Sky's the Limit 14 Nov 2023

How to Mitigate Capability Constraints with Juanita Gonzalez-Uribe


Juanita Gonzalez-Uribe is an Associate Professor at the London School of Economics and Political Science (LSE), a world-leading university dedicated to educating students in the social sciences. Juanita’s research focuses on entrepreneurship, innovation, and private equity. Her literature has been published in academic journals, including The Review of Financial Studies and The Journal of Financial Economics, and she has received awards such as the Jaime Fernandez de Araoz Prize for “Best Paper in Empirical Corporate Finance,” the Coller PhD Prize, and the Kauffman Dissertation Fellowship. Juanita is also the recipient of several research grants.


Here’s a glimpse of what you’ll learn:

  • Juanita Gonzalez-Uribe discusses how her career has evolved over the years 
  • How did the risk of moving to London work in Juanita’s favor? 
  • The importance of mentorship for entrepreneurs and where to find a mentor
  • How to mitigate capability constraints to increase entrepreneurial potential 
  • Pre-investment funding options for entrepreneurs
  • Juanita’s insight on comprising a complimentary team 
  • Tips for entrepreneurs to manage career-related stress

In this episode…

Growing a business is much like experimenting. As entrepreneurs begin the journey of building and launching their businesses, they will discover both favorable and limiting processes. Learning how your business responds to certain variables can increase its valuation. The problem is that too few enterprises have access to resources that allow them to take risks, a concept known as capability constraints.

Juanita Gonzalez-Uribe, an expert in entrepreneurship and innovation, recognizes that business owners experience these constraints due to not being taught how to navigate these limitations in an educational environment. While an entrepreneurial curriculum could benefit business owners, learning from experience is fundamental to mitigating capability constraints that naturally occur in the industry.

On this episode of The First Buck, Nicolas Cary welcomes Juanita Gonzalez-Uribe, an Associate Professor at LSE, to discuss her research on how mitigating capability restraints increases entrepreneurial potential. Juanita shares resources available to entrepreneurs seeking mentorship, creative funding strategies, and how to build a complementary team. Her entrepreneurial background encourages aspiring and veteran business owners wherever they find themselves on their journey.

Sponsor for this episode:

This episode is brought to you by Sky’s The Limit, one of the largest nonprofit programs for underrepresented young adult entrepreneurs in the US. Sky’s The Limit is a quick-growing digital platform that connects entrepreneurs with their peers, volunteer business mentors, training resources, and funding.

Our goal is to develop the social capital that founders need to chase their business dreams.

To learn more, please visit today.

Episode transcript

Intro 0:04

Welcome to The First Buck podcast, where we feature stories about entrepreneurs and the people who support them. Now, let's get started with the show.

Nicolas Cary 0:21

Hello, and welcome to The First Buck podcast brought to you by We feature stories about entrepreneurs and the people who support them. Today we're joined by Juanita Gonzalez-Uribe, an associate professor at the London School of Economics and Political Science. Her research focuses on entrepreneurship, innovation in private equity, or work in these areas has been published in top economic top academic journals, including The Review of Financial Studies, The Journal of Financial Economics, and her work has won several prizes, including the Jaime Fernandez de Araoz Prize for Best Paper in Corporate Finance, the Coller Prize Award, and the Kauffman Dissertation Award. She has also won several research grants, wanting to earn a PhD in finance and economics from Columbia University, and a master's in economics and a bachelor of economics in mathematics from Universidad de Los Angeles in Colombia. Wow. Well, we were so excited to have you here on the podcast, Juanita, we have a little tradition. How did you earn your first buck, dollar, or peso?

Juanita Gonzalez-Uribe 1:22

Well, first of all, thank you so much for having me in the podcast, Nick. It's, it's it's very exciting to be here. How did I earn my first dollar? Okay, so Well, I think the first peso I earned was, in 2000, I was basically a freshman at the University, I was on this. And I was friends with, with a guy that was tutoring high school students in mathematics. So he was a math major, I was an economics major. And he had like this side gig. And he was gonna go abroad, he was doing like, like one of these exchange programs or something, I forget the details. And he was looking for a substitute teacher. And he said, Look, you should do it, I think you would be great. You know, you have the personality of Bharat, go for it. And to be honest, with the benefit of hand side, it was an obvious thing to do, because I had been, you know, explaining to my friend,

Nicolas Cary 2:27

you're already helping them with their homework, as well make them money.

