Redefining Economic Development Through Entrepreneurship With Thom Ruhe

 

If entrepreneurs are inspired, empowered, and genuinely love what they are doing, their efforts can lead to profound economic development. Gary Schoeniger speaks with his longtime friend Thom Ruhe, President and CEO of NC IDEA. Together, they discuss what it takes to build thriving entrepreneurial ecosystems – not just programs or funding pipelines, but cultures of agency, inclusion, and possibility. Thom also explains why mindset may be the missing piece in economic development and how to put entrepreneurial thinking at the heart of education, workforce, and economic growth. Tune in and discover why entrepreneurship is one of the most powerful forces for unlocking human potential.

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Redefining Economic Development Through Entrepreneurship With Thom Ruhe

Welcome to the show. I’m speaking with my longtime friend, Thom Ruhe, a true pioneer in entrepreneurial ecosystem building and one of America’s leading voices redefining how communities think about economic growth. I first met Thom while researching for the Cisco Entrepreneur Institute. I knew almost immediately that we shared the same fundamental belief, that entrepreneurship is one of the most powerful forces for unlocking human potential.

Thom’s own entrepreneurial journey led him to build one of the nation’s first regional ecosystem models, work that soon caught the attention of the Kauffman Foundation, where he went on to help launch national initiatives like 1 Million Cups and none other than our Ice House Entrepreneurship Program. As president and CEO of NC IDEA, Thom continues to invest in people, places, and ideas that expand economic mobility across North Carolina and beyond.

In this episode, we talk about what it takes to build a thriving entrepreneurial ecosystem, not just programs or funding pipelines, but cultures of agency, inclusion, and possibility, and why mindset may be the missing piece in economic development. By the end of this conversation, you’ll see why Thom’s work offers a blueprint that any community can follow, one that puts entrepreneurial thinking at the heart of education, workforce, and economic growth. Without any further ado, I hope you enjoy my conversation with my good friend, Thom Ruhe.

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Thom, thanks for joining my show.

Gary, come on. You know I’m happy to. I was looking forward to it.

For those of you who don’t know or have never heard of the Thom and Gary show, we have a seventeen-year history. I think I met you in 2008 when I was doing the Cisco research. That’s where our paths first crossed. I’m super excited to talk to you. What I want to do in this show, in this conversation, is talk about ecosystems. The work that you’re doing at NC IDEA is blazing new trails.

How Thom Got On To The Entrepreneurship Bandwagon

You’re creating a blueprint that the rest of the world needs to see. I’m hoping that we can unpack some of that. I know you’re free to give it away, or you feel strongly that it’s your obligation to give it away. That’s what I’d like to talk about on this show. Let’s start with a simple question. How did you get on the entrepreneurship bandwagon?

When I think about my career, there have been stages in my career. Probably the first stage, we could loosely define as the entrepreneur stage. I didn’t set out to say, “I want to be a founder,” or “I want to be an entrepreneur.” I didn’t even identify with that word or that notion. I graduated from college. I took my first job. I thought I was going to go right into the Air Force because I went through school on a four-year Air Force ROTC scholarship. This was the ‘80s. The Reagan administration, at the time we were all graduating, was doing a big reduction in force.

Many of us who had had our college paid for and did training in the summer were given a new option to say, “You don’t have to serve. We’ll give you credit for time served. You can go and start a civilian life.” Since I had a degree in what today we call Comp Sci, Computer Science, but back then we called it MIS, Management Information Systems, I thought, “I could probably get a job.” I did at a very corporate stalwart in Northeast Ohio, the Progressive company. Although I will say back then, Progressive was more of a high risk. It was known more as a high-risk insurance company.

That was the total of life planning that went into it. I interviewed. They hired me. My life plan was that I was going to be a career officer in the Air Force. I disrupted that. I bumbled into that first job. Not that there’s anything wrong with the company, just my career, my degree necessitated the path I was going to be on. You want to talk about a mismatch between my lizard brain and my personality. Let’s say most programmers, and I don’t want to stereotype here, tend to be somewhat introverted. You might be aware that I’m not quite introverted. He pauses to smile.

I actually quit that job before I hit one year. I was eleven months in. I was engaged at the time to a woman with whom I celebrated our 36th anniversary. I had to rethink what I want to do with my life. I stumbled into a job opportunity with a true entrepreneur, what the reality of entrepreneurship is, not the movies. This was a guy. His admission was a simple man of average intelligence who barely graduated from high school. That’s how he self-identified. I’m not being pejorative here. He was a very good man from what I could tell, but he was driving a fourteen-year-old rusted-out Buick. The office was in the dirty industrial park, not glamorous at all.

Did you take this job because you were interested in being an entrepreneur or because it wasn’t a big corporate behemoth and it was more appealing?

More the former. I was on a journey of discovery. I did have that crash course in a big Fortune 500 company. Progressive is great, but it is everything that every large company is. I had a taste for that. That didn’t appeal to me. That didn’t feel like my vibe. To tell you how much I wanted to experience something different, I went from what was a very decent, sure salary to working for Bob on a $1,000 a month draw against commission. No salary guarantee.

That was entrepreneurial in and of itself.

I remember my parents thinking I was crazy at the time, especially because I was getting ready to get married, have to provide, and whatever would come with that. I’ve always had a certain confidence as a kid, even, and that I could sell. I had good people skills. The founder, Bob, had done some research to understand that what they sold, the government bought, but he’d had no idea how to sell to the government.

He looked at me, saying, “You were in the Air Force.” This is what he said in the interview. “You understand what that fruit salad on their costumes is.” I said, “You mean the ribbons of merit on their uniform? Yes, I understand what that is in the ranks.” He said, “Yes, whatever. Figure it out.” I was like, “Okay.” I took it as an adventure. I threw myself into it. I was very lucky to be successful at it early and quickly.

This was a company that, before I joined, in a good year, was doing about $700,000 in revenue. In the first year, I had secured our first multi-million dollar contract with the US Army. By the way, the gross profit margins were three times what the commercial side of the house was. I remember we secured that first contract, and Bob was giddy, but trying to stay cool about it. I was looking at understanding, “My first year income is going to be six figures based on my comp plan,” which was almost three times what my salary was at Progressive. That started clicking. I started noticing. When we secured that first contract, we had no idea how we were even going to fulfill it all.

It was a typical entrepreneur journey. No experience.

Learn to fly on the way down. We muscled through that. It started changing the organization. People had to start getting hired in the back because all this equipment had to be refurbished and packaged. We had never sold anything at that volume, the amount of product that had to go out the door. Change the dynamics of the sales room. It was an old-fashioned boiler room. He had six young bucks chained to a phone with the mandate to make 50 calls a day with a little LED receipt printer that counted our calls.

I learned a lot about the discipline of sales and things like that. It’s not all glamorous. Some of it’s probably not very worth repeating, but I learned the good, the bad, and the ugly of all that. At a higher level, there was something else I was learning. It was maybe six months after we did our first big tranche shipments, and big six-figure checks started rolling into the organization. One day, I pull up to the office. I don’t see Bob’s rusted-out Buick in the parking lot.

As a matter of fact, in the spot where he usually parked was this brand new Lexus LS 400, a big sedan. If you remember these from the early ‘90s, Lexus sedans were these big land boats. It looked gorgeous. I was like, “Bob’s going to be so pissed. Somebody is parking in his spot.” I go into the office. Bob comes out of the back. He’s like, “Ruhe, come on. Let’s go talk.” I was like, “You are here. Somebody is parked in your space.” He looked at me. He had this great smile. He gave me this grin. He’s like, “That’s my car.” It’s like, “Must be nice.”

I’ll accelerate this for the purpose of the audience. Things started changing for Bob, and then we got the second multimillion-dollar contract. He was making between $1 million and $2 million on each one of these contracts because that was what the margins were. Yes, I was making six figures because of my small percentage of the gross profit. That was my commission, but the real money was in the owner. When I started, he was living in this 1,200-square-foot bungalow in Parma. Two to three years later, he bought this big mansion in a gated community in Bratenahl up on the lake. My young brain started, at a higher level, piecing things together.

How could it not? You’ve shared with me in the past, Kauffman data about when people get exposed to it, specifically at an early age. That’s a moment for a lot of people. It demystifies the whole thing. You see this guy who is putting his pants on every morning, as you do. You see how you’re contributing to it. That’s how startups happen.

I’ll tell you a funny story about that. The second multimillion-dollar contract we got, I was actually in D.C. trying to close that deal. When we got the close, I called the office. I told Bob, “We won it.” I thought our call got cut off because I couldn’t hear him for a minute, but I heard something like a noise. It took about a minute before he got back on the line. I was like, Are you all right?” He’s like, “Yes.” I was like, “That was weird.” I come home the next day. He had a wonderful assistant, Caroline. I said, “What happened yesterday when I called in to say we won the contract? Bob cut out for a minute.”

