Teching FinTech in Edinburgh

The idea

This year I got to try an experiment: take a graduate class I had already been running on technology entrepreneurship and focus it entirely on FinTech. There were a few reasons for this:my University had committed to supporting FinTech and data-driven entrepreneurship as part of the Edinburgh city deal and also that my attempts to build a technology commercialisation class (the idea which was completely stolen from Michael Camp at OSU) in which students learned how to commercialise new technologies by using university-owned IP never really gained traction.

Whenever I teach entrepreneurship, I want it to be experiential. I’ve drunk the Babson kool-aid on experiential education. Entrepreneurship theory is fun to study, but the only real way to learn entrepreneurship is to do it. The classroom is an imperfect way to do this, but it gives students a nice, protected place to play around with ideas and learn some key ideas like flexibility, resiliency, and opportunity recognition.

Why FinTech? Edinburgh has one of the strongest foundations for FinTech in Europe. It is the second largest finance centre in the UK as well as having one of Europe’s most successful entrepreneurial ecosystems. Edinburgh is big enough to have everything an entrepreneur needs, but small enough that an entrepreneur can meet everyone she needs to in order to get what she needs.

Edinburgh has fewer FinTech founders with a finance background

But so far, the Fin hasn’t met the Tech in Edinburgh. Awhile ago, just for giggles, a PhD and I looked at the backgrounds of the founder of FinTech startups in Edinburgh, Manchester, and a random selection of those in London. We found that Edinburgh FinTech startups had the lowest rate of founders with a finance background. This isn’t a bad thing, but it means that FinTech startups in Edinburgh aren’t able to tap into the great pools of knowledge and social capital that have built up within the finance sector. And this is really important for entrepreneurship: who is better set up to realise that there’s a problem they can solve in the finance sector than someone who’s working within it.

The class

So, I had a few goals with this class:

• It should be experiential: minimise lectures, maximise group work.
• It should be interdisciplinary: Fin and Tech need to meet. The class needs to be welcoming to students from our Entrepreneurship & Innovation program, the regular management degree, along with students from computer science and anyone else who felt like they’d like the class.
• It should connect students with the local finance community: Students should be able to draw on Edinburgh’s finance community to find and validate opportunities.

That last point was the most important. In most entrepreneurship classes, the motto is: “Find a problem you have and solve it, chances are other people have that problem and it might be a real opportunity.” This is a great idea, but it my experience it ends up with class projects focused on solving students biggest problem: Where to find the cheapest drinks on Friday.

To come up with a good idea, entrepreneurs need a deep insight into the industry they’re looking to sell in to. But less than 10% of the students in my class (I asked) have any experience in finance. How do we give students a journey into the finance world that was deep enough for them to come up with a unique insight into a problem while at the same time doing it quickly enough that that have time to validate, test, and develop the ideas into full-fledged business models?

The answer was a two-pronged approach. First, I brought in speakers from Edinburgh’s finance community. I gave them specific instructions (sometimes followed, sometimes not) to talk about their jobs and daily activities rather than their thoughts on FinTech. What I wanted them to do was talk about what parts of their day that were annoying or wastes of their time. I wanted them to talk about the competitive threats that kept them up at night.

Second, more than anything else I wanted students to learn how to ask questions and listen. This is the most important thing: rather than just doing some research on an industry and coming up with a product, good entrepreneurs need to be able to listen to potential customers, figure out what is valuable for them, and then find a way to create that value. Your first idea about something is often wrong, but talking to people helps you refine the idea and make sure it’s a real problem.

The first part was accomplished with the help of both the Business School’s partnership team and the helpfulness of Edinburgh’s tight-knit finance community. We were able to get guest speakers ranging from executive vice presidents at global asset managers, investment research analysts, fund managers at boutique firms, and FinTech regulators at the FCA. As student groups focused in on a particular market or solutions, I was able to draw on the School’s connections to link them with industry experts and potential clients to interview. Students talked with venture capitalists, financial analysts, actuaries, and Turkish mobile banking users.

The second part was harder. I used Giff Constable’s wonderful [Talking to Humans](https://www.talkingtohumans.com/) to help students understand the risks of confirmation bias and how to ask non-leading questions. I tried to ensure that there was plenty of time for students to ask questions of the guest speakers and encouraged them to use the Q&A time to look for new opportunities. The most important questions being: “What do you still use Excel for” and “What wastes 10 minutes of your day, every day.”

I think this is where the class really worked. All the groups ended up shifting their ideas throughout the class, some radically while some less so. But all of them were able to show how interactions with customers or analysis of secondary data showed them that their initial ideas has some good points but could be better.

This is also the most transferable skill. FinTech is just using technology to solve finance problems. That’s a big market, but still a tiny slice of the world. Learning how to listen to people is one of the most important entrepreneurial skills and it one of the best ways to learn it is through doing it.

