

And as a reminder, the hedgehog concept is what are you most passionate about? What can you be the best in the world at? Not that you are the best in the world at, but what can you become the best in the world at? And what drives your economic engine? And the intersection of that Venn diagram is what success looks like, is that concept. So I love that. And you know what I love further, Rich, in this whole story that Danny shared with us was the practice what you preach. And the fact that the students went to him and say, hey, this is great that you're teaching us to see it, solve it, and scale it. You've seen it and solved it, but you're not scaling. What's going on here? And the fact that he actually wrote the book and is now scaling it globally and getting himself out there in the world to scale what he truly believes to be really what he believes is a strong, enduring, unmet need himself for entrepreneurs, um, that are scaling their businesses. So I love the fact that he's looking to scale his business. And I had a recent situation myself, Rich, even in coaching where I found myself coaching some entrepreneurs on what I felt like they needed to do in their business and came to an aha moment. Oh my gosh, one of my businesses is not actually doing that. And so sometimes putting a mirror up to yourself and being, hey, if I'm going to talk about this, I better be out there doing it. I love the fact that Danny's looking to scale his business and his concept.

And his idea of the burden of abundant resources and the benefits of scarce resources, it does remind me What we see a lot with entrepreneurs is once they run out of lines of credit, they're no longer able to fund bad decisions. And many things that need to right-size the business happen when money runs out or when money is scarce. And there is this burden of abundant resources that you can make bad decisions and you can afford to make some bad decisions and you can afford to not have conflicts or not right-size things or not reduce here. And then all of a sudden, when money's an issue, it forces those scarce resources, forces certain benefits to the organization that wouldn't have been there if the abundant resources were still there.

Very well said. And I've been mentioning this a little bit recently, and I talk about it as well in my book, but like management-influenced waste is what I call it. And the amount of waste, the millions and millions of dollars that's just wasted because of exactly what you just talked about. We have so many resources so we can make these bad decisions. We don't have to look over every expense that happens. Then when things tighten up, you get really the benefit of, okay, now we're going to make the tough decisions because we don't have as much resources. So I love the fact that when you're trying to see and solve a problem, you don't need a lot of resources. You just need to spend the right amount of time. But then where do you start? And that's where the structure for me really comes in, that whole structure frees creativity. And I love the quote that he provided as well. I don't recall exactly the source of it, but the quote was, freedom is found in the context of limitation. That's interesting. How do you take that quote yourself? I'm very curious to your read on it. Freedom is found in the context of limitation.

Well, you know what that immediately makes me think of is the principles of priority management that entrepreneurs who do not take discipline and intention with their priorities look at priority management as a structure, almost like it's a jailhouse. Oh, if I commit to filling my schedule with certain things, I don't have the flexibility to do what I need to do. And it's no, it's actually the opposite. If you commit to a structure of how you set priorities and manage your time to them, you can do anything you want. It's not that it holds you back from being able to do anything you want. It actually equips you to do anything you want. So that structure frees creativity. It allows people to be more flexible and actually achieve what they want to achieve. But from the outside looking in, it looks like jail cell bars to have to be rigid to a schedule, but you get to pick it based on your priorities.

If I take it a step further in this conversation, if you think about the entrepreneurs that typically listen to our podcast, it's typically not a startup entrepreneur. Typically not. There are, I'm sure there are some people who are thinking about starting up a business, but it's typically people who already have their business in place. Including myself, the biggest takeaway I had from this conversation, Rich, is something you said at the end, which is we have 2 jobs as a CEO to really protect what we're building and to future-proof our business. And way too many entrepreneurs that I work with, including myself, are more like 100% preserving what we've built and not really looking at future opportunities and seeing and solving future ways our businesses can grow 30 years down the road. And I love that part of this as well, which is I'm big into 30-year life plans and really looking far into the future. But do you do that with your own business? That's a stretch to be thinking 30 years out and backwards problem solving, right? He said, invent the solution backwards for how you're going to future-proof your business. But even if you just take it, not 30 years, think of 10 years, there's a lot changing in a lot of industries. where's the puck going? How can you think through the future-proofing of your business? So others who aren't burdened by trying to preserve a business, they're trying to create a business in your space, may come eat your ham sandwich. That to me was a big takeaway.

Yeah. And he had said specifically, your competitors don't have a legacy to protect. They're not trying to protect the past and the extension of a legacy. They're just trying to solve issues and problems that are coming up in the future. And they have all the flexibility in the world where sometimes the legacy that we try to extend into our future actually handcuffs us.

Yeah. Rich, I have to ask you about this. Your, the name of your company is Trusted Leadership Coaching. And Danny talked about something at the end. He was very important for him to get this in because I was about to close the conversation. I said, hey, before you do that, I got one more big thing that we have to talk about here. And what he talked about in essence was the team formation. And he said, basically, you need diversity and inclusion to create a trusting environment. I'd like to get your read on that last piece.

Yeah, I couldn't line up more. I think with the diversity and a lack of inclusion, what often happens is backchanneling. And there's this passive aggressiveness because there's diversity. But there's not inclusion in the actual meeting where problems are getting solved. So the inclusion happens outside of the meeting where there are one-on-one conversations, backchanneling opinions, creating some politics in the organization, which is why you said the homogeneous company that does not practice diversity, the homogeneous company is actually better than the diverse company without inclusion. Because the diverse company without inclusion creates a political environment, which I'll take you back to the Table Group or Pat Lencioni's consulting company. Their definition of politics is changing what you're saying depending on who's in the room. And I think if you have diversity that you've invited into the room, but not inclusion and how that conversation takes place, You're teeing up those conversations to take place outside of the meeting and creating a political environment that's going to slow things down and be less functional.

Yeah, I encourage all people listening to this to go buy the book, See, Solve, Scale, and please help us get more guests like Danny by subscribing to our podcast, leaving us a review. Help us get more guests like this. If you have a guest you'd like to hear, On the Entrepreneurs United podcast as well. Please reach out to us. We love referrals of great guests like Danny. So thanks for joining us here today.