Building Statewide Ecosystems From The Ground Up With Erik Pedersen

 

Entrepreneurship is not always about building and earning the biggest – sometimes, it is simply about getting started and doing consistent work. Gary Schoeniger sits down with Erik Pedersen, president and COO of Network Kansas, who shares how he builds statewide ecosystems centered on fostering an entrepreneurial mindset. Together, they discuss what it takes to build these grassroots communities from the ground up and help people see themselves as capable of creating change as highly equipped entrepreneurs. Erik also explains why entrepreneurship should be taught to children as early as elementary school, making it less overwhelming and demanding yet more thrilling and fulfilling.

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Building Statewide Ecosystems From The Ground Up With Erik Pedersen

This conversation is with someone who doesn’t just understand the entrepreneurial mindset. He’s been putting it to work for years on the ground in rural communities that many overlook. Erik Pederson is the President and CEO of Network Kansas, one of the most Innovative ecosystem builders in the country. What sets Erik apart isn’t chasing unicorns or building tech hubs. It’s his commitment to meeting people where they are especially in rural communities and helping them activate the potential that already exists.

For nearly two decades, Erik and his team have built statewide networks of local champions, financial tools and support systems to spark entrepreneurship at the grass roots level. What they’ve learned is that mindset is the key. Not just funding or training, but helping people see themselves as capable of creating change.

In this episode, we talk about what it takes to build inclusive bottom-up ecosystems, why it requires trust, patients and systems thinking and why the entrepreneurial mindset may be the most underutilized tool we have for community transformation. This is the entrepreneurial mindset in action and it’s making a real difference. Let’s dive in.

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Erik, thanks for joining the show.

Gary, it’s my pleasure to see you again.

We have known each other for close to ten years.

You are way underestimating, Gary. It was many years ago since I was hired to help open this organization with Steve Bradley and we began working in the eCommunity world in ‘08. I remember one of the very first programs that we brought in to help create entrepreneurial mindset and flourish in rural communities was Ice House. I think it’s been about 16 or 17.

Unbelievable. I feel like you guys are blazing new trails in this space like a statewide. How would you characterize yourself like a statewide CDFI?

Not a CDFI. We’re a statewide organization that simply works to better the entrepreneurial environment and create more entrepreneurs that have a mindset to start or those that have started to expand or those that are looking to transition so that the next generation can come along and the community doesn’t lose that vibrancy that’s going with the entrepreneur. We do provide access to capital but we also provide that wraparound.

It’s important to give the entrepreneur capital and I thought of that when you mentioned the CDFI. It’s important to solve the access to capital question but every bit as important to make sure that entrepreneur has the foundation underneath them. That can look at a thousand different ways to not only pay back alone, but to flourish in their business.

Access To Capital Is Not The Barrier

Let’s talk about that, Erik. We’ll start in the middle and then we’ll go backwards. I feel like a lot of people fake like access to the capital is the barrier to starting. I’ve always felt like it’s not. You need capital once you’ve proven the concept that you’re ready to grow. Can you speak to that at all?

I couldn’t agree more with what you said. Access to capital is oftentimes elevated as the barrier. You’re right. I contend that it’s 1, 2, and 3 steps prior to that. It’s the ideation phase. It’s proving out the concept. It’s finding customers 1 and 2. It’s doing customer interviews. It’s finding 100 customers or 100 people in the marketplace and exploring whether this idea fits or not.

 

 

 

I had somebody tell me many years ago and it’s very simple but I like it. He said, “The three questions to ask are, what’s the problem, what’s your solution and does anybody give a damn?” I think at the core that’s it. Is there a market that’s going to buy your product? That has to happen before you go get a loan or ask somebody to take an equity stake in your business.

That’s a big missing piece from the discourse. Maybe I’m late to the game here but I see a lot of SBDCs. People show up with an idea and they’re just like, “Let’s write a business plan and go find a debt capital.” I just think that’s the wrong way to think about it. You hit this point right out of the rip, Erik. The first trick of entrepreneurship is not to fool yourself and you’re the easiest person to fool. We could get way more people to jump into the entrepreneurial arena if they understood it’s not about quitting your job, mortgage in your house and taking these enormous financial risks, which is too often how the game is portrayed.

It’s interesting you mentioned that. I think the SPDC or the Small Business Development Centers and Economic Development Professionals across the state frankly do an outstanding job of doing what you’re talking about. They have shifted their mission over the years in the many years I’ve been doing this. I do think a lot of times an entrepreneur thinks a business plan is a necessary evil for me to go to the bank and get a bank loan.

If I’m lucky enough to get the bank loan, then maybe I set the business plan up on the shelf and it’s served its purpose. I’ll speak about Kansas only but there is a wealth of people across Kansas. As I said, the Small Business Development Center. The Department of Commerce has field reps. Economic Development Professionals and every County in Kansas that are outstanding at helping that entrepreneur realize they don’t have to do a full-blown business plan.

