Sunday, September 15, 2013

What is a "True Entrepreneur"?

I asked the directors at not one but three of the "12 Business Incubators Changing The World" in Forbes here, how many failures they have had?  (With incredulous looks on their faces) the directors basically said that they only accept applicant entrepreneurs who have an above 50% to 75% chance of success and that the incubator's successful functioning companies output rate is above 95%.  Are you kidding me?  Forbes put you in the Top 12 incubators!?

"... entrepreneurs are contrarian value creators. They see economic value where others see heaps of nothing. And they see business opportunities where others see only dead ends."

"Equally, there is a world of difference between the typical small-business owner (who dreams of opening another shop) and the true entrepreneur (who dreams of changing an entire industry)."

From a brilliant article form Schumpeter in July's The Economist on entrepreneurism, "Crazy diamonds" (quotes in this blog are from the article).

I believe in the "true entrepreneur".  Over the past three decades I have started, built, and sold companies, and lost out as well.  The ones I am talking about have been my ideas, and my investments.  My first functioning company was at the age of 10.  I carry the badge because I created two breakthrough successes out of the ashes of 2008, when most "untrue" entrepreneurs ran for the hills.  Specifically, on one of my ventures I was told failure was guaranteed!  Sorry that did not happen.

"True entrepreneurs" as defined above in Schumpeter's statement are rare, and think fundamentally differently about basic constructs.  A specific example in case is incremental approach to resolving a need versus continuously discovering ways to leapfrog the status quo to get an advantage.  Incrementalism is not a true entrepreneurs domain.

Mr. Daniel Isenberg states "that successful contrarians also need the self-confidence to defy conventional wisdom ... and the determination to overcome obstacles. Indeed, some of the best entrepreneurs are distinguished more by their ability to achieve the impossible than by the originality of their thinking."

These cannot be created through education, they are born with the genes.  Events and experience refine and carve them out.  They cannot be "grown" as in a crop; they cannot be "herded" to form large groups; and they cannot be told what to do and how to do it.

In drops policy makers to help as they may:

"The G20 countries hold an annual youth-entrepreneurship summit. More than 130 countries celebrate Global Entrepreneurship Week. Business schools offer hugely popular courses on how to become an entrepreneur. Business gurus produce (often contradictory) guides to entrepreneurship: David Gumpert wrote both “How to Really Create a Successful Business Plan” and “Burn Your Business Plan!”."

"The policymakers are as confused as the gurus. They assume that it must mean new technology; so they try to create new Silicon Valleys. Or that it is about small businesses; so they focus on fostering start-ups. Both assumptions are misleading."

The super democratization of the true entrepreneur to "we are all entrepreneurs" is incorrect as well.  At least the market economics to some extent cleans out the wheat from the chaff in the entrepreneurs' case, most of the time.

The contrarians should not be reigned in or democratized.  Or perhaps that is what has happened to the US?

"Politicians and bureaucrats do not just confuse entrepreneurship with things they like—technology, small business—they also fail to recognise that it entails things that set their teeth on edge. Entrepreneurs thrive on inequality: the fabulous wealth they generate in America makes the country more unequal. They also thrive on disruption, which creates losers as well as winners."

The global corporate has recognized the power of the entrepreneur.  The corporate development organizations are out there hunting for the next breakthrough they know will not be created within their own borders.  Please see my previous blog "Large corporations and the desire to innovate" here.

In conclusion, "Joseph Schumpeter once argued that economic progress takes place in “cracks” and “leaps” rather than “infinitesimal small steps” because it is driven by rule-breaking entrepreneurs."

Please link to "Crazy diamonds" here... enjoy!

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