Juanita Gonzalez-Uribe 2:31

Exactly. So it's gonna be better, obviously. But at the time, it's, it's difficult to know, and I wasn't sure. But the second thing that happened was that my dad who had been working, like in civil service jobs for his entire life, he found himself out of a job. And then he wrote Cialis, and this is not a not exactly cheap. And so I had an additional additionally, like this motivation to really find financing for myself, like both pocket money, but possibly also just took a education. And I ended up saying, Yes, and I, it was the right decision, I absolutely loved it, I had to tutor some Boolean students that whose families were willing to Columbia, and the math curriculum, and the two countries are different. So all I had to do was to train them so that they would fit in, you know, with the math program in their schools. And, and I, and I think it was a great job, not only because it gave me my first dollar, I'm sorry, my first so for sure. But it also exposed me to, to these Peruvians that were coming to Colombia. And what was interesting about them, is that their families were, these were families that would travel constantly, right? Colombia was just one of the countries in which they had lived. And so they also exposed me to this, I guess, more cosmopolitan view of the world, which I had always wanted to leave abroad. But then with them, this just became clear. And I don't know, it sparked in me this, you know, this desire to find solace in the sort of job where I could, you know, explore the world, see different things, and just, you know, meet different people. So yeah, that was, that was my first vessel. Oh, I

Nicolas Cary 4:12

like that story. One of the things I'm always inspired by is how almost everyone starts off as an entrepreneur, they use their skills or the resources they have around them in a small way. And then they sort of go on this journey, and it takes people in a million different directions. But I can see how, you know, meeting these travelers that were, you know, moving around the world and being exposed to all these different ideas would have certainly been inspirational to go out and explore yourself. So let's talk a little bit more about what happens next. So what happens in your career? What were some of the pivotal moments that help you sort of evolve and eventually take you to the London School of Economics, economics?

Juanita Gonzalez-Uribe 4:52

Oh, I mean, what happened next was that I mean, it's interesting because that first peso really put me in the path of where I am today. And I don't think that's true for every first job, but it was certainly for me. Because when I was teaching, just tutoring, and it was simple app, I really enjoyed it. I knew I enjoyed it. But it was very satisfying to see that something that I really, really liked was something that I could earn money from. And as I was studying at university, I realized that it could also potentially be like a full time job. Yeah, to be very clear. Back home, when I was studying at the Universidad de los Andes, at at the time when I was studying, so this was, you know, early 2000s. I don't think I knew what being a professor meant. So we had professors, of course we did. But the vast majority of them hadn't really pursued the academic path that you would see, let's say, the US or maybe in Europe, where, you know, people, you know, they do a masters, they do a PhD, and then they devote themselves to research and whatever they research, they then hopefully teach to their students. In Columbia, the education system worked very, very differently. And while there were few people that had gone through that cut, like, let's call it traditional, you know, academic path abroad, the vast majority of thumb of the professors are not like that. And so, it at the moment, it wasn't clear that you could have like a full time job, just doing research and teaching what you researched on and she loved. So anyway, I think the first level stall moment, was kind of serendipitously realizing that that was something I could do. And I say serendipitously, because one of these professors that had indeed gone through this academic career abroad, came back to Los Angeles. So this was Marcella Slava, she was my, she told me something in economics, I forget exactly which class and she had done her PhD in Maryland. And she had gone back to Columbia, and to teach at Universidad de los Andes. And she was looking for a research assistant, I applied for this. And I would have, I could have not applied I don't know, anyway, and I met her. And through hair, I recognize that this could be something I could do like for a living, and that it was super exciting that it would take me abroad, which was also something I wanted to do. So my first pivotal moment was meeting her understanding this could happen. And in Colombia, and I think this is true for many of the Latin American countries. One thing that happens is that civil servants in general, are highly educated, so many of them have gone abroad and study and then they come back to their countries. Yeah, that's something that you see all the time. And, as a consequence, there are institutions. So for example, like the Central Bank of Colombia, baccala, Repubblica where they have, like a scholarship programs for people, let's say in economics or in finance, that will want to go abroad study wanted these programs, PhD is included, with the understanding that this is a scholarship if you've gone back home, but if you decide to stay abroad, this is more like a low. So yeah, exactly. So I stuck and pivotal moment was when so I forget exactly how this happened. But someone explained how like one path, to go and study a PhD was to get engaged with the Central Bank of Colombia, and started working there apply to one of these scholarships, and I never get there. And so that's what I did. And so I learned about this early on. And I started an internship at the Central Bank of Colombia, like very early on in my career, when I was studying, I forget, I must have been like, in my third year or something like this. And I stay there. Basically, I was an intern. And then this became like a regular job. And then through that job, I applied to the scholarship. And after that, I landed in Columbia University in New York. So that was kind of like that, you know?

