We create life-changing opportunities when we help those in need discover their niche and skills for success. In this episode, Patrick Donohoe interviews Steve Mariotti, an educator and entrepreneur who is constantly aiming to make a global change to the way students are educated. As an advocate for entrepreneurs and entrepreneurship education worldwide and the Founder of Network for Teaching Entrepreneurship, Steve has traveled to many countries searching for impactful and relatable content for his book Goodbye Homeboy and introducing entrepreneurship in the school systems. Sharing some significant experiences that has shaped his self-perception and understanding of progress from varied facets, he also discusses his venture on educating others about entrepreneurship.
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Entrepreneurship Education: Introducing Entrepreneurship In School Systems With Steve Mariotti
My guest is Steve Mariotti. He is regarded as the world’s leading advocate for entrepreneurship education. He’s the Founder and Former President of the global non-profit Network for Teaching Entrepreneurship (NFTE). He also is a senior fellow for entrepreneurship at Rising Tide Capital. He is the author of a few bestselling books and textbooks, Entrepreneurship: Starting and Operating a Small Business, Entrepreneurship and Small Business Management and Goodbye Homeboy: How my Students Drove Me Crazy and Inspired a Movement. He is working on a film called The Triumph of the Entrepreneurial Spirit. Steve, welcome to the show.
I’m glad to be on the show. Thank you for inviting me.
Can you talk about a couple of those significant experiences of your life that shaped your perspective of yourself and what was available to you and also the potential that lies within most human beings?
The ability to find a comparative advantage or a niche is within every human being and its part of what makes us human. It’s the ability to think and to be aware of oneself. It’s part of humanity. Often by accident, I don’t think it’s done intentionally at least not in this country, but it gets stifled for many reasons. That something that should be discussed on a national level, a continual level a lot. It’s a concern of mine that in the debates in the election beginning 2016, I have not heard any conversation on education except in one debate. I timed it and it was a minute 56 seconds. If you go back and if you look at the debates in 2016, it wasn’t mentioned at all. Education is critical to any discussion of solving any problem whether it be poverty, health, self-actualization or happiness. That’s a key ingredient. A major reason I wrote Goodbye Homeboy, which is my memoir as a Special Ed high school teacher in South Bronx, New York City, we’re very proud of that, happy years for me where I required every student who each of whom had dropped out of school.
I had to convince them to come back into an offsite program. They couldn’t go back and go to a regular school building, I convinced them. We spent a year and a half almost two years, each working on a business for two to three hours a day and then we do other activities. This concept of helping people find their niche, what they liked to do and what they can do based on their knowledge of unique time and space which means you don’t have to be the best at it. You have to be the best at it at a point in time, in a particular space. When people realize that, it can be life-changing.
As you have had these experiences, here are those that essentially have been labelled as not necessarily fit for the public school system or regular school. They have this label on them and then you bring to them some ideas. What is it about those ideas that got the light switch to flip on? What was the connection that they made in your opinion?
The most important thing is the concept of ownership. That you can actually own something is many times not taught to low-income people. They will be encouraged to view life as receiving something that they don’t really own. I always talk about ownership. If I had my 40-year career to do over, I would have emphasized the concept of owning and entrepreneurship as being one tactic to get to owning ideally your time. That’s the most valuable thing. The second more tactical or practical concept which is important and I hope you’ll try it with your own children is that many young people in poverty will think that there’s one price. They’ll think this book is $16 in a bookstore, not realizing that there’s a wholesale price, manufacturer’s price, jabber’s prize and that’s true for any good. The majority of the world’s population is not aware of the concept of the production structure. When someone learns that and experiences it, it is life-changing as anything I ever saw as a teacher. We assume that knowledge but the vast majority of people in the world are only exposed to a retail price and left out of these huge opportunities to buy something and then resell it or buy something then use it and save money.
It’s also interesting that there’s a huge population that also is unaware. It’s not the fact that there are some people that are unaware, it’s a big population which creates a social belief or social understanding of how things work. Therefore, the narrative and the dialogue are drastically impacted if only a few people understand the value chain and where things start and where things end. That’s an interesting comment that you can see in the political space. Would you talk about the story of your book and the film that you’re working on with regard to some of the countries that are emerging, they are experiencing poverty and what the ideas taught through entrepreneurship have been able to help to improve their life?
In my opinion, the most political acts somebody can do is to create a business because you’re defining a space that you have a lot of control over and people never think of it that way. It’s very healthy to think of it that way because it’s an alternative to the tendency to have centralized power, the 191 different governments and rather look at that each person has political empowerment often through the creation of a small business. I went to Cambodia in 2012 and it was life-changing for me. The American State Department asked me to go and covered all my expenses. I had read all about the Genocide there, three million people out of eight million were murdered without the use of bullets. I didn’t quite understand it. I read pretty much 90% of the literature. I spent 400 hours before I went. I landed and I thought I had a feel of it but going around the country and lecturing on small business and even my first lecture was 95% women. I said, “Why is it 95% women?”
