Published: Jan. 19, 2023

Jeff听 0:00 听
Welcome to Creative Distillation where we distill entrepreneurship research and actionable insights. I am Jeff York, research director at the Deming Center for Entrepreneurship at the Leeds School of Business at the University of Colorado in Boulder, and I'm joined by my co host,

Brad听 0:14 听
Brad Warner. And Jeff, it's great to see you, you know that I'm part of the dining center as well. I'm a priority dresser. I think it really I think so Na, actually, though, Notch Brunner and we're still here at liquid lick pad.

Jeff听 0:31 听
Totally. So, we're also still here with Devin Helden, as well as our guest, Tony Kahn, who is Associate Professor of organizational behavior at the Leeds School of Business. And now we are going to transfer into our discussion of academic paper. So we've been enjoying a few lovely beverages. Once again, liquid mechanics has been kind enough to host us and Devon, a two time buff has been us. Yes. And he's gonna stick around and talk about an academic paper list, which is awesome. Devin, we're thrilled you're gonna stay. Thank you, especially because you keep giving us beer. So anyway,

Brad听 1:02 听
and we're gonna be talking about you guys see the tab?

Jeff听 1:05 听
Yeah. This is one of those cool. So Tony just joined our faculty. And I was like, Oh, cool. He's a really, really great accomplished scholar, as you know, definitely excited to have him join. And then he published a paper in my favorite personal journal, The Journal of Business venturing, the premier academic journal, and entrepreneurship. By my opinion, most people's journal business mentoring is cool, because it's like a big tent journal. And what I mean by that is they take papers from all different disciplines, all different perspectives, but they're all concerned with the empirical phenomenon, as we like to say in academia, or reality. In other words, entrepreneurship and Tony's papers, a good example of that. So it's in the latest issue of the journal. Will the startup succeed in your eyes, venture evaluation of resource providers during entrepreneurs in formal signaling? And I'm just gonna go through all the co authors here so of course, now, Tony, is it did June Yeah. All right. I got right. Did you turn Kang fester at least go business also Curtis l Wellesley the second Connor J. Luba, Jackie,

Tony Kong听 2:08 听
I think so.

Brad听 2:11 听
together a lot when you talked about

Jeff听 2:12 听
the income section and Todd section, I'm not gonna go through all these people's affiliations, because there's a lot of authors on this paper, but but we have one of them here with us. Welcome to you. We're thrilled to have you, Tony, how

Brad听 2:22 听
do you collaborate with this group?

Jeff听 2:24 听
Yeah, it's interesting. So.

Tony Kong听 2:25 听
So actually, I was not on this paper initially, but they got a revision opportunity, but they don't know how to revise the paper effectively. Because there's a lot of psychological theory issue. So they, Curtis and I were former colleagues when I was in Houston. So Curtis know, like, I'm pretty interdisciplinary. I know, the risk theory. I know, the social exchange theory pretty well. So brought me in. And then we revise the paper, the editor was so in love with the idea, really. But it was so tough. Like, I thought, like, you know, publish intrapreneurship will be easier. But like, yeah, went through like five rounds in total. So it was a really a lot of rigorous revision, and then thinking, so I was so excited. Like, finally we can set it off. And then you know, publish it. And finally we got to imprint.

Jeff听 3:15 听
Yeah, so So for non translations, first of all, well, yeah, here, here. Thank you. So our non academic listeners, when you say five rounds, that just means like, you know, you wrote five emails, right? That was not like,

Tony Kong听 3:30 听
it was like, every round is three months, basically, like, review. And then we have to collect more data and a year and a half to get through probably two years in total, just to publish a paper.

Jeff听 3:41 听
Yeah. And that's, that's the thing. People are like, oh, yeah, academics just sit around, you write your little papers.

Brad听 3:48 听
And how many people read it? Well, we

Jeff听 3:50 听
don't know. More now. So that's sort of the idea of my cast are trying to get actual insight. I think there are actual insights in this.

Davin Helden听 4:00 听
That's the importance of peer review, man,

Unknown Speaker听 4:02 听
right?

