Hi, this is Dan Morrell, host of Skydeck.

Eric Schultz (MBA 1983) was working as an executive chairman for a tech company, and on his way home from a fundraising presentation at a venture firm when he had an epiphany.

A longtime executive with a personal interest in history, he had been struggling with how to frame a new book he was working on about the history of innovation in America. But sitting around a makeshift bar with some of the other executives who had just laid out rosy scenarios and hockey-stick returns to potential investors, the truth came out. One of the executives was running out of cash. Another had a new competitor they didn’t have a few months prior. One had lost her star software developer to a rival. This, Schultz thought, was the perfect framing: Take all of the historical entrepreneurs he was focusing on for his book and put them in a bar. Let them trade stories, tell jokes, share insights, and see what commonalities these icons could find over a few pints.

The result is Schultz’s new book, Innovation on Tap: Stories of Entrepreneurship from the Cotton Gin to Broadway's Hamilton, and on this episode of Skydeck, he and I discuss what two artists separated by more than a century can teach us about innovation, and why it’s important for business leaders to reflect on history.

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Dan: There are six themes of entrepreneurship in America that you discuss here—five of them that intersect and build upon each other, and the sixth set sort of runs alongside and throughout. Can you briefly introduce those themes?

Eric: The first theme is mechanization. If you were a young person in the early Republic in America and you could build a machine that did what had been traditionally done by hand, you were in the sweet spot of entrepreneurship. And so Eli Whitney fits in nicely there with the cotton gin and his musket factory. And I also look at Oliver Ames who was making shovels just down the road from the Business School in Easton, Massachusetts, mechanizing that process. Now we start to get things like the telegraph and the railroad and you start to see these huge factories arise and we get into the second theme, which is mass production. So we're taking the mechanization and we're just doing it faster and more of it.

Once we get good at that, then we begin to run out of customers. Beginning after the Civil War into the turn of the 20th century. We start to overwhelm the market. And the way to think about that, is if you had looked at a group of Americans in 1870 and described them, you would've said “American citizens.” By 1920 that group has become “American consumers.” So there's a flip. And what happens is entrepreneurs must become as good at making customers as they are at making product in this period. Now suddenly, we're so good at those two things that by the 1950s and 60s we start to overwhelm the environment. So we're making good stuff, we're making lots of customers and we're taxing our world. And that's the fourth theme, which is sustainability.

And then the fifth theme is sort of a callback to mechanization, which is digitization. So now suddenly we have the tools to completely change our world again from mechanical processes to digital processes. So those are the five what I would call dominant narratives. They're not the only way to be an entrepreneur, but they tend to be thematically the ways that really stand out in each of those periods. And then there's another set of innovations that are social and cultural in nature. They don't necessarily conform to the dominant narrative. Quite often they are people who don't get to participate in the dominant narrative. Maybe they don't have the educational opportunities or the employment opportunities and they represent a whole bunch of things. Education. I profile a couple in music in the book, for example. And they are people who are wildly creative, wildly inventive, but they are not allowed for whatever reason to participate in the mechanical process or the mass production process.

So those are the five themes that sort of run consecutively and build on one another. And then the sixth theme that, as you mentioned, sort of runs alongside throughout.

Dan: So, yeah, let's talk about one of those characters that sort of embodies one of those themes, Buddy Bolden.

[MUSIC]

Tell us a bit about who Buddy Bolden was and what entrepreneurs can learn from his story.

Eric: So Buddy Bolden is born in New Orleans in 1877. That's an important date in American history because that's the date that Reconstruction fails. Collapses. So Buddy Bolden's life will be one of rapidly constricting opportunity for black Americans, especially in the South, but throughout the country. When he plays his last concert, that's the year that the Supreme Court rules on Plessy vs. Ferguson and they say separate but equal is the law of the land. So those are the constraints in this entrepreneur's life. He's the grandson of a slave, son of a teamster. And we don't know much about his early life, but sometime by the middle 1890s he's managed to find the cornet. Maybe in a barbershop. Barbershops are particularly important places in America because they tend to be what Ray Oldenburg called third places. There's your home, there's your work, and then there's this third place where everyone drops their titles. Or in the case of New Orleans, black, white and Creole could all come together and converse and share.

We think that may be where he picked up the cornet and began to get some early training and maybe participate in some jam sessions out after hours. So he becomes Kid Bolden. He's clearly a very creative guy and you have to now understand the context of New Orleans. New Orleans was what I would consider to be a classic innovation community. The same way we think of Silicon Valley now, or maybe Detroit in the 1920s with the automobile industry. Okay, there's all these musicians, there's all this music. It's in the air. New Orleans is considered the opera capital of the world. There's blues coming out of the sugar cane plantations and the cotton plantations, of blacks coming to New Orleans to find employment. The Baptist Church are swinging their hymns. There's something called ragtime that's sort of running up and down the Mississippi River. So all of this is in the air and coming together in New Orleans.