The woman host, she’s a wonderful entrepreneur, wonderful person. She said, “The men were all killed.” I knew that but hearing it and being there and then seeing these museums of skulls, it was life-changing. My secretary picked up a human tooth while we were being given tours of the killing field. I’ve heard about a white light moment where you have a basalt view and it changes your life. That moment went right to the center of my being. I said to myself whatever I could do with my remaining years here to prevent this type of pain, suffering, and murder on a mass scale that I was going to do that. Ironically, I was then invited to Hanoi by the government there. In my generation, going to Hanoi, I was in the ‘60s and it was surreal. Talking to the leaders of the government and they say, “What can we do to encourage small business here in Vietnam which has the highest growth rate in the world?” It’s almost 9%. I warrant the topic and that’s very professorial. I said, “First, we should get your tax code right and have a flat maybe 10% tax and low-income people wouldn’t pay any tax so they get out of poverty.” There’s this long silence and this very timed manning. It looks at me and he goes, “Mr. Mariotti, it is our tax code.”The ability to find a comparative advantage or a niche is within every human being, and its part of what makes us human. Click To Tweet
I was shocked and because I had a picture of a socialist centralized state allocating resources, determining prices and all that kind of thing. I said, “How did you learn that?” Much to the credit of technology and all these geniuses that have had helped the world.” He goes, “We were watching the presidential debates years ago.” Steve Forbes says, “I’m advocating for a flat tax.” We’re all over at Minh’s house and Minh said, “Why don’t we try that?” They go in the next day, retrieves the tax code and went totally from a labor theory of value where everything is determined by a centralized group of people. The prices, that should be $4, $5. There’s no supply and demand for a completely decentralized system with low taxes. I said, “You’re kidding me. How long did it take for you to see a change?” He said, “Three to four days.” People hadn’t been able to get the glitch to repair their homes, tile. All of a sudden, they said you’d see people out in the streets trading. At first, it started as barter and then within two weeks there was money, then gold started to come out and Vietnam began to boom. We’re all reading F.A. Hayek and is a big advocate of free markets. They had totally left the view of centralization in the end economy. It was a very beautiful moment in my memories of my life.
I’m not sure if there’s a magic formula for these emerging countries that want their citizenship to come out of poverty and to thrive. I know that infrastructure is one of them. Whether it’s the structure of property laws defining intellectual property laws, physical property laws. It’s also the formation of the business and the ease there. Coming down into the tax code. What you allow or what people take home. I would say infrastructure, you can have all of the education in the world. If you don’t have that infrastructure then I don’t think the education and drive that an entrepreneur would have would work as well. That’s when you went in and were consulting with them. How did you add value in that situation based on your background and education?
I was shocked because nothing that I had read had indicated that Vietnam had gone to a flat tax. I didn’t know that. I wasn’t a charming and intelligent person as I am now. I was stunned. I wanted to be in a learning mode. I let them talk to me about how they have gone from one of the poorest countries that had been devastated. Six million Vietnamese were killed during the American involvement there, another million to Cambodia and we’re not sure how many in Laos. That’s what was officially recorded. Their industry was destroyed and their value system uprooted. To come back from that, I remember being in Hanoi, it was booming. They said, “You’ve got to go down to Saigon and we’ll cover your trip. This gentleman here will be your guide.” I went down to Saigon and businesses everywhere and energy. In my understanding is it’s gotten better and they’re even doubling every eight years. That was the most vivid display of the power of the concept of voluntary relationships being allowed between people when you let adults work out their own problems. I don’t know how much value I added unfortunately.
You created the conversation and I think that in and of itself is powerful. When you look at countries that have difficulty and go through those trying times, it’s easy to throw a check at them or throw money to fix the problem and alleviate things. Does that really create lasting change that allows someone to thrive personally? That’s where it’s interesting. This whole conversation which I didn’t plan on, but what’s going through my mind is this idea, whether it’s in the States or whether it’s outside of the United States. It’s this whole notion of ownership. It’s knowing that you are responsible for the results of your life. I’m not sure if that’s the right way to explain it but it’s knowing that you did something and got a result from it, not that someone did something for you and you got a result. There are two different experiences there. I look at how our school system is set up, which was in large part a function of Horace Mann’s vision before the turn of the century.
It’s this idea that the United States started on this entrepreneurial footing in a sense where people wanted to come here and control or own the means of production which was it readily available where they came from. It was flipped on its head. A system in which the oppression school system which was designed for training military as well as the factory workers. I think that totally threw this idea of what gets people to thrive, what gets people excited, what gets people to feel like they have a professionally meaningful life. This conversation is bringing up those thoughts in my mind because you’re experiencing it in these countries. They’re emerging, but what most we consider very poor and would not otherwise thrive. You’re seeing opportunities in which people are recognizing that it is possible for them. They’re recognizing that there is an entrepreneurial seed inside of them that can be responsible for their life and provide for their families and provide for themselves which is profound.
What you said was very powerful to me because a major error that could have been a huge homerun and did a lot of good but somehow took a turn. I think we’ve got to discuss more. We never heard discussed is that for the low-end income children in particular and many middle-class children. By that, from the resources that their families have, financially not spiritually or in any other way, but often get limited choices in their education. In many of the urban areas without mentioning any particular city because it’s endemic to the system. A child will be assigned to a particular school and have to stay there for years, even if he or she doesn’t like it.