Let’s start with maybe an executive summary. Let’s get your ideas down on paper from the napkin to a simple few pieces of paper then let’s begin to discover. Let’s begin exploring a marketplace and do competition analysis. Let’s do a ring analysis and what else exists and begin to check some of those boxes that lead us to the awareness that a more full business plan is the right step. There are so many of those interim steps that are great chances to validate but also, Gary, frankly, they’re great chances to take an off-ramp. Sometimes, the off-ramp is not a bad answer.

Why You Need An Actual Business Plan

I got a reputation for being vehemently atheistic when it comes to business planning but now, I’m going to flip the script on you and argue for the business plan. I think business planning is appropriate. When a guy walks into the door who’s an expert and let’s say he’s worked for a tool rental company for ten years. He knows the business and the market. He’s seen the shortcomings of the company he works for. He’s going to open a competing thing, maybe in a different market or whatever. That’s the case for a business plan. Somebody knows the industry. They know the customer and those are the instances in which a business plan is appropriate.

You’re right. You continue because I’m in agreement. If you are embedded in the market, if you have a wealth of knowledge about the market itself and maybe you are taking over a business, an existing business. You could make that case over and over but when you begin in the ideation stage, that’s where there’s probably some incremental steps that get you to check the box, “Yes, business plan is the need.”

Here’s what I’m saying. I’m just putting a slightly finer point on what you said, Erik. This is the purpose and the beauty of these conversations. I said as much in my new book that what this conversation is bringing to the fore is the difference between opening a business and being entrepreneurial. That sounds like the same thing to a lot of people, but it’s not.

You’re right, it’s not. I do think that’s where people default to. That laser focus sometimes can be harmful. If I’m an entrepreneur, that must mean I’m going to start from scratch and start a business. With an entrepreneurial mindset, you opened up many possibilities of whether it be expansion or acquiring. There are a lot of things that a mindset itself opens the door to versus just a linear line from, if I’m an entrepreneur then that must mean I am opening the doors to a business.

An entrepreneurial mindset can open many possibilities. It allows you to expand and acquire new opportunities. Share on X

The other line of assumptions to opening a business are, “My idea is solid. The market exists. All I need is the money to rent the building, put the stuff on the shelves, and open the door and get people to come into my door.” Again, in my book, I said that’s an artifact of managed aerial thinking. Entrepreneurship is about the discovery of useful things and I’m arguing that planning and money get in the way of discovery.

I want you to go further with that before I either push back or agree because I’m not quite sure.

What I’m saying is that needs are often articulated. For the typical entrepreneur, data like data don’t even exist. I use the example in my book about things like in the late ‘80s. I have tried and failed at a restaurant that I opened in my twenties. I was dead broke and in debt. I was employed. I strapped a borrowed ladder to the roof of my car and went up in a wealthier neighborhood knocking on doors that offer to clean gutters. I’m afraid of heights. I don’t love God or cleaning but I had an assumption that it was a problem. That people in upper middle-class incomes are a pain in the ass to call up on your house. It’s a big house.

You don’t want to do it on your Saturday afternoon, so you’ll pay somebody. $100 was what I was charging in ‘87. It’s like $300 now. I probably cleaned like five gutters until I found an adjacent opportunity. People started asking to fix this and fix that. I realized they were code violations. You couldn’t sell your house without updating all these code violations. People started hiring me to do that and then real estate agents started coming to me as the go-to guy. All I’m saying is that opportunities are latent. They are present but not visible. They can’t be fleshed out with the business plan and data. There’s no way to verify that like gutter cleaning is a market.

I know exactly what you mean. Now that you said that, I appreciate that because one of the things that happens and it goes back to a trap that can be fallen into, as I said because let’s be honest. At some point most or all entrepreneurs are going to need some capital. The financial institutions were fortunate enough to work with across Kansas. They’re outstanding. The access to capital we at Network Kansas provide is gap financing.

We believe that the bank can provide everything you should and if they want to, they should. If this is functioning well in Kansas, they recognize they can’t provide everything Gary Schoeniger needs. He needs $100,000. They can only provide Gary $80,000. Network Kansas can step in as that gap. That’s when it’s flourishing well. To the point I was going to make, the financial institutions are going to need some form of data. They’re going to need some form of numbers but sometimes the idea, the point you’re talking about is skipped because of the immediate thought of any capital.

Therefore, I need to provide data to the people that might give me capital. If you as an entrepreneur can take the chance to let the situation wash over you in a way, diagnose the situation early on with your guts, your head, your mind and exploratory. You can uncover lots of those things that you’re talking about without a rush to capital. If you get there, you’re going to need it.

 

 

 

Convincing More People To Get Into Entrepreneurship

That’s 100%. You were spot on in my view, Erik. What I want to come back to is we could convince a lot more people to jump into the entrepreneurial arena if they understood this doesn’t require you to quit your day job and mortgage your house and put your family at risk. It requires you to reappropriate some small percentage of your discretionary thought, time and effort and explore in the margins. Erik, I’m not making this crap up. I’ve observed hundreds of entrepreneurs and started to analyze what they’re doing.