Nicolas Cary 9:02

Okay, cool. So from being a math tutor, to working at the Central Bank, to catapulting to Columbia University in New York, I love this story. So let's talk a little bit about risks. You know, we interview a lot of business leaders and entrepreneurs, and they sometimes have this sort of moment where, you know, they have to risk some capital, or they have an idea or an initiative or something that they want to test out, and they don't know if it's going to work. And then, you know, through a variety of circumstances, we try and tell the positive stories, but we can also talk about negative ones. But can you talk to us about a moment in your life where you you took a leap, and what the return on investment was for that? It's not obvious to leave your home and travel abroad and reinvent yourself and leave, you know, your social network and other things. So, you know, maybe, you know, in your personal experience, you know, what was that? What was the one that made you kind of most like free you're full. And then what do you which one? Do you kind of feel most grateful for the courage of doing?

Juanita Gonzalez-Uribe 10:05

It? Absolutely. Yeah, that's a great question. So I think the, the, the moment where I really took a risk, on my, I guess, on myself and on my family was when I graduated from Columbia University, I, so I basically got my PhD in finance and economics. And as we explained before, there were two potential paths. Right, so path number one was just go back to Columbia. And which was by no means a bad path. So first, it was a scholarship, therefore, I didn't have any debt. And second, as I said, the technocrats in Colombia. So basically, the people that advise the government and all the politicians are highly educated. So I could potentially aspire to get like a very interesting job was in the government where I could apply all the things I had found at Columbia, like I had learned at Columbia University. So that was path number one. Part number two, instead was to say, You know what, let's just make this scholarship below. And let me stay abroad. Once a debt, Mitchell budget that let's start from with that, you know, clean laid in. And when I graduated from Columbia, I went to the job market, the academic job market, and it's a highly organized process, as you would expect from like, econ, and find the speech nice, and I had a number of offers, after this process. One of them was in London, that was the LSE one, I had I had two options in the US. So that was like path number two, there was some variation in path number two of what I could do, and what we decided to do with my husband, when done yet it was, let's go for the second option. And beyond that, let's not stay in the US, which is closer to Colombia, let's just go cross the ocean. And let's go all the way to London. And at the time, I mean, again, with the benefit of hindsight, perhaps it seems like Yeah, exactly. That was the path to take for many reasons. But when we were making that decision, it wasn't obvious at all. And what do you think about risk? So what was the risk here, so of course, we had this debt, so that that's an important thing. When addition to that, in terms of risk, it wasn't clear, we wouldn't necessarily be successful. And the reason for that is the academic career actually goes with the job market. If you know, if all goes well, you get an offer from a university as I did from the LSE, then the job that you get is not a permanent job by any means. You have to prove yourself to the department, the University and he that happens, and there's a timeline like a limit for this to happen. You get tenure, which is basically a permanent position, you can get to stay in the university. But if you don't get that you have to move, you cannot stay the university, you have to find a new job elsewhere. And so, and the probability of actually getting tenure in any single university is quite low. So when I was looking at the new at the LSE, at the final requirement, the probability was very, very low. They hadn't put up for tenure anyone, like in the past three or four years. So it was highly risky. But anyway, we decided to go for it because it was an adventure. We wanted to experience I want to express the life of an academic with, you know, in its schools, you know, in its fullest expression. And London is a great place where we thought then he only will be able to get a job. And anyway, let's just risk it. So that to me was is the moment in my life. Cool.

Nicolas Cary 13:46

Well, I think everyone in LSE is grateful that you took that leap of faith across the pond. I mean, LSE is a convening force in the academic world, you know, Nobel laureates, prime ministers, George Soros famous LSE graduate. And so you know, what kind of advice are you giving students today in your classes that come to you with questions about how to start navigating the entrepreneurial world or finding their first job? I mean, it's changed a lot in the last 10 years and certainly, in your time as a professor, so talk to us a bit about some of the concerns they have and how you help encourage them to think through this challenge, you know, for for this new world.