Davin Helden听 4:03 听
If it gets in there, it's real.

Jeff听 4:06 听
Well, as least as best we can tell, right? I mean, you know, it's like, that's the thing is, like, I always have students are like, Well, I'm gonna cite these facts from the American Council on, you know, whatever industry is great, like, just don't want to pick an industry. And you're just like, yeah, that doesn't actually mean anything. Because they just paid for it. Like, so many times, I've been approached by organizations that were funded by the Koch brothers, because I do environmental entrepreneurship, and it'll be like this organization called, we like freedom, and like, we're gonna give you like, $10,000 to approve this paper we wrote and I'm like, Oh, I like freedom. We like freedom. Sounds good. You go, oh, look, it's Charles Koch, if you're not familiar, are basically the biggest perpetrators of continuing our climate change catastrophe that we're engaged in. And so it's got to be careful. It's interesting, but peer reviewed, and certainly journal business venturing has a extremely high bar is a difficult draw. To publish and, and has arguably a much bigger impact factor, which means how many times papers get cited by other people than a lot of other journals. So Tony, tell us a little bit about like, oh, good grabs

Brad听 5:11 听
Charles Koch they'll ever be right. Here's the thing. Could Charles Koch ever be right? Here's the thing, peer review should actually say there are points that are valid, and there are points that are false.

Tony Kong听 5:22 听
It happens to every writing, like if you send some horror Business Review, it's the same,

Brad听 5:26 听
right. So my point is, though, just because someone sends you something that you may not agree with their overall politics, there could be

Jeff听 5:33 听
Oh, I see what you're saying. People for freedom actually have a very good paper. And they just happened to be funded by Charles Koch. And we shouldn't hold that against him. Right. That's yeah. And we said, Yes, yeah. Not really no, because like, because when people fund things like that, yeah, in my humble opinion, is same as if Greenpeace funded the research. I still don't think it's valid. They might be right. But it's still not peer reviewed research. But it's a different level of evidence due to peer review.

Brad听 6:03 听
So that in the sense that you could say, this component of the paper makes sense. So this Yes,

Jeff听 6:08 听
except for they're paying me to do it. Okay. So so we don't get paid for this stuff. And you've told me I didn't know. So this is the deal. When we submit these papers, Tony got no money for this paper. I got

Tony Kong听 6:20 听
time socked in. Yeah, he cost

Jeff听 6:22 听
him heavily. So they're buying reviews, they will Kim who said that the Babson school is amazing, amazing professor and Greg, he didn't get paid for editing this. And I guarantee he put a lot of effort into it. He's a very good Scott, the people that wrote the reviews for five rounds

Brad听 6:37 听
to Tony, it was a clarifying event for me because I just assumed no, that's the point. He transfer No,

Jeff听 6:42 听
who made money, a salvia made money and 4995.

It's a digression, but it's like, it's like PACs or politics, right? When you get you and I go start a little activist organization, and we want to remove taxes for entrepreneurs, right? Perfect. We go out and we do that. And yes, we might be right. And we might be lobbying. As soon as all of a sudden Exxon is paying us giant influxes of money because there is anyone paying for money. Right, right. I mean, as soon as money enters the equation, you know, things change, right?

Brad听 7:17 听
So that's that's the point. Editing is done pro

Jeff听 7:20 听
bono. It's all free. It's all free. It's all for that. That's really good. For our listeners. I had no idea it was my mind. Yeah. So that's why it's a problem when Charles Koch or anybody I'm not I'm not trying to pick up the Koch brothers, although they are evil bastard. So we can pick. But but but I want to understand

Brad听 7:36 听
the process when we Yeah.

Jeff听 7:38 听
And that's why peer review. Look, is it right? Like, quote unquote, correct and the truth? Maybe, maybe not, we'll never know. Because like, all we can do is the best we can do.

Brad听 7:50 听
We can do, right. And I just, if I'm writing a paper, and I will never write a paper, but I'm writing a paper, we're gonna write a paper. I'd like to send, Jeff, I'd like to send it to people with sensibilities that are totally different

Unknown Speaker听 8:04 听
than YouTube. You could not choose your review, right? It just goes out in the world, right?

