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Becker Private Equity & Business Podcast
Entrepreneurship, Focus and Leadership Lessons with Michael D. Alter of The University of Chicago Booth School of Business 5-11-26
00:17:56
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- [00:00]
Grainger Narrator
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- [00:30]
Scott Becker
This is Scott Becker with the Becker Business in the Becker Private Equity Podcast. I'm thrilled today to be joined by a very special guest. We're joined today by Michael Alter. Michael has had the beauty of running several companies, mostly private equity backed. Private equity backed. He also serves as a professor, a teacher at the University of Chicago Booth School of Business. I think of as the best business school, one of the best in the nation, certainly the best in the Chicago area. And we're going to talk today. He teaches entrepreneurship. We're going to talk today about entrepreneurship and about his background and a lot more. Michael, can you take a moment and introduce yourself and tell us about your pathway as an entrepreneur and then teaching at Chicago Booth?
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Michael Alter
Sure. So again, Michael Alter. And my background is sort of unique and interesting in that I started out as an entrepreneur in high school and college just doing some boring photography, paying for my education. Then I went about as blue chip and branded as you could. I worked for IBM, I spent six years at McKinsey, went to business school and then I jumped off a cliff in 2000 and started an online payroll company called sure Payroll with three other folks which we grew, grew and sold to one of our big competitors, Paychex in 2011 and then from there gotten more involved in the sort of growth equity startup world where I have run some companies and advised a number of companies, sit on a number of boards and along the way there I got connected up with the folks in entrepreneurship at Chicago Booth and I have been on the faculty there since 2017.
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Scott Becker
Truly remarkable and I know you. Aside from a great business person, a really high integrity person and wonderful person. Talk for a moment about entrepreneurship. When you look at entrepreneurship and entrepreneurs, are there traits that separate people that build lasting businesses versus those that struggle to scale or more end up in a fat area that doesn't end up being a long term business business? Any thoughts on this? You know, what do you see there in entrepreneurs and what's the difference between those that can actually grow something and sustain it over time versus those that can't?
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Michael Alter
Yeah, I Mean, I think there's, there's a lot in it and there's probably a lot of different things. And one of the things that I think is interesting about entrepreneurs is they come in many shapes and sizes. And so it's hard to say there's any one path to entrepreneurship because you see a lot of people that are successful because they know an industry inside and out, and then they see a problem, they build it in that industry versus others that, you know, hey, I don't think about real estate, but then they built a great prop tech business because of the advantage that they understood a problem from a different angle. So I think it's, it's different. I would say there's some common characteristics, I think, of entrepreneurs or people that are successfully entrepreneurial. And that is one, it's sort of an innate curiosity, and it's a curiosity about whatever problem they're tacking, tackling, and sort of a willingness to marinate in it. And at the same time, these are folks with giant ears in that they listen really well, they have really good listening skills. And that sort of curiosity and listening skills helps them to see something that maybe others don't see. And if you think about it, a couple other things I think that make very successful entrepreneurs. One is an absolute ruthless focus and a willingness to say no or not now, because they understand that businesses that you're starting more often than not fail not because they starve for things to do, but they drowned because they just have too many things to do. And so these folks tend to be great listeners, very curious, ruthlessly focused, and they probably have a little bit of irrationality in them because, you know, an entrepreneur has to see something different than everybody else did. Otherwise it already would be done. And so they see the world a little bit differently, at least on that problem. And that makes them a little bit interesting sometimes to talk to and talk
- [04:44]
Scott Becker
a little bit about. When you look at sort of that relentless focus and talk for a second, you said something that I think is just right on. Founders come in all sizes, types, backgrounds, and so forth. I think about intelligence, focus, drive. Where does personal skills or emotional intelligence fit into that? And that could be very different than sort of charisma. What people think of as charisma, as this big personality. But where does emotional intelligence fit into being an effective founder or longer term founder? And how do you think about that?
- [05:21]
Michael Alter
Well, I think, you know, I think you're always better off if you have emotional intelligence, for sure. I'm not sure it's a criteria that you see in all successful entrepreneurs. I think you certainly see it in a number of them. But I would also say that the best entrepreneurs, they don't sort of listen to mom. And what I mean by that is mom always said that you need to round out your skills and be good at everything. And the best entrepreneurs understand what they're really good at and they make sure that that's all they do. And the things that they're not as good at, the good ones either hire or outsource for that gap. So to your example about emotional intelligence, it's great if you got it and it certainly helps and I think just about everything. But there are some entrepreneurs that just have these brilliant ideas or brilliant perspectives of how they see the problem. But they might not be great at growing and scaling a business. So they bring in a founder or a co founder or someone who can help them in their areas of weakness, who might have great emotional intelligence and has a good language to talk back and forth with that entrepreneur.