She looked at me. She smiled and said, “He turned around to vomit in the trash can,” because, again, we weren’t sure how we were going to fulfill the contract, but the margins were so big. We had confidence that even if we had to overpay for the raw materials and things like that, we could fulfill the contract. That’s the journey. It is what you were saying. That’s more reality. It’s not this glamorous thing. I started watching this and going, “Bob’s family, Caroline’s family, and the extra jobs that got created.” I started connecting with the cascading economic benefit because this guy started a company and saw an opportunity.

The point I want to drill into, by your own description, an unremarkable guy. That’s the point. That’s a through line through this conversation.

We’re going to talk about this later in this conversation. What I was seeing, what I was living, and what was growing inside of me was what we refer to now as an entrepreneurial mindset. We didn’t have the language for it. We didn’t see it as a field of study. We didn’t see it as an economic phenomenon or a skill that we’re all innately open to having. It’s not nurtured, or the opportunity isn’t revealed at an equal level with everybody. I was living that.

I was also young and stupider. I’m still stupid, but I was much less intelligent and younger. I started saying, “I’m making good money here, but Bob is making the real money.” I started being obnoxious. It was funny because I was quickly getting to that point where my value and my annoyance factor were getting dangerously close to being equal. Bob took me aside all the time. One time, he sent me to a Dale Carnegie class on relationship building and public speaking. I don’t win friends and influence people.

He was like, “You need to soften your edges a little bit.” The way I reacted to that was like, “I’ll go take this. What’s it going to cost the company to send me?” It was $3,500. I said, “I’ll do this, but I’m going to make you a bet.” There were 32 people in the class. I said, “If I get the number one ranking, you pay me 2X as a bonus. You pay me a $7,000 bonus. If I get anything less than the number one ranking, I’ll reimburse you for the cost of the class.” He grinned. We shake hands. He had to write me a $7,000 check four months later. It was also time for me. I have outgrown that experience.

If I can interrupt you for a second, Thom, it’s annoying sometimes and obnoxious, but exuberance is an important thing. It’s got to be balanced with a little humility, but you’ve got to be a little bit over your skis at times. I think of behavior always through an evolutionary lens. Had you not had that exuberance, for lack of a better term, stuff wouldn’t have happened.

There are so many metaphors, like in the field of athletics. I don’t care if it’s long jumping, sprinting, or weightlifting. You only get better by pushing beyond your comfort norms. You only get better by trying something that, until you did it, felt impossible. If you have the ability to understand that the benefit outweighs the anxiety and the uncertainty, you have figured something out because you can go into situations and say, “I know this is going to make me uncomfortable, but the payoff on the other side will be worth it, so I’m going to go do this.”

You only get better by pushing beyond your comfort zone. Share on X

How many people stop themselves? Historically speaking, when I’ve looked at people who have been stuck in life, they like to blame external factors. Everybody does. It’s part of protecting our own ego. I have yet to find a situation where their position was exclusively limited because of external factors. More often than not, you’re the one holding yourself back.

That’s super important. Quick story. My brother and I were starting a construction company back in the early ‘90s, about the same time you were doing this. You didn’t have two nickels to rub together. I went to a developer, two guys that were partners, very wealthy guys. I asked them for $1 million worth of real estate with nothing down. I want the rights to it. I was so sure these guys were going to tell me to get lost. I’m in this office, Thom. Pictures of the guy golfing were of Ronald Reagan. I’m on this puffy leather couch.

I don’t know how old I was in my early 30s. My teeth are sticking to my lip. I’m out over my skis. I’ll never forget the dude looked at the proposal, looking up at us and going, “I’ll do this.” He paused and said, “I’m going to do this for you guys, because somebody helped me when I was going.” I thought about that for so many years. People never calculate upside versus downside. The fear of rejection is so powerful that we don’t even consider, “What’s the worst that’s going to happen?”

That’s what I’m saying. It’s a self-limited thinking.

It’s all mindset stuff. I don’t want to derail you.

I’m going to speed it up. It’s nostalgic for me to share, but I doubt that it’s all that entertaining. It put me on the path.

That’s what I wanted to get to, Thom. The context of it is important because it was a transformational moment for you. What I’m seeing is a juxtaposition. I considered this desk at Progressive and could collect a reasonable paycheck, or I could make a bigger impact. I could fly by my own wits and make something happen.

I call that the agency transition, the programming job, being a small cog in a massive machine. I would be absolved of any responsibility other than doing my work orders. Fix this piece of code. Write that piece of code. It was very transactional. I could go home at the end of the day and not think about work until I showed up the next morning. Life would just happen to me. That’s the external locus of control. Life is something that happens to me. The company was called Level Six Systems. When I went to Level Six, I understood.

What drew me to that, even though I wouldn’t have been able to articulate it at the time, was that I felt I had more control of my destiny, and I had confidence that I could sell. I had confidence, thanks largely in part to the Air Force, that I could figure out military procurement. I wouldn’t be intimidated by going to the Pentagon. I remember one time I had to go to D.C. to drop off a contract for the Department of Energy. I called in. I said, “Yes, I’ve delivered the proposal.” Bob was like, “Why don’t you go to the Pentagon? While you’re there in D.C., go to the Pentagon.” I’m like, “What do you mean, go to the Pentagon? You don’t just show up without an appointment.” He was like, “Try it.”

How do you do this? I go buzzer. “Hi, I’m Thom Ruhe.”

I can tell you how you do it. You show up at one of the guarded gates. You say to the Marine that is standing guard, “I would like to talk to somebody in the procurement ombudsman office.” They’re like, “Do you have an appointment?” I was like, “No, but I had learned at this point that all big procurement agencies had to have an ombudsman. It’s like a small business liaison, somebody that is there to help businesses engage with government.” He was like, “I’ll tell you what. Go to that phone.”

They had a phone with a little 2×2-foot table, as most of us have in our house, but it had a plant on top of it. There was one phone on it. He’s like, “Let me look up the extension.” I dial this extension. I call, and I get a human, this gentleman. I’m like, “I’m so-and-so with this company. I would love to talk to you about how we might be able to sell more.” He’s like, “Hold on a second.” I can hear him leafing through papers.

He was like, “How about six weeks out?” He was giving me a date. I’m like, “I’m actually at the South Gate. Any chance you could talk to me right now?” He’s like, “Wait, what? You’re here?” I said, “Yes, I’m at the South. I think it’s the South Gate. It’s a big place. I could put the guard on for you if that helps.” He’s like, “Yes, put him on.” I gave the phone to the guard. He says, “Okay.” I think he told him exactly where we were because I had no idea.

We hang up the phone. The guard says, “Sit tight. He’s on his way down.” He couldn’t just let me walk into the Pentagon. He comes down. He’s mildly annoyed, understandably so. I’m being like, “I’m sorry. I didn’t know you couldn’t do this.” He walks me. It was my first time being in the Pentagon. I remember it was almost like Disneyland. It was cool. In my four years in college, going through ROTC, I never went to the Pentagon.

I had been to other bases. I had to do boot camp, flight training, and a bunch of other stuff, but I had never gone to the Pentagon. There was that extra personal appeal. “This is the mothership.” We had a great 30-minute conversation. The cherry on that Sunday was when we were done, he was like, “You can go now.” He didn’t want to walk me back out, even though I had a badge that said, “Escort required.” I was like, “Cool. He’s going to let me wander around.”

I started wandering around the Pentagon until finally somebody noticed my badge and said, “Where’s your escort?” I said, “I don’t have one.” They’re like, “No, you have to have one.” They took me by the hand and threw me out. Bob’s encouragement was to go try. You and I talk about that in serendipity, or Sara, as we refer to her. When she shows up, I find that Sara is closely related to curiosity.

There’s such an important point in that story, which is, try stuff. It’s intimidating, but there’s no downside.

The worst worst-case scenario is that I didn’t get through the door. I was on that side of the door to begin with.

There’s no downside. It’s that making your own luck thing that Naval Ravikant talks about. You keep shaking the tree. Every once in a while, an apple falls out of the tree. Most of the time, it doesn’t.

I’m going to try for the third time to accelerate my story. What happened after Level Six, I went to a much larger company, but still very entrepreneurial. At the time I joined, it was doing about $400 million a year in revenue, but the sales team was all hired guns. It was all about relationship building and solution-based selling. I got to manage the government marketing division because that’s where I had my portfolio from. I doubled my income again.

That was very timely because that was right around the time we started having kids. It’s nice when you can start seeing bigger obligations in your life, and that your income is going to help support all that. That ran a course. By the time I left that company, five years later, it had grown to almost $1 billion in revenue. I got to learn a lot about scaling. That was what was important about that tenure. It is the importance of scaling and building bigger teams to go after bigger projects. That was wonderful.

