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Bret Waters and Rio Fish
Guest Blog

Defining Entrepreneurial Mindset

Guest blog by Bret Waters, Miller Center Executive Mentor

I was recently asked to give a lecture on “Entrepreneurial Mindset”.

So I did a little research for my lecture, beginning with the Google gods. The definition that Google responded with was: “Entrepreneurial mindset refers to a specific state of mind which orients human conduct toward entrepreneurial activities.”

Boring, and not very helpful (plus, it’s kinda recursive, Google).

Then I decided to turn to some friends of mine who are very successful Silicon Valley startup founders and venture capitalists. I figured maybe they’d give me some interesting definitions of an entrepreneurial mindset.

Here’s what they said (emphasis in bold is mine):

Olivia (VC): “An entrepreneurial mindset includes excitement around building something new, and perseverance to navigate the many obstacles that come up in that process.

David (Founder): “An understanding that the world is both mutable and imperfect coupled with the resolve to improve it.”

Tim (VC): “Folks with outsized smarts, goodness, and grit who can’t imagine not spending their life solving the unmet need about which they care most deeply.

Kent (Founder): “It never occurs to me that I might fail at starting a company, which is kind of crazy given the low probability of success of biotech companies. Perhaps obvious, but you cannot have any fear. It doesn’t mean you are oblivious to what can go wrong, but you have confidence that you will find a solution.

Jeremy (Founder): “A relentless dissatisfaction with the status quo that drives you to build novel solutions that others will value.”

Bob (VC): “An entrepreneurial mindset is one which takes risks others won’t take to achieve a vision others don’t share.”

Jason (Founder): “Seeing what others don’t, and having an unstoppable will.

Danielle (VC): “The entrepreneurial mindset is one consisting of grit and perseverance while being realistic enough to know when to adapt and change course.

Chris (Founder): “Entrepreneurial mindset is all about efficient hypothesis testing and grit.”

Thane (Founder): “I believe there is an entrepreneurial mindset or spirit: creating shared value.

Oh, there’s some great stuff in there! Let’s take a look at some of the patterns in these answers:

  • Grit, Perseverance, Unstoppable Will, Relentless
    This is pretty obvious — being an entrepreneur is hard. The successful ones have a mindset that makes them relentless at pursuing passions. In fact, Steve Jobs himself said “I’m convinced that about half of what separates the successful entrepreneurs from the non-successful ones is pure perseverance.”
  • Hypothesis testing, a willingness to adapt and change course
    This is a key point because the reality is that for most startups, the original idea fails. But great entrepreneurs are always testing their assumptions and pivoting their way to success, even when the original idea fails. YouTube thought their main use case would be video dating, Instagram began as a mobile check-in app called Burbn, Slack began as a video game studio, and Uber’s original idea was a fleet of company-owned cars called “UberTaxi”. In all of these cases, the original idea failed but the team was agile enough to test their assumptions, realize where they were wrong, and pivot to success.
  • Driven by a desire to solve problems worth solving
    As Paul Graham wrote, the best way to get startup ideas is to look for problems. Great entrepreneurs fall in love with a problem worth solving, and that passion then creates the unstoppable will that drives a startup to success.
  • Creating shared value
    Being an entrepreneur is a team sport. Successful entrepreneurs are great at recruiting team members, customers, and investors to join their valuation-creation mission. Not everybody is passionate about creating shared value — but every single great entrepreneur I know is.

So now I felt like I was making progress on my lecture. But I still needed to weave this into a concise definition of entrepreneurial mindset. The definition of “Entrepreneurship” that I like to use is from Howard Stevenson at Harvard Business School, who defines it as “The pursuit of opportunity without regard for resources currently controlled.” I love this definition because when successful entrepreneurs see opportunity and decide to pursue it, they are never deterred by a lack of resources — they know they can put the resources together.

So if we use that definition for Entrepreneurship, then the definition of an Entrepreneurial Mindset must be something like “A set of mental habits that optimize the successful pursuit of opportunity.”

Now, by adding the input I got from ten smart friends, we can expand this to:

An entrepreneurial mindset is a set of mental habits that tend to optimize the successful pursuit of opportunity. These include a passion for solving problems worth solving, a willingness to test assumptions and change course, and a relentless desire to create shared value.

