Karl Moore: This is Karl Moore of the Desautels Faculty of Management at McGill University, talking management for The Globe and Mail. Today, I am talking with Andy Nulman, who was the CEO of the Just for Laughs [comedy]festivals and currently [president]of Airborne [Mobile] Andy is a McGill graduate. We are here at McGill for homecoming, so were delighted to shoot this before a couple hundred of McGill alumni who made it back to campus on this beautiful autumn day. Good afternoon, Andy.
Andy Nulman: Hey Karl, wow.
KM: Andy, you were involved with Just for Laughs as an entrepreneur, now onto Airborne. You have been an entrepreneur a couple of times, what we call a serial entrepreneur. What is the mind of an entrepreneur? How is it different from a corporate manager type, like I was at IBM? What's the mind of an entrepreneur?
AN: Well, the mind of an entrepreneur is the mind of madness because what you are doing is that you are going against the grain. Everybody is telling you that you can't do it. I have to tell you that it was the same thing for Airborne as it was for Just for Laughs.
When we started, people thought that we were crazy. Never mind my family but even our investors thought this. I have a great story to tell you about Airborne investors. When we started with Gilbert Rozon, who was, he was the original founder of Just for Laughs, I came along to help him co-found the English side. When we started out, nobody believed in us. Nobody! We went to the States and I will never forget this. We were excited to get a meeting, and the great William Morris of the huge talent agency gave us a meeting, and we were so excited that they actually let us meet them - and they wouldn't take us into their offices. They came out and met us in the lobby. We sat in the lobby pitching for our Just for Laughs festival.
So then they tell us: "Let me see if I get this straight." So remember that a comedy festival did not exist. "You are doing a comedy festival, bilingual, in Montreal, right?" Yes, that's exactly what we're doing. Basically, we were shown the door countless times. The same thing with Airborne. [When]we started Airborne, our pitch was that the mobile device was going to be way more than just a telephone. We went to people and said that what is going to happen one day is that - and this is true, I still have the notes - what you are going to see one day is that the screens on your phone are going to be in colour and there is going to be video on it. Then, they looked at us and said, "Are you nuts? You're crazy!"
So, that's really the mind of an entrepreneur. If you can go ahead and fight the wall of everyone telling you, no, that it can't be done, then you have something at hand. I have always said that if you fight the consensus, that's when you know that you have a winning idea. I never believed in the consensus. I never believed when people said [no] If you ask a whole bunch of people, [and they say]"oh, that's a great idea", or "you have got a real winner," "it's 100 per cent," then you know that you got a losing idea. I swear it's true.
People will go ahead and they will fight you, and I see this all the time. I see a great marketing campaign or a great product - you know there are bits of dead bodies. You know that there are bits of people who say that this will never work and I guarantee you that it will never work. That is the mind of an entrepreneur. If you can fight that and laugh at that, then you have a chance. If you let that beat you, then you are history.
KM: How did you come up with the idea because I have all sorts of ideas but they are dumb ones, in retrospect, most of the time. But you had an idea that turned out to be brilliant. How did you know that was the one, as opposed to the other ideas that came floating through?
AN: You don't. You never know. If you knew, I would buy lottery tickets. Do you think I would work? If I knew it would tell the future, I would buy the lottery ticket. I wouldn't go ahead and actually put my blood, sweat and tears into it. But, you don't know, so you have to make it happen and it only becomes brilliant once it works, because if it doesn't work, then it just becomes another stupid idea.
So then what happens is … I see this happening all the time, you retrofit intelligence. Here is what happens: You have two ideas; they both go their paths. One dies and the other one soars. They may have the same merit right up until this point in time, but at that point of time there was a drop-off. So what happens? Why did this one work? You know that it was a stupid idea, stupid as this one going up, but suddenly it worked! Well, I better feed them to retrofit intelligence.
