In Chapter 17 of 21 in his 2012 Capture Your Flag interview, design educator Jon Kolko answers "How Has Working at a Startup Incubator Taught You to Better Teach Entrepreneurship?" Kolko shares how his experience taught him the language of business and entrepreneurship and how to talk about products and services from a venture capitalist perspective. For example, Kolko notes venture capitalists look not only at how a product might sell, but also the product intellectual property value.
Jon Kolko is the founder and director of the Austin Center for Design. He has authored multiple books on design, including "Wicked Problems: Problems Worth Solving." Previously he has held senior roles at venture accelerator Thinktiv and frog design and was a professor of Interactive and Industrial Design at the Savannah College of Art and Design (SCAD). Kolko earned his Masters in Human Computer Interaction (MHI) and BFA in Design from Carnegie Mellon University.
Erik Michielsen: How has working at a startup incubator taught you to better teach entrepreneurship?
Jon Kolko: It's definitely led me to understand the vocabulary around VCs and financing and how that game works around funding. It is a game and those involved in it will actually gleefully describe it is a game. And so, I think working at sort of the heart of that helps me understand both what that mentality is like and how to leverage it if you want to or how to completely avoid it if you don’t like it.
It is literally a different language and I don’t just mean in terms of vocabulary and jargon. Yeah, there's a ton of jargon and that takes a little getting used to but it's also just a very different way of talking about products and services.
And I’ll give you a very quick example. When a designer creates something new, irrespective of social entrepreneurship or anything else, they think of the value of that thing to a user. And typically, a good VC, will when they look at something new, will think of the IP value of that beyond the simple investment. Meaning yeah, that’s great. I obviously have to get my 10X return over three to five years. And then how can we continue to leverage the intellectual property that’s inherent in this invention well beyond me actually owning -- you know, having a full stake in this company because that will allow me to sort of tweak up that valuation. The notion of an invention having monetary value outside of its sales price and outside of the value for a user is 100 percent missing in the world of design, for better or worse, and I don’t really care to argue the value or non-value of IP right now. But it's just that it doesn’t cross any designer’s mind I've ever worked with in my life. And it's like the first thing that most good VCs will think about.
And so as an example then, if you're trying to teach a student how to present their work during a pitch, one of the things they need to understand is that the person looking at their thing is not thinking about how much is it going to sell for on the shelves of Best Buy, right? There's this second market of IP that they're considering which is totally in a third plane. That designers are like, “I don’t even know what words you're saying.” And that’s just an example. There’s tons of those. There’s tons of different ways of thinking about stuff.
Ask a designer what derivatives trading means. And it's not just that they don’t know because they're inexperienced. They don’t know because their brain doesn’t work that way. It's the same way when you ask somebody who’s in financial services to draw a teapot. They’ll say they can't but it's literally like their brain will not allow them yet to draw that teapot. And I think the closer, the sooner students realize that, the sooner they can decide if they want to overcome that hump or not.