Juanita Gonzalez-Uribe 14:34

Yeah, absolutely. I mean, you're, you're you're absolutely, it's absolutely true. I completely agree with you about the landscape of, of job searching. Let's put it that way. It's very different from when I began. It's also a very different place, right. I mean, when I talk about my own experience, it's a smaller country. It's a relatively poor country, so not that many people were in the university studying what I was studying at the time. So it was like a very small subset of circumstances, all of which, you know, pointed me in my direction. When you think about the average LSE student is completely different, right there in London Do you know, this is Europe, it's like, you know, the center of the world in many, many ways. So competition is insane. And also, I think that now, one needs to appreciate the importance of the online tools that were not available when I was starting. Right. So everyone now, you know, you network through LinkedIn, LinkedIn, is it very important to and just having like a social profile or profile in LinkedIn itself, it's something that people are expecting, they want to see you doing this. And, and as a consequence, it's just like a very different journey. But from the one I took, but in terms of the advice that I keep my students, I think, I think there's two important things. So so the first thing is, I think it's super important to find a mentor earlier in their career. And you have to do this early, rather than then, you know, rather than later. And, and the moment when you start looking for this, you will probably feel like you're not ready or prepared or don't have much to offer to this mentor, as ego as a way of like, you know, interesting conversation or something, you know, in return, because you're gonna be younger than, you know, he experienced, etc. But that's exactly why you should be looking for a mentor, because mentors help you understand what are the potential career paths going forward, they can introduce you to different, you know, options that you may not have heard of. So, you know, in some sense, my mentor in my story was my sailor, my, you know, my professor, she told me about this opportunity and Columbia, right, that works. Now, as it worked in my case. And, and I think also, the other thing that mentors have is that this because they have more experience that typically older, they also have, like a different perception from what the individual in its in specific circumstances were. Right. So as a student, or as any person, you could only see dust bar, whereas a mentor can take one step back and look at the bigger picture. And I think that's, that's very important. To that, I would say, look for a mentor. Of course, the question is, where do I find one of these people?

Nicolas Cary 17:20

I was taught to say, what what advice would you give to someone around how to begin this sort of, you know, sort of search? Or how to even approach someone who, you know, there's probably a bit of it can be a bit intimidating, I suppose.

Juanita Gonzalez-Uribe 17:34

Absolutely. I mean, I would say that nowadays, there are places where are like organizations or mutual intermediaries that can help bridge the gap between people looking for mentors and people that are looking to for people to mentee in some way. And one of these institutions that I recommend my students to, you know, to go to all the time, is, for example, an accelerator within your university. So at the LSE, we have the LSE generate, it's, as I like to call it is the what is it the entrepreneurial, you know, the hub for anything entrepreneurial within the university. And what's nice about this types of institutions or organizations is that they run multiple programs, where they invite both students, you know, budding entrepreneurs, but they also invite people that want to mentor this, you know, this founders, because either they have a business at present, or they just recently exited a business and they want to contribute to the, you know, give back to the community in some way. They also invite investors who are looking for potential deal flow, they have entrepreneurs in residence, the point being, there is an ability for students to find people that are not necessarily very different from that, but are much more experienced a bit older. And I think that's also super important. A mentor, I don't think everyone would succeed from having I don't know, I don't know, oh, Baba, as a mentor, everyone would love Ababa mentor, do you wouldn't necessarily think see, because you may not see yourself identified or reflected in that person. And I think that a mentor should be also someone that you feel like kind of represents who you could potentially become, you know, give it a bit more time and given a bit more experience. And so it is, as you said, it's a matching process is a little bit of dating to find exactly that chemistry, but going to places like you know, let's say the local, you know, accelerator, in your, in your, in your university, that's something that that's a place where you can find on Steam.

Nicolas Cary 19:43

One of the things we concentrate a lot on it, sky's Is this transfer what we broadly call a social capital, which lives in this professional class, these entrepreneurs, the role models that serve in institutions and academia in the business world and We try and match those role models with entrepreneurs early on in their journeys. And, you know, it's so cool to hear the story of you and Marcella. It's such a common one where you find a sponsor, that plays a part time role as a therapist, as a friend, as a coach and advisor, but ultimately, is someone that then that you can trust that you look up to that, you know, that doesn't actually tell you what to do, that just helps you see the blind spots in your thinking and in encourages you, you know, to to keep exploring, really. And so, you know, one of the key themes we have in this podcast that we find with so many respected leaders is just, they never do it alone. And we don't always like to talk about it, but we get so much help along the way. And mentors are so critical. And I think for young adults, as they begin to navigate all of the intimidating choices in their lives, it's really obvious that that can be such an important component in their journey. So thank you for sharing that story. Let's, let's talk a little bit about your research. You've been published in so many leading journals, and I've been recognized for so much of your work, I could probably spend hours digging into some of this. So I'll try and keep it at a summary level. But what have been some of the things that are most surprising, maybe are insights that you've learned that were counterintuitive about entrepreneurship in general, or the innovation process? You know, what are some things that, you know, you'd like to convey maybe to young entrepreneurs out there listening to this podcast that, you know, they could they could take home and think about?