Brad听 8:08 听
I don't want right I don't want it just to be reviewed by a certain type of individual.

Jeff听 8:13 听
Well, that'd be lovely. If you could pick but you don't get none. That's all I'm saying is that I'm saying that that that makes sense to me. Right, right. Yeah. So that's, that's how we get to. Anyway, let's get back to

Tony Kong听 8:23 听
this paper. It's really interdisciplinary, which makes me really fall in love with entrepreneurship research. Awesome. So right now I'm actually working with other entrepreneurship scholars, different issues on different paper. I love this journal after a

Jeff听 8:38 听
couple years to that.

Brad听 8:40 听
We need more energy part of the struggle

Tony Kong听 8:43 听
now. And Ashley, I'm working with Melissa Cardin, and we have a special issue on work passion, which includes entrepreneurial Are you helping them? Yeah, I'm

Jeff听 8:54 听
mostly Kernza. One wonderful professor at the University of Tennessee.

Tony Kong听 8:57 听
Yes. So we are so excited about that special issue, which will encourage a lot of work entrepreneurial passion, because that contract is very popular, but it's very poorly understood. Yeah. So what does that

Jeff听 9:09 听
mean? Like, she's one of the leading lights, and she really started that whole conversation. Yeah,

Tony Kong听 9:13 听
so it was really my pleasure to work with her on the special issue, and then work with other scholars on crowdfunding, which is so interesting to me. Because the whole process about you know, social psychology process and how to perception issues and also stereotypes issues. So all these are really important issues, which will probably relate to Devon's like fundraising. How does he choose a funder that will be successful, secure to fundraise?

Jeff听 9:38 听
That's awesome. And I mean, that's what this paper is, well, not directly about, but pretty much so tell us tell us a little about the paper. What are you guys trying to do in this?

Tony Kong听 9:46 听
So in the entrepreneurship literature, actually is a really theoretical challenge. Like there's no theory about like, what's in the mind of funders. But what does the experience driving their funding decision?

Brad听 9:58 听
I can tell you about the experience. But we're gonna need about 10 more beers,

Jeff听 10:01 听
we probably got those mechanics a lot

Brad听 10:04 听
about our experience.

Tony Kong听 10:08 听
And then also, we actually are looking at three categories like of investors of without funding investors with funding. And also funders without investment experience, they actually have very different mentality or mental models.

Jeff听 10:20 听
So these people are all being approached to provide resources to an entrepreneur.

Tony Kong听 10:23 听
Yeah. So we collect data for six years in Midwestern six years, six years from then two years

Jeff听 10:29 听
to publish 2000.

Brad听 10:30 听
Seriously, so almost 10 years to put this paper together. Yeah, that's incredible.

Tony Kong听 10:35 听
Well, it's what it takes to publish in these journals. Yeah. So the six years, they have a regular luncheon meeting, which invite all those people to give a talk, and then networking. So in the meantime, we just collect data. And after that, like, we just have a real time survey data. And then we did analysis. I mean, I was not involved in the data collection, but I can imagine is so time consuming God, it was clear to Indiana so like, there are a lot of interest in entrepreneurship. And finally, when they give me the data set, like I was like, okay, a lot of variables are not established. It's like a new variables, like how to make sense of that. So that was a really time consuming just to think about what is the conceptual model? How does it make sense based on theory, and based on you know, practice this journal? I think that the beauty of this journal, they really care about practice, like, what is the practical insights? actionable insights,

Jeff听 11:25 听
right? There's actually they require you to write an executive summary, which is meant to be understood by anyone who picks it up and reads it.

Tony Kong听 11:33 听
Yeah. So one of the flaw of management journals, like some manager, and just what usually published I don't want to name them, but like I totally gave him, they usually do not care about actionable insights that much, right. So this journal, they really care about that, and then looked at and then force you to think about the so what question like Why do we even care about this?

Brad听 11:51 听
Right? And that key, right? And that's why we're here today? Yeah.