I had this guy on my show, John Dearie. He runs the Center for American Entrepreneurship. It’s a policy advocacy institute in DC. You should probably know him. One of the things we talked about is that, 5.5 million people applied for a business license in the United States in 2024. Less than 1 in 10 acted on it. I’m interpreting that data as there are lots more people that have the intention that are doing it. We could help close that gap, you and I, Erik, by helping people understand what the process looks like. Don’t quit your day job just yet. Take $100 or $500 in your spare time. “F around and find out,” as they say.

You said the word exploring in the margins. I like that very much because you’re right. It is a huge leap, and as every year goes along in your life you have things like maybe you’re married or maybe now you have kids. Jumping into the deep end of the pool, scares the hell out of people and as it rightfully should. That’s not a negative comment. This opportunity to explore the margins and if we can help figure out what that looks like, how to assist with that, as you said. I couldn’t agree more.

Entrepreneurship is an opportunity to explore the margins. Share on X

As a part of a partnership with Kansas State University, we’ve been working with eleven different rural communities on some neat and new exciting projects. There’s one up in North East Kansas and I’m fascinated to see where this goes. It’s called the side gig studio. The purpose is exactly what you’re talking about, Gary, how to figure out how to provide a little bit. Not a bunch of formal stuff, but a little tiny bit of structure around how to help that side gig grow enough to help people act upon the license that you just talked about.

I keep hearing it in the interviews on my show. I listen to these stories. There’s one guy that comes to mind. I met him and he was in Saylorsburg, Pennsylvania like Eastern Pennsylvania with a little farm. It was less than 5-acres and he was growing organic stuff. He had a bakery but this guy worked for the government. He came home every day for like 7- or 8-years selling zucchini at the end of his driveway.

Differences Between Opening A Business And Being Entrepreneurial

You’re building and developing in the margins. I think that’s the story people need to understand. What I advocated in my book was to find a friend. Take $100 and try to make it into a thousand in your spare time. Let me come back to something. I want to fly this up to the flag pole. We talked a little bit about the difference between opening a business and being entrepreneurial. Opening a business is more like an artifact of managerial thinking.

Are you exploring the idea of adaptiveness, adaptive thinking, adaptability versus being more technical in your mindset?

That’s where I was going, Erik. Thank you for pulling me out of the ditch there. Managerial thinking tells us. It’s called causal reasoning, like, know before you go. Figure it out and then act on it. Make a plan and then act on that plan. That’s appropriate in stable conditions when data exists and when you’re spending lots of money, you’re taking big risks. That causal reasoning is important but there’s an alternative logic. It’s called the effectual reasoning, which is the exact opposite, Erik. It’s like you have to go in order to know.

That’s the secret to the entrepreneur. What’s the difference between an entrepreneurial and managerial? Entrepreneurship is like experimenting in lots of little ways. They’re trying lots of little things. The data bears this out. The chances are very high. The probability is very high that your original idea isn’t the right idea but that something adjacent will emerge.

I’m glad you went down that path, Gary. That is very true. I couldn’t agree more on that regarding causal versus the effectual and the differences on that. There’s something that struck me as you were talking that I hear and I probably say it a lot myself. It’s one of those just anecdotes you throw out there, “Build the plane as you are flying.” You hear that said a lot and as I said, I probably am a victim of that myself.

As I hear myself say it, the conversation we’re having around, “Take $100 and try to make $1,000. Side gig, explore the margins and don’t risk it all.” When I hear myself say, “Build the plane as you’re flying,” it seems very big. If you can take away the scariness of that, it’s almost like building a bicycle as you’re riding it. If I crash a bicycle, I skinned my knee. If a plane crashes, there’s a whole lot worse things that happen. Sometimes that saying is so big and daunting that even it scares some people saying it.

I agree with that. I’m guilty of saying. Richard Branson’s like, “Screw it. Let’s do it.” That’s great when you’re a billionaire. That doesn’t translate to the guy who’s trying to raise a family and pay a mortgage. They can’t be doing that but the way about it is like this, Erik. It’s like biology. The way that an organism orients itself in unfamiliar terrain is to try lots of little things on a small scale to see what works.

That’s interesting. I hadn’t thought about that.

I know, but we don’t but it’s like there’s nowhere in nature. Nature doesn’t take big bold bets because it increases the probability that you’ll survive long enough to find the connection. The way I put it is like, if you and I are in a plane and it crashes in the Amazon. We’re lost in the jungle starving to death. We come across a bush full of berries that look good but we don’t know what the hell they are. You don’t just start eating the berries. You take a berry. You rub it on your lips and walk away and see if your face swells up then you eat one berry. That increases the probability that you get to live.

There are opportunities for that. I’ll give an example. The site gig studio made me think of. There’s becoming more and more fab labs, maker spaces and places around Kansas anyway where there is the opportunity for somebody to dip their toe into the entrepreneurial water. Exploring the margins and tinkering with an idea. Do early-stage prototyping. You see cutters and things like that. For goodness sakes, Gary. You and I both know of certain people that are in Kansas that have mobile fab labs.

They’ll drive around in their car and make them available to the entrepreneurs in their community. Things like that are making the barrier to that easier to get over. You now have a place you can go and conformally tinker without having to even invest in a large amount of capital or equipment that you were going to spend your own money on. There’s abilities out there. It’s trying to synchronize that process of little steps, as you talked about from the organism standpoint. Try lots of little steps. Lots of little things to culturally embed yourself and grow and then follow the momentum.

