Saras Sarasvathy (Bombay, 1959) is one of the academic references in the world of entrepreneurship. Professor at the University of Virginia and Ph.D. at Carnegie Mellon University with a thesis supervised by Nobel laureate Herbert Simon, this academic has just received the Global Award for Entrepreneurship Research from the Research Institute of Industrial Economics. On a visit to the IQS university in Barcelona, she attends La Vanguardia to address the keys to entrepreneurship.
What is the magic formula to start a successful business?
After studying many real cases of entrepreneurs for years, I have developed a theory that breaks some schemes. I have baptized it with the name of "the effectuation thesis" and it is summarized in five principles.
Which are?
First of all, the person who undertakes should not make predictions. They are of no use. The future is unpredictable, so it's not worth spending time guessing. Instead, you have to draw the business strategy from the aspects that are under control, lower the bar of expectations.
Can you give an example?
Very simple: if a person wants to cook a chocolate cake, he will surely get frustrated right away because he will not get all the ingredients he needs. On the other hand, if he sets out to cook something sweet, he has a better chance of success. It doesn't mean that he has to abandon the chocolate cake idea, he may come later, but at the beginning, it is essential not to be too demanding.
What other aspects are key?
Find people who truly believe in the project. In this way, more resources, more visions are obtained, and the risk of failure is distributed.
And what else?
It is essential that the entire team calculate the individual loss that they are willing to take on this project. That is, the money and time you want to spend trying. Contrary to what many think, it is not necessary to leave work to start a business. It's all a matter of priorities.
And the rest of the requirements?
They are linked to the above. The fourth principle says that the entrepreneur must be flexible, receptive to change. It's a cliché, but... if life gives you lemons, make a lemonade. In every failure there is an opportunity. I have found that all successful and experienced entrepreneurs have failed at least a couple of times. So the person who undertakes must be willing to fail.
And the last?
The last principle is related to attitude, mentality. Throughout my career, I have seen that the best entrepreneurs do not think that everything has already been invented, but rather they are convinced that they can co-create the market together with the people and the environment that surround them. A clear example is Sony, which started with rice cookers and gradually evolved into one of the world's technology leaders.
In his theory, he puts little emphasis on the money needed to start a business and take it to a global scale.
I believe that the person who undertakes does not need money.
Why? If the vast majority of start-ups resort to venture capital funds to grow.
My studies go beyond start-ups and address companies of all kinds. I have observed that entrepreneurs who start with no resources and who do not ask for extra financing have a better chance of success.
Do you have figures to back it up?
Nine out of ten entrepreneurs who have obtained venture capital financing fail in the short and medium term. In contrast, only five out of ten entrepreneurs who do not resort to external financing end up closing the business.
How do you explain it?
Entrepreneurs who don't have money or resources put much more effort into finding talent, suppliers and clients and, in the end, their product or service ends up fitting much better in the market.
But with money you can hire the best professionals or the best suppliers...
It is not entirely true. With money it is easy to attract good people and suppliers, but their commitment to the project will be weak. At the slightest change, the commitment will be broken because their link with the start-up will be based mainly on money and not so much on the conviction of the success of the product or service. On the other hand, the entrepreneur without resources who manages to attract people or companies to collaborate with him, even without receiving anything in return, will forge much deeper ties because they will truly believe in the project and the people. Therefore, they will have the best information on the market. Hence the importance of my theory, of connecting with people who are truly convinced of the project. They will be willing to go to the end.
So, is it encouraging you to work for free?
The beginnings of entrepreneurship are hard. I encourage people to work with future expectations of success, to work with that "acceptable loss" that I mentioned before in one of the essential points of my thesis. Many successful companies, like Starbucks or Virgin Atlantic, started from scratch. Without having influence in the market, the founders had to knock on many doors to obtain favors in exchange for the possible success of their project.
Are you saying that venture capital is detrimental to the entrepreneurial sector?
Inflating companies with money will make the founders lose their focus, it will reduce the efforts of entrepreneurs. But I don't blame the investment funds. Your role in the market is to make money.
What is your opinion of the Barcelona ecosystem and the country as a whole?
I have no references. It is the first time I visit the city.
And in Europe?
I think that in the Nordic countries in general they do better thanks to the excellence of their educational system. Young people must be taught that entrepreneurship is available to everyone, not just a few. All you need is an open mind to changes and, above all, a lot of effort.