In some school districts, if they allow the schools to advertise to be aerodynamic or very esoteric, sexy memes and the young person will go and once they’ve been there one year, they can’t transfer out. The teaching community has spent 40 years and K-12 education has been my whole career. I have so many friends that are teachers in junior high and elementary and loved the community. The design of the system, sadly which was an advocate and did come out of the Hegelian system. Somewhere along the line, it ended up doing damage particularly to children that have limited choices, to begin with. Anybody who you want to be able to maximize their choices in life is those with unlimited resources because of one error, they don’t have a chance to correct it.
Figuring that out, how do you get a choice into education would be a huge breakthrough in our society and the people. This gets my friends upset but it’s true. The people that are often hurt the worst by nonchoices, by preventing choices are the teachers themselves. The prison system is in part based on second-grade reading scores. You’ve got a forecast of prison out between ten and fifteen years. We’re talking about a multimillion-dollar investment. A maximum-security prison is a $1 billion budget for 2,400 prisoners to build it. I’m not sure what those numbers are because I hear different ones but it’s multibillion-dollars. They don’t want to make a major error. They start by looking at first, second and third-grade reading scores. I’ve always thought who would be the highest-paid person in the community if there was more choice allowed? For me, it would possibly be a good second-grade reading teacher. Think of the value there. They’ll be equal to any surgeon. Some markets get distorted and that’s never a good thing because not only does it limit choice but it limits feedback and information between people.
I’ve thought a lot about how are our personalities and the way in which we operate our vernacular, whether it’s the way we raise our children, how we treat ourselves, how we treat someone of the opposite sex and relationships. In large part is formed when we’re young. Our young minds are plastic. They’re so vulnerable to ideas and ways of doing things. That’s where I look at a school system. It’s one of those operations that has so much potential to completely change the face of humanity. I believe that it will because when things are not working, what ends up happening is it gets too painful and things change. We’re experiencing a lot with the theoretical approach that you and I are talking about but then you have a financial approach as well. There are some results that end up putting a person into a camp where criminal activity is the way in which they operate. I also look at the student loan debt crisis that we’re in where kids are paying exorbitant amounts of school fees but are not getting the return as far as the training and the information they’re getting in order to be relevant and profitable in the workforce.
I did not once ask about degrees or experience in school or anything. The idea of how the workforce is evolving. The political arena is stagnant and then the schooling system is stagnant, yet people are so thirsty and hungry to succeed, to excel and to make something of their life. It’s an interesting crossroads. Maybe the question would be with the books you’ve written, the textbooks or the film that you’re doing, the experience you’ve had over the last several decades in this entrepreneurial mindset. What are you seeing in the political environment, the educational environment, not necessarily in the West but globally that’s giving you hope, that’s showing you that there’s progress in a lot of different facets?The ability to think about changing one's life is a big part of entrepreneurship. Click To Tweet
First of all, I’m a huge optimist. I agree that when we’ve made a long turn, the feedback from it becomes great that we end up back on a better road. That’s why I’m so interested in getting discussions going about education regardless of what views come out. I remember in the ‘60s growing up, you couldn’t go 24 hours without a debate about what was being taught or how it was being taught. The whole home school market, John Holt, was key in that. It was discussed constantly and a lot of good came from that. My biggest worry is when things aren’t discussed and then you can get in at real rut. From a positive view, the internet is a game-changer and that we’re just beginning. We’re at the 1% mark of all the uses that these incredible connections are. What they said to me in Vietnam, we are watching the presidential debates and Steve Forbes said, “Let’s do a flat tax.” A man said, “We’ll try it.” I realized that the power of the information, the ability to share information. Having said that, I was in Silicon Valley tour which has been one of the great birthplaces of creativity and wealth.
A lot of great things come out of that community in 30, 40 years. It’s been remarkable. In certain top prep schools out there, the owners of these very successful companies would say, “We don’t allow the use of screens during school time.” That piqued my interest. I pushed on it. In certain schools, they don’t allow cell phones or computers during school time. You have a Socratic method, you have group work, you have art and you’ll have reading time primarily on books. There’s research that reading on a screen lowers comprehension by at least 25% universally. There’s an interesting woman named Wolf. She moved from Tufts University to UCLA as director of cognitive studies. Her works are not as well-known as it should be or publicized as much as it should be, but she has spent at least a decade. I’ve read all of her stuff and all the footnotes too. All the research says that actual reading from screens lowers your ability to understand and they don’t know why yet but I sense it.
What’s going through my mind is we live in this very complex world and people have retreated to the familiar. They’ve retreated to what’s been the custom and it’s difficult to make these in a very large scale type of change. What I’ve seen and experienced is those very simple to understand ideas. It’s not complex which is simple that anyone can understand that produces a big result. That’s what I wanted to discuss as some of our final points. There are tens of thousands of books, maybe even more about business, about entrepreneurship that the information is there. We have more information than you can consume in a hundred lifetimes or maybe more at our fingertips.
As you’ve seen people’s life change because of one idea which is this entrepreneurship idea, what is that idea to somebody? What do they connect with that the information now becomes way more relevant than it was before and it inspires and it motivates them to do more? That right there, if you could package that up, that idea, whatever it is and simply explain that to someone. That’s one of those variables that move the needle. In your experience, what are those connections where people in your book where their whole life changes? Their whole future trajectory completely shifts because of connecting one idea to whether it’s making money or owning a business? How do you characterize that or think about that?