Entrepreneurs must try a lot of little steps to culturally embed themselves and grow. Share on X

Ditching A Business Plan For A Minimally Viable Product

I don’t want to pick too much on the business plan thing but what I would advocate, Erik, in the beginning, is to ditch the business plan and replace it with an MVP. Here’s my case for that. I value your opinion. You’re someone who’s deeply immersed in this space. I already said there are exceptions, but for the typical entrepreneur, the minimally viable product like what can you do with what’s in your garage, your attic, your basement or your kitchen? What can you do with $100 or $500?

The minimally viable product almost becomes like this perfect mechanism. I don’t even know how to describe it, Erik. The minimally viable product becomes the discovery mechanism because it enables you to engage with the outer world. The minimally viable product is like, when people pay you for something. They’re providing scientific evidence that your thing is useful. It’s a real time feedback loop with the world. You’re not fooling yourself. Somebody pays you for it and to your earlier point, you got to try it again. You can’t just take an end of one and make them case around that.

Not only does it provide feedback. That helps you find the right product market fit. It helps you generate revenue that you can build on and you can start to sustain on. There’s one last point I want to make on this. The minimally viable product not only provides evidence of the usefulness of your idea, but the capability of you as an entrepreneur.

If somebody walks in your door and said, “I built this minimally viable product in my basement. I spent a couple thousand dollars over the last whatever. I’ve generated $20,000 in revenue in the last year in my spare time.” You’re going to treat him very differently than somebody that walks in your door and says, “I got a great idea. I just need $100,000.”

Let me tell you. That guy that walks in your door after having created $20,000 of revenue. He is carrying himself with a different level of confidence when he’s coming to you. That in itself builds on it. I truly believe that confidence builds on itself just like activity breeds activity. Doing things is going to do things.

I love this, Erik. How do we get that message out to the world? Here’s my take on ecosystems. Let me do an ecosystem rant for you for a second.

Before you went there, you said a little bit ago, “I want to not push back.” I’m going to ask about the business plan idea. I’m going to walk the fence but, in my mind, I believe it’s a little bit of an inverse relationship, Gary, and here’s what I mean. I wholeheartedly agree that those 30 pages are overkill. You need to live in it. You need to test it. You need to do as the organism does, reach out, try different things, fail, succeed, adapt or tweak. Whatever it is. As that grows and you fit your $20,000 and now you’re trying to hit $40,000. At some point, there’s going to be the need for the plan.

We’re saying the same thing. Where I’m at is, the need for the plan should be much greater and much broader than just to get a loan or to get an equity investor. The plans should be your business. It should be how you’re going to place the product, how you’re going to promote it, how you’re going to create it, the pricing structure and cost of goods sold. All these things should be for your success. Not just to get a loan. That’s where I get hung up on it. I fully see the value in everything from a short napkin to a full-fledged business plan. I advocate for it and see the value of everything there and in between if it’s done for the right purpose.

 

 

 

Where I landed on this which we can agree on, is that it’s not that business planning isn’t prudent. It’s premature.

I can live with you on that. Depending on where you’re at, it could be premature when you put it that way.

 That’s what I’m saying. My brother ran a CDFI in Detroit for 25 years and he was frustrated. People walk in the door like, “I got a great idea. I need $25,000.” It’s like, you never worked in this industry.

Let me tell you, I haven’t just discovered this by saying this. Sometimes, giving an amount of capital to an entrepreneur could be the worst thing that happens. You don’t want to cause an entrepreneur or family to suffer and struggle to not be able to make it. There is a need for planning. It’s just done in conjunction with all the other things.

I’ve said as much. Money gets in the way of discovery. Planning and money come at the point where the discovery period is almost over. I’ve proven the concept. I’ve generated revenue. There’s a market here. There’s something here and now I need to press on the accelerator and replicate it. Before that, money gets in the way. A shorthand way of saying it is, money makes you lazy and stupid. If somebody gives you money, you can misconstrue that as validation for your idea. Not so fast.

Why Learning About Entrepreneurship Should Start At School

There’s a bigger thing here, Erik. I came away from that. My conversation with John Dearie from the Center for American Entrepreneurship troubled me and let me just tie some ideas together. I’ve done a lot of work in South Africa. I’ve got some friends who are doing big things in South Africa. One of my friends just asked me to help write a recommendation for the G20. They’re convening in South Africa in 2025.

She sent me a document called Entry Comp, which was written by the European Commission acknowledging the need to cultivate entrepreneurial attitudes and skills starting in Lake Elementary School throughout society. I’m not sure they have a clear grasp on how to do it but at least they’ve recognized the need to do it. We got nothing. I’m even thinking about going back to John Dearie and be like, “Let’s write a policy recommendation for congress.” How do we get this starting in middle school?

To that point, we are pretty heavily involved in youth entrepreneurship at Network Kansas and start middle school and high school. This school year that just ended, there were over 65 or 70 local competitions and then rolled up into a statewide championship. We’ve been doing it for almost a decade, the Statewide Youth Entrepreneurship Championship. It is truly a big deal. Twelve hundred or thirteen hundred students participated. It has become a real brand.

