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Edward Amoroso, "Reaching the Chasm: How to Drive Your Early-Stage Start-Up to Scale" (Columbia Business School Publishing, 2025)
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- [00:01]
Edward Amoroso
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- [00:44]
Marshall Poe
Hello everybody, this is Marshall Po. I'm the founder and editor of the New Books Network, and if you're listening to this, you know that the NBN is the largest academic podcast network in the world. We reach a worldwide audience of 2 million people. You may have a podcast or you may be thinking about starting a podcast. As you probably know, there are challenges basically of two kinds. One is technical. There are things you have to know in order to get your podcast produced and distributed. And the second is, and this is the biggest problem, you need to get an audience. Building an audience in podcasting is the hardest thing to do today. With this in mind, we at the NBM have started a service called NBN Productions. What we do is help you create a podcast, produce your podcast, distribute your podcast, and we host your podcast. Most importantly, what we do is we distribute your podcast to the NBN audience. We've done this many times with many academics academic podcasts, and we would like to help you. If you would be interested in talking to us about how we can help you with your podcast, please contact us. Just go to the front page of the New Books Network and you will see a link to NBN Productions. Click that, fill out the form and we can talk. Welcome to the New Books Network.
- [01:51]
Alfred Marcus
Welcome to the New Books Network. I'm Alfred Marcus and this is on the Cusp, where we explore how strategy, ethics and governance intersect in shaping organizations and society. Today I'm speaking with Edward Amoroso, founder and CEO of TAG Infosphere. His new book, Reaching the Chasm how to Drive youe Early Stage Startup to Scale, draws on years of advising and evaluating thousands of startups in technology fields. Instead of yet another manual about Crossing the Chasm, the book focuses on an earlier, often messier challenge of how founders actually find their first real customers shape a compelling purpose and survive long enough to justify scaling. We'll talk about why purpose beats product in the early stages, how to think about competition and funding, and why. Ed ends the book with a disarmingly personal question. Should you really be doing a startup at all?
- [03:01]
Edward Amoroso
Emphasis on disarmingly, right? Yes.
- [03:05]
Alfred Marcus
So, Ed, could you start by telling listeners a bit about your own journey? How bell labs and ATT's C suite to running Tag Infosphere and becoming involved with startups took place. Why did you think we needed another book about this topic about startups? That's another important question.
- [03:24]
Edward Amoroso
Well, thank you for inviting me to chat here. You know, I thought I was going to be an academic. My career when I always wanted to just do computer science and teach. So I got a job at Bell Labs in this thing called the doctoral support program where he worked lab and I was cool. I worked on Unix security with all these kind of really iconic people, died and went to heaven work. And they paid for me to go get my PhD in computer science. So I figured, all right, I'll let them pay and then I'll go off, ride my bike to a little universe. I was very happy. But I loved it there. I loved Bell Labs.
- [04:00]
Alfred Marcus
That was an amazing place, amazing experience.
- [04:03]
Edward Amoroso
I just loved it so much. And then weirdly, in the middle of my career, like early 90s, the guy who ran the network is a friend of mine. His Name's Frank Guyana, NJ Guy. I just knew him and he said, hey, would you make this little group to protect AT&T hackers? And I went, huh? What is. I didn't even know what that. I went around and it turned out he was looking for something we would now call a chief information Security officer, like person in charge of company. So I became like the second person on the whole planet to do that. I didn't know what it was, but it caused me to start thinking about business. So know much about that as a computer scientist? I mean, I always had an entrepreneurial bent. Like as a kid I had businesses and my wife and I owned a retail store and like I always knew about selling and being an entrepreneur. I was a fuller brush salesman, was a little kid, but I had that. But it. So at, AT and T, they said, why don't you run do this business executive thing. They sent me off to Columbia Business School to learn a little bit about finance. So I got very interested in business, which was unusual. I wasn't going to be my life. That was not my career path. So that ran its course. I I retired from ATT and I thought the one thing I've never really done in tech is a startup. You know, I run some businesses and my wife and I own retail, things like that. So I decided to create Tag as a startup which weirdly was set not just to help enterprise but also to help startups. A startup to help startups started interviewing 10 years ago. These startups primarily in cyber and I started writing reviews of them and ratings and I would do and still do several a day. Like I talked to a startup this morning. I mean, so it became one of my passions to really learn about these people that put it all out on the line. I'll tell you, you hear some stories about people who take spectacular risk to step away from well paying jobs because they have this dream or this vision to build a insert name of thing they want to do. It ranges from good lord, anything from nuclear fission to using a AI to stop spam. You know, it's all kinds of crazy things that people are doing. So I started noticing patterns in that science pandemic would do right. We trained to look for patterns and I didn't force it. You know, it took many years before I got some confidence that I thought I understood what it was that was making some of these companies succeed. Because if you stick with it long enough, you can start to see what's working, what's not. Because a startup is not a startup. Ten years later they're either out of business or the airplane's up in the air. So that was kind of the genesis of it. I mean, we can get into some of the specifics. For my career, that's how I came to write the book.
- [07:07]
Alfred Marcus
What about these patterns in the conversations that you had with the startups, what were some of the dominant patterns and what were the conversations that worried you? Especially because you have now knowledge of whether these companies actually took off or not. And how do these patterns shape the book?
