Bob MacDonald, founder of LifeUSA Insurance and retired CEO of Allianz Life, N.A., regularly blogs with timely, hard-hitting comments on almost every business subject from entrepreneurism to better management, smart business leadership, government and politics, and of course, the life insurance industry.   In the following interview, Mr. MacDonald provides an in-depth and insightful perspective on achieving success as an entrepreneur.

What was the impetus for you to give up an already successful career in the corporate world to become and entrepreneur?

The most powerful motivator pushing me to become an entrepreneur was the desire to control my own future. For the vast majority of us, no matter how high we may rise in the corporate world, we are never really in control of our future. There are always those above us (sometimes people we don’t even know) who retain the power over our future. Being an entrepreneur is the only opportunity individuals will ever have to really take control of their future. Many see becoming an entrepreneur as taking a huge risk, but for me an even greater risk was continuing to allow others to control my future.

What advice would you give to someone who is thinking about becoming an entrepreneur?

From my perspective there are three fundamental considerations: 1) Have they identified a need not currently being met in the market? 2) Have they developed a realistic, workable plan to meet an identified need? 3) Do they have a clear way to differentiate their efforts and offering from the competition?

Unless and until a prospective entrepreneur can honestly address and resolve these issues, they should tread lightly, but once they have, it gives them the best chance to be a successful entrepreneur.

What did you under-estimate and over-estimate when it came to the challenges of starting your own business?

Good question. The first thing is that budding entrepreneurs (as I was) are overly optimistic and positive that they have a great idea that will create amazing success. They are convinced people will recognize this great product or service and flock to it. If they didn’t feel that way, they should not be an entrepreneur. As a result, there is a natural tendency to over-estimate the ease of achieving success and under-estimate the time it will take to be successful.  

Passionately believing we were offering superior product and services, I under-estimated the difficulty convincing the customer and sales people to do business with our company; especially considering we were a new company competing against large well-established companies in our industry. At the same time, I over-estimated my ability to convince those who were skeptical about our products and the longevity of our company to do business with us.

What I learned as a new entrepreneur was that no matter how passionate I was about our products and services, people, even if they were unhappy with what they were receiving from other companies, are reluctant to change. Most people are hesitant to be the first to try something new. When building a new company, the entrepreneur must overcome the natural reluctance people have to change and the only way to do that is to persistently work to add one customer at a time, building a momentum that will encourage others to follow. The problem is that this is more difficult than many anticipate and it takes more time than new entrepreneurs realize.

Did you discover any shortcuts to success as an entrepreneur?

Yes I did and it was very helpful. What I discovered is that more effort is wasted searching for shortcuts to success than the time spent achieving it. What many new entrepreneurs need to recognize is that the real shortcut to success is to do more, not less.

There is one thing that can be very helpful to a new entrepreneur and that is to find and bond with a mentor. Someone who has been there and done that; one who has already been successful as an entrepreneur. Finding this type of person was very helpful for me, not so much because he told me what to do, but because he offered great advice on what not to do. That was the best shortcut of all.

What is the biggest risk an entrepreneur faces?

The biggest risk for any budding entrepreneur is not the risk that their enterprise will fail, but that they will fail to understand the difference between a dream of success and a vision of success. In essence, a dream is something we hope will happen (like winning the lottery) but have no control over achieving. While a vision is something that can be made to happen. The key for the entrepreneur is to know the difference.

Also, to increase the chances for success, the entrepreneur must understand the difference between a “risk” and a “gamble.” Overcoming risk leads to success, while taking a gamble invariably leads to failure. The nature of a risk is that while the outcome is uncertain, it can be managed and mitigated by specific actions. On the other hand, the outcome of a gamble is also uncertain, but there is no (legal) way to influence or control the outcome.

The entrepreneur must recognize that what separates winners from losers is not the elimination of risk — which is not possible – but it is the ability to understand, manage and mitigate risk. If the entrepreneur does not understand the risks and has no plans to diminish them, they become a gamble and that is the riskiest approach of all.

What are the three most important things that will enhance the entrepreneur’s chances for success?

Having intimate knowledge and experience in the industry the entrepreneur seeks to compete in gives them a big advantage. Building a new company is enough of a challenge itself, but attempting to do so without experience in the industry creates a learning-curve that can easily overwhelm the entire effort.