I wanted to get my teeth cut again and do my own things. I did a startup. I was on this journey of going from small startups to bigger growth companies. The last startup I was part of got rolled into a big national VC roll-up. This was circa 1999, going into the dot-com era. Everything was blown up before it became the bust. This team raised $160 million in venture capital. I got to learn what that looks like. We did the poster child of the stupidity of the time. Our negative burn rate was $4 million a month.

How 9/11 Changed Thom’s Career Journey

We had 600 employees all over the country. The important lesson there that millions of other people and I learned is economics. The math still has the math. If you don’t have what everybody was sure of, everybody was just going to IPO, and profitability didn’t matter. The party came to an end. There was a bust. That all imploded in ‘01. For us in particular, and this is a weird footnote to my journey, the last footnote of that occurred on 9/11.

On September 10th, I got a call from the VC saying the party is officially over. That year, the nickname in the company for me was the angel of death because I was being flown all around the country to all our remote offices and laying off 10, 20, or 30 people at a time. Professionally, it’s the most challenging year I’ve ever had. It’s not even close. In my psyche, on everything, I have never so far, and I hope to never have anything more challenging.

On the 10th, they were like, “It’s over.” We have 30-ish employees left in our office in downtown Cleveland. They said, “You’ve got to get to the office early tomorrow. We’re overnighting COBRA paperwork, the separation agreements, and everything. By the way, your shares aren’t worth the paper they’re printed on. The severance package we promised you, we’re not going to honor that. You probably might want to sue us, but we took all the money out of the company. There’s going to be nothing to collect.”

They thought they were doing me a professional courtesy to let me know that. That’s a topic for another time. The next day, I’m on the phone with corporate, which was in Virginia, five minutes from the Pentagon. I was talking to them when the jet went into the Pentagon. I hear on the other end, “Thom, we’ve got to go. We’re being bombed.” I was like, “What is that?” I get up, I walk out of my office, and nobody’s at their desk.

I’m like, “Where is everybody?” They were all in the kitchen. We had two big-screen televisions in the kitchen. We would watch news events and things like that there. I walk in to see everybody in there. The Twin Towers were smoldering masses. They’re evacuating downtown Cleveland because the Pennsylvania flight was seen going through Cleveland airspace with F-16s.

I was downtown at the time.

I’m running back to my office. I’m calling every number I have for corporate. I finally get somebody on the phone. I’m like, “Tell me we can do this tomorrow. They’re evacuating downtown Cleveland. I got to send everybody home.” They were like, “It sucks to be you. You’ve got to do it now.” I had to go back into the kitchen, ask everybody to turn around from the TVs for a second, and say, “If this day hasn’t been surreal enough, today’s the day.” We all knew it was coming. We are the last of the 600 survivors. It was not a surprise to anybody that this day was coming.

In hindsight, I’ve told people that the unfortunate events of 9/11 actually made it a lot less personal because everybody understood that the world had changed at that moment. The fact that you lost your job, but you’re still driving home to loved ones and family members, feels a lot more important. I took that experience and then rolled into another little startup. We had great success. I got bored. Partners bought me out. I was like, “What do I want to do now?” At this point, I felt like I had put the puzzle together that this thing called entrepreneurship can strengthen the economy.

It’s fun. It’s daring.

In one of the companies, I did most of the sales, as most founders need to do. If you’re a founder tuning in to this show and you think, “I don’t like sales,” you’d better get over it because you need to do it.

That’s the Bob story.

The office was in a dangerous part of Cleveland, down on the flats. Our parking lot was fenced off with razor wire because you couldn’t just let people in. It was our parking lot. What I would love to do is sit for a moment, and I would count the cars in our parking lot. Over the years, I enjoyed seeing that more and more cars were in the lot because we were building this successful company that was creating these jobs.

Thom, I’ve heard that a number of times from entrepreneurs. It’s interesting. Part of the satisfaction is seeing the number of cars in the parking lot. I’ve heard a number of entrepreneurs say that. It reflects something that may be difficult to articulate. I’m making a difference.

I will tell you something strange. I’ll blame myself for this. For me, it felt patriotic. It felt like I was doing something for my country. Maybe that was the residual thinking from my time with the Air Force. I felt like here we are, every one of these cars. Are mortgages getting paid? Is food going on the tables? Are Little League teams getting sponsored? The fabric of society is stronger because of what we are doing.

I don’t know how to say this, but at a more primal level, I am making an impact. The need to do that, the need to contribute, is innate.

To me, it was personally satisfying. It gave me joy. It gives me joy.

That’s what I’m saying.

It’s not ego, like, “Yes, I made that.” It feels like you’re putting good karma out into the world.

I’m contributing.

You’re putting more into the world than you’re taking from it. At the end of the day, that’s what most decent people do. I enjoyed that.

You are putting more into the world than you are taking from it. Share on X

Let’s double-click on that for a second, Thom. That’s a mindset moment we should talk about. That moment when you’re in your office, and you’re looking out at the number of cars, is very different when you’re sitting at your desk in a large corporation, doing a thing. Maybe somebody comes over and gives you a pat on the back, but it’s different. What I don’t want to be lost is that I feel like in those circumstances, you’re fully activated. You’re optimally engaged. Your brain is thinking about how to grow this thing, whereas you yourself said it a few minutes back. At your job at Progressive, at 5:00, you stopped thinking about it.

No. I’m thinking about meeting my buddies for wings and beers.

That’s the essence of the entrepreneurial mindset. We stumble into these conditions that optimize us as humans.

Creating An Entrepreneurial-Led Economic Development

I think so. I wish I could say I was smart enough and planned it all this way. I’m not, and I didn’t, but I am good at pattern recognition. At this point in my trajectory, my life journey, I was like, “Something started coming together.” This is where I transitioned to phase two in my career. That was when some folks in Northeast Ohio were looking at the entrepreneurial ecosystem of the region. Everybody, especially publications, loves putting out listicles, top ten this and top twenty that. This was 2003. Entrepreneur Magazine published the top MSAs for entrepreneurship in the country based on whatever criteria they pulled up.

What’s an MSA?

Metropolitan Statistical Area. Think of metropolitan regions. Cleveland and Akron together form one MSA, for example. It’s a way that economic researchers can make classifications by certain sizes in metropolitan areas. Northeast Ohio was dead last on that list. Some people were in the formal economic development space, which I hadn’t been introduced to yet, because I was busy doing it. I wasn’t worrying about helping people do it. I wasn’t worried about the field as it were, this economic development practice, but the people who were, that was the clarion call.

That was the call to arms. That was the moment because the chain of thinking is that the strength of your entrepreneurial ecosystem is the canary in your economic coal mine. If it is weak and dying, your long-term financial prospects for the region are going to be in decline. If it’s vibrant and growing, the long-term prospects of your regional economy will be likewise vibrant and growing.

Can I say something here for a second? The same is true for an individual. If you’re not out on the edges, learning and exploring what’s coming and what’s next, your forecast, your future, is probably going to become increasingly insecure.

No doubt. We both know mutual people who personify that for better and for worse. I don’t know how I was connected to it, but there was this effort that came together to create something new. It was a new model for entrepreneur-led economic development, where entrepreneurship was at the forefront, something different than smokestack chasing because that practice has been around for decades. Talk about a race to the bottom. We’ll get to that later.

There was this new thing that was coming together. The impetus behind it was, if it’s going to be new, we can’t staff it like these fields are usually staffed, namely with PhDs, academics, and career people from nonprofits that had never practiced and been entrepreneurs. They study it. They teach it, ironically, without ever having experienced it. This effort was very disciplined in the sense that, no, this is going to be different.

We’re going to treat it like a startup and staff it like a startup. There were several folks who were pulled together to be the founding team, of which I had the great privilege of being one of the founders. It created this thing called JumpStart, which, for anybody tuning in from the Ohio ecosystem, or actually beyond Ohio, because JumpStart’s got a great record, this was a new model of how we were going to do entrepreneurial-led economic development.

Can I ask you a question here, Thom? You said ‘93.

This is 2003.

Sorry, you did say that. This is about the time people are starting to realize that entrepreneurial activity is the engine of our economy. As you said, it’s the driver. It’s the lifeblood of our economy. This is the beginning of people saying, “Why are we allowing this to happen by accident? Why don’t we start to create to be intentional about it?” For the audience, that’s a relatively new idea in economic development. In the ‘70s, academics and economists were starting to put those pieces together. Nevertheless, JumpStart was one of the first ecosystem builders.

Credit where it’s due, there were a few others. We stole a lot of best practices from a couple of organizations in the state, to the right, to the east, the lovely Commonwealth of Pennsylvania. There were a couple of organizations there that were about three years ahead of JumpStart, but similar motivations, like the Rust Belt, economies in decline, and innovation work, most notably. They were very generous with us, invited us for a visit, and shared their learning, which is another reason why everybody who comes up through these ranks has an obligation to help those who are following and share. That’s why we’re giving away our playbook.