Jeff听 11:54 听
So what you guys were trying to answer is, what is the experience of investors? And how does it affect their propensity to fund but you're looking at the type of expertise they have as moderating that. So let me see if I've got your model right here. I'm gonna say say we have the propensity of someone to invest in that, then that's just like baseline, whether or not I think I'm going to fund entrepreneurial ventures. Yeah, my inclination to do that, in

Tony Kong听 12:22 听
general, just like whether you buy stocks or whether you will.

Jeff听 12:26 听
And then you're looking at, people are going to, of course, look at the venture and make an evaluation on that. And then they're either going to provide financial resources or social resources. So those are two categories. Because when you're when you're trying to start a business, you're you need funding, yes. But you also need connections. But here's what I think's really interesting about the paper. And I really like I mean, I think that's all interesting and fun and actually grounded in reality, which is nice. But you're looking at the how the venturing experience affects that, right? Yes.

Tony Kong听 12:56 听
So like a floor for entrepreneurs like Devin, right? Who you should ask for money. Right?

Jeff听 13:02 听
And that's actually what boss my timer, I won't do the job. I did enough in the last episode.

Tony Kong听 13:07 听
That's the actionable insight we want to provide. Right. So so let's

Jeff听 13:12 听
talk through. Go ahead, Brad.

Brad听 13:13 听
I'm sorry. No, I think I would like to talk it through with Devin about his experience about trying to fund a new business. And I think that we should get some feedback from what Tony found and his findings and see if they actually aligned. Yeah,

Davin Helden听 13:25 听
cool. You know, I haven't I haven't read the paper, but I can definitely tell you all our story. So when I gone through a year and a half of writing our business plan and using Frank Moises financial model, I knew that we wanted to be pretty big equity owners, the three co founders, so that meant a bank loan of some kind, it means personal risk. So we had to put in each chunk of money in order to get a bank to give us an SBA loan. We also have two very small private equity investors. One it around nine and one around three. So the three of us owners own the rest, 28 point whatever percent. And I did that by design, because I wanted to, I knew it was going to be at 80 hour weeks for years. And I wanted to have that in the back of our pocket, you know, but getting a loan from a bank was extremely challenging. And I thought that our business plan was great, but it's just a piece of paper, right? I'm trying to convince people about who we are and what it could be, you know, without even our location picked out. And while that's really a challenging thing, I had met with five banks the first for the plan and said, you know, the craft beer things kind of blown up. They're all big everywhere now. No thanks. The fifth person who has since funded everything and will give us any money amount of money we want now, because of the success you tried to ask us who we were, this individual is the vice president at a local bank, I can tell you if

Brad听 15:06 听
I think you should plug the bank,

Davin Helden听 15:08 听
first First National Bank of Omaha. Also Monty Medina, is the guy that we worked with super awesome individual. When we first met with him over lunch, you know, I handed him the business plan. I'm very nervous, because four banks had already told me to go kick, hey, yeah, and, you know, a hand on the business plan. I was like, Listen, man, I probably getting close to not doing this anymore, because I'm not doing equity stuff, because that's a pain in my butt as a CEO, and he took the business plan and put it on a SlideShare. He said, Tell me about yourself. And that started this relationship. And the relationship grew. And he met my business partners. He tasted some beers, we went to some hockey games together, like he's a real personal relationships, Colton. He's trying to figure out who we are, as much as we're trying to figure out who he is. And that's our experience. And he he gave us a ton of money. And as of March of this year, he got all paid back through through the bank, you know, it says Be sure, with all the interest and crap, they were horrible payments to make some months, but we did it. And now we're debt free, is it? Oh, that's

Brad听 16:18 听
the type of relationship with this person.

Davin Helden听 16:22 听
He will call me about every six months, literally saying, what do you need? You know, so

Tony Kong听 16:28 听
that's one of the inside we found, like people who have found the experience like you are more willing to give advice to the budding entrepreneurs, and also give like, support. So that's something like investors without funding usually are not inclined to do.