- [07:28]
Edward Amoroso
Actually, here's what I would say. Let's say you and I decided we wanted to come up with a business to reinvent supermarkets. I'm just making this up. So let's say, and we go out to a coffee shop and we're writing ideas and we're very excited, can barely sleep. We're so excited about this idea. That enthusiasm is what startups should be selling. Because what we see happen too often is after we get through that period of intense sort of enthusiasm, we immediately, a lot of them immediately try to make believe they're Whole Foods, which they're not. They're like they're trying immediately to be a big company and they start talking about features that Whole Foods doesn't have and that compare them to us, you're going to lose if you compare against the big company. People don't buy based on what you're doing. They base, they base it on why. Like, why are you doing this? Like, why are you guys trying to disrupt supermarkets? Why are you trying to. What's the purpose? Not what are you doing right now. Because usually a startup is just not going to be able to compete feature by feature against big company. But they can compete on purpose if you have a vision that's exciting. And we noticed that the companies that would take a stand on a belief system knowing that maybe not everybody agrees with them, but some do. The some who do become their initial customers and they can build on that. So you don't build on what you do, you build on why. And then I started noticing books like Simon Sinek, start with why were saying that. And then I noticed Geoffrey Moore, who wrote this spectacular book called Cross Chasm, very popular. I went and I looked and I contacted him and his company and I said, I think I have the front end to your book. This is the prequel to your book. Because he's talking about when you're big enough to scale, you have to change the business. But doesn't really help you with how you get to scale. Right. I think I've discovered the secret here. And I started looking at big companies that had gotten there and middle size and ones I was interviewing. And the pattern held. The companies that grew from idea to scale were built on a belief system, not built on here, feature for feature. This is better than the other thing. It's rather idea for idea and belief for belief. This lines up better with what the early buyers would agree with. So that was kind of the secret. It was quite exhilarating because I was having a hard time finding counter examples. And I went, wow, I got to write this down, start writing chapters about how this was all working, passing it by, you know, along to the founders getting there. And it became some advisory sessions. And there you go. It grew out of a laboratory. This didn't grow in my head. This was a laboratory of meeting with, listening to, working with thousands of.
- [10:44]
Alfred Marcus
That was your research, essentially. Could you give us some examples of companies who, if you're able to reveal this, you know, that did have that purpose behind what they were doing and others that, you know, you can draw on public examples too of companies that ended up failing because they were Just focused on products and services and functions. And in the opposite, I mean, I'll.
- [11:09]
Edward Amoroso
Give you, I'll give you some collage of examples. And in the book, I do name names. There's no, you know, a, you know, a group in New York trying to do xyz. You know, I gave names, addresses and companies. So the case studies are specific. But today's purpose, there's somebody in there that. I'll just give you a collage. For example, it's not unusual to meet a group of people who might be mid or later career. And you and I probably share a generation, so, you know what I mean, who they're doing fine at work and they probably could just keep going and retire and move to Florida and play pickleball or something. But they have this gnawing thing where there's this idea that they've wanted to do and it's almost like a pejorative thing because, gosh, it's gnawing at them. They know they need to do this. Talk to the spouse, they'll talk to their leadership where they work. And leadership doesn't want to do it because leadership thinks it's crazy. But the fresh founders thinking, no, this is not crazy. And when I hear about this and they say, listen, I took two of our scientists and a couple of our people and we all quit IBM or we quit some company like that, Northrop Grumman or whatever it is, and now we're going to go build this vision. It's exciting because you say, tell me about it. And it's not like, let's say what they're building is some next generation, I don't know, HR system. I'm making this up. Let's say they're using AI to completely reinvent HR when they have this idea and they say, look, the problem is nobody likes hr. Who likes the HR people? Nobody. But this is different. This is using, I'm making this out like AI and it's going to tailor what you do and be empathetic and help you with your career and blah, blah, blah. They say this.
- [13:11]
Alfred Marcus
I think I've seen those examples. Wall Street Journal people are using your AI for xr.
- [13:17]
Edward Amoroso
Describing this, you see in their face that they see this vision. But when you ask for a demo, they haven't built it yet. So the point is, when you decide to buy from them, you're not buying because ADP is inferior to them or whatever HR system you gusto or something like that. You're buying because you see in their face this vision of where they want to go. And you, the buyer would like to be part of that. You see, that's exciting. I want to be part of that. That's what you're buying. You're not buying the feature. So that's an example. That's a very successful example. That means it's coming from a belief system where you're putting a lot on the line. You didn't have to do this, but you had to do it because it was in you to do it. You didn't do it because mechanically, you know, there was some contrived idea here. It was, it grew. You couldn't sleep, you talk to the spouse, you quit a great job. You're putting. Whatever you do and you're just saying, I've got to do this. It becomes very infectious. It's just, you want to be part of.
- [14:25]
Alfred Marcus
It's an obsession. It means they'll stick to sounds like that. You're talking a lot about older people who work for other organizations.
