Planet Money – Summer School 1: Planet Money goes to business school

Intro

In this episode of Planet Money, the Summer School series continues with an MBA program. The hosts explore the fundamental principles of starting a business and share cautionary tales of entrepreneurship. They discuss the journey of Frederick Hudson, who started a successful business while in prison, and the experiences of twin chefs who turned their crab delivery service into a thriving restaurant. The episode emphasizes the importance of understanding customers, running experiments, and being flexible in order to succeed as an entrepreneur.

Main Takeaways

Principles of Starting a Business

• Business School teaches the principles that drive competition for attention and dollars.
• Columbia Business School Professor Angela Lee shares the fundamental principles of starting a business.
• Understanding the customer is key for entrepreneurs.
• Unique value proposition: understanding the problem you’re solving for your customers.
• Talk to your customers and test your idea.
• Being flexible is important for success.

Case Study: Frederick Hudson and Pigeonly

• Frederick Hudson started Pigeonly, a business that allows people to send photos to inmates.
• Hudson came up with the idea while in prison and developed business plans while still incarcerated.
• Despite facing challenges as a convicted felon, Hudson raised over $10 million in funding for Pigeonly.
• Hudson’s experience as an inmate gave him unique insights into the market and helped him pitch his business idea to investors.
• Pigeonly faced the same challenges as any other startup but succeeded through trial and error.

Case Study: Ray Sean and LaShawn Middleton and R&L Crab

• Ray Sean and LaShawn Middleton, twin chefs, started a successful crab delivery business called R&L Crab.
• They saw a pain point during the pandemic and turned their idea into a thriving brick and mortar restaurant.
• They reinvested all their profits back into the business to expand it and hired drivers, but money was always tight.
• They brought on a business partner who became too controlling, leading to legal issues and the dissolution of the partnership.
• R&L Crab now has a brick and mortar restaurant in Columbia, Maryland, where they use a secret ingredient (beer) to cook their crabs.

Summary

Principles of Starting a Business

Columbia Business School Professor Angela Lee emphasizes the importance of understanding customers and their pain points. Entrepreneurs need to have a unique value proposition and be willing to talk to customers and test their ideas. Being flexible and willing to pivot based on customer feedback is crucial for success. The myth of the visionary founder is debunked, and it is highlighted that great entrepreneurs run experiments and respond according to data.

Case Study: Frederick Hudson and Pigeonly

Frederick Hudson started Pigeonly, a business that allows people to send photos to inmates. While in prison, he realized the difficulty of sending photos and came up with a solution. Despite being a convicted felon, Hudson raised over $10 million in funding for Pigeonly. His unique insights as an inmate helped him pitch his business idea to investors. Pigeonly faced challenges like reaching customers and figuring out payment methods but succeeded through trial and error.

Case Study: Ray Sean and LaShawn Middleton and R&L Crab

Twin chefs Ray Sean and LaShawn Middleton started a successful crab delivery business called R&L Crab. They saw a pain point during the pandemic and turned their idea into a brick and mortar restaurant. They reinvested their profits back into the business but faced financial challenges. Bringing on a controlling business partner led to legal issues and the dissolution of the partnership. R&L Crab now has a successful restaurant in Columbia, Maryland, where they use a secret ingredient (beer) to cook their crabs.

Conclusion

Starting a business requires understanding customers, running experiments, and being flexible. The case studies of Pigeonly and R&L Crab highlight the challenges and successes of entrepreneurship. The Summer School series provides valuable insights for aspiring entrepreneurs and showcases the importance of perseverance and adaptability in the business world.