There are two thoughts that come to mind under this whole concept of the entrepreneurial mind frame which is what we’ve struggled with for decades now is the ability to be alert information and different opportunities. I thought about that nonstop for 25 to 30 years. I’m reading randomly an article and within it was this paragraph that 1/3 of somebody who was born with limited resources will become a billionaire. One-third of them start off as dyslexic and I’ve had dyslexia. I struggled with it in different forms in my whole life. I have a reading problem. I have always been putting things in order is something that unless you’ve been there, it’s hard to understand. My secretary walks in and goes, “How can this look normal to you?” To me, that’s how my mind is. It’s a picture not of a staircase. I thought a lot about that and then started reading and talking about it. The literature is starting to point it out. I haven’t agreed with this body of thought that having something that looks like a liability. When one is a child, you’re mocked, you get the C-minus and you’re asked to stay after school. I live in Princeton, I love the community but you’re not going to go to one of the top-rated schools and everybody asks you about that. You learned something else and that is how to build teams and all the Disney being a classic example. Grit went bankrupt seven times, not personally but the business. Henry Ford twice, on and on.
The ability to build a team around you that is helping a vision that you all have and dyslexics have to do that. I remember my whole life, third grade, fifth grade, sixth grade, the simplest things it would take me fifteen minutes, but the people around me would like me, care about me and recognize that I had a unique way of handling paper. They always come to my aid. When I read 1/3 of Schwab and Branson, the results also plotted Great Britain. That was a huge insight intellectual breakthrough for me. There is a center on the study of dyslexia at Yale. If you’d go to Yale dyslexia website, there’s a husband and wife team, who are both medical doctors who have devoted their career to studying dyslexia. They started off with how do we solve it? Gradually, they started adding all these successful people on the website that were enormously game-changers and success. You look at him and go, “She has dyslexia? It’s unbelievable.” You go back and read the literature. They were all people that had the knack for admitting that I need help. People rally to help you. That’s a huge clue in wealth creation for every country and every human being alive and will lead to many other insights.
It’s such a profound point because in the typical schooling, you’re taught to work as an individual. If you work with somebody else, it’s cheating. You’re almost conditioned to not work with other people.
It’s backwards. I didn’t think of that until after I read the article about dyslexia turn it integrate well. It’s not an obvious point, at least it wasn’t for me because as a teacher, I would always let them work in groups, but I wasn’t thinking of it from that point of view. I was thinking of it that one child could teach another. Now, that I’m talking about it, it’s very similar to that insight. No one creates great wealth, wins a Novel, finds a vaccine or discovers this or that without a team. It’s always a magnitude of people that are combining their thoughts.
If that were the driving philosophy, think of how things would change. In the business world, culture, there are new buzzwords but at the same time, there’s so much merit to them which is culture, teamwork. They have the whole systems built around people playing different roles but working together for a common objective. They all have different roles and different skillsets. Those are typically identified after schooling, after someone has been conditioned in certain ways. That’s fascinating because I look at what children naturally do which is play together. I have a pretty big gap between my five-year-old and my thirteen-year-old. My son gets to play with a lot of different kids and it’s so natural when they get together. It’s awkward in the beginning and doesn’t know, a little bit shy but then they’re like best friends playing. Human beings are meant to work together. We’re meant to play together and have fun together. When it comes to our learning and understanding of information and learning how to apply that information, we were conditioned to do it individually. It’s a fascinating point. If that connection could be made, think of what would change. A lot of things would change in society.
For the better significantly and like they said in Vietnam, I said, “How long did it take before you started to see these benefits?” They all thought about it and they said, “Four days.” One person said, “No, it’s the next day after they announced it.” Here’s where it gets interesting which is an issue that also needs to be discussed openly. That is from a legal viewpoint, who owns is critical. What I have been thinking about a lot is how do you get people to work in teams and yet not have one person own it because their parent is an intellectual property lawyer or their uncle is. It’s almost always transferred that the concept of intellectual property is very seldom, in my experience, learned in one zone because it’s a long space of time to develop that thinking of patents, trademarks and copyrights. Certain countries don’t believe in it and don’t view it as a valid thought process. Reconciling this concept of teamwork, I went back and started to read which I urge everybody which is the capitalist manifesto written in 1958 by Louis Kelso, who subsequently created ESOPs by going to Hewitt Long who was running the tax subcommittee. He said, “I want you to put in there that companies that create ways for workers to own will get a tax benefit by the owners not having to pay tax on dividends.” One insight which didn’t quite take hold for some reason which I don’t understand. That insight of employee stock ownership or plan so that everybody is benefiting from this great value of teamwork in this unlimited information that we’re headed toward.The beauty of the entrepreneurial mind frame is that it leaves you open to changing your life. Click To Tweet
You don’t want 1% owning 94% of the resources. It’s not sustainable. Too many people feel left out. The political system enables politicians to say, “If you vote for me, you’ll be part of that. You’ll move up and we’ll bring that 1% down.” That’s one of the worst things you can do. Rather, if we could approach it from an intellectual viewpoint of how it is everyone learns basic principles of intellectual property, law and ownership and then learn how to self-advocate because of so many determination of who owns what is self-assertion. Knowing the concepts, the words, percentages, “I did this to bring the steel together or I did this to help this situation. I think I should own 12%.” The difference between saying that and not saying that and being put in a worker category where you’re on the income statement but you’re part of salaries and you don’t get any part of the profit, which is always a multiple of earnings of value. That’s the intellectual issue that we should be talking about and thinking about. Otherwise, you end up going down these very tricky paths where someone who has power begins to determine that and it always ends up in disaster.