- [14:36]
Edward Amoroso
That's one example. There's young, too. The, the young. I mean, when you, when you meet a young person who's got this. Here's what I love. When I meet someone, usually it's someone who is in university and maybe studying physics and taken with sustainability, for example, yeah, you know something, we can power cars with water. Why aren't we doing that? And you and I could give them 100,000 reasons why that's not going to work. Oil and gas companies, energy, industrial, complex politics. What are reasons? Because you and I have lived lives and we would say, well, here's a reason why that's going to be a problem. But to a 21 year old at, you know, studying at NYU, doing physics, who says, I think we can do this, what an amazing thing, you want to step aside and say, you know what? Damn it, go do it, go do it. You listen to me. You know, any, anytime you ask somebody who's lived a life about something that's really, really unlikely but exciting, they're going to tell you why you can't do it. But a young person doesn't know that they can't do it. And that's exciting because you see in their face this determination to do it. And again, that's a belief system. You're not funding or buying or being part of that. As an early adopter, customer, let's say you want to be a design partner for them and they're going to build this thing and you're going to use water and you're going to break Apart the hydrogen and oxygen and try and power some pumps that you use. Maybe you're a manufacturer and you're going to do a project with them. You're not buying it because you believe that they're a company that's bigger, better than others. You're buying it because you see that belief and you think you know something. Let's have a look at this. That's what a startup is. It's high risk, high return, high reward and a lot of work. But also high failure rate. You know, that's something we talk about in the book that, you know, when you go down this path, it's, this is not smooth sailing. This is not an airplane taking off in nice weather and everything's great and the pilot hits the button, unseat your seatbelt and get up and enjoy the flight. This is strapped in. This is like those weather planes that fly into the hurricane. It's like that. That's the life. But that's another example of somebody maybe a little younger. And when you see it, you and I would listen to that. And even if we were tempted to say, you're crazy, we'd have to admit that it's exciting. And that's the belief system. That's what is meaningful. And you can't fake that. Let me give you an example to the contrary. Here's an example of a bad one. You meet somebody who says, well, I've exited three startups and I'm rich. We sold for a billion dollars to this company. And, you know, I'm sitting on the couch and I got nothing else to do. And my wife said, hey, why don't you go start another startup? So I know these other guys, I called around, I got some funding and we looked, we researched it. We think there's a little gap in this area of whatever it is we're doing. And so now, you know, now we're pretty sure we'll just grow it and sell it and I'll make more money. How much do you want to not do business with that person? So you just, again, you just, you realize that that's a sit where it's not a belief system. It's just this contrived nonsense. Now I'm not saying those don't always succeed. Like Rolling Stones were created as a band, but there's also boy bands that are put together that are contrived and both of them maybe succeed. But it's the latter one, this case where it's very contrived that I found the failure rate to be much Higher.
- [18:43]
Alfred Marcus
And it almost sounds to me like you're talking about motivation, but the motivation.
- [18:48]
Edward Amoroso
Is part of it. I think that the motivation is another word for drive and for. And yes, if the motivation is cynical, is not the right word.
- [19:00]
Alfred Marcus
Money making. Just money making.
- [19:02]
Edward Amoroso
Money making, yeah. You know something? I write in the book, that first question I always ask people is, tell me about your business. And they tell me what they do, not why. Then I always listen and say, well, I didn't really ask you what you do. I just said, tell me about what. Like, why are you doing this? And then they're usually taken aback because they want to say, well, because I want to be rich. And the answer to I want to be rich is, well, if you take stock of your life right now, you probably are rich. Like, do you know there's a favorite story about two kids fishing? I don't know if. A couple fishing poles in a pond, and some big city slicker drives up in the car, he's lost, gets out and sees the two kids fishing. He goes, hey, kids, there's like a gas station around there. You go, yeah, up the way. He looks at the kids fishing, goes, hey, what are you guys doing? And the kids go, we're fishing. He says, well, you got one pole each in the pond? Yeah. He goes, well, why don't you put 10 poles in? And the kids go, why would I do that? Well, look, I can see over there. There's a store over there. If you had 10 poles, you catch a lot of fish. You could probably sell them up there. Well, why would that? They said, well, if you sell them, you could make bigger. You could probably get some refrigeration trucks. You get the trucks, you get more fish. Then you get a lot of people fishing, and you fish other ponds and you build a big business, you know, with all this fish. And they go, why would you that? Well, if you have a big business, you'll make all this money and you'll be rich in a big company. And they said, why do you do that? Well, if you're rich, then you can retire and you can just relax here and fish. And so, I mean, it just reminds you that if the motivation is to make money, what the hell is kind of motivation is that again? You and I both know that when you get to a point in life, you realize that money is a terrible motivator. It's empty. Probably the most miserable people you know in your life are the ones who've got a lot of money, but the ones who have a plan for Life where they've got this vision that they want to achieve. And by the way, startups can be nonprofits, too. So it can be a startup is your vision. It's not when the motivation is I need to do this thing. That's very infectious. And that's what we wrote about in the book, that if you've got that. Great. And the last chapter that you alluded to, where I said, should you even be doing this? Reminds you to really look in the mirror and ask that question, why are you doing this? What's the reason? Because anybody get a job. And if you want to just do something for purpose, it doesn't have to be a startup. Startups are hard. You want to go volunteer, it could be very rewarding. But if the idea requires capital and build and design, and you want to create something, because it's this burning, gnawing belief that you can build something that'll make the world better, make lives better. Right? So your medical device idea, you've got something that you believe really could make people better, healthier, or you want to make robots to go be a companion to grandma in the nursing home. I mean, I'm not saying that that's your role, but if that's your passion, and you can't do that in a nonprofit, you need capital. But like here, I'll give you an example. I met some kids from another country. I don't want to say which country. They came to NYU Startup Kids, and they were all giving their presentations on their startups, and these were funded by their government. And I was listening, and it was very sterile. And the dean of the business school was there and knew that I worked in this area. And at one point I was being very quiet because I wasn't impressed. And at the end, they said, you'd be very quiet. What do you think? And I said, none of you have put anything on the line here. One kid had talked about building these medical devices to help older people, you know, get into and out of tubs. And they're like, using robotics for that. And I said, if you described it in a way that was so impersonal, do you have grandparents? Do you have a grandfather that you love? And you built this because you want to make his life better, and you saw it and it's personal, and you're going to do. Or you're doing this because you just looked up that that seemed like a project you could do, and if it fails, move on to something else. Like, it stuck out that there was no personal connection, There was No belief system, there was no drive. It just felt like a school project for a lot of these young people who were funded. So when I see school project, when I see no connection, when I see no emotion, I immediately think this is not going to be a successful startup. And I'm usually right.