I say all that to say one of the things that is the strongest that I hear when a middle school teacher will try and help students expand their mind, introduce them or expose them to entrepreneurship early on is to simply say, “Look around your community. Find a challenge. Find something that you think could be done better or we need that we don’t have. Write your short idea around that.” I think that’s a wonderful way to begin at an early age in middle school.

They don’t have blinders on. They’re still thinking freely. They’re thinking very clearly about, “I love this town I’m growing up in. What can I do to make it better?” The number of ideas that flourish out of something like that that we see every year, is fascinating how stuff like that comes. I completely agree with you in how we can introduce this at an early age. I’m going to steal it from you. You said it before you ever pressed go. I got to give you credit for it, but you made a comment a little bit ago, Gary, about how we oftentimes don’t see how building a tree fort can lead to architecture.

That’s such a true statement. It’s the same thing as being a seventh grader that says, “My town needs an arcade because I like to play Pinball or I want to play Skee-Ball and we don’t have a place to do it.” How that can lead to in 5 or 6 or 10 years somebody that has an entrepreneurial tamp. We have to start small with the experiments and build.

You’re touching on something that’s so important, Erik. It’s a head scratcher to me. Let’s start with this basic premise. The economic impact of entrepreneurial activity is perfectly well understood. I’m finding academic papers that are saying the entrepreneur is the most important player in the modern economy. By the way, entrepreneurship has been in decline since the 1970s in the United States. We’ve gotten a bump. It’s climbing back up since COVID.

I don’t know whether it’s back at the 1970s level but when the number of businesses that closed exceed the number of new businesses, we’re in trouble. We’re in big trouble. It’s a head scratcher to me, Erik. We all understand this, the impact and let’s not even talk about the developmental impact in the human flourishing component, the psychological well-being, the optimal engagement. Take the economic impact of it for now.

You got to ask yourself, why in the name of God isn’t this mandated in school starting at grade five or age 12 or whatever? It’s mind-blowing to me because you drive to any neighborhood on a summer afternoon or summer evening, and you’re going to see parents with lawn chairs cheering their kids at a baseball game or soccer game or something. Why aren’t we doing that with entrepreneurship?

Celebrate it. Why are we not celebrating it?

The community thing you talked about like the challenges. The community needs the entrepreneurial impulse of the individual but without the support of the community, that impulse is not likely to come forth.

It needs to be propped up on the shoulders of a community that celebrates entrepreneurship from the ground up. As we work across Kansas in many different world communities, for many years, I’ve stolen a term from another guy who’s a good friend of ours, Dell Gines of the International Economic Development Council. Dell Gines said many years ago and I can still remember. I was in Kearney, Nebraska at an early entrepreneurship conference with him.

He used the term called grow your own. I thought, “That’s exactly what it is we’re trying to do.” We understand there’s great value and I’m not in any way disregarding the starting of a business and the hiring or the growth of 50 employees. I’m in that corner. I also think that it’s easier to digest and put your mind around the idea of helping ten different companies or seventeen different companies grow by three people.

That’s something that speaks to where our mind is with Network Kansas. It’s that idea of grow your own and it speaks in this roundabout way to what you’ve been saying about exploring in the margins, living in the gap and the organism that tests and experiments. This idea of helping seventeen businesses grow by three people. You got the same net result as a company starting a business with 50 people. Which one can you truly help over a community do better?

Creating Statewide Entrepreneurial Ecosystems

Let’s use that as a segue to talk about entrepreneurial ecosystems, if we could. I came back from Indianapolis from the Global Entrepreneurship Conference. I’ve been going to those things for over a decade and I’m frustrated, Erik. I saw this big poster on the wall and it said, “Entrepreneurial ecosystem.” It’s got an icon of a guy in the middle with a suit and tie and a briefcase in the center. It’s got an icon for universities, large corporations, government and risk capital. The look on your face says it all. It’s like, “What?”

I just think that the conversation around ecosystems is hopelessly skewed towards the unicorn type high growth venture backed entrepreneur. There’s nothing wrong with that person but those startups are such an infinitesimal percentage of entrepreneurial activity. That’s not an ecosystem, Erik. That’s big game hunting. You’re a hunter. You’re setting up in a tree stand with a long barrel. That’s what that is.

If you think of a pyramid, at the very top of the pyramid, there’s that ecosystem conversation and that’s usually in major metropolitan areas around university. It’s a tech transfer. It’s all finely good. Whatever. People invent things that’s fine. Beneath that, the conversation around ecosystems starts to fall apart. You’ve got SBDCs, CDFIs, other entrepreneurial support organizations and debt capital. I don’t think those two entities are talking to each other. In fact, the high growth ecosystem builders look down their nose at our customers.

If you, as a community, as a state or as a group of resource partners or whatever you want to define it as. If you can bring the right people to surround that entrepreneur, there’s no telling which one of the seventeen, back to the analogy I gave. They’re not all going to stop at three. You know that as well as I do, Gary. Some are going to add 5 or 10. They’re going to become that 50-person unicorn in a period of time.