- [06:26]
Scott Becker
I think that's so right on. Because as I think about the question, some of the great entrepreneurs, if you think about Steve Jobs, people don't think of him as having tremendous emotional intelligence, though he probably did quite frankly, but a big temper but great at what he was great at. And we talk a lot about, and I forget the name of the book series on this about knowing what you're great at and doubling down on that. How important is that as an entrepreneur, a CEO, to know what's going great, who your best people are, what your best product lines are, who your best customers are and focusing on those while being aware of other opportunities out there. How important is it that, that knowing your own people, business strengths, strength finders was the name of the book but. Or the concept but. But how important is that to really double down on what you're great at?
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Michael Alter
I think it's critical to be able to double down on what you're great at. I think the challenge is sort of knowing that and having the self awareness to know what you're great at and what you're not as good at. And one of the challenges early on when you're starting a business is the entrepreneur has to wear so many different hats and you have to know a little bit about everything. And then over time as you get more and more specialists in your organization because you start to scale, you get repeatable processes, you end up with people that are just smarter and better at any single job in the company that you are or than you are. And so therefore what you end up happening is the role of the entrepreneur really needs to evolve from someone who is jack of all trades doing a little bit of everything. Maybe they're doing lead gen marketing, but they're not that good at it. But they got nobody else and they got no money to get anybody else. But over time the best ones bring in someone who is knows way more about lead gen marketing than the entrepreneur ever did and they just get out of their way. And that's a hard thing for people to sort of give up what they've been doing.
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Scott Becker
We've talked a lot over, over the years about the evolution of the founder in several stages. You just hit on one that's really important. This concept of many founders start out as sort of the, it's the old adage would go, the chief cook bottle was sort of doing a lot of everything. Then they evolved where they hire people, then they evolved to where they hire people. And those people are far better at those different department leadership roles or the CEO role than they ever were. How important is and how hard is it for founders to make that evolution from sort of doing to managing to hiring stronger and better people that can take the company so they're no longer the limiting step on everything. How do you think about some of those things?
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Michael Alter
So I mean, I think there's a couple of different dimensions to think about it, right? I mean it's certainly hard and a lot of entrepreneurs don't make that transition because you see that just in how many sort of change outs you have where new leadership comes in as the business scales and evolves. And I think it's due to a couple factors. One is a lot of entrepreneurs like the problem solving and that early defining, you know, the ambiguity and figuring out what the answer is. And once they sort of get to the answer and they start to get the business started, they're just not as interested in the process and structure and all the scaling things that go, you know, into building a bigger organization. And then once you have a larger organization, you become a manager of managers. The role is just very, very different. Right? You're spending time, you know, thinking about your people and having performance reviews and all sorts of management updates and your KPI dashboards and all these things that are really important to sort of scale or maintain a large organization, which just are not where a lot of entrepreneurs get their energy. And so they just don't like it and therefore they don't focus on it and they sort of move on. And I think one of the challenges is the entrepreneurs that want to evolve and are self aware enough are often very able to make that evolution. And we see that maybe a little bit more today than we did in the past, but it's not an easy thing. And a lot of it I think has to do with sort of self awareness, sort of energy and interest of the founder and then just sort of the nature of what the role is as you scale.
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Scott Becker
Let me ask you this question, Michael. What are you most excited about right now as you look at business and entrepreneurship in our country? Is it a time when people are excited about starting businesses? Are they nervous? What do you see out there? What's the temperature that you feel or what are you excited about and see out there?
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Michael Alter
Well, I would say to me it's scary great and scary scary right now. And a lot of that has to do with, you know, the AI evolution revolution is real and it is exponential, which I think we all struggle with sort of understanding how that plays out. And I think at a time like this, in a time of change, there's great opportunity to, to start a business and build something. And at the same time it's never been sort of easier to do that. And so I think there's a really great opportunity now if you've got an idea and you're committed to it, to really build it, you can build it at a lot lower cost than you ever used to be able to. And I guess I'm assuming it's a technology business, right? Certainly there are non technology businesses that may not be as effective, but I think there's a real opportunity to build and scale businesses right now that we just haven't seen before.
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Scott Becker
Thank you. And when you look at some of the great lessons you've learned in business over the years, I mean, what a great variety of careers from starting own businesses in college and in high school. You know, the path of what we see is so often the prototypical entrepreneur always starting things to big professional careers at places like IBM to then back to running companies for growth oriented PE funds and growth oriented funds. What are some of the great lessons you have learned over the years that have stuck with you?
