JetBlue Chairman Teaches Entrepreneurial Lessons

February 2, 2012 /The Wall Street Journal/ – Investor Joel Peterson has spent his career building companies—and leaders.

For the past 20 years, Mr. Peterson—the founder of private-equity firm Peterson Partners and chairman of JetBlue Airways Corp.—has taught entrepreneurial management and leadership courses at Stanford Graduate School of Business in Palo Alto, Calif.

He draws from his personal experience in the business world. On the leadership front, he headed real-estate developer Trammell Crow Co. for years, and currently serves on the boards of several companies, including consulting firm Franklin Covey Co. While investments in JetBlue, the nation’s sixth-largest airline by traffic, and closely held building-supplies company 3Form Inc. have been successful, he has had his share of misses, such as toy maker Cranium (now owned by Hasbro Inc.)

Mr. Peterson, 64 years old, spoke with The Wall Street Journal about modeling leadership, coaching students through failure, and what he looks for in an investment. Edited excerpts:

WSJ: How do you teach entrepreneurship? Clearly you can’t just memorize a formula and be ready to build a business.

Mr. Peterson: One of the best ways is to expose students to entrepreneurs. It inspires them to see the world through a different lens, but it also exposes them to the processes that entrepreneurs go through—things like coming up with an idea, developing it, raising capital, hiring people, all the nuts and bolts.

WSJ: How do you advise student-entrepreneurs?

Mr. Peterson: It’s hard to pass [specific lessons] on to young investors or young entrepreneurs. However, if you can work with them as they build their business, they’ll run into most of those issues [like coming up with an idea] and you’re able to discuss them as they’re going through them.
It is an experiential learning process. There are a lot of bromides that people pass on, but until you have the specifics of a [business] it’s hard to know how to apply them.

WSJ: What do you look for in a [business] pitch?

Mr. Peterson: There are four buckets that I look at: leadership, the market that they’re addressing, the product or service that they’re proposing, and the deal structure.

I put a heavy weight on leadership: the character, quality, experience and competence of people. That drives everything. It’s the No. 1 bucket.

WSJ: What do you tell students when they’ve failed?

Mr. Peterson: Knowing when to give up is important. Stopping sooner is smarter than going on forever with something that will never succeed.

WSJ: You also run a course on leadership development. How do you teach that?

Mr. Peterson: You model it. [You] bring in leaders from different walks of life. Some will be tech leaders, some will be deal leaders, some will be idea leaders. We have the guest give [their] background and experience in leadership, a little bit of their philosophy of leadership, and then we just open it up for students to ask questions. Often, they’ll ask about times a leader has failed, or has had an ethical dilemma.

WSJ: What do you hopestudents walk away with?

Mr. Peterson: The hope is that they have a much more sophisticated understanding of what leaders do. Do they understand the costs and the benefits of leadership, the roles and responsibilities, the trade-offs of being a leader? We’ve had some students go through [the course] and say, “You know what, I’m much happier being a team member.”

WSJ: What’s the biggest leadership lesson you’ve learned over the years?

Mr. Peterson: You have to care about the people you’re leading. You listen, you understand, and then you have to help them set objectives to figure out what winning is. You have to articulate that in a way that is consistent with their values, so they own the success. It’s their goal as well as your goal.

WSJ: What’s your biggest [business] mistake?

Mr. Peterson: To trust people too much and too long. My leadership is derivative of high-trust relationships. More often than not it works, but when it doesn’t, it’s painful.

By Melissa Korn
The Wall Street Journal