By the way, they’re not beholden to any finance packages or things to have kept them in the community. They probably have a stronger feel or a stronger part of the culture, the ingrained culture of the community. Maybe I’m just not smart enough to define the word ecosystem, but the ability to create an environment where you can bring the right resources to the entrepreneur and each one needs different stuff.

If you can create this environment where you can bring the right resource to that entrepreneur at the right time and then help them inch along then bring more resources to them and bring more resources and surround them with everything including the community lifting them up. Now you begin to develop. Maybe that’s the ecosystem I’m referring to and I don’t know, but you begin to develop. I believe a more diverse community that can stand on its own over time.

 

 

 

Erik, I have loved that. John Dearie and I talked about this. Eighty-nine percent of the businesses in the United States have nine employees or fewer. That’s 89% and 5% have between 9 and 20. You have like 94%.

You’re a 94% or 20 or less.

You got 6% that are twenty and above. I think that’s lost on people and I understand the temptation to want to chase a unicorn but we’re missing the aggregate impact of the guy that employs five people.

I don’t agree more and I think that when you say aggregate impact, I also think that you’re intentionally looping in intangible things that mean a lot to the community. Whether it be the support of churches, local ball teams or a sponsor. You’re an embedded member of a community that you started there, hired there, had the family there and grew there. You’re anchored in that community and likely so is your business.

I started to mess around with this model of ecosystem. At the top of this pyramid, you have the high growth model. That’s fine. It’s a tiny fragment. Underneath that, you have the other 94%, let’s say. By the way, people also overlooked that a lot of large established companies like Walmart, Waste Management, and Hewlett Packard, take decades to reveal themselves as large. I think Sam Walton took 23 years before he had a distribution center.

Our thinking is skewed by these high-growth overnight success stories but what I’m trying to get to is this, Erik. The top of this pyramid is high growth. Underneath that, the other 94% are this mom and pop entrepreneurs that you’re so familiar with. I’ve talked to you about this before, the Secretary of State in North Carolina published a report. I don’t know what the population of Kansas is, North Carolina’s 11 million. You increase the number of startups that get to between $50,000 and $100,000 in top line revenue. It adds between $1.5 billion to $2 billion to the state economy every year.

I read that same report. You sent that to me and I read it. That’s a striking number. You’re exactly right. What seems like a pretty minute progression. The cumulative of it is mind-boggling.

We’re under resourcing and under emphasizing the bulk of the pyramid. Guys like you are the unsung heroes that are doing the hard work of helping those mom and pops start, grow and survive.

Creating Impact Through The Entrepreneurship Community Initiative

Let me jump in on something, Gary, because I appreciate the kind words. I want to share some kind words back. I referenced this earlier when I talked about how long we’ve known each other. We have from almost day one, when we began what we call the entrepreneurship community initiative. Where there’s now 75 specific counties or cities across the state that we work very deeply in. We’re still statewide very much so but we do deeper work in those 75.

Part of that work is to work with a local leadership team. A group of local people like economic development professionals or maybe a chamber, a few entrepreneurs, a few bankers or a few concerned citizens built together into this leadership group that helps advance the mission of how to stir the pot and advance the entrepreneurial climate in that community. One of the very first things that was brought to our attention was this thing called the Ice House Program. That’s where you and I first crossed paths.

I remember it being brought to my attention by Jill Nichols, an Economic Development Director in Sterling Kansas and a gentleman named Brian Richter who was a teacher at Sterling High School. He was teaching it. She said, “Erik, you need to come up and see this and sit through it. You’re going to want to share this.” I did. She was spot on right. Our partnership started. I couldn’t count. It’s triple digits the number of Ice House cohort programs we have done around Kansas over the years.

I truly believe that fits that foundational level where we’re talking about, Gary. This stuff you and I are discussing, the mind has to be open to the value of growing your own, to the value of exploring the margins and to the value of side gigs. That forms a wonderful thing to help people open their minds up. Not everybody’s going to embrace it, but that’s perfectly fine. It allows people to embrace exploring the margins.

The mind has to be open to the value of growing and exploring. Share on X

I love you for saying that, Erik. Here’s what we’ve learned from Ice House. Ice houses have been out in the market for many years. It’s probably about as long as I’ve known you. People started showing up for Ice House training. We thought we were making an authentic program for everyday entrepreneurs. We use Clifton’s story as the vehicle to show how ordinary people can do this. What blew my mind and continues to blow my mind is people showing up and using this in ways we never anticipated in workforce development, reentry programs, city government workers and corporate.

That leads me back to my ecosystem model. What Ice House taught me is the vast preponderance of entrepreneurial potential is beneath the surface. These are people that are never going to show up that might never otherwise show up at a Network Kansas event or in a small business development center. I divided it into two categories that’s invisible. One of the things that you’re doing that’s relatively unique in the United States is like you’re going upstream and trying to wake people up to the possibility.

That’s what’s missing from the ecosystem because the vast proponents of entrepreneur potential lie beneath the surface. I think of a mindset development as the nutrient in the soil but I think of the community events that you’re doing as the sunlight. That’s the sunlight. The thing needs to grow. I already talked to you about the data that shows as a whole lot more people that have the intention but they don’t understand that they equate it with big risks. “I got to invent something I’ve never done.”