Offering a new approach to an industry that is being pressured by change is a big advantage for a new venture. The initial reaction to change forced on established companies is to resist that change. Most are satisfied with the status quo and concentrate on protecting it. This creates an opportunity for a new venture to respond to change with new ideas or innovations; without having to compete directly against the established companies. Remember, in times of stability, the established companies will always win, but in times of volatility and change, it is the creative and innovative company that wins.

The entrepreneur who has a clear vision of what the future of the industry and their company will look like has a big advantage. I like to call it “reminiscing about the future.” Everyone has the ability to do that, but few make the effort. Reminiscing about the future is not predicting the future, rather it is developing a vision that paints a picture of the future others can understand and work to achieve. And that almost always assures success for the entrepreneur.

For example, when I founded LifeUSA (a start-up life insurance company) I had over 20 years of experience in the industry. Entering as a sales agent and moving up the ladder to company CEO, I had intimate knowledge of the insurance industry and knew all that was right and wrong with the industry.

When LifeUSA was founded, the insurance industry was entering a period of tumultuous change. Industry growth had begun to slow as the business model and products had become obsolete. Rather than embrace change, the industry fought it and adopted a “get back to the basics” defense. This created an opportunity for LifeUSA to enter the industry as a start-up company without having to compete directly against the established giants.

The life insurance industry grew large and profitable by offering products that “protected against the economic cost of dying too young,” but times were changing and the consumer became more concerned with “living too long,” rather than “dying too soon.” At LifeUSA we had the vision to responds to those changes by building a company that offered products that “protected against the economic cost of living too long.”

Is there anything else that can increase the chance of success for an entrepreneur?

When the entrepreneur understands that without their vision, ideas and willingness to take a risk there would be no opportunity for success, but that success cannot be attained by their efforts alone, the chance for success increases. The entrepreneur creates the opportunity for success, but success itself is created by those who buy into the entrepreneur’s vision and offer their efforts and talent to make it happen.

The entrepreneur who crafts a business culture of what I call “parallel interests” significantly increases the potential for success. Parallel interests means aligning the interests of the all to achieving the same goal. The best way to do that is for the entrepreneur to allow those who buy into the vision and contribute their efforts to help bring it about, to share equitably in that success. I have a philosophy and a belief: Those who have the ability to add value to an organization will be motivated to do so, if they are allowed to share in the value created. It is a simple concept that no one wins unless everyone wins. The entrepreneur who adopts and commits to this philosophy of parallel interests significantly increases their chances of success.

There are numerous ways to build a culture of “parallel interests,” but let me give you one example. From the start, everyone who joined LifeUSA became an entrepreneur. This was accomplished by requiring everyone who came to work at LifeUSA to take 10 percent of their pay to buy stock in the company. This was the same class of stock owned by me and the other founders and was at the same cost. In reality, LifeUSA did not have employees, we had owners. And these owners were respected and treated as owners. That meant that everyone working with LifeUSA was just as committed to the success of the company as I was, because they would share in the success of the company, just as I would. I could not benefit, unless everyone benefited. In essence, over time, there were hundreds of people working hard to make me successful, because that would be their success as well.

Any final thoughts?

A lot of people dream of taking control of their future by becoming an entrepreneur. Unfortunately many fail to follow though because they fear failure more than they desire success. They fail to understand that the costs of failure as an entrepreneur are significantly less than the benefits of success. Others blindly follow the mirage of a dream, rather than a clear vision backed by realistic plans, and find themselves drowning in failure.

My encouragement and advice to any would-be entrepreneur is simple: If you understand and are willing to accept the risk of being an entrepreneur; if you have identified a need not currently being met in the market; if you have created a solid, workable solution to the identified need; if you can differentiate your efforts from the competition and if you are intent on enlisting those who can add value to your efforts by offering them a personal stake in your success, then go for it.

If you desire to control your future as an entrepreneur and you have covered the bases that lead to success, success cannot be guaranteed, but if you fail to act, failure is guaranteed.


Mr. MacDonald has enjoyed a remarkable 40-year career in the financial services industry. He entered the field in 1965 as an agent for New England Mutual Life in Los Angeles, and retired in 2002 as CEO of Allianz Life of North America and as its chairman in late 2003.