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Veer Away from Heavy Management Theory - David Heinemeier Hansson (37signals)
Date: 1/20/2010
Length: 2 minutes
Speaker(s): David Heinemeier Hansson (37signals)
Sources: Stanford Technology Ventures Program
Description: "Unlearn Your MBA." It's the most important piece of advice new entrepreneurs can take, argues David Heinemeier Hansson. Hansson estimates that 96.7% of what he learned at the Copenhagen Business School has no impact on what he
does today as a partner at 37signals. MBA students need to readjust and recalibrate their thinking away from heavy management theories towards building a product and pleasing a customer.

Other Videos in Series

A Small Business Can Be a Highly Profitable Company - David Heinemeier Hansson (37signals)
David Heinemeier Hansson (37signals)
1/20/2010
Summary: Asked to clarify the difference between a small business and a scalable business that hopes to earn a billion dollars, David Heinemeier Hansson, partner at 37signals, says they are the same thing. Scalable for Heinemeier Hansson
means there isn't a direct correlation between profit and employee count: I can earn 5 million dollars and not hire five people. Many large companies give the impressions that that there is a connection -- i.e., for every $500,000 earned, a
company must hire two people -- so smaller companies wrongly focus on organizational charts and meetings. He points out that 37signals is both a small business (15 employees) and a highly profitable company. Watch More
Constraints Are Your Friends - David Heinemeier Hansson (37signals)
David Heinemeier Hansson (37signals)
1/20/2010
Summary: David Heinemeier Hansson reminds the audience of a simple fact: you'll never outdo Microsoft or Google; they will always have more resources than start-ups. But an entrepreneur must realize that constraints are your friend. Having
some limitations will force you to think differently than your competition. Watch More
Don't Play with Other People's Money - David Heinemeier Hansson (37signals)
David Heinemeier Hansson (37signals)
1/20/2010
Summary: The key problem with venture capital remains simple: You're playing with other people's money. David Heinemeier Hansson, partner at 37signals, believes that using venture capital removes the accountability that's inherent when an
entrepreneurs use their own money. When it's your own money, he continues, you want to make more of it faster, so you don't just put out a product without a price. The urgency you get from spending and making your own money is the most
powerful driving force for an entrepreneur. Watch More
Great Ideas Derive from Well-Rested Minds - David Heinemeier Hansson (37signals)
David Heinemeier Hansson (37signals)
1/20/2010
Summary: Being a workaholic is no guarantee of success. David Heinemeier Hansson points out that 37signals' main product, Basecamp, was created on 10 hours a week of development for a total of six months. When you're overworked, you can't
think creatively. A great idea comes from a well-rested mind. Watch More
Out-Teach Your Competition - David Heinemeier Hansson (37signals)
David Heinemeier Hansson (37signals)
1/20/2010
Summary: A startup, David Heinemeier Hansson argues, will never have the resources to outspend a Google or a Microsoft in promoting itself. Instead, his own company 37signals tries to out-teach. "We're trying to build an audience; we're
not just trying to have customers." Through blogs, lectures, seminars and other teachable moments, he explains that 37signals has created a following of the company that may not use the product today. But at some point, these people will
either buy our product or recommend it to someone who will. In the end, all sustainable businesses are built by word of mouth. Watch More
Overnight Success Does Not Exist - David Heinemeier Hansson (37signals)
David Heinemeier Hansson (37signals)
1/20/2010
Summary: "Nobody is an overnight success," claims David Heinemeier Hansson, partner at 37signals and developer of the Web platform Ruby on Rails. When some product or company suddenly appears out of nowhere, it usually arrives out of 10
years worth of work. He points out that 37signals and Basecamp took just this length of time to become a success. Accelerated growth is a charade, Heinemeier Hansson stresses. It takes time to develop a sustainable, profitable
company. Watch More
Planning Is Guessing - David Heinemeier Hansson (37signals)
David Heinemeier Hansson (37signals)
1/20/2010
Summary: Long-term planning, strategic planning, tactical planning -- all of these types of planning are really funny for a start-up, chuckles David Heinemeier Hansson, partner at 37signals. The punch line, he delivers, is that a start-up
doesn't even know if it will be doing business in five years, let alone five months. These types of planning suit a stable business, like McDonald's in Northern Illinois. But a new business in a new industry has no clue what it will need
long-term. In fact, he adds, most decisions for a start-up are incredibly temporary. What does matter more than planning? Simply starting. Watch More
Playing It Small Doesn't Mean Not Making Money - David Heinemeier Hansson (37signals)
David Heinemeier Hansson (37signals)
1/20/2010
Summary: Skewed expectations present a major risk when accepting venture capital. Most venture capitalists expect to make a lot of money, and they expect the company they help to become billion-dollar ventures. David Heinemeier Hansson,
partner at 37signals, compares this type of risk to putting all of your money on red five in a game of roulette. When you build a business that earns a million dollars per year, you're taking a more calculated risk, analogous to that of a
skilled poker player who steadily builds up his winnings. "The fact of the matter is that a million dollars is a lot of money when it goes straight into your bank account," asserts Heinemeier Hansson, partner at 37signals. Watch More
Unlearn Your MBA (Entire talk) - David Heinemeier Hansson (37signals)
David Heinemeier Hansson (37signals)
1/20/2010
Summary: David Heineimeier Hansson, the creator of Ruby on Rails and partner at 37signals in Chicago, says that planning is guessing, and for a start-up, the focus must be on today and not on tomorrow. He argues that constraints--fiscal,
temporal, or otherwise--drive innovation and effective problem-solving. The most important thing, Hansson believes, is to make a dent in the universe with your company. Watch More
Veer Away from Heavy Management Theory - David Heinemeier Hansson (37signals)
David Heinemeier Hansson (37signals)
1/20/2010
Summary: "Unlearn Your MBA." It's the most important piece of advice new entrepreneurs can take, argues David Heinemeier Hansson. Hansson estimates that 96.7% of what he learned at the Copenhagen Business School has no impact on what he
does today as a partner at 37signals. MBA students need to readjust and recalibrate their thinking away from heavy management theories towards building a product and pleasing a customer. Watch More
Venture Capital Is a Time Bomb - David Heinemeier Hansson (37signals)
David Heinemeier Hansson (37signals)
1/20/2010
Summary: Venture Capital is a time bomb and one of the most harmful things to give to a new business. David Heinemeier Hansson explains that a sudden windfall of money provides start-ups a false sense of security. The VC-injected companies
believe that they have a future and lose the urgency to create a sustainable, profitable product. And because they come to depend upon venture capital for their existence, the companies become addicted to venture capital funding. Watch More
What I Did Learn at Business School - David Heinemeier Hansson (37signals)
David Heinemeier Hansson (37signals)
1/20/2010
Summary: What was one of the main things David Heinemeier Hansson took away from business school? Buy for $1, sell for $2. While it may seem like a simple idea, some of the most basic lessons are the most difficult to understand. For him,
these lessons have helped him better understand capitalism. Through this clarification, he has realized that you have to both appeal to people's own self-interest and assign some value to a job or product. Watch More

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