It’s big. It’s daunting.

There’s a whole other massive reservoir of people who will never start a business but they’ll become more engaged employees and citizens. They’ll be more employable. They’ll be able to make a greater contribution to their organizations, their communities. They don’t have to start a business. That’s the bigger idea that we need to get to.

It’s been something that sounds a real oddity than what you meant. I know for these years, one of the things that I’ve heard many people talk about when they’re talking about Ice House is it’s a great program for people to experience and to expose themself to etc., built around Cliffton’s book and the life lessons even if you’re happy at your full-time job.

There is still a great amount of growth that can be gained as an individual, even if you’re incredibly happy and satisfied at your full-time job. I love this idea of exposing entrepreneurial mindset. It does not have to lead to the unicorn. It can lead to the margins or to a more effective employee and community member.

Even if you are happy at your full-time job, there is still a great amount of growth that can be gained as an individual. Share on X

Erik, a good friend of mine, the guy that taught Ice House at community college in New Mexico who is a mayor stall away. He’s like training 3,000 city government workers. There’s usually Ice House for a verb in the City Government of Albuquerque. They’re using Ice House as a verb like, “Let’s Ice House is the problem.”

No way. That’s cool.

It’s like a metaphor for life, we don’t have any authority. We don’t have any resources.

Let’s Ice House this thing.

Let’s roll up our sleeves. Let’s try it. That’s the idea. The entrepreneurial spirit is the human spirit, Erik. It’s not just in some of us and all of us. Starting a business is one way to manifest it but you’re one of the few people that you’re intuitively or otherwise understands that. You just said it, you got to expose yourself. This needs to be regular in school. That’s one of the drums I’m pushing on. We don’t expect Lionel Messi to like walking off of a farm at twenty-years-old ready to play professional soccer.

He had to kick a ball for the first time and he had to be exposed to soccer. He didn’t even know it was an option before he could consider wanting to do it.

Think about how much more exciting and easier your life would be if people were encouraged to have entrepreneurial projects, say starting in middle school all through high school and college. Somebody shows up in your office like the basic fundamentals of entrepreneurship are already there. You don’t have people saying, “I got a great idea. I need $100,000.” You got people saying like, “I have $100,000 for my MVP. I need a $500,000 ability.” My wife and I were watching the documentary about Lance Armstrong, which you should watch. It’s good.

I do know. I have that marked as one to watch. My wife and I were just discussing that.

One of the things he said when he was a kid was he wanted to become a professional swimmer when he was twelve. Everybody told him at twelve years old it’s too late. It’s like, why are we waiting for college for people to do entrepreneurship at university? Why should that be the first time you grabbed a baseball bat and swung at the right.

The Human Flourishing Aspect Of Entrepreneurship

When you go back and think about the economic impact of entrepreneurial activity but I think we can’t let this conversation come to an end without coming back to something we talked about before we press record, which is the human flourishing aspect of this. I’m saying this in the context of, the world is changing rapidly. This managerial mindset to which we’ve all become inured and we don’t even realize we have it. It’s becoming increasingly maladaptive in the face of change.

I think of entrepreneurial mindset development as a national imperative and I want to know what I can do to put you forth. Maybe you’re too far down in the weeds to even see this but you’re one of the few people. You’re out on the bleeding edge of this but it should become a national imperative. Erik, what’s going to happen? I got this lady coming on my show from Harvard. She wrote a book called Employment is Dead.

I’m fascinated to hear more on that.

Right out of the rip, I was on her webinar. I read her book and what she’s saying is that I buy a hook line and sinker that top-down managerial like other directed models are maladaptive to dynamism and change. I think educators don’t understand the ways in which routinize extrinsically motivated other-directed learning stifles the development of the adaptability and the creativity that are essential for anyone. What I’m excited to talk to this lady about is to the extent that you need someone else to tell you what to learn and do in order to be successful. It’s the extent to which you are going to be increasingly vulnerable.

That’s very well said. You were talking about the human flourishing and the gentleman you visited with at Harvard. You were educating me a little bit on that and you used the word autonomy, relatedness and competency as three things. Those three when you think through ways to elevate entrepreneurial mindset or entrepreneurship or this whole idea of taking seventeen companies and helping them each grow three employees. Those three words fit perfectly into that, Gary.

they completely fly in the face of the managerial thinking that you’re talking about. Managerial thinking has very little autonomy related to it as the employee. Your competency is told to you by the person telling you what to do and by the way, here’s how to do it. There’s probably not much relatedness that goes with that. The idea of taking an idea in the margin, tinkering with it in a community or in your city.

It doesn’t have to just be the world because I tend to focus a lot of my time on the world. It lives there but tinkers with that and experiments. You’re touching small experiments. You’re trying small things. You take $100 and raise $1,000 as was said earlier, then take $1,000 and generate revenue of $10,000. That incorporates autonomy, competency and relatedness. All three of them are part of that.

I would add to that, Erik. When we’re able to use our faculties, let’s say. When we’re able to pursue our interests, the things that are interesting to us in ways that are useful to other humans. We become intrinsically motivated and therefore optimally engaged.