Jeff听 16:48 听
actionable insight, I

Unknown Speaker听 16:49 听
love to ask my partner to have a sound to like, whenever I see something like that.

Jeff听 16:55 听
So to restate, if you're in a startup position, and you're looking to try to get resource providers to work with you, you're better off approaching people who have actual experience as founders, rather than just randomly wealthy individuals or people who are able to invest because of other circumstance.

Tony Kong听 17:15 听
So there are two fold of the advice if you want to seek social support, right? Seek someone who has a founding experience. If you want to seek like a financial support that ask the person like Devin, are you willing in general, are you willing to invest in entrepreneurial ventures? If the answer is yes, then I will seek you for the money if no, like it's probably a waste of time.

Jeff听 17:34 听
Right. Right. Cool. The

Davin Helden听 17:36 听
two private equity investors that we got had, I think, no experience investing prior. But also, I think that the percent that I allowed them to take was so small that it was probably digestible for them, you know, the highest was 9%. So I probably could have gotten it all funded through friends and family, but that just makes her uncomfortable Thanksgiving.

Brad听 18:03 听
Your grandmother, yeah, the

Jeff听 18:05 听
Thanksgiving problem of like, friends, family. Well, fools are great. If you can find them. The three F's, I've never been very successful in finding the fools that want to give me. I don't know, I don't know where they are. If I could find them, I'd be in. Well, I probably wouldn't be sitting here with you guys. Anyway. So what do you think, Brad?

Brad听 18:22 听
First of all, I'd like to know, Devin, have you sent other people to this bank, other people in the community that are looking to build their businesses?

Davin Helden听 18:31 听
Yeah. So I think along what he was saying, through my experience, I've helped nine other breweries review their business plan, do lease negotiations, trying to help them open for did five chose after I showed them kind of what it's really like, chose not to open which is an equally valid decision. You betcha. Yeah. You know, I think that my help, there was maybe even more value of getting to know you may have saved their lives. Yeah. And then the four that did were really passionate about it, and they made it happen. However, they made it happen. They're still open today.

Brad听 19:05 听
What do you think, Tony?

Tony Kong听 19:07 听
I think it's perfect mix. I mean, the uplifting finding of the paper is like people are helping each other. I have found the experience you actually have building a community together,

Jeff听 19:16 听
which we keep seeing on this podcast over and over again is like, collectively help people in the craft brewing industry in particular, but also craft distilling, but we just happen to be more craft brewers. So we end up with more

Brad听 19:26 听
and we never get to a paper if we're actually at a craft

Jeff听 19:29 听
those that challenge too. But you know, you actually see this, I think that's kind of what's unique about Boulder, and elite school. I'm not saying this doesn't happen everywhere. I think it happens with more frequency and a little bit easier in the boulder kind of startup community. There's this thing that people talk about give before you get. And unlike many other communities, there's an expectation that you actually are willing to provide social resources and In some cases, financial resources, before you necessarily take from the pool, and you should help people. And that's just not the way it is. And I mean, Brad's often talked about comparing boulder to

Brad听 20:09 听
Chicago, right? And I just want to throw that out one more time in Chicago. And I'd be very curious about the beer industry. In Chicago. If our company had to pay $10,000. For some HR work, you'd get in the elevator and someone would stab you for that work. Holder would literally say, Come on over have a beer, and I'll give it to you. Let's go for a hike. And yeah, and so is it the community that actually allowed this to happen? Would this have happened if you'd launched in New York City?

Davin Helden听 20:37 听
No, I don't think so. I think it was this environment. And at the time, I was at startup brewery number six that I was trying to help through. I mean, I spent a lot of time with some of these companies, reviewing financial models and doing ratios from them as compared to us. Some one of those years, my family is on Medicaid. You know, that's what grown a business is sometimes.

Brad听 21:01 听
hard. Really hard.

Davin Helden听 21:02 听
Yeah. It's, I wanted to give back when I was in that position, because I wanted people to know that it's hard. I'm not sure myself in we're gonna get through it. Sure. Okay, here's all the information you need. And karma.