And it creates an opportunity for someone like Bolden, who doesn't have the education, who hasn't been given the economic opportunities, to still be innovative and to let talent be the great leveler. And that's music. So by 1897, he's running his own band. He's moving from Kid Bolden to King Bolden. Because he's clearly the best at the cornet. And he starts to play a kind of music that now in retrospect as they go ... in the 1930s and 1940s, as they're interviewing these older jazz folks who are in New Orleans at the time, they say it was different than anything they'd heard before. We now know to call it jazz, but they won't have that term applied to music until 1915. So he's creating something that nobody knows what to call. It's called that raggedy uptown stuff. And he's doing it in a way that's attracting a younger, hip crowd. We would call them early adopters today.

Now, Bolden has three things that are sort of working against him. One is he's not classically trained. So we think he could read music but not read it well. And I think there were things going on in his head that he couldn't quite play. He could hear them but he couldn't quite play them. And that was frustrating for him. And New Orleans is a highly competitive market. Like any innovation community. If you were playing that night, your band was playing that night, you might put it on a wagon and drag it around the city in the afternoon. If two bands met at a crossroads, they would hitch the wheels together and they would try to blow each other down. Right? And the winner would obviously have the larger crowd that that night. So you have to put it in the context of Bolden constantly feeling like he has to protect his title. His crown, right? He's the King.

Number two is we think he was a hard drinker and that didn't help his music. But number three is there's an underlying ... It's risky to diagnose someone from 125 years later, but some kind of depression or manic depression that he was subject to, some kind of underlying mental illness that he never got the right help for. When he had problems on the stage and became violent, they would put him into jail instead of in a hospital. So his run goes from maybe 1895 through 1906. He maybe gets 10 or 11 years of creativity and by Labor Day 1906 he's committed to the insane asylum of Louisiana state and he never comes out. He never plays again. And he's lost to history until historians in the 1930s and forties start to put together the history of jazz and they start to hear about this guy named Buddy Bolden.

I think what he says to me in terms of looking at the sweep of the book from cotton gins to Broadway is that, number one, an entrepreneur has three tools to work with. They have their God-given talent and then the talent that they can build on: going to school, playing in bands, et cetera. They have community. And community is the thing that elevates. I consider it the entrepreneur's superpower, right? Let's say you want to launch a business today in blockchain and you're a historian like me and you understand there's an opportunity. I can spend three years learning blockchain, maybe learning how to code, or I can go to a meetup and find a partner and bring that on right away. So the quality of my community in many ways determines my ability to be a successful entrepreneur.

And then the third piece: talent, community, your business model. I'm going to bring a novel combination to market and I'm going to disrupt an economic flow. That defines my business model. So my ability to pick the right business model, to pick the right market to innovate in, will determine to great extent my success. The Bolden story is all about community. He probably couldn't have been successful in Boston or New York. New Orleans was an open community. It had been Catholic and Spanish, not Protestant and British. And it just was more accepting and he had a chance in that particular community to find other musicians, to take advantage of everything that was in the air, and to build something entirely new with it.

Dan: And are those the same sort of characteristics that we find today in a place like Silicon Valley? And I guess what I'm really asking there is, can we more clearly make that analogy that you alluded to earlier, that turn of century New Orleans was like modern day Silicon Valley?

Eric: So think about it in terms of it being very competitive, as it is in Silicon Valley, but at the same time very collegial. So there's mentoring going on. There are people who might compete during the day but have a beer at night and talk a little bit about their business or their music. It's also very fluid, so that it was not uncommon in New Orleans for you to be playing in a band with someone who would then be in a competitive band the following month. I think it's very similar than in Silicon Valley, that people are able to change jobs quickly. That helps spread education and knowledge throughout the entire ecosystem.

Dan: The book sort of concludes with a focus on another entertainer, Lin Manuel Miranda, the creator of this blockbuster musical Hamilton. And there's this great line at the end of it. It says, you know, the conceit that everyone's leaving the bar at this point. And one of the guests says that one of the takeaways is that it's great to have transcendent technology, but sometimes you just need to have the founding fathers rapping. It's the idea that the novel combination of two existing ideas can change the world. Talk about how that relates to the success of Hamilton.

[MUSIC]

Eric: I think we get a little bit lost in technology sometimes because it can be such a game changer for us. But when I graduated from business school and I started going on business trips, I carried my luggage around. Luggage had been, I don't know, two or 300 years old, maybe a thousand years old. People had luggage. The wheel was much older than that. At some point in my career, someone decided to put luggage on wheels and they changed the nature of how people travel. Now I drag it around. Those were two things that existed, right? It wasn't a new technology. It wasn't some new intellectual property that someone came up with. That's what's happened with Hamilton. You take the founding fathers and you have them played by people of color. That was startling to audiences. You take the founding fathers, you take Jefferson and you have him rap. Rap goes back to the 70s and 80s. Jefferson was born in, what? The 1740s? Two old concepts that you bring together and all of a sudden people think, wow.