Juanita Gonzalez-Uribe 21:42

Yeah, I mean, I think a big part of my research is looking at the can potential constraints that entrepreneurs can face when they're trying to start to build or even terminate a business right, in that process. And I think there's a lot of emphasis on financial constraints. And I certainly believe that those potential exists, so I think they're out there. But I've tried to focus on a different type of constraint, which I call capability constraints, and eats. If you think about the capabilities, what I mean by that is like, kind of like non monetary resources, that founders still need to take an idea to like and build it into a really successful business. And the capabilities that I'm thinking about in it, just to give you a couple of examples, when you think about a high growth company, or like a company that has potential for high growth, would be something like understanding that growing a business is kind of like a series of experiments. And as a consequence, you have to learn how to design that experiment, raise financing from the best potential investor you can get for for that particular experiment. And learn from that experiment as much as you can. So they ended an experiment, not only do you have better information about your business, and therefore you can steer your business in the path that it has to go. But also, you're increasing the valuation of your business along the way. And that's one very broad type of capability. And I think what my research has shown is that, perhaps not surprisingly, lots of people don't have this capabilities. And I think the reason why they don't have it partially, is because this is not something we typically teach at a university. And we don't typically teach at a school, that things have been changing over time. And now everyone's talking about entrepreneurship and entrepreneurial entrepreneurship, training and all this stuff. But what I think happens, and it's a fundamental belief I have is that lots of his capabilities, you have to learn by doing. So even if we created a curriculum that was all about this, you just had to go to the experience, you have to go through the experience to really internalize those things. And so what so anyway, so a big part of my research is looking at this, what I call capability constraints, and the ways in which entrepreneurs can potentially, you know, like, mitigate those constraints, right? Build capabilities,

Nicolas Cary 24:13

let's tie him. So one of the things that I think is true in in sports, for example, like, I'm probably not going to be like the world's best figure skater. But if I go in practice, every single day for a year, I will improve from where I am today. So in terms of the advice, or the research that you've done, that talks about how to increase your capabilities so that you can deal with the real world. You know, talk to us about what what that looks like, how can people practice this?

Juanita Gonzalez-Uribe 24:43

So one of my most recent papers looks at the potential role that going through venture capital due diligence, can handle capability building. So when we think about venture capital investors, we think we tend to think of them as having this important impact to the economy because they provide financing to, you know, innovative companies that otherwise wouldn't. And, and they also add a ton of value. Right. So they advise, you know, strategic thinking, make the boards better, etc, etc. This is like a very rosy picture of what they do, but I believe one

Nicolas Cary 25:16

set of businesses that

Juanita Gonzalez-Uribe 25:18

Exactly, exactly. But anyway, I do believe that there's some truth there. But the other thing that VCs do, and I don't think we give them enough credit for this, and this is probably not only VCs, right, it's just like investors in general. So angels would be a big part of this equation, it's just that best setting that I could potentially study was a seed venture capital investor, one of the things they do all the time is they in, you know, they engage with lots of entrepreneurs, as they are looking for their next potential investment. And that the way that they engage with them, which, you know, I, I would describe as, like their due diligence process, in some sense, right, through this training people evolves, lots of interactions with entrepreneurs, right. So entrepreneurs have to pitch to them. The you know, VCs are going to ask tough questions, entrepreneurs are expected to provide some sort of answer, a things continue to go, well, then you're going to have more to share. So you know, you give access to your data room, the VCs will like to test that technology. Anyway, the whole time. There's this conversation, difficult conversations, often that are happening. And I think that going through that process, with individuals that have a lot of experience, I mean, after all, entrepreneurs have typically one business, whereas VCs see tons of business in a given day, Walter we, so being able to get all this difficult questions. And all this pushback from someone that has this perspective and experience can help entrepreneurs build their capabilities. And so that's something that we show in our, in our paper, we use data from a seed funded the UK. And I think the main finding here really is that, that even if entrepreneurs don't get funding, right from the seed fund that is conducting due diligence, you do see an increase in the business performance of you know, the business that goes through this process. And I fundamentally believe that the main channel that is happening here is its capability building and capability building will include both, oh, I'm learning how to do things better, right? Either because the process of doing it, there's like some learning by doing process, or perhaps the VC tells me something I hadn't thought of. So there's like an information channel there as well. But there's also another important thing, which is the VCs can also make introductions, they can tell you about another company that they had no idea existed, it could be a client could be supplier could be a, you know, a competitor, you have to keep an eye on. So there's this idea that, you know, there's some information going out that is, you know, that is being, you know, given from the VC to the entrepreneur, but also some other potential resources that are also difficult to get, like, you know, connections, etc. And so, yeah, that's one of my most recent papers and