Steve, one of the interviews that on this entrepreneur theme that we’ve been on is he was one of the founding engineers at Carta. Have you ever heard of Carta before?
I have but I don’t remember how and I apologize.
The CEO, Henry Ward, has this theory and philosophy which is very much part of what Carta does is that we’re evolving as a society from a work standpoint. Work has gone from serfdom to slavery and now it’s in this paycheck or an employee but it’s going to ownership. How he uses that philosophy with Carta is that Carta is the biggest platform that manages ESOPs for some of the biggest companies that are out there as well as private company ownership. It’s an amazing platform but what it’s doing for companies is it’s allowing them to easily and it comes down to what we had mentioned, which is the infrastructure. When the infrastructure is hard, it doesn’t matter how much theory you have, nobody’s going to do anything. When it’s clunky, it doesn’t work. If you don’t have a property system where you have a title and it’s a very transparent and accurate way to prove ownership of something, then people are not going to go develop a piece of land. They’re not going to improve a property. Without proof of ownership, it’s going to be very difficult for that entrepreneurial bug to set in when it comes to that property. What he is advocating is when you make it easy for a company to put equity as a means to compensate.
When it’s easily and objectively valued, then that inspires different energy inside of an employee. They’re there for a paycheck but they’re also there for something more. What does that marginal increase do? That margin can make a huge difference in a company. The ease of doing it is what’s important. There was some tax change with regards to ESOPs in 2017 that most people and most companies don’t know about. There’s also a very lucrative tax incentive for employees when they are able to cash out and liquidate in a series-A or liquidity event with a company where they don’t have to pay taxes on companies that are up to $50 million in revenue. The pathway is starting to form for what you’re mentioning which is interesting because I have a lot of opinions and I love that philosophy because it empowers people to take ownership. Even if it’s something small, they are talking ownership of something that they knew. In their work, they get a paycheck but then they’ll get upside as well as part of their compensation.
The landscape’s changing and it’s pretty exciting. We’re not surprised. There are a ton of challenges but you and I are like, “There’s somebody working on that.” There are a lot of people working on these different challenges. It’s only a matter of time before they’re widely known and start to make a big difference where people notice it. It’s fascinating to have these conversations. I hope you have a different reference from Carta. They’re doing some cool things. It’s an amazing company.
You taught me a lot because I had not understood Carta. People would mention it in passing. After I have read all the literature I can find, an example that I think of was in ‘46 when MacArthur was a dictator over Japan. One of his first orders was that every Japanese citizen and if I’m wrong on this, I’d be glad to get feedback and learn about it because I’ve just been able to find four or five references to it. He made everybody go out with a piece of chalk and draw what they owned between homes which had never been done before. That one act was one of the things that allowed Japan to boom in the following years. People knew exactly what they had to negotiate with their neighbors after 50 years. They’ll never talk about it and wasn’t perfect, but did it create wealth. That wonderful man who I’ve seen, I’ve read all of his books on capital. The gentleman in Peru is a genius.
Is it Hernando de Soto?
I have all of his books lined up and I try to look at them.
He’s my next guest.If you can be 51% right, you'll be one of the best in the world at what you do. Click To Tweet
Would you tell him that I salute him and I read all this literature? I asked for his autograph, that’s so much I admire him. I’ve never done that before. He’s a game-changer. That concept of thinking about even if we don’t get it right the first year, decade and two decades. Maybe there’ll be a setback here and there. They’re talking about it, discussing this, what is wealth and how can you spread it and create it? You have used the word infrastructure three or four times. I’m fascinated by that word because it’s used and I think of it as an intellectual infrastructure. Is that how you were using it?
That’s the primary concept under that and out of that will come millions of different thoughts and permutations of interactions between people. If we could get this right and start to free out people to exchange on a decentralized basis, everybody would be better off including the professional politicians would be a thousand times better off. They could get more media and not have to do as much work and not be as angry with each other. It’d be way more resources. We could do the theatre.
You’re spot on at the same time because there are so many fundamental challenges of a society that are easy to solve. I would consider the seed of that infrastructure as a trust in humanity. A trust that this is part of what makes up a human being. The drive to provide value and take the resources around you and figure out ways in which you can exchange. People thrive off of the knowledge that they did something and got a return for doing something, as simple as that. People thrive off of that type of experience. If a lot of infrastructures trusted that, the world would change but I don’t think it does trust that based on what exists. It’s getting to the point where nobody trusts it. Nobody trusts politicians anymore. They don’t trust centralized powers that are dictating everything. People are fed up with it but they don’t know where to go. I would say one of those first dominoes is a trust in human nature that it will, not all the time but more than not, do the right thing and do things that are conducive to a healthy society.