- [23:52]
Alfred Marcus
I mean in summary, what you're talking about is they want to make the world better in some fashion. They're compelling vision about making the world better. There's some gap that they see.
- [24:03]
Edward Amoroso
I mean the world can be small. You and I might say the world means everything or the world, my neighborhood, you know, I mean.
- [24:09]
Alfred Marcus
Right, right.
- [24:10]
Edward Amoroso
We're just trying to do something and it doesn't have to be social good. By the way, there's a lot of startups made by people who you know, want to build fossil fuel things that I wouldn't be all that crazy about. But again it's their belief and it'd be their customers that believe the same thing as them. So again, my ethos and your ethos, you and I both probably share a very similar. But that doesn't mean that a startup has to do what we like. A startup that does things that they believe in and they connect with their buyers and that maybe ultimately might be making the world worse, who the heck knows, right? Belief, it's something that since sincerity is the key.
- [24:56]
Alfred Marcus
Yeah. I mean even well intentioned technologies that are introduced into the world sometimes. Right. I mean social media was social media, right? Absolutely.
- [25:10]
Edward Amoroso
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- [25:28]
Alfred Marcus
What do you have to lose?
- [25:29]
Edward Amoroso
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- [25:43]
Alfred Marcus
So given the fact that let's say somebody does have this vision, the obsession and they really want to, they're, they're very motivated and they're comp. But the fact is that most startups do fail. So what do you, you know and you're talking about scale up, pre scale up. I mean how do you help them get close to the chasms? If you will.
- [26:06]
Edward Amoroso
Well, it's a tough one. You know, my, my oldest daughter is a musician in New York City and she's very intelligent, went to nyu and my youngest daughter is a stylist in New York City, also in Denway. You have three kids who are in Denmark. Like they're both in tough, they're in tough industries. Music, right? Absolutely right. So that's one where logic would have told me to say, listen, go find something useful to do and get passionate about that. You can get passionate about accounting. It may not sound all that exciting when you're 18 years old, but if you get a job as an accountant, you're going to make good money. You can get passionate about spreadsheets, which.
- [26:58]
Alfred Marcus
Among some people there is that passion.
- [27:01]
Edward Amoroso
The world would be kind of a crappy place if every single person made that rational decision. It would. And not everybody should, you know what I mean?
- [27:12]
Alfred Marcus
And they become alienated at a certain point in time. Maybe, maybe they're. This is about meaning, really. People who want to have a meaningful existence.
- [27:24]
Edward Amoroso
Startups are the same thing. It's when a young person dropping out of Columbia University to do a startup on solar panels using some technology that China's not using, they think they can do it. And you can think of a million reasons why this is just a going to be one in a million shot. But you look in their face and you think, ah, so it fails. Who cares? You failed. That's one thing about Americans, like we're time right now, when it sometimes feels a little rough to be an American. It's been tough. It's been tough, Right?
- [28:02]
Alfred Marcus
Right.
- [28:02]
Edward Amoroso
One thing I'm very proud of as Americans is one thing we do is when we fail, we pick ourselves up. We already had.
- [28:08]
Alfred Marcus
Right.
- [28:09]
Edward Amoroso
And by the way, the book is not an American book. I talked a lot, right.
- [28:14]
Alfred Marcus
I think that's what the research shows in general, that Americans tolerate failure and that's the reason why we have a strong imperial culture.
- [28:22]
Edward Amoroso
Well, when a startup is going to fail, it's like, hey, Thomas Edison, after time with the light bulb will go, gee, you failed on all these. He goes, no, I've succeeded in showing a lot of things that don't work. Not I failed at finding what the.
- [28:39]
Alfred Marcus
Wright brothers too, with flights. I think there are like a thousand attempts at different.
- [28:44]
Edward Amoroso
Yes. So I always tell people, go, what's the failure rate? I say, here's what your image should be. You walk into this bizarre classroom where there's a teacher at the front of the room. It's your venture capital teacher, 100 kids in the room, and the VC venture capital says to everybody, okay, welcome 100 students. These are all startups, Metaphorically.
- [29:05]
Alfred Marcus
Yeah.
- [29:06]
Edward Amoroso
Here's the way it's going to work. There's a hundred of you in here. I'd say about three or four will graduate. Maybe another five or six of you will have some sort of exit. The other of you will crash and burn. Welcome to class. It's like, who walks into that room? Someone who believes that they'll be one of the three or four.
- [29:26]
Alfred Marcus
Right. I mean, I think all things that are worthwhile in life really have those kind of odds against you.
- [29:33]
Edward Amoroso
My book is intended to tell startup founders that if you don't have that sincere belief and drive into your motivation, don't walk in that classroom.
- [29:46]
Alfred Marcus
What about this? You make a distinction between competing against other startups and competing against big companies like IBM and Gartner. How should founders think differently about those two types of companies?
- [29:58]
Edward Amoroso
Situations are all different. Like my little startup tag, we compete with Gartner and there are bigger than us. It's easier, frankly, when there's a Darth Vader, you can go after David and Goliath. And it's weird too, because I respect Gartner. Like, usually when you're going after going after, meaning you find Target, a larger company. Usually what that means is that there's an awful lot about that company that you admire. But find something about it that you feel like you as a small company can deal with, let's say, proverbially managed. This big giant hospital that you're just standing looking at, and they've got the greatest medical people and the greatest staff and the greatest equipment. Big giant medical facility with big parking lot lit up, the whole thing. And then right next door is a little tiny hut with a couple of nurses. The nurses can't compete with that medical center.