Here is why, because we had this plan and basically, so many times it is out of your hands. You don't know that it's going to work until you make it work or luck plays the hand in fate - it goes ahead and pats you on the butt and then whacks you on the head. That is what I find time and time again. It's so hard for people in business to say, "Hey, you know what, I was lucky" or "I was there at the right place and at the right time." I have to say, to demystify this, that in so many cases that's exactly what happens but go and tell that to The Wall Street Journal. You can't say that. You have to say "Well, basically our strategic plan, we're looking at it as a five-year plan and we saw the growth of this and we saw it coming up from China." … It's insane! You don't know if it's going to be great until you make it great and until the hand of fate pushes you along the way. But you got to believe in it and the real win is trying to sell other people [on the merit of your idea] There's a zillion great ideas and if you watch those shows: Dragons' Den , what's the one in the States? Shark Tank . What makes one idea better than the other? Success! In the end, you cannot predict that, so you just have to keep trying.
KM: Some of my students say that they want to be entrepreneurs because they will have greater freedom and they won't work as hard.
AN: Ha!
KM: How wrong are they?
AN: It depends what your idea of freedom is. You are never free because you're always having to use diligence and you got to serve somebody and if it's not your boss or the board or the shareholders, it is your banker or your investors, or the client that you are begging to do something and they put unreasonable time or money demands on you. You'll never be free. If you want to be free - retire! Don't work. As an entrepreneur, you are not free. You're busting your ass! You are working weekends.
I have to tell you, that I really don't have to, not because I am independently wealthy because I'm not, but at this age I could slow down. I work seven days a week just because it's unfortunately, or fortunately, in my blood. But there is no such thing as freedom. Yes, you may take a vacation but really, even then, are you truly free?
This is an idea: You're out of town, you see something and say "This may work" on your way back home or whatever. Freedom comes with retirement. Not that there is anything wrong with retirement but believe me, there is freedom from what you see as a corporate restraint, but there are other restraints that you don't get in corporate life. So it just all depends on which road you want to take and where you are more comfortable.
KM: What are some of the restraints in the entrepreneurial life?
AN: One of the constraints is never really knowing, even when things are flying, and you really don't know how long they are going to fly for. One of the great marketing professors I had was a guy by the name of Don Tobin at Vanier College. He was the head of Catelli at one time and he retired and came to teach marketing to young upstarts at Vanier College. One of the things he taught to us was that there are two types of variables; controllable variables and uncontrollable variables.
The controllable variable part, I never understood that because once you go into business, there is no such thing as controllable variable. It is all uncontrollable, so that is really the real constraint. The constraint is that you never really know what you are doing; every day is a Pandora's box.
I was going to tell you a story about our investors. Unless you are independently wealthy and you can bootstrap some of the minute investments which is happening over the Net, which is great but you need money from somebody, so if somebody puts in money, very few investors who invest money walk away and say, "I will see you later." (In fact, we had a couple of investors who did that and it worked quite nicely with them.) Most of the investors want to know what is happening with their money, so that is a major constraint. Even our investors did not believe in us; for the first two years at Mobile, we had zero revenue. We were trying to sell content and there wasn't anybody who wanted to pay for it in the U.S. and Canada.
I remember one of our investors was part of a family who was involved in the liquor business and they had Vivendi attached to it. I said that Vivendi are into water. They have media and they have water. You guys should look into this mobile business. Why do you get into water? But in retrospect, maybe they were not all that stupid but you don't need investors telling you "Guys, we really don't believe in what you are doing. Instead, look at a commodity like water instead of what you are doing." You realize then that there are plenty of constraints. There are a lot of people you have to prove wrong.
KM: The entrepreneur is all-consuming. I run into your family a fair bit and it seems like a good marriage and the kids are turning out well. How can you be all-consuming and yet maintain a sense of a good family life?
AN: Because your family has to buy into what you are doing. I never believed in the balance-life thing. I have heard it living a balanced life. It is really tough to go ahead when all hell is breaking loose and you have to work 24 hours a day or 48 hours and you have to say I really can't because I have a ballet recital to go to. I understand that.