And what they end up doing is by breaking this economic cycle, they create new customers. We know that when Hamilton launched, he got all the regular Broadway people who'd been coming to Broadway, but he suddenly had all these 11th graders who the Rockefeller Foundation was sending into Broadway, for the first time probably for most of them. Now suddenly Broadway is part of their life. They understand what it is. The ambassador to the UN brought the UN Security Council to Broadway. This is the kind of thing that I think that innovation can do.

Now, Lin Manuel Miranda, like Buddy Bolden, I could call them both geniuses. They simply heard things or saw things that nobody else saw, right? It wasn't that they just did things better than other people. They actually saw something that no one else saw. But the story of Miranda that I tell in Innovation on Tap is of a genius who then goes into an innovation team or innovation community and everyone in that community makes a different kind of contribution that elevates the entire thing. The director was Tommy Kail. He creates structure. He creates deadlines. He becomes an expert at drawing the best out of people in the room, getting the best idea out. The music director, Alex Lacamoire.

Miranda comes in and maybe has a little bit of a song. And what they say about Lacamoire is he paves the road. So he creates the ability to complete that song and to sort of ornament it so that it becomes part of a Broadway show. You have this really important guy, Jeff Seller, who's the lead producer. He's supposed to make money. It's nice to have someone in an innovation team who thinks about making money. Sometimes we see venture teams that don't have that, right? He's also the guy who's most responsible for keeping the audience and the investors and the cast happy. So as you think about your own role as an entrepreneur, it's important that you don't fall for some sort of figure that you must look like in order to be successful. There are all kinds of ways to contribute to innovation and entrepreneurship that don't necessarily involve one being a genius, which is good for most of us, right? But has all kinds of skills that are required in order to bring something like Hamilton to market.

The other thing that struck me about Hamilton, and it struck me about a lot of the stories in this book, is that we're told as entrepreneurs, we want to dent the universe, right? And we do want to dent the universe. But most of these things that dent the universe start as really small problems that someone's trying to solve. When Lin Man Miranda goes on vacation,He picks up Ron Chernow's book and about Hamilton and he says ... And he Googles it right away, says someone must've set this to music.

Now that's an insight that only he had. He didn't find anyone, but his first thought is, I'll make a mixtape. This is a perfect book for mixtape. He doesn't say, I'm going to create an earth shattering Broadway show. That happens over time in community with other people contributing, and they all begin to see the possibility of this.

So I think it's okay to want to dent the universe, but I think it's best if you're an entrepreneur to think about something that's in the present that needs to be solved right now. And then look for ways to leverage that into something bigger.

[MUSIC]

Dan: Why is history important to business? What are we missing when we don't reflect on the past?

Eric: So I have what I would call a liberal arts perspective. And by that I mean knowledge is good for the sake of knowledge. It just enhances your life. There doesn't have to be a payoff. I have no issue with applied knowledge. I am the son of a mechanical engineer. I am the husband of an aeronautical engineer. I'm the father of an environmental engineer. I love STEM. I love applied knowledge. But coming out of a liberal arts background, it was, how do you build a foundation and know all kinds of interesting things? Steve Jobs says that innovation or creativity is just connecting stuff. If you're good at connecting stuff like he was, you're all set. If you're not necessarily good at it, the more stuff you have, the better your chances are. So just filling up your gas tank with stuff is very helpful from kind of a liberal arts point of view, if you're entrepreneurial.

The other thing that liberal arts really stresses is critical thinking, critical reading, and I hate to say it this way, but storytelling, right? Stories are really important. When you pitch your business, the story is everything, right? Daniel Kahneman the economist says, "Nobody ever did anything for a number. They did it because of a story." And I think the liberal arts gives you the basis for storytelling in a way that moves people and can be very effective.

This episode included clips from: “Didn’t He Ramble”, performed by Wynton Marsalis, from the film soundtrack to Bolden © (2019); and “My Shot”, performed by Lin-Manuel Miranda, Daveed Diggs, Anthony Ramos, Leslie Odom Jr., Okieriete Onaodowan, from the soundtrack to the musical Hamilton © (2015).

Skydeck is produced by the External Relations department at Harvard Business School and edited by Craig McDonald. It is available at iTunes and wherever you get your favorite podcasts. For more information or to find archived episodes, visit alumni.hbs.edu/skydeck.

Featured Alumni

Eric Schultz

MBA 1983

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