- [31:02]
Alfred Marcus
No way.
- [31:02]
Edward Amoroso
But you can think of a thousand scenarios where you and I might rather go talk to the two nurses in that big place. That's the David and Goliath. The two nurses are not taking on the hospital. They're finding a way to find those customers who are terrified by that big place and might be better served by two nurses who can sit you down, make you a cup of tea, and say, now tell me about your headaches. Is it really a headache? Or what's going on in your life? And you realize the kids all moved out, my mom passed away and now I'm getting headaches. And they say, honey, I think it's your life. You don't have anything wrong with you have another cup of tea. Let's come back in a week. Think about it. It's probably your psyche. You go home and you feel better instead of going in the big place where there's insurance and tests and MRIs and they don't ask you any questions about your kids. That's the point. It's, it's.
- [32:00]
Alfred Marcus
It's personal and it's finding a niche. Finding niches, I think are very small niches to get started, to scale up. Does that make sense?
- [32:08]
Edward Amoroso
That's the little guy versus big. The little guy versus little guy is where there's a new area. Like think clear. Think. Fusion is a good example.
- [32:17]
Alfred Marcus
Right.
- [32:18]
Edward Amoroso
So fission is what we do now in nuke. And it creates waste, whatever. But fusion, if we can get it right, creates no nuclear waste. It's the way the sun heats the earth. So all of the companies doing nuclear fusion tend to be physics nerds?
- [32:35]
Alfred Marcus
Yes.
- [32:36]
Edward Amoroso
It's the best student with the professor and a little bit of money in a lab. And they're trying to build something that's sort of like. That's the way scientists in many cases are competing with each other where it's on equal footing, different universities, and they're all racing to reach some conclusion or build something. Like a lot of companies doing deep fake detection. You see all these deep fakes on the Internet. There are a lot of startups now trying to figure out, can we come up with tools that when I point it, I can say that video is real, that video's fake. There's not a lot of big companies doing that. I mean, Google probably has a lab doing it, but for the most part it's startups. So that's a different scenario. That's not the big hospital and the nurses. That's a lot of companies that are all chasing at the same idea. And it's like a bunch of people in a race. You line them up, you shoot the gun and they all run. And their runners are all pretty equal, but one of them will win. That's different data.
- [33:39]
Alfred Marcus
In big pharma, I think big pharma is drawing on startups mostly for their acquisitions. Make acquisitions to innovate. What about the difference between B2B and B2C startups?
- [33:53]
Edward Amoroso
It's different scenarios. Like B2C is a different thing because usually with B2C, your relationship with customers and consumers and users is kind of through a piece of glass. Right? You're creating something, you put it out there and then you hope others Will come. Let's say, like we talked to some companies that do online sports betting, which I don't approve of. I'm just.
- [34:18]
Alfred Marcus
I don't like that either.
- [34:19]
Edward Amoroso
It's terribly.
- [34:21]
Alfred Marcus
Yeah.
- [34:22]
Edward Amoroso
I mean, what do they do? They lure in young men at the platform. Do they know any of them? No. Do they care that they may be ruining their lives? No. But be a very successful B2C without really knowing your customers, other than knowing their profile, knowing their tendency. Modeling what they do, building a platform and then watching as the user base grows. That's the Hollywood version of the startup. You throw Frisbees around, you build a platform, and then somebody sitting there counting the users getting on your thing. ChatGPT is an example. You and I don't have a relationship with the people who built ChatGPT. So that's. B2C is usually a little more impersonal. B2B is different.
- [35:09]
Alfred Marcus
Interesting.
- [35:10]
Edward Amoroso
You're selling to a business. You will have to have a relationship with them. There's going to have to be. You're going to have to connect with them. It's a little bit more difficult for younger people. I found young people connect nicely with B2C because they like to build a platform and hope that people will come to it. Like a dating platform or something. There's no connection there other than the platform. But B2B is better for people a little bit further in their career who can actually talk to their buyers. Like, I'm an example. I sell B2B. I sell cybersecurity and AI research as a service. That's what we do at TAG and that research. When I'm selling it to a business, when I meet with the buyer, we share a generation. They knew I worked at AT&T. I can connect. I know how procurement works. I know how legal process works. I know how they're going to check out my company. I know how, what they're gonna be looking for. Because I live that very relationship.
- [36:11]
Alfred Marcus
It's a personal relationship.
- [36:13]
Edward Amoroso
It's different. But all that stuff I said about belief, that doesn't. B2C. B2B doesn't matter. But they are different businesses. They require a little different marketing, different setup, but still the same principles. No, different.
- [36:25]
Alfred Marcus
I think I know the answer to this one, but I'm going to ask you anyhow. Why should startups celebrate their competitors? And why does that approach help in winning early adopters?
- [36:35]
Edward Amoroso
Miracle on 42nd. Miracle on 34th Street. Remember the movie when the Santa is recommending gimbals and he wears some Macy's, do you remember Mr. Macy realizes that his Santa Claus is saying, well, we have a great again, Macy's. But Gimbel's is good too.
- [36:54]
Alfred Marcus
I mean, look, you're selling the industry, the concept selling you.