I totally agree. I want to footnote one concept and that is the concept of error and mistake. If you can be 51% right, you’ll be one of the best in the world at what you do. Before the downturn in 2008, there was a firm on Wall Street. The people were all great and everything but they had this viewpoint of I go in there and meet with their two executives, “We never make mistakes here. Are you up to our standards?” I said, “I had a good year. I was right 52% of the time.” They were shocked because they had to be right 100%. They were the first ones to collapse and when they collapse it was $9 billion. They couldn’t find it but it’s in a bank account. It wasn’t stolen. It was just by accident went into their own company’s bank account in London but they couldn’t find it. They made mistakes all the time. Mistakes are great feedback from the market. One of the best articles that everybody should read if it was a little better written was Hikes 1946 cover in the American economic review. It was the use of knowledge in society. Particularly paragraphs ten and eleven. Those two paragraphs talk about the value of feedback loops. You make mistakes and you learn from them.
He uses the words unique knowledge of time and space which I opened with when I was talking about a comparative advantage that you don’t need to be the best. You can have knowledge like, “I know more about this than you do.” You know more about that room than I do. That’s a great value. You could have maybe a hotdog stand at 11:00 PM and not have to compete with 50 people during the day. You might be better at it than they are. That leads to another point that is important and that is the concept of stress and anxiety. Excessive stress has been linked to every disease from Parkinson’s to MS. It looks back in literature to start to see the word stress and when you look at it, what it does to cells and your mind and the dendrites. It’s a killer and it leads to habits to lower stress, excessive alcohol consumption, drug use and anger.
The beauty to me ultimately, this entrepreneurial mind frame is that it leaves you open to changing your life. If you’re in an untenable position where you have a boss who no matter what I do, the boss wouldn’t let me or I was in a position where I couldn’t be good at it. It was horrible stress. I’m sure that you had it yourself. The ability to think or maybe I can change it a little bit and do it this way. Maybe I can go do something else. Maybe I can leave and then settle back into the organization. Stress and anxiety are very seldom talked about in our culture because people are embarrassed to say, “I can barely stand Sunday nights because I got to go to work in this place that I hated,” and that’s related to what you and I have been talking about. The ability to think about changing one’s life is a big part of entrepreneurship.
The entrepreneur has redefined what failure is and what stress is. From a failure standpoint, it’s like a 180-degree shift. You want to fail because it is an essential step to success, to succeed, to being, to learning and to grow. Redefining that rule is interesting because we all have rules for failure. If most people’s rule is based on how we’ve been conditioned, especially in school. If you fail, there’s something wrong with you and if there’s something wrong with you, then you won’t be respected. If you’re not respected then how can you ever be loved? It’s amazing how it comes down to these essential needs that humans have.
The same thing with stress. Stress comes from us having this expectation of ourselves. It’s predetermined by how we’re wired and conditioned. When it doesn’t go exactly according to plan, suddenly it’s like, “What’s going to happen?” Our survival instincts from tens of thousands of years ago kick in. Entrepreneurs are rewiring it and reframing it and redefining the rules because stress is just a signal where, “There’s an opportunity.” Failure is an opportunity also to grow and using stress to fuel you as opposed to make you retreat. It’s incredible how many entrepreneurs out there that maybe they’ll define it or explain it like that but have owned those two powerful drivers and used it to completely reshape their life.
I couldn’t agree more. When I was in Silicon Valley, I snuck away from the group for a little bit. I’m 66 so I have had the benefit of knowing younger people because I got older. They’re rising in these positions of, “Are you the head of that firm? You’ve done this and that?” It’s great. They feel they have to see me. I’m the senior guy. I went to see some venture capitalists. They’re pretty well-known. I’m proud of them. I said, “What’s the big breakthrough that you need that I can pass along to young people?” They said, “We never invest in somebody that hasn’t failed twice.” I was stunned. I raised my hand, I go, “What do you think I can get, $200 million?” There’s a lot of beauty in being able to accept which is negative feedback from the market. You missed a market, so what? Learning from that. There’s a country in Europe that I visited. If you are the CEO of a company that fails, you never can be a CEO again. I tried and pretty much succeeded in giving a talk to twenty CEOs.
That’s the worst policy you could have. We went around the room and each of them had a major failure but not as a CEO. They’ve had a failure at lower-level management so they weren’t blacklisted out of becoming the leader. Was it failure where they learn from it and enabled them to move up? In my own life, I’m trying not to be like Bette Midler who in Beaches said, “Enough talking about me, now let’s talk about what you think about me.” It’s a great line. That’s what I know most about my own life. All the things I ended up becoming able to make a livelihood from. They all began out of some misfortune, some fumble or something that went wrong. I got into teaching from being mugged in ‘81 and then was an acquaintance, my grandfather was Ayn Rand’s lawyer. He meets her to see me and then I would listen and she would talk for five, six hours straight. She enjoyed having someone to talk to who was familiar with her literature. I’m a very spiritual person and she at that time wasn’t into that. She would be very direct with me, a mystic fool and I laugh and say, “Miss Rosenbaum,” which was her real name and she gets upset. She laughed that Russian laugh with pure joy when she’d see the humor in it. A big life change for me was I was minorly pushed around mugged but in front of my girlfriend when I’m 25 and now it wouldn’t bother me at all. I would accept it.