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Michael Alter
Yeah, well, you know, I'm not one that sort of believes careers have to be perfectly linear. Right. They're only linear when we look back and we have to tell a story, to weave it together, to meet with somebody. But a lot of the things in today's careers, and I think especially going forward, you're going to find people that have multiple careers over, over a lifespan. And I think the Key is to try to understand what you can take from one career and bring it on into, into the next one, if you will. You know, I think from sort of an operating and the scaling perspective, there's probably three or four things that, you know, I've learned over the years and maybe learned these lessons over and over again. You know, one is that when you're building a business, people are usually the problem and the solution and getting it right. Getting the right people in the right seats with real decision rights, clarity on who gets to do what, and making sure they have the skills and the will to do the job they want is usually 90% of the problem. If you get the right people in the right seats and you get out of their way, you're sort of amazed at what happens. And that, you know, that sort of leads into a lot of the classic things that people say about running a business, but they're just true. Right? Hire slow fire fast. I can't tell you how many times that I've been bitten by that, even though I know it over and over again. I think another thing is realizing that I don't always have to be, have the answer or be the smartest guy in the room. And when you're the CEO or the founder, you're sitting in a meeting with the rest of your team, you always think like, you got to lead and you got to tell them what to do and what the answer is. And what I found over time is sort of sitting on my hands and listening. They can. The team just has better ideas and they contribute more and they get to a better answer than if I just try to lead quickly and drive. Maybe as you, as you see a CEO do on TV or something like that. And then last, I would just say back to the point we talked about earlier, but focus, focus, focus and having a pace that really drives things quickly. Right. I think pace is one of the ways that entrepreneurs can beat big companies because big companies have such a, you know, incumbent advantage in cash, in market share, in brand, but they just don't tend to move that fast. And I think that's a way that startups, you know, can be more successful against them.
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Scott Becker
Thank you. Another question, Michael, Any sort of great business readings that you're a huge fan of? You talked about getting the right people on the bus. Reminds me so much of Good to Great and Jim Collins. But who are some of your favorite influences on you over the years in your career, in your business and how you think? And anybody that great mentors, great.
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Michael Alter
There are a Ton. Right. And it takes a village to be a successful business person as well. And I have lots of different folks who have given me a ton of time and big been mentors to me, you know, in terms of sort of books or frameworks or things over the years that I think have sort of held the test of time and are really good. You know, Clay Christensen's innovators dilemma, I think, has always been helpful in starting a business, especially if it's sort of a technology business, but just a really great way of thinking about things, the jobs to be done kind of rules. I think you've got other folks that, you know. I think one of the other challenges in, in building any kind of business is communication and how good you are at communicating with others and, and conveying your message. And I think folks like the Heath brothers with a number of their books are also really powerful and, and interesting in terms of sort of practical stuff and how you think about things.
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Scott Becker
Thank you very, very much. Now, you and your spouse, I believe, were both business school graduates from a top business school. And is there a sense of who is the smarter of the two? And then how do you compare Northwestern to the University of Chicago or Harvard, for that matter?
- [16:24]
Michael Alter
Well, if you're asking, there's a difference between who's smarter, between my wife and I, it's very clear. The only thing that I did right that might give me any benefit is the fact that I chose to marry her, you know, that I asked her to marry me. But she's way smarter in terms of, you know, the business schools I went to, I went to Northwestern undergrad, I went to Harvard for business school. I teach at the University of Chicago at Booth, as mentioned earlier. I think they're all really good business schools. And there's, you know, opportunities to be very successful coming out of those places. And quite frankly, there's opportunities to be very successful without an MBA from one of those schools. And I think a lot of it is very situational, depending on the person and what they're trying to accomplish and where they are in their career, as to whether it makes sense to go to a business school or to play on without it, if you will, and then within those business schools, which ones are the right ones for them, because you both end up with an mba. But the pathway through these schools are different. Different curriculum, different approaches to how they do it. And so I guess the only thing I would just close on is, I have to say the Booth is the number one, because that's where, you know, I get my paycheck from these days.
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Scott Becker
Well, I think that's probably the right answer. If you got to rank all three, you got to go with Chicago booth number one. Obviously, like over the course of my life has been the top by far in sort of the quantitative and economic thought processes. By far. Northwestern has created the most people with the best, you know, marketing smiles and perspectives and that smile and sell to you. But I'm sure they're very bright, too. Some of my best friends went to Northwestern. Very, very smart people. Not as bright as my University of Chicago friends, but very smart people. And then the Harvard category is a different category. The only thing you know about a Harvard person is they make sure they tell you very quickly they're a Harvard person. Whereas Kellogg, they're pretty quick on that, too. In any event, Michael, great pleasure to visit with you and great comments on Sarah. So I think you nailed that question, right? Right. Completely. Thank you for joining us on the Becker Business and the Becker Private Equity podcast. Thank you very much.
- [18:22]
Michael Alter
Thanks for having me.
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Grainger Narrator
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