Nicolas Cary 28:00

super interesting real world data backs us up, which is great. We ran a survey at You know, asking entrepreneurs, what had prohibited them from pursuing entrepreneurship in the past, and the word sort of two answers that map very neatly to your own research here, which was our entrepreneurs, from a 60,000 community size cohort, respond with the reason why they wouldn't or hadn't pursued entrepreneurship before, as a lack of role models, speaking directly to the importance of mentors, and in people that you can aspire or see yourself looking like someday. And the second was a lack of knowhow, which speaks a lot to the type of capacity building that can happen when you go through, you know, actually trying to build a business or then having your business potentially meaningfully interrogated by an investor and a due diligence process. And I think that that second one, you know, boils down to this theme we hear a lot from entrepreneurs is that they think they need money. You know, right away. They're an entrepreneur, they see these eye popping eye watering valuations and fundraisings. And so I wanted to ask you this question. And maybe you could share a little bit about what your research or what your perspectives, studying this has been. But, you know, what advice would you give to a young person who's thinking about their startup? And like, you know, they think they need a loan to get money to get started. But is that actually true? And, you know, what, how should they be thinking about that?

Juanita Gonzalez-Uribe 29:36

Yeah, I mean, I, that's a great question. And I completely agree with you in the sense that you see entrepreneurs thinking often you see entrepreneurs thinking, the first thing I need is a bunch of money, right? I mean, that's like step zero, then we can think about when the actual businesses or whatever it is, and ideally, the my answer is, absolutely not. So the hub they can know The first thing that I think has to happen is, as I said, so I see entrepreneurship, or any entrepreneurship endeavor, let's say, as a series of experiments, because that's really what you're trying to do. You're trying to figure out whether this initial very raw idea that you've come up with can get any traction. And so I would say that the first first thing like step zero, is really understanding your idea and getting information about is this something you can actually create a product off? And is this a product that people would want to buy? And if so, how big a market is that? Like, how many people would want to buy? And based on the solutions, or the answers to all those questions? Is this a big enough market for you? And if the answer to all of that is yes, then you have to ask, is it as a big enough market for what type of investor right and what type of funding I'm going to need? So I would say, first thing, like, broadly speaking, is just getting information, getting more information about this very row ID and you've come up with, and I think, that journey of learning more about your idea. And the first series of experiments you've run, you don't necessarily need a lot of money. You don't you need to engage with what would be your potential client. And you need to set up, we know like a small experiment, to see whether that product you've imagined is something that they would be willing to buy, and if so, how much are they willing to pay as well. And so all those, all those kind like first steps, I think it's about getting information, you don't need necessarily funding. Now, of course, that depends on the specific product. And it depends on the specific, you know, idea that you have in mind, there are some that just to get started, you need some money, just because it's a very capital intensive. So this is not to say that no one should raise it to the very beginning, you know, that there is variations to this. But more often than not entrepreneurs, you know, that are young, or inexperienced, often some of these ideas are things that you can iterate and really try to understand much better without raising much financing. And by the way, I would say that another way in which an entrepreneur can learn more about the idea, and don't raise financing just yet, is sell services along the way. So for example, you want to learn more about your potential clients, how about you become like a small consultant for those clients to try to understand them better, as you're trying to build your product, etc. And I had a guest speaker and the I my entrepreneurial finance class, last star, Joel Perlan. He is the co founder of Oaknorth, a FinTech unicorn in the UK. And he spoke very much about how at the beginning of the journey of that company, what they were was basically consultants, because that was a way in which they would get some money that they can then use to bootstrap the actual business they were interested in. So I think, be creative about how you spend your time while you're acquiring this information. And potentially think about consultancy as a way to acquire information, right, and also get some money to live in, you know, like eat, while you're building your business.