Brad听 21:21 听
I'm with you. It's probably not in the

Davin Helden听 21:22 听
paper. But I think it's probably getting pretty close to that.

Tony Kong听 21:26 听
No, yeah. So the one of the important thing we try to promote is like, it's not only about money, it's actually about social resources, advice and help and moral support. Yeah,

Jeff听 21:35 听
I mean, so a lot of times we're teaching entrepreneurship, I'm sure it's never happened to you bribe our students enter into the class, like thinking, how do we get in front of VCs? I'm like, Well, you don't, that's not really your goal, it shouldn't be your goal. Your goal should be to build a business. And if you get to the point where you actually need to be in front of venture capitalists, or VCs, to build the business, the money, they'll find it, they'll find you. Like, if you're seeking them out, that's not a good thing for you. That's like a refuge of last resort, actually, like you need to be able to have that big of a cash infusion to grow, you'd rather hold on to your equity, like like Devin was talking about, you don't want to like, Hey, can I give away my equity as quickly as possible? Like, no, that's a terrible fucking idea.

Brad听 22:20 听
Please, I'm thinking about here is that geographical culture is a big player here. Yeah, in some of these areas that are cutthroat where I come from, and I mentioned New York City to if they could actually, I would say, somehow grow this culture of collaboration. Their economies may do much, much better.

Davin Helden听 22:44 听
GDP goes up, right. All good things happen, you know?

Jeff听 22:47 听
Yeah, it's not it's a challenge of capitalism overall, right? It's sort of a narrative that we have to challenge in the business school. Sometimes I think, like, of course, you have to have a, of course, you have to have a good business model. Of course, you need to have your finance in line. Of course, you don't let other competitors come steal from you and whatever. But the idea that everyone is out to get you and you got to screw everybody first. Man, that's just not the way to grow a business or a much less a life that

Brad听 23:12 听
you want to lead. And I also believe in the karma, let you know, how do we take these little signs off the playing board? I think that's

Unknown Speaker听 23:20 听
that's definitely.

Brad听 23:23 听
Alright, this is for you where we're taking the gloves off the board.

Jeff听 23:31 听
The way to take off the board is to be more collaborative.

Brad听 23:35 听
Was that right? I would say that I think that that we're getting to at least a anecdotal consensus that the collaborative sensibilities of community really matter. Yes.

Jeff听 23:48 听
There you go. Eric, that one's for you. All right, Tony. I know in the past, you have been more of a psychology and OB professor, but you're now enamored with entrepreneurship,

Unknown Speaker听 23:57 听
or we would definitely I definitely would love to join the Devasena entrepreneurship. Now you just

Jeff听 24:05 听
joined. Okay. Congratulations, Tony, are you now? What's next, you said you're working on some other entrepreneurship projects?

Tony Kong听 24:14 听
Yes. I'm very interested in motions, like how does it influence the fundraiser? So we are looking at that. And then, so far, we have some promising findings, and then look at how creativity actually influenced people's perception and then also decision for fundraising.

Jeff听 24:29 听
That's awesome. And those things are so tightly entwined. Hello, once again, I want to thank Dowden. Thank you for having us here. And liquid mechanics, Lafayette, Colorado, look them up. If you want to buy their beer, it's available across most of the Front Range, but you're better off coming to the taproom. It's a far better experience. Yeah. I'm all about that. Yeah. And it's just a awesome place until Devin, you said hi. And if you're a buff, come on out. Tony. Welcome to the faculty. We're so thrilled to have you here. Too many Cheers. Yeah. Brad, as always, it is wonderful to spend time with you.

Brad听 25:04 听
You as well. This was great. Devin, you're part of the Deming center now to Yeah,

Jeff听 25:10 听
this is great. I'm really excited about this season. We got some real cool surprises coming up. And again, this is creative distillation brought to you by The Deming Center for Entrepreneurship at the Leeds School of Business at the University of Colorado Boulder. My name is Jeff York. I'm the Research Director there and

Brad听 25:24 听
I'm Brad Warner and we will see you next time Cheers.

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