I could not agree with you more. The word relatedness, in your word, there is so much intrinsic value in the word relatedness that things bubble out of it. There are tentacles that come off of the word relatedness that help an individual flourish in a myriad of ways.

That’s ultimately what the work you and I are doing is about. We talked about this before. Two thirds of kids leave school not engaged in learning. This is well established data. Gallup calls it the engagement cliff. From grade 5 to grade 12, that goes from like 75% engaged to 35% engaged. When you look at the workforce in North America, it’s about the same. Two thirds of workers are not engaged in their work. One in five is hostile. As Gallup calls it, actively disengaged, meaning their hostility to the organization.

Fighting against.

Making Work More Fulfilling And Energizing

When you look at entrepreneurial, and I don’t mean you don’t necessarily have to own the business to be entrepreneurial. They’re optimally engaged. They’re not saying, “Thank God it’s Friday.” They’re saying, “Thank God it’s Monday.” The thing that I want to get to and maybe we can land here for now is if you and I can help more young people experience learning and work as something that’s energizing, fulfilling and exciting that’s self-directed. That’s how it’s supposed to be. Work is not supposed to be a beat down school. It’s not supposed to be a beat down. How do we square that peg?

I got to tell you what I’m excited about and I look forward to it, Gary. This is something that we haven’t discussed. We’ve worked closely on Ice House and we’re figuring out how to begin to build Ice House 2, Kansas Ice House. You and I are throwing around all kinds of names. Here’s the cool part about it that I like. It will stand on top of what has been done for many years. I have every confidence in the world. The things that are going to be highlighted and elevated out of it are going to be exactly what you just said.

It’s going to show that this thing about entrepreneurial isn’t just starting a business. It’s also buying a business. It’s also staying at my day job but I’m a much more engaged employee. It’s also being a more engaged community member. It’s just being a more satisfied person with a feeling of self-worth that comes out of that whole thing that you and I have been talking about for over an hour.

 

 

 

That’s it, Erik. That’s ultimately what our work is about, human flourishing. I was giving a talk at UT Arlington back in December or something like that, my book first came out. I was talking to a group of students and I’m borrowing heavily from Abraham Maslow. I’m saying to these kids like, “No one’s ever going to tell you this. You show up in this life with gifts that are encoded in you. You didn’t even pick them. They’re just in you. It’s your job to figure out how to use your gifts to make yourself useful to other humans.”

As educators, as tribal elders or whatever you want to call us. We’re here to facilitate that discovery. What I’m saying, Erik, is that when you pursue your gifts in ways that contribute to the community. You’ll flourish and that’s not a philosophical religious. That’s biology, but if you don’t honor that, you will suffer. Maslow put it this way, “Unless you plan on becoming all that you can become. You should plan on being unhappy all the days.”

I also took it one step further. If you don’t figure out how to use your gifts to contribute and this could be at your job at Taco Bell. I don’t care if. If you do that, you’ll flourish but if you don’t, you’ll suffer. Here, I’ll take it one step further, Erik. Your community will suffer because they won’t know what your gift.

I’m glad you said it. I was thinking the exact same thing, your community will suffer.

I’m so grateful to have you on this show and to partner with you on these projects. You and Tom Rue, I have you guys out as people that are blazing new trails in understanding and unlocking human potential and pushing the limits in helping people understand entrepreneurship as an imperative, as a human imperative.

I appreciate that. You’re right, I looked down and I thought we’d been going like ten minutes. I love the dialogue. I love being able to go back and forth and openly push back and discuss from every different angle. This has been a pretty good example of the relationship we’ve had for many years.

I read Benjamin Franklin’s autobiography about a few years ago and he created this thing called a Guntle. I don’t know what it means in Latin but it was a group. He assembled a group of people and he met regularly with them to like, “How can we better the world? How can we challenge each other? How can we create these environments that produce good ideas?” That’s what you and I have just been engaged in. It’s like a salon, the dialogue. We’re not afraid to challenge each other and add or take away or push back or whatever. That’s how we make the world a better place.

Agreed completely, my friend.

Get In Touch With Erik

I didn’t even get a chance to ask you. We just hit the ground running. We’ll have to do the next episode. Erik, where can people contact you if they want to learn more about the work you’re doing at Network Kansas?

Go to NetworkKansas.com. In our website, there’s a phone number. There’s an email on their Info@NetworkKansas.com or you can just come directly to me at EPeterson@NetworkKansas.com. I’d welcome the chance to talk.

Erik, thanks for being a guest in the show. I’m going to just ask you publicly. Are you up for another episode in a knot? I’m going to circle back to you in a year and see where we’re at.

Buddy, do it. I loved it. I welcome it. Please count me in as a yes.

Thanks, Erik.

Thank you, Gary.

 

Important Links

• Erik Pedersen on LinkedIn
• Erik Pedersen on X
• Network Kansas
• CDFI
• Center for American Entrepreneurship
• International Economic Development Council
• Sterling Kansas
• Employment is Dead
• Info@NetworkKansas.com
• EPeterson@NetworkKansas.com