I’ll talk more about that in a minute. We started putting that together. We tweaked the model that would be a little more relevant for Northeast Ohio. We did a little bit of innovating on our own. We started formalizing it, calling it a venture development model. Think of economic development and venture capital, but coalescing to advance high-impact entrepreneurship. We had a blast doing that because everything that I did for myself selfishly in a good way, and I don’t mean that in a pejorative way, but selfishly benefited my family, I can now help other people do at scale.

You’re pulling a bigger lever.

Take that joy and amplify it.

Can I interrupt you for a second, Thom? I had a similar experience. I’ve probably told you this story before. When I was experimenting pre-Ice House, I taught entrepreneurship at Lake Catholic High School as a volunteer for a year. I got such a response. I had parents calling me, “What are you giving away? I can’t understand why my child, who I couldn’t get out of bed in the morning, can’t wait to go to school an hour early to take this class.”I had the same epiphany where, at the end of the year, I was thinking, “I’m going to come back and do this next year.” I thought, “Wait a minute. Why don’t I create a toolkit and a curriculum that I can put in the hands of teachers that can multiply this impact in hundreds or thousands of schools?” That’s the beginning of Ice House.

Thank you for interjecting that, because we’re getting to the point, dear audience, when the paths of Gary Schoeniger and Thom Ruhe start coming together.

That’s a fair point. That’s what’s happening.

We’re both heading towards a similar destination, obviously unaware of each other. These were the early pioneering days. There were a bunch of people doing it. There was a very large foundation in Kansas City called the Kauffman Foundation that was doing it. They had been doing deep research for several years prior, led by a brilliant man, Bob Litan, doing great research on the economic impact of entrepreneurship as a phenomenon and as a practice, trying to legitimize it as a field.

Very smart people with very long academic CVs and credentials were getting into the data. We need that. I was only saying earlier that if you’re teaching entrepreneurship, ideally, it would be from a position of experience. When it comes to research, likewise, people doing the research should be the people who are experienced in it and qualified to do it. Kauffman was doing that, and other groups, little pods around the country. We were all heading to a common destination.

 

 

In an emerging field, though. The way I think about this is that at the dawn of the 20th century, there was no such thing as management. We were figuring that out.

There were bosses, and there were workers.

Entrepreneurs Are Not Born With Mythical Traits

That was it. Frederick Winslow Taylor came along, and Taylorism started. That was the dawn. I feel like that’s where you were with entrepreneurship. Another important piece that I want to inject in this conversation is, at least back in the early aughts, when you went to JumpStart, broadly speaking, there was an assumption that entrepreneurs were somehow born with some mythical traits that psychologists have been trying to nail down, and they couldn’t do it. Broadly speaking, it was assumed that every once in a while, somebody comes down the chute with these scientifically unfathomable traits that somehow enable them to be entrepreneurs.

I was lucky in my own personal experience because, like Bob, I did manage to graduate with an undergraduate degree, but barely.

You didn’t distinguish yourself academically.

Truthfully, for a few years, it was a sense of inadequacy because I would go into some environments, and some fancy MBA talking head would be saying stuff. It’s like, “You’re a Harvard MBA. Good for you.” It took a few years to get comfortable with my confidence. My lived experience was such that I know you weren’t born with it. It’s not a genetic trait. If I were successful in doing it, I know for a fact it’s not a genetic trait. That’s what I’m trying to get to.

I want to add to that. Thanks for bringing that up. What I want the audience, ecosystem builders, educators, and policymakers to know is that we’re missing this reservoir of entrepreneurial talent if we’re only looking at the world through the lens of academic credentials.

The world is waking up to that. AI is going to decimate the academy. It’s already happening, and the finances of it all. A good friend of ours is at a big university, an R1 university in Texas. To their credit, they’re being proactive because they can see the five-year forecast and that the current models are failing. It’s going to be inadequate. They’re going to have to reinvent. Many of them are going to go out of business. The math is going to math. It’s not the dot-com era.

The math is going to math. I love that. That’s going to be the title of this show.

It’s inevitable. We’re doing all this. We think we have a cool model. It’s still theoretical to a certain extent because it’s only a couple of years in, but it starts getting the attention of others, namely, that little foundation. By little, I’m being silly. It’s a multi-billion-dollar foundation in Kansas City called the Kauffman Foundation. They reached out, showing interest in what JumpStart was doing. Shortening this story as much as I can, that became the catalyst with which I ended up going to Kauffman.

There were the first almost twenty years of my life doing entrepreneurial things, going to startups, growth companies, and venture-backed companies, piecing together all the learnings of that, then trying to figure out the model to help others do the same more efficiently, quicker, and redefine what economic development should be. At Kauffman, it was a magical place because during that tenure, this was a priority for the foundation, understanding entrepreneurship and trying to have an impact on a global scale.

This was JumpStart on steroids.

On steroids, strapped to a rocket, traveling at hypersonic speed, and going into new competencies because that’s what money does for you. When there’s a discipline and smart people who are told, “Don’t let resources limit your thinking,” that’s cool. It’s a very rare privilege. It’s not a safe place to live in indefinitely because it distorts reality.

Say more about that. I want to double-click on that. Don’t let resources limit your thinking. Say more about that.

 

 

For most things, most people who are running nonprofits, economic development organizations, regular social charities, or small company startups, what you can do is limited by the resources you have. I can’t drive a Lamborghini if I can’t pay for a Lamborghini. I can’t build a massive factory if I don’t have the capacity to pay for that. When you’re at an organization with a lot of resources, you can say, “If resources weren’t a constraint, what would you do?” Again, that’s cool. It’s very rare. It’s a privilege that should be cherished, but used judiciously because resources can also make you stupid.

It’s a double-edged sword.

What I’m saying is that on my arc of development, it was a magical time because the organization at that time cared about the space and was investing in the space.

There was global reach also at the time.

They are the godparents of Global Entrepreneurship Week, where you and I have traveled the world and been part of thousands of conversations, programs, and cool stuff. I look at this portfolio, which I was part of at Kauffman. You’re talking things like Ice House, a flagship program here now in North Carolina. It’s the top of our funnel where we understand and deploy the entrepreneurial mindset as a life skill, not a business skill. That was born in my tenure at Kauffman.

1 Million Cups was born during my tenure at Kauffman. There are thousands of people getting together every week with entrepreneurs in their community, helping them, learning from them, understanding the value of an entrepreneurial ecosystem and what that means, and establishing the fact that community is an asset. Community is a form of currency. It can be more valuable than actual money. I saw that as we launched this program, which by the way, was never intended to be an external program.

It was us eating our own dog food of being entrepreneurial. We started what became 1 Million Cups as a way to educate our colleagues at Kauffman. Here’s a little secret of the foundation of entrepreneurship. There are scant few actual entrepreneurs that ever worked there. We thought our associates and our colleagues would benefit from meeting the entrepreneurial community of Kansas City.

What a concept.

People ask me, “Why is it on Wednesdays?” I was like, “Because Wednesday was the one day of the week when the foundation served breakfast. That’s why. There was no rationale. We didn’t do any research and say, “Hump day is the day people are willing to go.” We didn’t know if we’d get anybody to show up. We thought, “If they could come and get breakfast, they’ll probably show up. What days do we serve breakfast? Wednesdays.” 1 Million Cups has been on Wednesday mornings ever since.

That was part of our portfolio. Startup weekend, Kauffman put up the money from the founder to take what was a hunch and a hobby and turn it into an international program that births high-potential companies every year. NSF, I-Corps, you want to talk about untapped potential. It’s in all of our research universities, great research of high economic potential, languishing on the shelves. Whereas we have brilliant minds that can do the R&D, there’s a big gap in the entrepreneurial mindset.

Somebody good at doing deep research, more often than not, is going to be very challenged in trying to build a company out of it or understand customer validation and customer discovery. Kauffman, in partnership with I think the Deshpande Institute at the time, helped NSF create this I-Corps program. It is big in our portfolio here in North Carolina. We continue to support that. I can go on and on.

Empowering Valuable IP Languishing In Academia

I’ve often said this. You’ve probably heard me say this. On the whole, inventors are very good entrepreneurs. Maybe you could count me among them. The inventor himself or herself is not good at putting ideas out into the world. Bob was the inventor. You were the entrepreneur.

Maybe.

Your point still stands. There’s all this super valuable IP languishing in the basement of academia.

Through the I-Corps program, we’re helping unleash that. Ten years later, the origin of it is largely forgotten, but the impact of it is undeniable. It has been incredible. I got to spend seven magical years at Kauffman. Many of those years with you, tramping around the country and the world, preaching the gospel of entrepreneurship, as I like to say, and taking programs to places that need it and would benefit immensely more. In the US, entrepreneurship is taken for granted.

