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The Trouble With Lifestyle Entrepreneurs

New Zealand's business owners have struck a work-life balance that many of their American counterparts would envy. So why is this becoming a national crisis? And what's the lesson for us?
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Anyone who wants to schedule a meeting with the founders of Burke Publishing had better be flexible. The textbook publishing company is run by Rory and Sandra Burke, a husband-and-wife team who operate the business from a 35-foot sailboat, the Pacific Voyager, in the coastal waters off New Zealand. Their floating headquarters has on occasion anchored miles beyond cell phone or e-mail range. It's a fabulous lifestyle, but one that severely limits their company's growth potential.

To really ramp up sales, Rory says, they'd need to dry-dock the boat, move to a land-based office, and start hiring employees. And to the Burkes, that sounds like a lousy tradeoff. "We're lifestyle entrepreneurs," Rory says. "We try to strike the balance between income, possessions, the time we work, and where we work." If that means Burke Publishing remains the same size, that's okay with them.

It's not okay with New Zealand's prime minister, however. At a time when American entrepreneurs aspire to improve their work-life balance, New Zealand -- as a matter of public policy -- is trying to coax its lifestyle entrepreneurs into spending a little less time enjoying life and a little more making money. In the process the country is struggling with a novel question: How do you get laid-back business owners like the Burkes psyched up about growth?

Entrepreneurial But Not Ambitious?

New Zealand -- the source of lamb, kiwis, and the Lord of the Rings movies -- is, by some measures, already phenomenally entrepreneurial. Businesses enjoy a number of advantages, including a highly educated English-speaking work force and a time zone that straddles the North American and Asian workdays. The economy has been growing steadily, with GDP rising 3.5% last year. And more businesses are popping up all the time.

According to a recent study, 14.7% of New Zealand's adult population is involved in launching a business, a level that exceeds even that of the U.S., where the measure is 11.3%.

Despite its many businesses, however, New Zealand has been falling far behind other developed countries in terms of its standard of living. The problem is that many of these lifestyle entrepreneurs work just enough to buy a second home and a boat and to send their kids to school; for the lucky ones that achieve those things, the incentive to keep enhancing their personal fortune seems to vanish. Experts say that an annual income that is the equivalent of just $70,000 in the U.S. is considered the pinnacle of economic achievement in New Zealand. As a result, few businesses have American-style expansion plans. By one count, the entire country, with a population of four million, has just 240 businesses that employ more than 500 workers.

Since 1999, Prime Minister Helen Clark has been trying to push entrepreneurs in her country to expand. Her efforts are nearly as much a part of the national discussion in New Zealand as the efforts to fix Social Security and cut health care costs are in the U.S.

Usually when governments want to spur entrepreneurship, they tinker with the tax code, reduce red tape, and increase research spending at universities. Many European Union countries are going through these exercises now. Trouble is, New Zealand is already business-friendly by those measures; it needs something else to kick-start business expansion.

Dealing with the problem is all the more difficult because it seems to have both a practical dimension and a philosophical one. On the practical side, most experts believe that the key to raising New Zealand's standard of living is to get companies to export more aggressively. New Zealand's small domestic market -- its economy is roughly the size of Orlando's -- offers only so much opportunity.

To that end, the University of Auckland Business School's entrepreneurship center has started a group that brings together a few dozen entrepreneurs every month to hear guest speakers, discuss case studies, and network. Andrew Hamilton, who runs the center, says the goal is to help aspiring exporters focus their efforts and better understand the risks, from currency fluctuations to cultural hurdles, of expanding abroad.

The initiative has met with some success. Heather McEwen, chief executive of an agricultural software company called Xenacom, credits the program with helping her develop valuable contacts and bolster her market analysis skills. McEwen's company opened its first U.S. office last December in Ames, Iowa -- more than 8,000 miles away from its main headquarters in Auckland. "We may be slightly more ambitious than your average company in New Zealand," McEwen concedes.

What Makes America Different

Opinions differ as to the roots of the country's slow-growth mentality. But one thing is clear: The lesson for Americans is, Be careful what you wish for. As much as entrepreneurs in the States love to complain about their fast-paced, stressed-out lifestyle, many of the factors that create that stress are the same ones that allow U.S. businesses to flourish and grow. Take them away, and you might be left with a dearth of fast-growing companies -- and an economy that fails to produce the high-income lifestyles that Americans take for granted.

Consider Americans' long work hours. Most New Zealanders can still recall their country's days as a nationalized economy (an era that lasted into the 1980s), when few businesses remained open on weekends and employees saw little upside to working harder. Even as they have embraced the free market philosophy, some companies still have trouble getting workers -- and even owners -- over the more practical hurdle that, under capitalism, he who works the most tends to win.

The Kiwis also suffer from a lack of role models. In the U.S., a generation has grown up celebrating company founders such as Steve Jobs, Bill Gates, and the Google boys. In other economies, these success stories have no analog. "The Bill Gates type -- slightly nerdy, glasses -- there are no people here who are idolized like that in any way," says John Blackham, who runs XSOL Limited, a six-year-old Auckland company that develops business process management software.

Tall Poppy Syndrome

When New Zealanders do talk about celebrating business success, they often use a phrase drawn from agriculture: "tall poppy syndrome." When farmers raise poppies, they routinely lop off the tops of any that are growing too fast, in an attempt to maintain uniformity. In New Zealand, the thinking goes, those who appear too successful feel pressure to cloak their wealth. "If people make it, they don't let anyone know they've made it," says Jana Matthews, a Colorado-based entrepreneurial leadership expert who puts together workshops that teach growth strategies to New Zealand businesses.

Americans' willingness to fail is another quality that the growth-minded New Zealanders admire from afar. While a stint at a failed start-up can be a badge of honor on an American resume, New Zealanders remain fearful of the stigma of having a business falter. This attitude partly explains the country's lack of serial entrepreneurs. Having risked everything and succeeded once, why take that risk again?

One final difference between American entrepreneurs and New Zealanders is that Americans have a passion to keep expanding their businesses, no matter how large they get. Successful New Zealanders prefer to stand pat. "We despise the growth mania that we hear Americans talk about, the compulsion to get more customers," says Howard Frederick, who tracks the country's small businesses at Unitec New Zealand, another Auckland university. "Here it's 'More customers? That's a bother."

Bottom line: New Zealand company builders like the Burkes have trouble getting off their boat to rev up sales, and American entrepreneurs have trouble getting out of the office and onto a boat in the first place. It seems each culture could take some lessons from the other.

Sidebar: A lifestyle economy by the numbers

Government: Prime Minister Helen Clark (at left with U.S. Transportation Secretary Norman Y. Mineta) leads a center-left party.

GDP: $92.51 billion

GDP per capita: $23,200

Major industries: Film production, tourism, winemaking, forestry and wood products, telecommunications, wool production, and apparel (regional industry concentrations are noted on the map)

Currency: One NZD equals 0.71 USD (as of 5/20/05)

Labor force: Two million

Unemployment rate: 4.2%

The Lord Of The Rings effect: Direct production spending was estimated at more than $350 million; additional revenue from tourism and services is estimated at $120 million per year.

Daniel McGinn can be reached at mcginndan@aol.com.

Last updated: Jul 1, 2005




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