Ethan Senturia thought he had it all. He graduated with honors, landed a job at Lehman Brothers, then struck out on his own when that Wall Street powerhouse shut down during the Great Recession. But Senturia quickly learned that becoming a successful entrepreneur takes much more than a great resume. Dealstruck, the online lending platform he founded, ceased operation in 2016. That experience led Senturia to rethink his long-held ideas about success. He has shared his personal journey in a new book titled, Unwound: Real-Time Reflections from a Stumbling Entrepreneur. Senturia talked about his experiences during a recent segment on the Knowledge@Wharton show on Wharton Business Radio, SiriusXM channel 111.
An edited transcript of the conversation follows.
Knowledge@Wharton: Tell us about how you started your company.
Ethan Senturia: I grew up the son of an entrepreneur and somehow made my way to Wharton thinking that the startup world and the broader world of business and finance were sort of the same thing. I learned that those were quite different. Ultimately, I went on to Wall Street and my first job was at Lehman Brothers in 2008. I was at this big institution, and they went through bankruptcy. I found that there’s not really this ideal stability out there that maybe I thought there was. I ended up going down the entrepreneurial path, following some of the things my father did. My first journey into entrepreneurship was prior to Dealstruck with a few Wharton alums. I decided to take the financial knowledge and training that I had received at school and in my first foray into the professional world and try my hand at something in the startup world….
Knowledge@Wharton: You had a lot of expectations that it was going to be a successful venture, but things turned out a little bit differently. What happened?
Senturia: Some people have their vision of success and it goes perfectly. But more often than not, even if your outcome ends up being a success, along the way you have a lot of ups and downs. Even if you know intellectually that this journey is going to be hard — there are going to be highs and lows — when you actually run up against them you realize that maybe it’s not a matter of intellect to get you through some of the hardest parts. It’s more a matter of emotional quotient and self-awareness and those sorts of things. But I think even the greatest successes have plenty of war stories. Unfortunately for me, we got down to our last dollar and then we didn’t make it.
Knowledge@Wharton: What have you learned about being an entrepreneur?
Senturia: Patience. When you’re starting your own company, you have this big vision…. You want to raise the money. You want to build the product. You want to get to market. You want to scale. Everything in the startup world is about scaling. You feel this inordinate pressure, sometimes from your investors, but sometimes just from yourself, to be the next Facebook or the next Google or to try to hit that home run. And you fail to realize that maybe these things take a long time. Solid, good companies don’t get built overnight. For every single story of a company that became a $1 billion success in two or three years, the vast majority of the success stories out there took 10-plus years. You have to slow yourself down and focus on one step at a time. If you make all the small decisions right, then those add up to the big picture. Being more patient for that success to come was a big lesson for me.
“For every … company that became a $1 billion success in two or three years, the vast majority of the success stories out there took 10-plus years.”
On a more personal level, we tend to associate ourselves a lot with what we do. When you run a business and you start something, it’s even more so. People have this idea that your business is your baby. As things go up and down, it’s very easy to identify yourself, your value, how successful you are based on whether your company’s going well or not, whether your job’s going well or not. The toll that takes on you and the people around you is an unhealthy side effect of entrepreneurship. I’ve tried to learn that business can go well, business can not go well, careers can go well, they can not go well, and it doesn’t necessarily mean that you are fluctuating the same as a person.
I think that’s where it can be really valuable to have strong partners or strong advisers, people around you who have been through it. People who venture out into starting their own companies, whether they’re big high-tech startups or just a bakery on the corner in the local neighborhood, tend to be people who are ambitious, who have been successful, who have intellect, and they’re not used to failure. I was pretty smart, got into a good school, got a job on Wall Street. I had a good outcome in the first startup that I was an employee at. I think a lot of people who take on the challenge of entrepreneurship have that sort of track record, and then you run into something where it’s not enough to just be smart and work hard. You need luck. You need people around you. You need the competitive landscape to cooperate. That’s a big challenge because you’re running 100 mph and hit a brick wall, and that can be a setback.
Knowledge@Wharton: How do you handle employees when things aren’t going well for your startup?