In the early days of Ice House, when we saw this explosion in interest in Latin America, and we are seeing organizations like Tec de Monterrey doing a pilot with 10,000 students, we’re in the States, conjoling and begging a college to do a twenty-student pilot and taking two years to do it. We take it for granted. It’s because you see there’s more urgency in places that aren’t as wealthy and aren’t as privileged.

I don’t know if we take it for granted or if we’re just complacent.

That’s the same side of it at this point. I would even throw lazy in there to a certain extent. Why is smokestack chasing still prevalent? For God’s sake, why do we still give hundreds of millions and billions of dollars for large established companies to helicopter into your backyard when we know the data on that does not support it? There are exceptions, of course.

There’s a political return on investment. There’s just not an economic.

Bingo. That’s not a reason to do it, but we still do it because it’s muscle memory, it’s lazy, and there’s going to be great photo ops. There’s delayed, if any, accountability at all because elected officials doing the presser are going to be out of office or on to the next adventure. The reports that show how bad it is are usually several years behind. Although I will say I had a chance on my podcast interview with Greg LeRoy of Good Jobs First. This is an organization, an individual who’s been tracking these deals for over three decades.

That was fun.

He was a speaker at our 2022 summit. He was one of our favorites because he brought receipts. You remember when this deal got announced, Amazon HQ2, and with all the hoops, everybody. Here in the state of North Carolina, there were a couple of big ones. I’m going to not name them so as not to piss too many people off. You all know which ones they were. None of them is coming through. I said, “Greg, this is your closing. What do you want to say? What’s the worst thing now? Is it still these general ones?”

He said, “No, for God’s sakes, let me say it now because the data is already here. Stop investing in data centers.” He said they are terrible, not just environmentally. He says economically, the best ones are losing $0.40 for every dollar in. The worst ones are losing $1.20 for every dollar in. According to him, in states like Virginia, the power grid has no more capacity because these data centers drop in and extract such a disproportionate amount of the total capacity of the grid, and they have very few jobs.

 

 

The jobs they have are very low-paying because these are dark rooms. These aren’t executives or product engineers. These are technical guys, but they’re making sure that the server racks, all the lights are blinking, and enough cold water is chilling everything. He said they’re terrible, but we still do it. Why? It’s because it’s lazy, it’s easy, and it’s what we’ve always done. The stuff you and I do is hard.

How Ordinary People Are Empowered Through Entrepreneurship

We’ve been talking for over an hour. I want to get to NC IDEA and what you’re doing. For people who don’t understand the connection, I want to point out that you were the guy at Kauffman who championed and gave birth to the Ice House Program. We came to Kauffman with the idea. You were the guy who advocated for that. That’s how the Ice House Program was birthed. I want to make sure our audience understands that. I want to tie this together. One of the common themes between you and me is the recognition of the way entrepreneurship can empower ordinary people. It’s not just a domain of the rich kids at Stanford, Duke, or whatever.

There’s a slice of that that is like that, but that’s societal. There have always been people with access and living in a certain privileged state. I’m not even denigrating that. There are benefits to society that the cool kids and the privileged kids can go to Stanford and Harvard and live in Menlo Park. That’s good. They’re still doing good for the world. It just overinfluences the dialogue around this. It gets too much.

That’s what I’m trying to say.

Movies are made about Zuckerberg and Facebook.

The word entrepreneurship is overinfluenced by the high-visibility venture-backed billionaire, when in fact, tongue in cheek, the unicorn entrepreneur within the context of all entrepreneurship, rounding up to the nearest whole number, is zero as a percentage.

We hear Elon, Bezos, and Zuckerberg. We hear it more now for reasons that have nothing to do with entrepreneurship, unfortunately.

It’s negative.

That’s a topic for a different show.

Here’s what I’m trying to say, Thom. At Kauffman, you get a front row seat to what’s working and what’s not. You’re in this position where we’re still figuring this stuff out. You get a front row seat at the mothership. Kauffman, at the time, had global ambitions. You left Kauffman. I forget how many years ago now.

It has been a decade.

You go to NC IDEA. You’re asked to write the playbook. It’s a smaller foundation. You’re not sitting on $2.5 billion, which is probably a blessing.

It forced you to be scrappy. Smaller is an understatement. At $50 million, we would be a rounding error to an organization like Kauffman. I would argue we’re having a greater impact today than any foundation that’s promoting or championing entrepreneurship because we’re doing it. To your point and to use your word, we wrote a playbook based upon everything that led up to me being here in this role, understanding what works, understanding what doesn’t, and having the autonomy to make certain calls, albeit with much limited resources. That is my only frustration because I have line of sight right now.

I could triple or quadruple the output of NC IDEA today if our endowment were $500 million, instead of $50 million. What does that mean when I say that I could triple or quadruple it? That means more high impact, not necessarily high growth. I’ll double-click on that for a second. We focus on high impact because that means different things in different places. If it’s here in the triangle, which is for the audience, the Raleigh, Durham, Chapel Hill area, it’s high net worth and lots of capital. That’s probably going to be high growth. We’re looking to activate startups. They’re going to go raise private equity and do that traditional model that many people know of.

We also have vast rural communities and historically underserved communities. If you truly are committed to economic development, that means economic development for all. That means you have to have a plan, a strategy. How are we going to grow opportunities in our rural communities? That’s where high impact comes in. That means maybe we help a company that’s not necessarily going to create tens of millions of dollars in revenue, but it’s going to create 20 to 30 jobs in a rural community. That is high impact. We had to take this whole wonderful state that is much wider than it is tall, with all these microclimates of ecosystems.

That’s part of your playbook I want to double-click on. You use the term high impact, but you’re willing to navigate the definition of it.

You have to have a certain degree of subjective latitude doing this work if you want to do it well. For too many things, well-intended people in organizations with stricter limitations can look askew and see a potential opportunity over here, but our charter doesn’t allow it. I’m going to keep going past that and pretend I don’t see it.

By the way, that happens in corporations every day, all day. People have great ideas that are not given the light of day.

One of the things we’ve figured out is that the right way to do this work is under the auspices of a private foundation. This is one of those things that I credit to learning at the Kauffman Foundation. You have a lot of freedom to do whatever you think is right, and if you have the money to do it. I’m not as restricted as many of our partners are and organizations that we have funded. I’ll give you a case in point. Under the current environment, we have funded almost half of the state’s community colleges and over a dozen of the universities in the state and the UNC system. We have always been equity first.

Equity is at the core of what we do. That doesn’t mean don’t fund high-growth White male founders. It means an and strategy. Those partners at this moment can’t say that they value equity. They can’t live that value such that it is. It’s heartbreaking to me. Side note, sometimes, that has put us in a few weird situations because if they are going after some federal funding and we’re offering a letter of support or even matching dollars, our standard letter of support talks about our values, with equity being based on all of that.

We’ve had some hard conversations with some of our partners. We love them. We’ve been serving in the trenches with them, but they’re going after something new, and they’ve asked us, “Can you take out the word equity from your support letter?” I’m like, “I’m sorry. No. Our values are our values.” If you don’t defend your values when they’re under fire, they’re not values. They’re something else. Maybe they’re aspirational goals, but they’re not your values. We stay committed to that. The private foundation gives you the autonomy to do that.

If you do not defend your values when they are under fire, they are not your values. Share on X

Since I am not yet being funded by the federal government or the state government, I’m not taking money from these sources as much as I could give you a great value proposition for it. If you think high-potential companies are good for the economy, I can pass through every penny. I don’t even need to take half a percent for overhead. We can cover our own overhead. I can put all that money on the street. That has been my challenge here. That’s the only complaint I have because the rest of my days are spent helping people realize the American dream of starting and growing a business, and the autonomy, building more vibrant, resilient communities.

Think about the places where there’s heavy leverage in one industry. We have that to a certain extent in this state. It’s in the Charlotte area. It’s mostly banking, finance, and what we call fintech. Entrepreneurship is an ongoing struggle to get a toehold. If there is anything that ever causes a downturn in an industry, people who normally ignore entrepreneurship, that’s the only time you hear from them because then all of a sudden, it’s like, “We’re all entrepreneurs. Who is going to save us?” Our industry is taking a big hit right now.

That’s why it is a very diverse entrepreneurial ecosystem. It’s resilience for your communities. I’ve had this argument with people. I’ve been unsuccessful in convincing the machinery in the state of North Carolina that does the traditional attraction incentive packages, bribing companies to move here. I’ve been trying to put this into the narrative to say, if you’re recruiting a big battery plant or some big corporate behemoth to come in, why don’t you start touting the strength of your entrepreneurial ecosystem?