Nicolas Cary 33:25

It's almost like you're teaching us about your own life experiences and how, you know, you become a tutor, and then you become a teacher, and then become a professor and a world leading researcher. And I think there's so much wisdom in that, from a use of the resources around you to begin the process of practicing business. Of course, if you want to build a next generation nuclear reactor, it's gonna take a lot of time and a lot of expertise and a lot of money someday. But before you can just go do that, you're gonna have to learn about all kinds of other things. And you can start practicing electrical engineering, you can build capacity for yourself, then you go on and get the necessary credentialing. And, you know, get the storytelling right, and, you know, get the political movement behind this epic. So it just takes forever to build that type of business. But I can assure you that anyone that wants to build rocket ships started off, you know, doing something much simpler, and the capacity building happens over time. And so I think there's a lot of wisdom in this. Thinking about business as like a wrote down something or like, you have to become a business scientist, and be a crazy experimenter and keep trying again and again and again.

Juanita Gonzalez-Uribe 34:39

So absolutely, absolutely. I do believe that there's a lot that entrepreneurs can learn from the academic process, which is, you know, you have to set up hypotheses you have to create a test to figure out whether your hypothesis is correct. And then you basically learn from that test, and you may set up or not a new hypothesis based then you're fine. So that's exactly what entrepreneurs should be doing as they're building their business.

Nicolas Cary 35:04

Absolutely. So let's talk a little bit about, you know, how teams get formed. And I don't know if this has been a specific topic of your research. But I'd still value your perspective on it either way, and no one achieves, you know, much without the help and support and cooperation of many others. And so can you talk a bit about what you've learned, either in your research or just from your own perspectives in how to build a successful team?

Juanita Gonzalez-Uribe 35:32

Yes, so I do have a couple of things to say about that. So as I was saying, I run an entrepreneurial finance class every spring at the LSE. And as part of that class, what students have to do is create a team, come up with a business idea, build a, you know, a simple, but still business plan, and then pitch it at the end. And we have this competition. So that's the idea behind the class. Along the way, they're learning about entrepreneur finance, but that's the big exercise they had to do. And so I've learned through by teaching, what happens at the team creation phase of this, which I don't assign them teams is important, I allow them to pick whoever they want to, they can form they're free to form their team. And second important thing to say about my class so that you understand what I'm going to say, it's open to anyone who's doing a master's at the LSE. It doesn't have to be in finance or in economics. So I have a white for that, you know, a wide range of people that are coming to the class. And what are you observe every year is that team formation is not efficient, in the sense that why do people tend to do and this is a very natural thing to do, let me do it, let me be clear, this is natural, is they tend to form teams.

Juanita Gonzalez-Uribe 36:53

We're all studying masters, chances are sorry, masters in finance, chances are, we're going to be able to do right, so everyone is a master of finance at the team. And they also typically tend to choose people that look like themselves in the sense that they've come from the same country, even sometimes the same city, meaning they're going to have exactly the same networks that happened. And when I look at this, I just don't understand it. To the extent that when I look at the teams over time that have been the most successful are those that instead of looking for someone that looks exactly like you and has to offer exactly the same thing to the team, you look for a complement, someone that has something you don't have. And that as a consequence, can really add to the equation. So that when we bring these two people together, we actually add up to more of, you know, tomorrow, that'd be you know, the sell of our carts basically. And so I think that a big, big message from me, from this experience of just seeing my students go to my class is, when you're thinking about a team, it's natural to, and more comfortable to work with people that talk your same language, both, you know, language, you know, per se, but also just like, you know, your experience language, your skills, that language, etc. But what you really have to do instead is think about, how do we build the best business possible, and what are the different parts that we have to have, and whatever thing you cannot satisfy, because we, you know, we're not jack of all trades, you know, we all have our own specialty. So you have to look for that other part who complements what you have. And I don't think people do this enough. It's funny,

Nicolas Cary 38:32

because it's like, it's a bias that everyone has the, you know, they're afraid to sometimes approach others or include others, or let their perspectives be vulnerable to, you know, someone else's lived experience or something. But if you think about it, quite rationally, like building a business is like building a ship, or a house or tool. And if you only have carpenters, and you're trying to build a boat, you're never gonna get all the components you need in order to put it out to sea. And you need a diversity of skills and experiences to do so. And so, you know, intellectually we can get there and understand that but we start off from this place of tribalism, and you know, in concern around fear around how to do all this stuff. So anyway, it's often those are the painful lessons that you could be, you could read about it in a research paper, or you could hear about it from an old mentor. And sometimes you have to make the mistake to to watch how a diverse group of people can overcome adversity far more quickly than a team of people that all look and sound and think the same way. So great insight. Thank you so much for sharing that. So I noticed you got quite the collection of books. I'm not surprised behind you. Quick tomato off the top of your head. What's what's kind of the best book you've read this year that's, you know, inspired some, some new thinking for you. We're always looking for book recommendations on a podcast.