Let me tell you that I made all my kids' dates but you pay a price for that because where you are going at 4 o'clock in the afternoon that is a low. You are basically borrowing time and it is going to be paid back later. Luckily, my wife is here with me today and my kids would be if they were not busy working at their own projects right now. I must say that I was lucky that my family understood. My wife is here so if something hits me you'll know why I am nervous here. I am watching from the left side of my face to see what is going to be thrown.
But many times I would say if you want to marry a "nine to fiver" that is fine. I will be a "nine to fiver" but I do not think the payoff is going to be the same. I do not think that the lifestyle we may be able to enjoy and the fun we can have is going to be the same, so it is always a tradeoff.
I remember if I may, there was a great friend of mine who unfortunately suffered from depression and ended up killing himself; very sad - Richard Jeni. He was a comedian and a great friend of mine. He was a brilliant comedian and we used to have these talks, He had this place in L.A. with a billion-dollar view and we would sit out there having a drink of beer and we would always be talking about tradeoffs. That is the thing about life that I do not think it is a balance as much as I think it is about a tradeoff. He would say you live in Canada. I would say I know, but the lifestyle is lower key and I do not have to worry about earthquakes and Hollywood constantly pressuring me. There is always a tradeoff and it is about how you balance those tradeoffs which I think is the most important thing.
AFTERTHOUGHT
This week, I am trying an experiment, where I have asked one or two McGill MBAs to join me in reflecting on what the CEO said and giving our two cents worth. This is part of a new course, "The Role of the CEO," which Dick Evans, just retired CEO of Rio Tinto Alcan, and I are teaching. This week, I asked Mike Ross for his thoughts before I prepared the following comments:
We talked to a couple of entrepreneurs, who agreed with much of what Andy said, but for them a couple of points particularly hit home. One related how their business tanked and so she and her husband sold their home and started up their venture. The way she put it is both colourful and to us reveals the mind of many entrepreneurs that Andy talked about: "We were going to the island on the canoe and there was no backup plan. There was no income and we bet it all on the farm." This mixes a couple of metaphors, but I think you get her point.
In my years at IBM and Hitachi, I faced some career downturns but I never recall this sense of rolling the dice. They have done very well with their new business, in a few years' time achieving a very strong market position in a niche market; however, as she left my office, her parting comment was that a new government regulation that was being pressed by some competitors might mean they would have to hand over the keys to the government and just walk away. This after slogging it through a challenging Great Recession year. Andy's comment how "even when things are flying … you really don't know how long they are going to fly for …" certainly came to mind.
In our experience, entrepreneurs are often very compelling and persuasive people. Having to raise money and other support probably teaches them these skills if they don't come by them naturally. Which is one reason that I enjoy interviewing people like Andy. They often have strong opinions; sometimes they overstate them, so you have to take what they say with a grain (or two) of salt and realize that what they say might be gripping but might not exactly apply to your situation.
Andy's two big ventures, Just for Laughs and Airborne were pretty risky; they really were new-to-the-world type of ventures. Entrepreneurs often have ideas which are more variations on a theme rather than entirely new types of music, as new-to-the-world type of ventures are. So his views on risk are absolutely correct for the kind of thing he had done and is doing, but there are new ventures that are quite a bit less risky in terms of their newness to the market. There the risks are more in terms of existing competitors' responses, getting financing, winning over customers from someone else and enduring tough times until you reach some degree of sustainable success.
One area where we questioned Andy was his implicit view that there are a lot of "9 to 5" jobs out there. Actually there are, but well-paid, stimulating, and challenging 9-to-5 jobs with high potential prospects are fewer and fewer these days. One friend, who has worked for "big corporate" and is now a family business entrepreneur, asked, "Is anyone with a serious job doing '9 to 5' hours any more? Anyone with a career now works all the time."
I have to agree with her. When I think of the senior managers or executives I know, they are certainly putting in more than eight hours a day. Karl Moore