I do believe it’s big companies’ business to do strategic planning. They understand things like supply chain management. They’re going to need people to source parts for them that haven’t even been invented yet. When you’re looking at these states that you might want to land in, and if the math is only based on how much they’re willing to give you, you’re missing an opportunity. Ask about the entrepreneurial ecosystem because that’s where product innovation is going to happen.

That’s where your supply chain management innovation is going to happen. That’s what’s going to make you more resilient. Rare earth minerals and certain kinds of magnets, rare earth magnets, are in such short supply. It’s going to impact your long-term viability. I would rather be in a state trying to grow a company where I know there are two dozen crazy guys in their garage right now trying to solve a problem I don’t even have yet.

What you’re saying reminds me of something Fareed Zakaria talked about in his book, The Age of Revolutions. He used the Dutch as a model. I don’t remember the exact timeline. He’s saying the Netherlands was a swamp. There was nothing there. They became the economic powerhouse of the world for around 300 years from a swamp. It was all entrepreneurial culture baked in.

It’s a historical picture that gets at the heart of where you and I are so simpatico that ordinary people are capable of this. That’s what I’m so excited about with the economic model that you’re doing, which is so different. If I dare say, it’s rooted in equity or whatever you want to call it. Inside Thom Ruhe’s brain is this deeper value or deeper assumption that this can empower people in myriad ways.

That’s not a theory. I lived it. I was lucky. I fell into a life trajectory that codified that in my brain.

If I can do it, you can do it.

Simple man, average intelligence here, barely graduated with my undergraduate degree. You figure this stuff out. It benefits everyone. It makes communities stronger. Frankly, it makes communities more engaged. When you see the discord now and all this tribalism that we’re dealing with, I would tell you one of the antidotes to all this tribalism and animosity right now is entrepreneurship. You think I’m crazy. Let me explain it to you. Entrepreneurs are vested in their communities.

They’re capable of critical thinking. They’re not going to be minions. They’re not going to be sheep that will be led and aggravated to a point of supporting things that are actually against their own self-interest. They’ll see it and call it for what it is. They’ll understand that I don’t have to agree with you on everything, but if we can still work together, we protect this thing of ours. I use that expression. That’s what I refer to as our work in our community and everything we do collectively in the state of North Carolina. It’s the theme for this year’s summit, “This thing of ours.”

I didn’t steal it from The Sopranos. It is a reference. This is allegedly a mob reference. I love the notion of the family aspect of it and that we’re all vested in it. I can’t remember whether it was Collier’s book, The Bottom Billion, or Piketty’s book. I’m trying to be like you, Gary, and drop a book reference here, so people think I’m smart. You have forgotten more books than I can even recall. It is this notion of enlightened self-interest. What does enlightened self-interest mean? It means that I understand that if you win, that doesn’t take anything away from me. It’s not that one person has to lose for one person to win. If you do well, it can help me, too. Collectively, if we do better, that’s better for everybody.

In my newer book, I call that an altruistic paradox. You miss the opportunity if you’re only thinking of your own needs. The actual opportunity comes by figuring out how to be as useful as possible to other people. That causes you to flourish. I do agree with you, Thom. I’m very reluctant to get into any political discussion on this in this show. I’ve said this for years. This is something that we can all unite on, left, right, or independent. Supporting entrepreneurship is a unifying idea that needs to be elevated.

Can I double-click on that point? I’m wildly in agreement with you. On the political spectrum, there’s one group that takes issue with that. They typically self-identify with the civil libertarian notion that government shouldn’t be picking winners or losers and putting money into. They’ll support the notion of entrepreneurship from a deregulation standpoint. From the allocation of resources, namely tax dollars, they’ll say, “No, we can’t do that.” That argument is so weak tea.

From the discovery of North America by this little Italian guy named Christopher Columbus, his voyage being funded by Queen Isabel, who put up the crown jewels as collateral to fund his little voyage that discovered, from the creation of the internet, GPS, all of these things were invented and created with government support. Why wouldn’t we invest in ourselves? That’s the other sad part of the counter side of the argument. I don’t want to get us too far in there. I wanted to poke that bear a little bit because here in North Carolina, we still have a little bit of traction with these groups that espouse old dead economists. Not only that, when they espouse views, they omit the views that were actually contrary to this notion.

Addressing The Underlying Assumptions Around Ecosystem Building

If you’re not pissing people off, you’re probably not doing anything worth doing. The playbook for NC IDEA, you’re breaking some new ground, at least in my opinion. I’m not an expert in ecosystem building. I’ve said this before on the show. I attend these global conferences around ecosystem building. I’m becoming increasingly frustrated with what people are largely calling ecosystems, which seem to me to be more about big game hunting.

There’s the university involved. It’s the guy with the briefcase in the middle. The university is involved and risks capital. There are some underlying assumptions in the conversations around ecosystem building that we need to double-click on. That’s what makes your playbook stand out, in my opinion, that you’re not limited by those assumptions.

Let me drill in on that. I agree with you. The more commonly worn notion of ecosystem, the R1, the big research universities, and the formal capital stacks, serve a purpose. They’re one piece on a spectrum. There are other things. If we focus on just that, the people we engage with will be the ones who are lucky enough to already have a certain mindset to find their way into this, to be born into this, or otherwise have access to that. We omit an entire stream of people that could be feeding this, changing the dynamic of it, expanding it, and making it greater.

I’ll take it personally. What’s the playbook for NC IDEA? We’ve got programs at different stages. It’s part of our portfolio. We have a strategic portfolio of grants and programs that plug into all of this stuff, but we go the full spectrum. That’s why Ice House is so important to us, because it is on the far end, highest upriver, or top of the funnel, whatever metaphor works for you. What’s that thing that we can share with everyone? What’s that thing that can provide some value to some degree to the most people possible? It’s an entrepreneurial mindset. That’s what it is.

Let me use that. I don’t want to make this into an Ice House promo, but what you’re doing with Ice House is ecosystem building. You’re going out in the field, sowing seeds across the whole field. The point that I don’t want to get lost here is that some of those seeds will awaken this traditional entrepreneurial potential in people. What goes unnoticed is that for every one person who goes, “I’m going to go start a business. I’m going to go to NC IDEA, get a grant, go through their programming, and so forth,” there are eight more who become better citizens, more engaged in their jobs, more employable, and more adaptable. They reinvent themselves. They’re never going to start a business.

They have more to contribute to humanity. That’s what we’re unleashing. That’s why I put it at the front of the upriver upstream or at the top of the funnel. When I told the board we’re going to put a BHAG, big, hairy, audacious goal, out there to get 100,000 people through the Ice House Program, they naturally asked the question, “How many of those people do you think will go through, convert, come in, and apply for our micro or seed program?”

I said, “That’s not why we’re doing this. This is one area where we create impact, low touch, but high volume, things that we may never even be credited for, and we don’t need to be credited for. A small percent, a fraction of 1%, maybe 1% if we’re lucky, 1,000 out of 100,000, or 500. I don’t care if it’s only 100, a 0.1%. We’ll have that many that will start something that’s going to be big, that will create jobs, wealth, and economic impact.

You’re also saying to people, “Do you have the stomach for this?” This frustrates me, knowing, Thom. People use the Ice House Program and economic development organizations. They’re being asked by their funders, “You put 100 people through Ice House last quarter. How many jobs have you created?” I’m going to blow my brains out next time somebody says that to me.

Let’s hope not. It’s because they don’t know. They have limited thinking. We have to be honest about something, Gary.

That’s part of your playbook I want to flush out. That’s all I’m saying.

I’ll go back to this being the status of a private foundation. I’m pissing people off every day and largely consequence-free because I’m not getting money from these people. I’m not getting support from these people as it is, so I’m not risking that. Maybe I don’t get invited to certain swanky things. I don’t get invited to the governor’s mansion. That’s okay.

I’d rather be at one of our partner events talking to people who are struggling, growing real companies, and looking for help, and are genuinely intellectually curious, kind, and courageous. Let’s face it. You have to be optimistic to go into entrepreneurship right now. In today’s world, optimism is an act of courage. Anybody who is out here planting trees under whose shade they will never sit, that’s an act of courage.

 

 

It’s an act of faith, too.

That’s the tribe I want to run with. That’s the tribe I intend to spend the rest of my years with because they’re doing something important, something valuable that’s making the world a better place, and beyond what it means for them. That’s the secret. That’s what economic development should be.

Economic development is human development. I said this in my book. If they’re just focusing on economic impact, you’re going to miss it. You intuitively, if not overtly, understand that if you focus on human development, the economic impact takes care of itself.

Allow me a parental moment to make this point. We do this. We call them fellow startup analysts. It’s an internship. For years, it was for MBA students only. It started before I took over. The program was there, and it was for MBA students at one university only. We’ve evolved it over the years. A few years back, we started opening it to undergrads. There was this young woman who came through. I’m not going to mention her name because she might tune in. I don’t want to embarrass her. She’s so humble.