Senturia: That’s one of the hardest parts because there’s this need to be transparent with the people who work for you. You’re the entrepreneur. You started this company. You have employees. They’re working really hard to help you build your dream. They’re participating in making that dream, internalizing it on their own. As things start to get really challenging, there’s this delicate balancing act of maintaining transparency but also not distracting them to the point where they get so concerned that they can’t do the things needed to turn the business around or get it through a tough period. But it’s definitely the most challenging thing when you see people who have left stable jobs, who have all different types of economic situations at their home and in their families. You just have to try to treat them well, even as things go sideways or wind down. You have to try to help them through financially as best you can. The other ways to do it are to give back in kind and make sure that they get onto the next [step].
Knowledge@Wharton: I’m guessing a lot of the employees at Lehman didn’t get that kind of support at the end?
Senturia: No. That was a pretty interesting scene. I remember freaking out, thinking, “Oh my God, this is my first job. My career is over.” People just packed up their boxes and walked out, and there were rows of media outside the office. There wasn’t a lot of empathy in that situation. I think that’s a missing factor oftentimes in business, where a little bit of empathy, a little bit of caring, a little bit of extra generosity, even when you’re suffering, even when you’re having a difficult time, just extending that little bit extra to your colleagues, your employees, makes a huge difference to them. It’s a small give if you can just get yourself to do it.
Knowledge@Wharton: Are leaders able to fully understand when things are going awry and a company is starting to take on water? Or does it hit you blind?
“Being more patient for that success to come was a big lesson for me.”
Senturia: I think it’s a little of both. There’s an illusion that I had as a first-time entrepreneur, that got debunked pretty quickly, that you have complete control. The reality is that there is no such thing as complete control. There are situations or things that come up where, despite your best efforts, you get blindsided and have to react. You can try to make the right decisions and figure out the right strategies, but that doesn’t mean that if you execute them flawlessly you’ll have complete control over the outcomes.
But there are also situations where it’s like playing whack-a-mole. Something pops up, you hit it, and then the next thing pops up and you hit it. You get into this spiral of not being able to look at anything other than your feet or your toes, and that can be a self-fulfilling prophecy or positive-feedback loop because you’re starting to look at things so close to you that you lose sight of the bigger picture and then really can’t turn things around. That is one of the challenges of being in distress.
Knowledge@Wharton: Was writing this book a bit cathartic for you?
Senturia: Absolutely. As I was going through this difficult period with the company and in my personal life as they were interconnected, people were saying, “Oh, in 20 years this is going to be the best thing that ever happened to you. Everyone fails their first time.” But I sort of said, “Gee, I’m not sure that success is going to come. I don’t know what’s going to happen in my future.” No one knows, right? But I felt that the way that I could try to make this failure feed forward into success is to study it and to look at it honestly, to take accountability for it, to try to understand what happened, what didn’t.
When we go through hard times, we tend to want to turn the page quickly, put it in the past and get onto the next. We don’t want to dig through the pain and unearth all the little thorny things hidden there. But I felt like that was a really important exercise. I think there’s a lot to learn from it, and the book was my way of doing that. I wanted to share it with other entrepreneurs just as an example of hopefully empowering them and saying, “Don’t be afraid to fail. Don’t be afraid to try again. And don’t be afraid to look at it and study it and own it.”
“The reality is that there is no such thing as complete control.”
Knowledge@Wharton: Do you look back at your time with Dealstruck and think of things you could have done differently?
Senturia: I guess one thing is raise more money. That’s a double-edged sword, but we had opportunities to raise more money earlier and we didn’t. I think if you have a chance to raise money and you’re an entrepreneur, take the money. Until you get that exit, you’re always fundraising. The other thing I would have done differently is probably more around the details of the product that we were originating. I think there was some product market fit that we didn’t have perfectly honed.
Knowledge@Wharton: Would you agree that small business is a critical part of the American economy and an area where there’s still a lot of growth?
Senturia: Yes. The most enjoyable part of being an entrepreneur at Dealstruck was being able to be a small part of the success of a couple thousand other entrepreneurs whom we financed. That was a big piece of our mission and a big piece of what drove me to start the company.
I would say that today the small business world is still underserved. There’s still a need for financial innovation, both from a product standpoint and a technology standpoint. There’s still a lot of great entrepreneurs tackling it. And I do think that it’s an unbelievably critical segment of the economy, of job creation. I hope that I can continue to play a role in trying to bolster it, and I know that there are a lot of other great entrepreneurs doing the same.