Juanita Gonzalez-Uribe 39:59

Isn't it And I absolutely love Margaret Atwood, I just I don't understand why she hasn't gotten the Nobel Prize yet. I'm just like, I'm still waiting, what's happening, everyone's waiting, I don't know, it wasn't a thing. And I recently read Hag-Seed, which I hadn't read. And I absolutely loved. And it's basically, what she doesn't this book is she takes like, a well known play by Shakespeare, and she, and it's part of like a bigger collection, as I understand it, of, of that, like that effort. So they basically had multiple authors taking different plays from from Shakespeare and trying to rewrite them as they wished. So she takes basically the Tempest, and rewrites it in the context of a prison. And, you know, there's basically there's, there's that the main protagonist is basically trying to get the inmates to, you know, to be part of the production. And it's incredibly funny. And it's also sell very thoughtful, it's, it's very much like who she is, is very surprising, and funny, and just very insightful of the human experience. And so I absolutely love that, and I highly recommend

Nicolas Cary 41:07

you to revisit some of the classics in a contemporary format. So maybe that's something I need to go invest in. Thank you for sharing those suggestions. Okay, one last question here. You know, taking the steps to pursue entrepreneurship, or to take any risk in your life can feel really scary. What tips can you give our listeners for how to manage some of the stress that might come with making, evaluating those risks, and maybe choosing to run your own business or become an entrepreneur?

Juanita Gonzalez-Uribe 41:38

Yeah, I think that's a great question. I think, I mean, as mental health issues have become more of a forefront right now, we think more about these things. There are more tools that are available to people. You know, we're both not entrepreneurs, but also entrepreneurs, of course. But that it's, it's, it's often difficult to forget that the stories that we hear about entrepreneurship, most of the times are the very successful ones. And in fact, for every, you know, every successful story, there's a ton of failure. And, and that's part of what the process is, and we shouldn't be afraid of failure, we should embrace it. And all of this is fantastic. But that's not to say that the people that go through that failure, don't suffer. And so I think it's very, very important to I think have I would say two things. A person or a group of people, that is something like the safe space of an entrepreneur, someone that you can talk to, and just honestly discuss what's going on in the business, but also particularly how that makes you feel. And I think that's important having this safe space, because as an entrepreneur, you often will have to wear this mask of, everything's good, and we're gonna make it and nothing's happening here. And so you do have to have this ability to really be yourself, you know, let go of this mass, and acknowledge the feelings, so that they don't build out, but then you kind of, like, explore. So I think that's important. And the second thing that he I think entrepreneurs can do, and I think it can be useful, is just really setting aside some time during the day during the week, you know, to reflect meditate in on things that are not just a business, because I think there's also this notion of losing perspective, and the business becoming your entire life. And you cannot forget that you have your families and your hobbies, and whatever it makes you kind of like a, you know, a fully fledged human. And so keeping track of that, what stuff is outside of the business, I think it's super important, set aside a time of day to do something else, beyond your business, that it makes you happy, and reminds me of your humanity. So I can't say

Nicolas Cary 43:58

well, thank you for sharing, that. I think those are great pearls of wisdom, you know, the path to success for everyone has ups and downs. And I think you know, one of the things that I really hope to reiterate to the community listening is that capability building comes with sort of a mindset to which is failure is going to happen. So anticipate it, treat it as a learning opportunity. If it becomes extraordinarily stressful, you need to go find a bench tribe, a safe space, where you can talk about how that is affecting you and the feelings you have for it. But use that to build resiliency and go test your idea again, learning from the mistake and if you can develop a way of doing that and persevering. You can improve your products, your business idea, your storytelling and over time. The practice of doing that just like a scientist, getting through a thesis has to try many different things before They get the outcome. They hope for you get there in the long run. And so I think finding other people that are going through the same thing as you is a great place to start. There are so many communities for entrepreneurs, to meet with other entrepreneurs, other founders, and that lived experience is one that's very hard for them to sometimes share even with family members or others. And so find some people that you can really be honest with to support you through that is great advice. So anyway, we we've been so grateful to have your precious time today. Funny to thank you for coming on the podcast. So at We connect underrepresented entrepreneurs with volunteer business professionals for free one on one mentoring. We also provide business guides to all of our members plus monthly funding opportunities, so you can sign up for free today. And if you liked what you heard, please subscribe and share. Thank you very much.

Outro 45:54

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