She’s as humble as she is bright. She’s incredible. She fell into this and loves it. When the students do these programs, we put them with the companies that we fund. This isn’t theoretical. This isn’t a textbook. It’s not an academic exercise where I was a judge at an MBA program, and for their graduation, their capstone project was a startup plan. It was an MBA program. These people had no intentions. It was make-believe. Here’s the hypothetical company we’re going to start. It was some weak tea. We put these kids in real-world situations. They’re sitting at the table, elbow to elbow with these founders, seeing them unvarnished and struggling.

They’re seeing what a waste of time their MBA was. I’m just saying. Go ahead.

I’m going to let that slide and imply that I agree. She has had an immense impact. She has now been invited to work in two venture funds in the area because she’s that bright and has much of a great work ethic for such a young person. She is getting ready to graduate. She has this big offer from a very big investment bank in a big city. She also has a local venture fund chasing her. She came to me. She was like, “I need help. What should I do?” She is not even 21 yet.

I say to her, “This is what the entrepreneurial mindset does to people.” It resonated with her during her time with us. It clicked. It was something that spoke to her sense of purpose in life. Other people are seeing that. They see that in her. She has all these options. I said, “I wish I could tell you which one you should take, but at the end of the day, as a parent myself, isn’t it wonderful that you have these great options and you’re torturing yourself over which one of these two exceptional options that you have? That’s a credit to your entrepreneurial mindset that you leaned in.”

That’s the sword I’m going to live by and die on, Thom. That’s what the entrepreneurial mindset component is all about, awakening that in a person. Whether you own the business or not is irrelevant ultimately. I don’t want to take the conversation there because your work at NC IDEA is to get startups going. You’re in the traditional entrepreneurship startup game. You’re doing it exceptionally well.

NC IDEA’s Playbook On Nurturing Entrepreneurial Thinking

You’re doing it in a way that is blazing new ground. It’s JumpStart 2.0. I can see the through line in the story here. What I want to get to is, can you lay out what the playbook is? What is the strategy? The way I like to put it is you’ve carpet bombed the state of North Carolina with Ice House programming and Ice House facilitator training as the top of your funnel.

Let me say that a little nicer, carpet bombing. I’ve heard you say that before, and I get it. I understand why you’re saying it that way. Let me come at it this way. If you’re going to be in this space, you understand that it’s a contact sport. It’s a social activity, so you have to be engaged. You can’t do this from the comfort of your office. You can’t do it by just writing emails and putting out thoughts, or just writing checks. You’ve got to be out there.

In my first year in my job at NC IDEA, I put 40,000 miles on my car. It was a brand new car. I remember taking it in for service at six months. The tech came out and said, “It’s going to be a little longer. We have to check your tachometer.” I was like, “Why do you have to check my tachometer?” He said, “It looks like you got 32,000 miles in five months’ time or six months’ time.” I’m like, “No, there’s nothing wrong with the tachometer. I’m putting the miles.”

You’ve got to be out there. You’ve got to see it for what it is. You can’t assume complete knowledge. You can’t assume, “Because I have the money, I know what you should do.” You have to have empathy. You’ve got to understand what the landscape looks like. That was the first basic year in this role. Once you start understanding the landscape, then you can start thinking about what pieces. You got a box of puzzle pieces, but it’s not clear. It’s not obvious.

 

 

You don’t look at the picture on the box and put it together that way. The puzzle, the image that you see once you put it all together, will only reveal itself then. What you have to do is start seeing pieces and go, “This looks like a corner piece. This might be a good strategy for us down East, where we have largely minority populations, it’s largely ag, and it’s economically distressed. What they’re going to need is different than what we’re going to need in the major metro areas.”

Part of that, Thom, is so interesting to me. I’ve heard this from many entrepreneurs before. You had a board that would tolerate that ambiguity. You yourself were willing to tolerate that ambiguity because our brains want to leap to solutions. The uncertainty, the not knowing, makes us uncomfortable. My friend, Stephen Post, who works in medical humanities, calls it premature diagnostic closure. We leap to a solution prematurely because the ambiguity of not knowing messes with us.

Trust me, I do. I’ve been invited to meetings in some of these markets. The meeting starts with a pitch. “NC IDEA, can you give us money to do this?” I say, “Maybe. Why do you want to do that? How are you going to measure the impact of that? Who are you serving with that?” More often than not, unfortunately, through the application of appreciative inquiry, I reveal that they’re taking a ready-fire-aim approach. Somebody said, “We need to bring in one of these accelerator programs. There are a few of them running around the US right now. I’m not a huge fan. In certain areas, the juice is worth the squeeze, but more often than not, it’s just rent seeking.

I had one of our trusted partners call me one day. He said, “Thom, I’ve got to run something by you. I have a benefactor who’s willing to stroke the check. I’m about to sign the contract, but I don’t know. I want to get a second opinion. Can I run it by you?” I said, “Yes.” He tells me about the organization. I said, “Hold on. Before you tell me what’s in their proposal, I’m going to do a little parlor trick. I’m going to tell you what’s in it. We will start with listening sessions and design the charades. We will convene the ecosystem stakeholders and distill their priorities. We will formulate certain strategies.” He’s looking at me, mouth agape.

He’s like, “Did you break into my email system?” I said, “No. The reason I’m being theatrical like this is what they’re offering to do. Look at that list of what they’re offering to do and ask yourself this. What are they offering to do that you can’t do for yourself? You sign that contract. The very first thing they’re going to say is, ‘Give me your list. Give me the companies you have funded. Give me your ecosystem partners. Give me your funders,’ because they don’t have that. Right out of the gate, you’re facilitating the activity you’re paying somebody else to do. Why are you doing that? We are the people we’re waiting for. Let’s roll up our sleeves. Let’s flip the script a little bit. Will you get some stuff wrong? Yes.”

You mentioned board, by the way, so thank you because I got this far into the show and did not give adequate appreciation for the board. We’re in the process of doing an IMPLAN impact study of our work over the last twenty years. This is our twentieth year in business. Spoiler alert. Companies we have funded have created thousands of jobs. They’ve raised billions in private equity, hundreds of millions, probably billions at this point, of tax revenue. It’s a no-brainer. Something that started with $30 million has had this economic impact. How many millions do we piss away for nothing in return, or a fraction of what this is?

We’re doing that so that people can understand and have the confidence that we are the ones who create the impact that we’re seeking. Just like we nurture the capacity within the individual founders, in the entrepreneurs we serve, in the ecosystem-building space, that’s part of our playbook, we look to do the same for our partners, so that they then understand. That’s why we have invested millions in our ecosystem work across the state. That’s why we are very big on the social aspect of it, the esprit de corps, this thing of ours.

We are the ones who create the impact we are seeking. Share on X

That’s why people have continuously been coming to our annual summit. The one word people will describe it as is family reunion because we’re all invested. It’s in our enlightened collective, enlightened self-interest, to succeed and support each other succeeding and nurture more great and diverse founders that are creating things that have yet to be created or even improving on stuff. It doesn’t matter. It’s all for the common good.

Programming Resources And Strategies For Those Who Don’t Cut It

Here’s a question I have for you, Thom. You’re infiltrating or saturating the community with basic mindset stuff, realizing that only a fraction of those people will actually start businesses. You guys are providing microgrants and seed grants. I think that’s the term you use.

That’s correct. It is $10,000 and $20,000.

Those are grants.

It’s free money.

I know that the grants come with training and coaching. It’s not just, “Here’s the money. Have a nice day.” How do you think about the people? I would imagine there are many limitations. What do you tell the folks that don’t cut it? What strategies do you have for that?

Everybody who applies and, more importantly, those who don’t get a grant, still get detailed feedback on their application. We have an incredibly generous, gifted, and accomplished group of core reviewers who generously serve, volunteer their time to help us, and review applications. Every application gets multiple reviewers’ feedback. The overwhelming majority of people who don’t get funded, it’s not that their company doesn’t deserve funding. It’s just premature.

That is the overwhelming reason. There are other reasons, but nine times out of ten, you’re not advancing because, comparatively speaking, the companies that are advancing are further along. Because it is a competition and we can’t fund everybody who asked for free money, we have to have criteria. They get very valuable information. We have heard over the years that applicants who applied two or three times before they won a grant said, “With every successive grant cycle, I had concrete things to build on. I did that.”

We also offer them a host of other programming and services that, because they didn’t get funded, they can still partake in. Our ecosystem is where our partners are such an asset. They are the ones that also offer supplemental support. We love them. We say, “We’re here for you.” Starting a company, I don’t have to tell you. It can be pretty lonely at times.

Pretty hard, too.