There you go. Stay safe, stay healthy, stay focused, my friends.


Photo: The author with entrepreneurs Angela Juliana Odero and Nixon Shikuku, founders of Rio Fish at Miller Center for Social Entrepreneurship’s In-Residence program, April 2022.

Guest Blog

Climate Tech is Hot with Investors! And Social Entrepreneurs

Last month I worked with Chris Zaw (pictured), an entrepreneur at Miller Center for Social Entrepreneurship, helping him to refine his investor pitch. Chris is CEO of Warc Africa, a startup in Ghana that helps small farmers in West Africa use regenerative agriculture, which improves their crop yields and their livelihoods. But it also helps to save the planet from climate change — regenerative agriculture helps to draw-down greenhouse gases and capture carbon dioxide. So it’s good for the company, the farmers, and the planet. #winning

Climate Tech is hot with investors right now. Silicon Valley Bank reports that VC investment in climate tech was up 80% from 2020 to 2021, and 64 new climate funds were formed last year, worth a combined $37B, plus there are funds aimed at adjacent sectors (Convective Capital, for example, is focused on technology for wildfire resilience). And more and more existing venture capital firms are listing Climate Tech as one of their investment areas.

The cynics, of course, will remember that for a hot second 15 years ago, “Clean Tech” was a big buzzword in the venture capital world, encompassing solar and wind power, biofuels, grey water, recycling, etc. But then the recession hit and many of these startups died because the products didn’t materialize, natural gas prices changed the economics of alternative energy, and public subsidies were withdrawn. Clean Tech fell out of favor with investors as they went running off toward some shiny new thing (There’s an old joke that a venture capitalist is what you get when you cross a sheep with a lemming).

But I think the current Climate Tech today is more than just a re-branding of Clean Tech. There’s a realization today that climate change truly is an imminent existential threat, and that all our other environmental concerns really roll up into climate.

But investors, of course, need more of an incentive than just saving the world — they also want to make money. Many Climate Tech startups are working on things that have a very long time horizon and no clear path to market at this time. That can be a tough sell for investors, especially those who are used to the rapid gratification of many software investments.

But there are plenty of climate change technologies that have a proven ability to make a difference right now, and agriculture provides lots of low-hanging fruit (pun intended). The World Bank says that nearly a third of the planet’s greenhouse gas emissions come from agriculture. So investing in regenerative agriculture can have a substantial impact on climate change while improving crop yields and paying dividends to investors. It seems to me that we need to accelerate investment in these areas while also investing in Climate Tech which has a longer time horizon. All of these things will be necessary if we are going to win the climate battle.

In all of this climate stuff is lots of opportunity for entrepreneurs, innovators, and investors (and the planet, hopefully).


Bret writes a weekly newsletter for entrepreneurs and innovators. You can subscribe here (and unsubscribe at any time).

Photo: Chris Zaw, CEO of WARC Africa at Miller Center for Social Entrepreneurship’s Fall 2022 In-Residence

Guest Blog

Avoid This Leading Cause of Startup Death

I’ve taught CAC<LTV to my students at Stanford and to social entrepreneurs at Miller Center for more than a decade. In that time, it’s gone from being a little-known concept to being an often-misunderstood concept. So here are a few updated thoughts.

A quick review of the concept:

A business is an engine that attracts customers, delivers something of value to them, and then extracts that value in the form of profits. That’s what a business is. And so it logically follows that the cost of attracting a new customer needs to be less than the value we can extract from that customer. If it costs us $15 in advertising to get a customer, and we can only make $7 from them, then Houston, we have a problem. But if it costs $15 to get them, and then once they are a customer, they make a bunch of repeat purchases that yield $75 in profit, then we are happy. Ultimately every venture of every kind has to have a Customer Acquisition Cost (CAC) that is less than the Lifetime Value (LTV) of a customer. It’s a simple, self-evident concept.

Yet it’s a leading cause of startup death.

A high percentage of startups die because their cost of getting customers turns out to be higher than they can make from them. Partly this is just because we’re all optimists — we all think our startup is so awesome that people will flock to become customers and they will remain customers forever. But eventually, that optimism fades as we realize that marketing is expensive and no customer stays forever. The immutable laws of economics set in, and at some point, many startup founders find that their LTV/CAC ratio is slowly draining the bank account. To paraphrase Ernest Hemingway, Startups go broke two ways: gradually, and then suddenly.