- [36:59]
Edward Amoroso
You're selling your authenticity. You're selling your belief. Here's a great example. I mean, there have been cases where inventors have been competing, like both competing to like think Watson and Crick, like when they were trying to in some sense make sense of DNA and they were competing with other universities. When it was done, they all celebrated together. They all celebrated as a group. They were focused on the end goal of advancing science. So you would celebrate your competition. You were competing with them, but you were so delighted when the thing was done because you could unlock the mystery of the world. So that's celebrating. But there have been other cases where people are chasing something. When the other guy gets there, you drop out and quit. You move and do something else. It wasn't really that you were trying to get to that point. You just wanted a successful business. I'm not going to give examples there. Yeah, but tougher. But if people listening can think of them. When the sincerity is not advancing the field, helping the customer, doing the right thing, it's just me, me, me, me, me, and I hate my competitor. They're terrible. You forget that to your buyers, you and the competitor are part of the same thing. So the minute you're criticizing them, you're probably projecting that criticism onto yourself. So you're.
- [38:31]
Alfred Marcus
I mean, when you celebrate your competitors, you're really trying to open a path for everyone in the new field.
- [38:37]
Edward Amoroso
Even in the David and Goliath, like the two nurses with the little heart next to the big hospital, the first thing they're going to say is, what a wondrous, amazing place that hospital is. Thank goodness we have that. That's the right thing. If you break your leg, man, you're not coming to two nurses. You better go over there, they're going to set your leg. They're amazing. But the one thing they can't do is. And then that's when you talk about what you can do. So I always coach startups when they talk about competition, the last thing you want to be doing is being this little guy who's badmouthing the competition. I've just seen empirically that that does not work. It doesn't work.
- [39:18]
Alfred Marcus
Interesting. For example, we're getting into the area of ethics. I think we've been talking about it from the beginning, but the unethical Startups where they overhyp. The most famous examples I think right now are Theranos and Elizabeth Holmes and Sonny Balani, but even FTX and Sam Bankman fried. But you have to project an image. There's these stories about Steve Jobs not really having what he was showing in these big shows. It really didn't work.
- [39:51]
Edward Amoroso
And yet.
- [39:53]
Alfred Marcus
So what is that fine line and, and even like corner cutting. How do you. Did you. When you advise startup, how do you. How do you approach that?
- [40:05]
Edward Amoroso
And well, first of all, and I knew Steve Jobs at AT&T, I ran the, the iPhone launches on the AT and T network. I was secure security there. So I had my run ins. Larger businesses operate differently. Differently like the crossing the chasm is different than reaching the chasm. So when you're a large business like you and I right now are on Zoom. Did we pick Zoom because we have the same belief system as Zoom?
- [40:35]
Alfred Marcus
No, no, we picked it free because.
- [40:37]
Edward Amoroso
It'S this, it works sort of in a sense has manipulated us like Microsoft and Google and Zoom, you could argue, kind of manipulate. We don't have any other choice, so we just do it. Likely life is different when you're a bigger company. Like one problem I have and I'd get political, but I'll just say this. When I'm coaching startups on ethics and honesty and all these things, in the United States we have a president that doesn't do any of that stuff. Of course orders would say, ah, all politicians are jerks. This guy just tells the truth. Now again, without getting political, maybe that's true or not, but clearly, you know, criticizing your opponents and making up names and stuff, that seems to have worked for our current president. But I'm just saying if you're a startup and you do that, that's a very bad idea. So I'm sort of confining my advice to startup companies. Apple, even Theranos. Theranos, I mean, look, that crashed and burned. Why? Because they had a very poor ethical framework. What happened there is that she was trying to change the world. The idea that instead of getting blood, maybe just do a finger prick. Can we do that? I like that idea. And we can all see how that would make people's lives better. Because my wife, for example. So that would have been a good. That's a good reason. But if you realize that you're one of the kids in the classroom where this isn't going to work, that's where your ethical framework comes in. Because you can't then just contrive something to be successful, if you have the proper ethical framework, you gotta throw the towel in when it's not gonna work. And that's where it got funny. That's where they were faking the machines and all that. I read the books and watched the movie and the whole thing, like it was terrible because you just saw that the ethical guardrails went down. Same with Sam Bankman fried. Genius guy.
- [42:34]
Alfred Marcus
Yes, absolutely.
- [42:35]
Edward Amoroso
Because mom and dad are geniuses. He's a genius. Read about his career. Like I read Michael Lewis's book. Yes. By the way, I got a phone call once from an attorney saying, hey, you're cybersecurity expert. I go, yeah, well, we got a guy in prison who needs. Need to call the judge and tell him that he used a VPN to watch the super bowl and that's not in violation of his terms. Could you prove it's not? Blah, blah. I said, who's your client that gets Sam Bankman fried? I said, I don't think I better. That doesn't sound like something I better touch.
- [43:08]
Alfred Marcus
So I did.
- [43:09]
Edward Amoroso
I declined. But. But these are people where the ethical guardrails just kept moving. You see it in their life, right?
- [43:18]
Alfred Marcus
Slippery slope.
- [43:19]
Edward Amoroso
Yeah, slippery. Little more. A little more low. Before you know it, they've gone beyond the like the, you know, like the soccer treasurer taking money from the soccer team's kitty, saying, I'll pay it back.
- [43:33]
Alfred Marcus
Right.
- [43:34]
Edward Amoroso
It's the ethical thing that moves a little bit at a time. They're not evil people. They just didn't have structured ethical guardrails. And that is something in the book that I make very clear, that when you're going to fail, you fail, you move on again. That's the beauty of our legal system and our bankruptcy system in the US is. And if you took venture capital, it's not your money, you just move on, go do it again. No. So that is a valid point that when you look at. There are cases where people with very poor ethical frameworks appear to have been successful. I'm old enough to know that eventually what goes around comes around. The ethics and honesty and integrity and empathy for other people. You know, eventually that always wins. The world goes up and down. We arc in the right direction, but it's a roller coaster. And sometimes it feels pretty terrible. But eventually things do come around. Those principles will hold. They always have. For thousand years.