The playbook encompasses all of that. There are a lot of soft aspects to it, but they’re just as important. If you look at our grant programs, you can say those are the pillars, but there’s also a lot of connective tissue in there.

It’s almost tangible.

Every day, we’re putting parties together. We’re putting somebody together, whether it’s a policymaker who wants to understand something better in their district. I say, “Hold on. I know one of our partners who is on the street in your district, who knows more about the limitations and challenges for our founder. Let me put the two of you together,” for example. That’s important. It doesn’t get a camera crew. There isn’t the metal, the gold-plated shovel. The turnover is symbolic.

There’s nobody breathing down your neck asking you, “You’ve invested X. How many jobs have you created necessarily?” The board that supports you understands you’re playing a long game, the blocking and tackling. I’m sure you had to help them understand that in some ways.

The board evolved. Trust me. The board that hired me is very different than the board I have now.

One of the points I want to interject here, Thom, and this is one of my critiques of ecosystems writ large, is when we think of professional athletes, I watched a documentary with Lance Armstrong, which is worth watching, but that’s an aside. He said that when he was twelve years old, he wanted to be a professional swimmer. Everybody told him it’s too late. We all know this. If you’re a professional athlete, you need to start when you’re four or five years old. Lionel Messi doesn’t just walk off a farm at nineteen years old, ready to play professional soccer. That’s what we’re doing with entrepreneurship.

It’s like your first at bat is in the major leagues. I’ve said this in my book. I’ve ranted about this ad nauseam. Why don’t we have kids in little projects like Pee Wee League, starting in fifth grade? By the time they become adults and show up on your doorstep, they understand how to function in ambiguity. They understand critical thinking. They understand that they have to be useful to other people. They’re not just doing this because they want to be their own boss.

You want to hear something funny, biographically speaking? I was an entrepreneur since I was six. I was always hustling something. In the winter, as you know, growing up in Northeast Ohio, my older brother and I, shovel slung over our shoulders, went door to door in the freezing weather, getting paid to shovel sidewalks and driveways. By the time I was sixteen, my best friend and I were in high school. We were running a six-figure landscaping business.

It’s to your point. My kids are doing great. None of them is running a startup at the moment, but all three of them have very entrepreneurial similarities. My son had the lawn cutting business. My youngest was selling scarves that she had woven on her hands. I remember she was nine. For this Christmas bazaar, she got a table and pissed off all the old women who were selling their cozies and knitted things because everybody thought, “How adorable.” She sold out of her product both weekends.

It goes to the mindset. That’s why we say the entrepreneurial mindset is a life skill. It’s not a business skill. If you go into business, if you go into entrepreneurship, it’ll serve you well. You could be the Thom Ruhe who worked at Progressive. Maybe if I already had an entrepreneurial mindset then, if it had already been fully developed, which probably couldn’t have been because I had to have those experiences, who knows, maybe I’d be the CEO of the company now.

Maybe Progressive might have a spinoff that’s worth whatever. I don’t want that to get lost either. You’re pushing that entrepreneurial talent out of your company if you don’t support it. I’m paraphrasing William James here, but I love this idea that speaks to your work, Thom, which is that the community will die away without the entrepreneurial impulse of the individual.

You said that an hour ago. Without the support of the community, the entrepreneurial impulse will die away and never materialize. That’s what you guys are doing. What you’re doing at NC IDEA, better than anyone else, you intuitively understand that. The people who get rejected are still coached and encouraged to keep coming back. You’re backfilling in many ways what middle school and high school should be doing.

We are trying to. Let me put a cherry on this or a wrap on this by paraphrasing what you said, but in our much less sophisticated way. Our family is very tight-knit, as you know. You know all my kids. You know my wife. We have a family motto that we stole from The Jungle Book. That is, “The strength of the wolf is the pack, but the strength of the pack is the wolf.” It’s ensconced in a tattoo on my right shoulder, as you know, because that’s how we believe. That’s the nature of this work. Let’s strengthen our collective pack by supporting the individual wolves.

Achieving Economic Development Through Human Development

That’s fabulous, Thom. Let’s leave it there. That’s a good note to end on. I love the fact that you’re an open book. You’re putting your IP out there for the world.

We’re going to formalize that by the way. We’re going to put all this in writing. We’re going to illustrate. It’s going to get announced at the summit. We’re waiting to complete the impact study because what we don’t want anybody to do is take the playbook on faith. A lot of those people who might be inspired to do that will still have to sell the notion in their states or their communities or to their benefactors. Once we have that missing piece of the formal impact, I can tell you anecdotally all this great stuff, the impact of our work, but we’re going to put hard numbers to it. Once we have that, we’re going to formalize the entire thing. We’re going to put it out there.

I was talking to somebody in another state. She was so excited. She was like, “Great. How much are you going to charge for the licensing of that?” I was like, “Come again, what?” “You’re licensing that, right? That’s tremendously valuable IP. You’re not just giving that away, are you?” I was like, “I’m going to give it away.” Why would I want to sell it? I don’t even know what competition would look like here. If another private foundation wanted to do the work we’re doing, I would welcome it. I already told you. I could five X it because I see the need. It’s unmet. If there was another group that wanted to come in and help, come on. Welcome aboard. If you’re not in our state, then why not give it to you? It’s a rising tide, folks.

This begs the question, Thom. Somebody could do this on a smaller community basis, on a regional basis. You don’t need $50 million to do this. A Jim Correll can do this in a small town of 10,000 people in Independence, Kansas. I want to make sure we put that out there. The playbook doesn’t require that you have a $50 million fund in statewide reach.

No, I’m making the case that if you have a certain minimum amount of resources and latitude, the right board, and the right staff, there are a lot of caveats. We’re going to spell all that out in the playbook because we do have to break through the curse of good intentions of places and people that they mean well, but they’re not qualified to do the work, or they’re not adequately resourced to do it. That miscasts expectations. “Here’s a gerbil on a ball of twine. Start me a billion-dollar company.” That’s not how that works. We’ll spell all that out. Hopefully, we’ll start a movement that, at its peak, will start challenging what economic development truly means. I like it when you said it earlier. Economic development is human development. That’s what we’re doing.

Economic development is human development. Share on X

I want to talk about tree planting in a second. For those who might be tuning in, let’s say the early majority who might be a little skittish, where’s the evidence that what you’re doing is working? Where did that report come from, Thomas, the governor’s office?

Secretary of State.

Thank you. North Carolina published a report on the impact of supporting even small sustainable businesses that get to $100,000 a year in top-line revenue, which has an enormous impact on the economy.

Spoiler alert. If we help 5% of companies at $50,000, make it to $100,000, the economic impact is between $1.5 to $2 billion per year, cumulative. If you can move 5% the next year, you get another $1.5 to $2 billion on top of the second year of that $1.5 to $2 billion. This is what’s not understood.

It’s definitely massively overlooked. We’re looking at the shiny, unicorn entrepreneurs, and we’re missing this. What do you call it? It is an economic opportunity hiding in plain sight.

It is the job creation engine, hiding in plain sight.

The Story Behind’s Thom’s Left Forearm Tattoo

Thom, to wrap this up and land this plane, one of the things that you and I are connected around is this idea that entrepreneurship is about unlocking human potential. The startup is one way to do that, but it’s not the only way. You got a tattoo on your left forearm. Could we close this if you could talk about what that tattoo says and why it speaks to you?

It’s a quote I heard many years ago. It spoke to me because it is the essence of our work. A lot of these things we’re doing are going to take 1 to 2, if not more decades, to see the benefit. It is a bit of an act of faith, but the saying that’s permanently ensconced on my left forearm here is, “Blessed are those who plant trees under whose shade they will never sit.” If you don’t have that mentality to do this work, you might want to choose a different field because that’s the essence of what we’re trying to do.

We’ll get lucky. What’s a very fast-growing tree? Poplars grow quickly. Hopefully, you get to see some poplars come to fruition, some early maples. I’m torturing this metaphor, but the point of it is you can’t do it for immediate gratification. That’s why traditional economic development still flourishes, because the political psyche knows nothing. It has no discipline for deferred. It’s all about immediate gratification.

It’s about scoring a point now in the present. That’s unfortunate. I hope it’s temporary. I hope we get back to a time when the people we put in power understand the higher purpose. In the meantime, I’ll try to continue to set an example and continue grinding out this work, because that’s the secret to this work. It’s qualified people, sufficiently resourced, patiently supported, grinding it out cycle by cycle. That’s the playbook.

I love it. Thank you, Thom.

My pleasure, I’m sure. See you.

 

Important Links

• Thom Ruhe on LinkedIn
• 1 Million Cups
• Ice House Entrepreneurship Program
• NC IDEA
• JumpStart Inc.
• Age of Revolutions
• The Bottom Billion
• The Jungle Book