Legendary Entrepreneur and Author Judy Estrin (Part 7)

SM: Really strong people do not tolerate that kind of dynamic.

JE: The way to lead innovation is to bring out the leadership in each individual. If you have risk without questioning, openness and trust, you have the economic crisis we have today. We have people taking risks but not asking questions. There was not the transparency to understand what risks they were taking. As a result, you lost trust between the lending agencies, and there was a paralysis of money flow.

SM: Additionally, I think two other dynamics have led us here. One is the sense of gold-digging, and the other is a sense of looting. It is rampant opportunism.

JE: A biological ecosystem consists of organisms interacting with their environment. In an innovation ecosystem the environment is leadership, funding, policy, education and culture. The two most important are leadership and culture. From a cultural perspective, we have come to value trading and flipping more than building and creating. When people look at trickle-down economics, the reason that notion does not work anymore in our society is because the people who made the most money were the people who created the most jobs. Today the people who are making the most money are actually not creating jobs, they are getting rid of jobs.

SM: I am completely in agreement with you. I wrote a piece called Silver Lining in the Financial Crisis. There are 185,000 jobs in Wall Street in steady state. They are going to lose 45,000 jobs in the midst of this crisis. This is the best thing that can happen. All of these young people who are rushing into finance without any consideration to other viewpoints or value systems are going to get turned off and scared.

JE: Unfortunately, it is deep-seated in the culture. It will take at least a generation, and we all have to think as parents, mentors and leaders, how do we affect this notion of instant gratification?

There are two types of leadership. People talk a lot about threat or competition being the motivating force for companies or countries, and they say we need another crisis. I don’t agree. We have had plenty of crises. There are two ways we can motivate. One way, which is anti-innovation, is to take that threat and create fear in your employees or your country. That is what Bush did after 9/11. If you just use the threat to create fear and do not give people an opportunity to contribute, you create fear and helplessness.

True leaders take that threat and turn it into a challenge which they use to inspire and rally people. That turns on people’s executive functions. If you look at Sequoia’s reaction to the economic crisis with their debt which created panic, that is creating fear. That is anti-innovative and is poor leadership. Others have reacted to it by realizing it is a challenge and an opportunity to invest. Instead of going to a portfolio company and asking them to cut 20%, you go to the board room and ask them to figure it out. How will this affect our market?

After writing the book, the reason I became a strong supporter of Obama is that I believe the country needs its psyche changed. For eight years, it has been led through fear. We need inspiration for us and our kids. We need to get people involved because that creates innovation. Business leaders need to look at these hard times and turn it into a challenge for their employees.

SM: Where do you go from here? What is the game plan?

JE: I have no idea. My book came out in September. The book is a means to an end. I wrote it for the same reason that I started my companies. Writing the book was harder than running any of my companies. I still have my board seats. I have purposely not plotted out where to go.

The book is fairly broad. It has business connotations, it has implications for non-profits and it has policy recommendations. I probably won’t do anything in the business world with it. I may get involved in non-profits or policy-level opportunities with it. The one disadvantage of being an entrepreneur is that it takes so much focus that you can become too focused.

This has expanded my mind. The things I listen to on TV and the things I talk to people about are completely different now. Now the scope of things is at a much different level. I am ready to be open to engage in different things. I am trying to get a message out, which is participating in different types of events.

SM: This has been wonderful, thank you.

This segment is part 7 in the series : Legendary Entrepreneur and Author Judy Estrin
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