Investors tend to obsess on the LTV/CAC ratio.

Obviously, investors care about your LTV/CAC ratio because it’s the essence of a successful business. But it’s also a proxy for the potential ROI of their investment. If you have proof that you can spend $1 on customer acquisition activities and get $5 in value back (a LTV/CAC ratio of 5.0), investors will want to shovel as much money as possible into that engine. As a VC friend of mine says, “What I’m looking for is a just-add-money opportunity.” Having a business with a LTV/CAC ratio of over 5.0 looks like a “just-add-money opportunity” to investors.

But it’s a blunt tool that is better if sharpened.

Let’s say that during the quarter we spent $10,000 on sales and marketing and got 1,000 new customers — a CAC of $10. But probably some of those customers came through word-of-mouth, some came as referrals, some came from our PR efforts, and some came from paid advertising. So we had a blended CAC of $10, but that doesn’t tell us anything about the relative effectiveness of each of our different customer acquisition efforts. Which leads me to the next point:

Not all customers are created equal.

With every business I’ve ever run, I’ve realized at some point that 80% of our profits were coming from 20% of our customers. It’s amazing how this tends to be true with almost all businesses. So if we look at LTV (Lifetime Value) of our entire universe of customers, we’ll probably see that 20% of them have a much higher individual LTV than the rest. Wouldn’t we want to focus our CAC efforts on getting more of the high-LTV customers? Yes, we would.

Therefore, cohorts matter.

The two points above would indicate we really want to track LTV/CAC ratio by customer cohort. For example, what’s the ratio for customers acquired through Facebook advertising vs those acquired through Google advertising? Knowing that would tell us a lot about how we should allocate advertising dollars. What’s the LTV/CAC ratio for customers acquired through our referral program? Knowing that would tell us how much we can afford to offer in a referral fee. Knowing your company’s blended LTV/CAC tells you the health of the overall engine, but it doesn’t tell you how to optimize the engine’s performance for next quarter. Tracking customer cohorts tells you that.

Also, velocity matters.

One afternoon recently, I sat in the backyard of longtime Silicon Valley venture capitalist Tim Connors as he drew graphs for me on his whiteboard (only VCs have whiteboards in their back yards). He explained that he doesn’t care about the LTV/CAC ratio, per se. What he cares about is the velocity with which invested CAC comes back in the form of LTV. So he’s developed a metric he calls CACD — the D is for “doubled”. CACD answers the question, “If we spend $12 in customer acquisition activities, how long does it take for us to get $24 back?” As an investor, he wants to see a business with a CACD of less than eight months. Tim’s formula gets to the heart of an inherent flaw in the LTV/CAC ratio: it doesn’t include a time factor. A business with an LTV/CAC ratio over 5.0 might seem good at first, but if you have to service a customer for 10 years before you make back the money you spent getting him, then it doesn’t seem so good, right? Velocity matters. So think about how you can measure CACD for your business. Putting $12 somewhere where it returns with a high velocity will accelerate your engine of growth (and make Tim happy).


The CAC<LTV concept applies to every business of every kind. Every venture must have a sustainable way to get customers at a cost less than the venture can make from them. It’s an immutable law of economics. Ignoring the formula (or misunderstanding it) remains a leading cause of startup death. As legendary venture capitalist Bill Gurley once wrote in “The Dangerous Seduction of the LTV Formula”, “The formula can be confused, misused, and abused, much to the detriment of the business.” So don’t do any of those things, or it will make Bill mad.

Sharpen the tool by tracking customer cohorts, improve the formula by adding a time factor, and remember that not all customers are created equal. If you do those three things, you will have an engine of growth that makes you happy, and investors eager.


Bret writes a weekly newsletter for entrepreneurs and innovators. You can subscribe here (and unsubscribe at any time).

Photo by Antoine Dautry on Unsplash

Guest Blog

Here’s to keeping the magic alive. 

The last couple years have been tough on everyone as we navigated a pandemic as best we could. For nearly 3 years Miller Center went without having a physical in-residence program, and honestly, I was sort of wondering how much longer I would stay engaged. Miller Center just became yet another set of Zoom calls on my schedule that already had too many Zoom calls on it. For me, it just didn’t have the feel that it once did.