My girlfriend was a stronger type person and she stepped in with these twelve-year-olds and says, “Stop that,” and then they’ll turn around. “Drop that screwdriver,” They’ll do it. “Get out of here, leave him alone.” They all ran off. She was a hero. To me, I went to see Ms. Rand soon after that and after an hour or so of her lecturing and brilliantly, she said, “What is wrong with you?” I said, “Nothing. What do you mean?” She said, “What happened?” I said “Nothing.” She said, “You’re talking to yourself which is post-traumatic stress disorder. It’s the number one symptom.” I said, “No, I’m not.” Bless her heart, she got this pre-cell phone. She had one of those long phones out on this desk where she’d written, Atlas Shrugged. She carved the plot into this desk of that architecture that she has gotten it during the time period. She called Albert Ellis. Do you remember that name, Albert Ellis? He’s worth researching. He created the concept of Rational Emotive Therapy where you changed your feelings by changing your sentence structure in your mind. She was a very strong person. She says, “You’re going to see him.” I could hear him going. It’s a Memorial Day and he’s going, “No, I’m not.” He said, “Yes, you are.”
They weren’t even friends. Eventually, he said, “Send him over.” He changed my sentence. I feel humiliated because I was unable to defend my girlfriend from four or five, twelve years old. He looks at me with contempt, “This is how I spend my holiday with this type of immaturity?” He got up and he crossed it off. He’d said, “Rewrite it in a different way.” I didn’t respond. He said, “I’ll do it for you.” He wrote, “I am a hero because, under attack, I was able to prevent any violence toward the twelve-year-old attackers on my girlfriend.” He rewrites it. He didn’t sit there as a graduate student. He sits there, I had to write it over and over again but it totally cured me.
By the end of it, I was irritated with him that he’d made me do it, but I totally have forgotten the incident. I go up and pay him $30. I said, “I’ll be forever grateful.” He went, “I suggest you go home.” He was grumpy. The next morning he calls at 8:00 in the morning. He said, “Get up to my office in this big beautiful home on 65th street.” Everyone should read his literature, A Guide to Rational Living. It’s a very powerful literature used by almost every psychologist now. I’m thinking, “Did I not pay? Was I by accident discourteous? Did I steal China?” I’m trying to think what did I do? I walk in apologizing, thinking he’s going to call Rand, who’s going to call my grandfather, who’s going to call my parents and I was going to be out.
I walk in and I said, “Whatever I’ve done, I apologize.” He said, “Don’t be so weak.” He answers, “I’d been up all night thinking about this post-traumatic stress disorder, it comes back, it’s a progressive disease and a minor cure like what we did isn’t wanting to solve it. It’s going to come back.” I said, “It’s impossible. I’m totally cured. Thank you.” He said, “You’re going to go teach in the hardest school you can find that will have similar students that you’ve become so afraid of and you were traumatized by.” I said, “I’m past on that, doc, but thank you.” He called Rand who I’m was scared of and she got an on the phone and said in this Russian accent, “You do what he says or there’ll be problems.” I’m going, “Yes.” I went in for a week. I stayed for 40 years. I’ve had the most wonderful career because of that. What looks like a setback turned into me becoming acquaintances of some friends with Albert Ellis that strengthened my relationship with Ms. Rand. He got me out of this horror post-traumatic stress disorder which is a leading cause of suicide in America. It certainly includes veterans. It’s pretty much 100% of the cause and it is curable.
Steve, it all relates. That’s what’s amazing. If we can all recognize that there are degrees of trauma. You could have traumatic experiences like those which is not necessarily being attacked but also being defended and then the context around that and who should I be as this person. That happening can ruin a person’s life or it can completely empower them and revolutionize their life. Does it depend on what is the way in which it registers up here? Is it empowering or is it belittling? A final example, I was at a Leadership Academy and there’s this woman who’s the CEO of a non-profit that served widows but also victims of some pretty dire circumstances. They had tens of women in this program. She was afraid to speak in public but yet she was a CEO. Looking at her going up, she went up on stage and volunteered, the background was to her not wanting to speak or being afraid of speaking which was so irrational. To her, it was the truth, it was part of her and that was her reality. Going to very similar to what you experienced with Albert Ellis, it was changing some of the languages, changing the tone of voice. She basically defined it, what are you afraid of? What is the challenge?
It was done in a very loving and compassionate way. She said the verse but the verse was very depressed and she was shrinking. He had to change her physiology. The order in which you use the words, he had her talking in Mickey Mouse’s voice and then talk really slow. What it does is that those are her ideas that this guy connected with her. I’d never heard of him before. That’s led to so much science around how we think and what reality is. At an early age, it impacts your entire life. We all have them. They’re all here and it causes us to behave a certain way. If we’re aware of that, imagine what we could do to change our own wiring regardless of how old we are and the new life we can have with a few different decisions. It plays into the entrepreneur because that entrepreneurial spirit, that seed is in most people, if not everyone.
It’s the conditions and the environment in which it’s planted and then nurtured that can completely change how a person uses their talents, their abilities, their uniqueness to change not only their own life but, but everyone around them. This has been enlightening for me, Steve. I appreciate what you do and I appreciate your story. How amazing of an example that something so amazing can come from one little decision. All you had to do is say, “Yes, you’re going to teach,” and your entire life changed. That’s how profound one decision is. That’s a testament to what’s possible with our lives. How much we can enjoy it more, be fulfilled more if we’re only open to some very simple fundamental ideas.