- [44:37]
Alfred Marcus
I hope so. But I taught business Essex for many, many years. And right now I'm not teaching it because I'm in phase retirement, but I'm almost glad because the examples right now are that you can get away with anything. It seems the prominent examples in our.
- [44:54]
Edward Amoroso
Society step forwards, one step back, that's the way it works.
- [44:58]
Alfred Marcus
Right? Right. I think that's.
- [45:02]
Edward Amoroso
If you and I are teaching two step forward and we're in the middle of a one step back, nobody believes us.
- [45:08]
Alfred Marcus
Right.
- [45:08]
Edward Amoroso
But you have to take a broader perspective and say, how about we go back a thousand years and think about the life that we're leading as a razor blade of time compared to the length of time that is applicable. And the wisdom over the many, many, many centuries and millennia is that honesty, integrity, that always wins. But sometimes you get caught in a little crosswind. Germans in the 1930s and you could argue there may be some taste of that going on now. So, fine, we understand that. But in a startup, one of the first things we coach is you do have to have an ethical framework when things are not going to work. You can't go cheating or making up numbers or doing things that are unacceptable or bad mouthing your competitors or maybe even making up things about them. Once you're in that realm, that's not acceptable, that you're in the wrong business.
- [46:10]
Alfred Marcus
I mean, funders will put pressure on these companies and the board and they'll want them to do things.
- [46:17]
Edward Amoroso
You gotta select, act carefully. You go. People you decide to work with on a funding level are people that you should also. I'm not mean. You don't just marry flippantly. So you shouldn't take money flippantly from some group just because they're willing to give it to you. That's a very bad.
- [46:38]
Alfred Marcus
To investigate who's investing in you as well. That's a very important thing to do. You talk about brutal honesty in the way you examine what you've done. If you're a startup, that's really difficult when you're scaling because how do you really know where you're at? I mean, maybe it's a temporary setback or maybe it's a fatal setback. And making that distinction.
- [47:11]
Edward Amoroso
It'S very difficult. I mean, there's no prescription here. Where you say do A then B, then C and you'll be fine. That's not the way this works. Like if you're, let's say you're a son or daughter getting married and you're there might be your son, you're fixing his bow tie. Before he goes up to get married, he says, dad, give me some advice. How do I make a successful marriage? What do you say? Like, there's no do this, do this, do this. You know what I mean?
- [47:42]
Alfred Marcus
There's no formula, no judgment.
- [47:44]
Edward Amoroso
Same thing with a startup. But the things you and I would likely say, be honest, communicate, have empathy, stick to some ethical principles. These are all things that I've time tested. Right. I mean, are there people who are skunks and terrible and cheat and have a marriage, the less. I guess so. But it's just these time tested ideas of following the basics of ethics. We know that that's right. But you do get caught in little pockets where sometimes it seems to the contrary. That's just history. You've been teaching this. You know that you can go back to any part of history and argue that, for example, the stock market would be a terrible thing to do. Even though you and I both know that over time the market just goes up, it just wiggles as it does. And if you're at a top and then for 20 years it's going down, it doesn't feel like we're right. But it does over time it integrates in this direction. And that's why with startups, we're very, very clear with them that if you don't have a moral ethical framework, then your odds of success are going to go way down.
- [49:03]
Alfred Marcus
Okay, so we're coming near to the end. And the last chapter in your book is personal one. Should you really be doing the startup? I think we do. You want to comment on that? Why do you feel it's so important to end with that note in your book?
- [49:24]
Edward Amoroso
Because I'm trying to warn people that, you know, this can go badly.
- [49:29]
Alfred Marcus
Yeah.
- [49:30]
Edward Amoroso
You know, the most important thing, let's say you're a family person. Let's say you're a mom and you've got some kids and maybe you've got a spouse that's, you know, working and you're dependent on your paycheck.
- [49:42]
Alfred Marcus
Right.
- [49:43]
Edward Amoroso
You know, this idea that I'll go do a startup and get rich is a dangerous thing. It can really create problems for families, for children, for your life. It can cause a big problem. So when you do decide to take the plunge, I think you do need to look in the mirror and say, do I have the right support system here? Like do I have kids and a spouse and family and friends that are going to be supportive or are they bitter and maybe resentful that I'm doing this because there's a lot of people step away from a paying job? I'm a good example. I'm married 40 years and I started TAG 10 years ago. And I was in a great job with probably nobody has tenure, but I had great relationship with our CEO, I was well established in the job. I lived the kind of life where this is going to sound funny, this is not my personality at all, but like limo, pull up to the house, drive you to a private jet, whisk you down to headquarters, eat dinner at a fantastic place, five star hotel, whisk you back like that kind of life. I hated every minute of it. It wasn't me, but my family benefited from that. I'm more happy when I trudge out to my used Volvo, drive to Hoboken, take the path into New York City with a bunch of other people while I'm reading my book, jostle through and eat pizza for lunch and work in a small office and do meaningful work. That's me. But you need a family that's willing to let you do that because when you do that, that's kind of a selfish thing, isn't it? You know, sort of selfish. It's so if you have that support system and for me, I'd spent 31 years in big business, my wife was happy, she said, God bless you, go do it. And I did. But if you don't have that situation, I wouldn't advise it. You know, you don't want to break up your life and your family because you got this startup vision. The startup is like having another kid. So you do have to think it through. And I have that warning at the end of the book. Look in the mirror. There's a lot of things that need to be coming together, a confluence of a lot of things for you to be successful. And if you don't think they're there, this is probably not a good idea.