And then Monday night happened. Brigit invited us upstairs for Thai food, I walked into the room and could immediately feel the magic – it was back again! Louis was talking wine. Jose was holding court talking about ops. Steve A. was in the corner helping an entrepreneur with his spreadsheet. Ed was talking strategy. The brainpower and passion in the room was giving off the unmistakable smell of magic being forged.

For me, this has always been the essence of Miller Center. Silicon Valley’s smartest women and men, huddled in a corner, investing themselves unconditionally in social entrepreneurs from around the world. Innovation has always been the result of moments of serendipity. And those moments of serendipity happen when a group of ridiculously smart people are immersed together on campus.

Monday night was it. Thank you for reminding me that the Magic of Miller Center is still alive.

Finally, I know that putting together a program like this takes so much more work than anyone realizes. You all labored hard to make the past week happen. Karen had a thousand details to organize, Lynne and Sharon had to wrangle recalcitrant mentors, Alex had to play money matchmaker, and probably a thousand other things that we never actually saw.

You all worked very hard to make the past week happen, and I want you to know how much we appreciated it. Truly.

So thank you. Here’s to keeping the magic alive.


Guest Blog

Become a Master Storyteller

If you walk into Warren Buffett’s office, you might think you’d see his framed diploma from Columbia Business School. But you won’t. Instead, you’ll see proudly displayed on his wall a 1952 certificate for completing a $100 course on public speaking. It was while he was a 22-year-old at Columbia that he saw an ad in the paper for a Dale Carnegie public speaking course. “I went to Midtown, signed up, and gave them a check. But after I left, I swiftly stopped payment. I just couldn’t do it. I was that terrified,” he recounts now.

Warren Buffett says that learning how to be a good public speaker changed his life.

Fortunately, he went back, overcame his fear, and today he credits that $100 course with having changed his life. “In graduate school, you learn all this complicated stuff, but what’s really essential is being able to get others to follow your ideas,” he says.

And so it is for entrepreneurs. Every great entrepreneur has the ability to tell a crisp, clear, and compelling story about what she’s working on, and why it matters.

“In the modern world of business, it is useless to be a creative, original thinker unless you can also sell what you create.” —David Ogilvy, founder of Ogilvy & Mather and “Father of Advertising”

In the world of startups, one often hears of “pitch decks” — a set of slides used for a pitch. And while most people think of this in the context of fundraising, the fact is that successful entrepreneurs are pitching all the time for all sorts of reasons. Entrepreneurs are pitching customers, recruiting employees, convincing partners, telling the landlord why he should give them a discount on the rent. Pitching skills matter.

At Stanford, I make my students give a 3-minute pitch on their startup idea. I do the same with social entrepreneurs at Miller Center. They usually grumble about being given so little time, and tell me that their idea is so amazing they need more time to properly explain it! I respond by telling them that if they can’t sell it in 3 minutes they won’t be able to sell it in 30.

Telling a short story is hard. But it is so important. It’s important because it’s a powerful tool for an entrepreneur to have, but it’s also important because figuring out how to say it short helps you to develop clarity yourself on what it is you’re working on.

“If you can’t explain it simply, you don’t yet fully understand it.” —Albert Einstein

I once met an entrepreneur at a social event and asked him what he was working on. “Well,” he said, “there are a lot of grocery stores in the country,” and then he took a long sip from his glass of wine. “Their biggest facilities expense is cold storage,” he continued before having another sip of Zinfandel. Now I was intrigued. “We make a device that cuts that cost in half.”

Boom! I wanted to invest! In three short sentences, he told me the size of the market, the problem to be solved, and that he had a solution!

An inexperienced entrepreneur might have described the exact same startup this way: “We’ve developed a cloud-powered IoT device that uses proprietary algorithms to analyze operational data for mercantile customers, generating paradigm-changing results…..” I would have walked away from that guy.

Learn to tell the story crisply and clearly. Watch videos of Warren Buffett, or of Steve Jobs, or of Elon Musk. Take a public speaking course. As an entrepreneur, the ability to tell a crisp, clear, and compelling story is a skill that will serve you well.

Originally published on Medium.