I’ve enjoyed the show so much.
Steve, we’ll definitely have to connect again. How can the audience learn about you and your book? Plug the film that it’s in production and from the details around that.
The book is Goodbye Homeboy. It’s been the number one seller on Amazon since it’s come out. I’m real proud of that because I was never in the top 500,000. Textbooks don’t sell a lot on Amazon. That’s been a big deal. For several years, I’ve been working with a team on a documentary that raises this question. I don’t think we’re going to find an answer but I want to raise the question. That is what happens to the entrepreneur during times of war or genocide? There’s no literature on it other than Gone With The Wind that is a great movie but has the characters as entrepreneurs. There’s no real discussion of it. The people that are written about caring these times are always heads of this government. I’m not belittling them. Churchill obviously did well. The more we read about him and that’s all great but not once did Churchill who published 3.7 million words won that Nobel Prize for literature. Never did he ever mention small business, the entrepreneur and he had less than 400 words on the industrial revolution.
In history, the actual power is invisible. Even the literature on Pompeii where almost everybody there was self-employed. You go there and it’s a mass of small businesses that people died from that volcano tragically. They died in what they were doing. For some reason, it’s been invisible. People have not thought about that issue of the entrepreneur as being somebody that can be broken out, analyze and that might give great insights into how to prevent and how to connect the entrepreneurs of the world. They’re a great source of under-utilized energy and knowledge. They’re never encouraged to go into politics or very seldom. There are whole fields. Never in the history books or if they are, it’s one sentence. I’d like to do a small part to change that with his documentary that raises the question, what happens to them in this particular time when there’s war or genocide? I thought of it in Cambodia. I went back to the town where this revolution started. That began as a free market, limited tax movement and then was taken over by Pol Pot and nine other individuals that were in any actual common cell.
They used a one-page document that everybody should read. I never read anything I call the Manifesto of the Equals, 880 words are written in 1793. I never read a more disturbing page. It argues you can kill anyone. They started with people that wore glasses because they would be theoretically smarter. They kill people with passports because they have been out of the country. They killed anyone who owns anything. It all came from that one page that they had found at the University of Paris, translated it into the Cambodian language and used it to train young people under Pol Pot. It led to these three million people out of eight million people were murdered in 24 months. That’s a clue. I don’t know what the answer is but that’s something everybody should know about.
It’s in production, do you have a date in which it’s going to be finished or is it still about work in progress and nothing definitive?
The executive producer raises the money and keeps the vision going. We think it’ll be done as early as mid-January. I’m interviewing distributors and learning about the film industry. I went to the Cannes Film Festival and went to the Toronto Festival. I was on the cover of all the trade journals there. It wasn’t me, it was the film because when they watch it, they’re fascinated by the question and the interviews. It’s going to open up a whole level of debate and discussion that could be very valuable.
This has been amazing. Thank you so much for this time. This wasn’t budgeted in your schedule but it worked out for mine. I’m super grateful to know somebody who knew and interacted with Ayn Rand face to face in a very intimate level, but also such an example of what we’ve been talking about. There are so many different elements of all the different guests and how we pretty much summarized it with the interview with you. It’s been amazing.
We’ll definitely have you on some time in the future.
I look forward to it. If I’m invited, I’ll be here. I learned a ton as well. It was wonderful.
Thank you, Steve.
- Network for Teaching Entrepreneurship (NFTE)
- Rising Tide Capital
- Entrepreneurship: Starting and Operating a Small Business
- Entrepreneurship and Small Business Management
- Goodbye Homeboy: How my Students Drove Me Crazy and Inspired a Movement
- The Triumph of the Entrepreneurial Spirit
- Atlas Shrugged
- A Guide to Rational Living
About Steve Mariotti
Steve Mariotti is an advocate for entrepreneurs and entrepreneurship education worldwide. He is the founder and former president of the global nonprofit Network for Teaching Entrepreneurship (NFTE), and the author of books, textbooks and articles exploring the transformative power of entrepreneurship for low-income communities. Steve’s memoir of his early career as a NYC public high school teacher, Goodbye Homeboy: How My Students Drove Me Crazy and Inspired a Movement was published this year by BenBella Books and immediately rose to #1 on Amazon.
He currently serves as senior fellow for Entrepreneurship at Rising Tide Capital in Jersey City and chairman of Experience Counts, an organization he helped found to help bring entrepreneurship to the over 50 million Americans aged 50+.
Steve began his professional career as a treasury analyst for Ford Motor Company, before going on to found his own company, Mason Import/Export Services in New York City. In 1982, Steve left his successful business career to serve as a Special Ed teacher in some of the city most poorest and most notorious neighborhoods. Frustrated at first by his rowdy classrooms, Steve discovered he could motivate even his most challenging students by teaching them to run a small business. This experience inspired him to found the Network for Teaching Entrepreneurship (today known as NFTE) with the mission to empower at-risk youth in creating pathways out of poverty. Today, NFTE operates in 23 locations in 10 countries and has served nearly one million young people.
Steve is the author of several textbooks on entrepreneurship, 1.2 million copies of which have been sold worldwide. A native of Flint, Michigan, Steve received his B.B.A. in business economics and his M.B.A. from the University of Michigan, Ann Arbor.
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