- [51:58]
Alfred Marcus
There's a lot of risk and uncertainty and you have to be at a point in your life either it seems like quite young and innocent and naive or old.
- [52:09]
Edward Amoroso
I point in the book that there's this Hollywood vision that startups are done by kids who drop out of mit. And that's not what I was. One of my big surprises in doing the research that so many startups are by people who are mid or later career, more than half of them.
- [52:29]
Alfred Marcus
Yes, right.
- [52:30]
Edward Amoroso
That's a Hollywood vision at all.
- [52:32]
Alfred Marcus
Right Now I know that's the empirical evidence is definitely the case that startups are middle ages and older.
- [52:41]
Edward Amoroso
I wish more young people would like, you know, there's like pretty high unemployment amongst 20 year olds.
- [52:46]
Alfred Marcus
Right.
- [52:47]
Edward Amoroso
I've been saying to grad students and so on who go, I don't Have a job. I said, well, why don't you do a company? If you're sitting home doing nothing, then for God's sake think about something you're passionate about and get a sense of maybe you can build something here. Then you got a job immediately. If you're in a startup, you have a job. That's one good side of track.
- [53:08]
Alfred Marcus
Drop ups from big companies and immigrants. Immigrants are disproportionately involved in startups and, and both in the high tech and in the mom and pop shop kind of startup, we gain immensely in our country from that. What about. We'll finish up now. So what are you working on now? What is your, your current passion?
- [53:32]
Edward Amoroso
I think, yeah, I'm doing it right now with you. I mean, I mean I've been a. I've spent a lot of time in academia my whole career and the time at AT&T. I've always been a professor, either adjunct or now full time. Yeah, spent a lot of time with my students. I teach at nyu. I love that. And TAG is my startup. So it's just, you know, like I wrote about startups, both looking in at them but also being one. And now I'm approaching the chasm. Like we're at the point now where we've got a nice little thing going. We've got some customers and it looks pretty good. So now I'm really living the research. It's like time to land the plane here. Where are we going with this? I don't want the startup to have just been this thing I did while I was doing the research. I want it to be. This is a business that I have legitimately grown and exited in a way that benefits the people who've been part of my company, benefits our customers, benefits me and my family. So it's a combination right now of really finishing the movie. I figured out the ending of this movie yet it's still being written and that's exciting.
- [54:51]
Alfred Marcus
How do you imagine the choices now that you feel that you've reached a certain scale?
- [54:57]
Edward Amoroso
Oh, you can get bought pretty. There's a lot of different opportunities where a larger company buys you. That big hospital sees the two nurses over there.
- [55:04]
Alfred Marcus
Yeah. And they bring them in.
- [55:05]
Edward Amoroso
That is a great idea. You know, hey, we got a little building over there. Would you like to expand your little nursing program? We'll leave you alone. You do the nursing program, then you're part of our hospital system. The billing and things can go through that, but you still service customers. And then the nurses think that's a Nice idea. We only have two of us here, but we could have 50 nurses here. Let's do it. That's when you get absorbed into something bigger. Then your vision doesn't go away, it gets realized into a larger company. Now most acquisitions of larger companies fail because they're usually clashes of egos. Right. We found that acquisitions of startups usually succeeded because the startup brings that ethos, they bring in energy, they bring a new set of new ideas and usually that works out nicely again when two big clashes of two titans come together. AOL Time Warner being the famous example of the.
- [56:08]
Alfred Marcus
That didn't work.
- [56:10]
Edward Amoroso
There's so many. I mean my own company AT&T when we bought NCR, that didn't work out. A lot of really examples of corporate egos and other things not working. But when a startup gets bought by a bigger company and understands what they do, it's kind of exciting. So for me, that's probably the most likely exit for us where one of the larger companies that likes our platform, likes what we do, will buy us. We'll go over there and that'll be sort of the way to end the movie, you know what I mean? A good way to validate the research I've been doing for 10 years.
- [56:47]
Alfred Marcus
Yeah. IBM rejuvenated itself through acquisitions recently and I guess Pfizer right now is trying to do that.
- [56:56]
Edward Amoroso
IBM is going to make its money in quantum. We didn't spend talk to so many startups doing quantum. I've got one. As soon as I've got a Quantum company in 20, take me through what they're doing in quantum computing.
- [57:13]
Alfred Marcus
That's the next after AI, that's the next thing.
- [57:17]
Edward Amoroso
Quantum computers are very expensive to run and extremely difficult and to keep working.
- [57:22]
Alfred Marcus
Really? Is that the issue?
- [57:25]
Edward Amoroso
Upside down, Big gigantic pieces of electronics that takes up the whole room and that you've got to drop the temperature of the tip of that to, you know, zero degrees Kelvin or something and then everything happens at that subatomic level. It ain't easy, but it's exciting. See how people would would get so super stoked to do that.
- [57:45]
Alfred Marcus
I heard a recent interview with the CEO of IBM and he said it's seven years off. That's what he. That was his.
- [57:52]
Edward Amoroso
That's probably seven. Like off from what if it's mainstream adoption? Probably right, but like adoption but doing it now. Yeah.
- [58:03]
Alfred Marcus
Cool. Very cool. Okay. This is a great interview. I really enjoyed it. And thank you for this guide to what early stage entrepreneurship really demands for listeners. I'm Alfred Marcus and this has been on the cusp on the New Books Network, where we examine how strategy, ethics and governance intersect in organizations and civic life. If you have comments or suggestions for future podcasts, please contact me@amarcusmn.edu or it.