What I learned

1. Striking for 4 weeks during the term really messes up a lot of plans, but at least there were a lot of protest doggies.
2. Teams with mixed backgrounds and skills are great, but can lead to conflict. I had a few groups where there was some tension between the business school people and the informatics people. I’m not sure there’s a good solution to this besides trying to find time to present some material on effective teamwork.
3. Edinburgh’s finance community really wants to help. I got amazing buy-in from finance professionals at all levels to come into the class as guest speakers or who were willing to take time out of their day to talk with groups. The best example of this was the folks at the venture capital firm Par Equity inviting a group to observe pitches so they could refine their investment decision management product.

Final thoughts

The class worked a lot better than I thought. Even with a major strike in the middle, the students put together some amazing venture ideas. I have hope that one if not two teams will seriously consider taking their ideas forward beyond the class.

The class works because Edinburgh has such a strong entrepreneurial ecosystem and finance community. My hope for the class is that it helps build stronger connections between the city’s finance and tech communities beyond the classroom. The class will evolve as it continues, but I think that this experiential setup based around customer interactions will continue to be a great way to teach entrepreneurship to a very diverse group of students.

#teaching/fintech/info

What I learned about teaching entrepreneurship from watching 14 seasons of Project Runway

What I learned about teaching entrepreneurship from watching 14 seasons of Project Runway (and 4 seasons of Project Runway Allstars, and one season of Under the Gunn, and reading all of Tim Gunn's books), OR What happens when the sun sets at 3 PM in Scotland OR How I learned to stop worrying and love skill-based reality competitions. Teaching entrepreneurship is a weird thing. There's not a huge amount of theory you can teach. Oh there is stuff about what is the nature of an opportunity or the role of personality characteristics, but I don't think many teachers or students think these are actually important to knowing about entrepreneurship. There are techniques to teach, like design thinking, customer empathy, and business model canvases, but it's hard to avoid teaching these in a way that isn't completely vocational. In a university class, I want students to develop critical thinking skills, not just know how to fill out a business plan template.

I think about it like teaching photography: there are technical skills to learn like f-stops, lighting levels, and colour coordination and there are things like the history of photography that students can engage with, but at the same time it is an art that can only be learned through repeated practice.

But while you can take a photo in 1/60th of a second, building a new venture takes a long time. We can try to simulate this with business plan assignments, but the problem with this is that it takes a long time (at the very least a good portion of a course) for students to figure out if a business model they're working on can work or the types of challenges they'll face.

So, we can't just practice entrepreneurship. I think a better approach is to help students develop good taste. Throughout Project Runway, Tim is trying to help the contestants become better designers by helping them become more tasteful. Often time this takes the form of 'editing,' taking away features of the clothes to reveal the brilliant design underneath. This isn't a rote list of what colors go together or what's fashionable this season: taste according to Tim Gunn is a highly creative and dynamic knowledge about what works in a given context given your resources, time frame, and customer needs.

Taste in entrepreneurship is similar. I think a business model can be beautiful if it opens up a path to create value where no one saw value before or identifies a solution to a problem everyone has but no one realises they have. Business models can also be ugly, like a model where you compete in a saturated market to provide a commodity service. A good business education should help students develop good entrepreneurial taste to realise what is a good opportunity and what is one to be avoided.

For Tim, the best way to teach taste is to ask questions. The teacher shouldn't say that there's no customers for a new product, they should ask who the customers are, what's the price point, what problem are they solving. A teacher shouldn't say that it's a bad idea to start a restaurant but instead make sure that the student can articulate their Unique Selling Point and then look for the holes in their argument. You're job is to be something of a speed bump, making sure that you don't let students get to carried away with their own ideas that they don't look at it from different perspectives to see the flaws.

Good teaching is always good mentorship, but mentorship is especially important when trying to cultivate taste in students. It's helping students to understand what questions they need to ask and to understand what a good idea sounds like.

Drawing on my now very extensive experience of watching Project Runway, I've come up with a few tips on cultivating entrepreneurial taste that I'm going to try to work into my classes:

• Identify beautiful business models and share them with students. Try to explain what makes the business model beautiful: does it uncover a new source of value (like AirB&B), does it try something totally new and unexpected (like leasing jeans), does it do something that's already out there but just much better (like Slack)?
• Ask questions, lots of questions. Make students re-think every aspect of their idea to find the weaknesses.
• Use silence. If the student can't immediately answer a question, don't just skip it and move on, just sit there until they can answer it. If they can't, then they sure know that they have to figure out how to answer it now.
• Don't do the work for them. One of the biggest challenges mentors face is not to just jump in when you see a student struggling (look at the first season of Under the Gunn to see what that looks like) and help them out. But struggling is part of the learning process. Make sure you're not just giving them ideas, but you're helping them come up with their own ideas.
• Force them to road test. No plan survives contact with reality but road testing an idea is the only way to see if it works. Figure out way to make students take their ideas out of the class room and into the real world. Make them come up with £5 experiments (a market validation test that costs less than a really good cup of coffee) and then talk with them about the results.
• Be empathetic. Tim Gunn is the world's best mentor because he deeply empathises with all his students, no matter what their background. He's good at teaching because his students instantly know that he cares about their success. That way even when he's forcing them to start all over on a 12-hour design question, they know he's doing it because he believes they can do better.