What is an entrepreneur?

(Andy Wootton) #1

I’ve always thought of an entrepreneur as someone with an idea that they are trying to commercially exploit. I don’t think they need to have the skills necessary to do that. I’ve seen the word used lately when it was less obvious what the entrepreneur was bringing to the party.

Google says: “a person who sets up a business or businesses, taking on financial risks in the hope of profit.”

Do you agree with Google that the only skill required for the job is money; that this is simple, pure capitalism? Financing the means of production, like a bank would, but probably taking greater risk for greater return by having specialist knowledge to make better judgements than a banker.

I think I’m seeing people who are asking for ideas and using other people’s money (sometimes the government’s), in the hope of profit with no personal or corporate risk. Isn’t that a ‘chancer’? Am I missing something?

(Marc Cooper) #2

The word derives from the French for to undertake. So, you could say they were undertakers. rimshot.

The google definition you give is straight out of Apple’s dictionary, which is derived from the OED, allegedly.

fwiw, the Spanish is empresario, which refers to its original English meaning of entrepreneur. And empresa is the word for a company.

(Philip Wattis) #3

A couple of points. Virtually everyone has some good ideas at some point, but unless you have an exceptional track record of turning ideas into successful businesses, then you won’t secure funding. Normally your business will need to demonstrate some sort of traction to secure investment.

Secondly, there is almost always an opportunity cost. Entrepreneurs typically take on a huge risk in trying to make something work for little reward. This is time when they could be developing a career and earning a nice salary working for someone else. My first venture was going for some years before I was earning my market value, let alone working for seven days a week with very long days.

So I think chancer is a little unfair. I would say that an entrepreneur may be more accustomed to taking risks and more comfortable with uncertainty than your average person. Other qualities I often see is accepting delayed gratification and a drive that enables you to do the things that need to be done, even when you least want to do them.

(Richard Cunningham) #4

The way I see it, there is a lot money in system that people need to “work” for them. If say you had £1m or a similar amount, you’d have some basic options, to make it work for you and avoid losing it to inflation over a 10-20yr period.

  • Put it in the bank: 0.5-1% (on deposits of this size)
  • Buy some property and let it out: 5% yield
  • Put it in a stock market tracker: 7% return

The above are not without risks, but in general pretty safe. Those that want larger returns are the ones giving money to entrepreneurs to help grow it, with the expectation they’ll out do the safer options.

Banks mostly lend money for quite safe things, houses, cars, businesses with a track record etc. So the VCs and angel investors are the ones that fund entrepreneurs.

To your original question, I see an entrepreneur as someone wanting to create new something of value, typically a business, but not always. Often they are taking much risk themselves initially, though after a short time they’ll need more money they have personally, to grow it quickly, so they’ll need to get that from somewhere (i.e. a VC). In my experience entrepreneur typically don’t have much money (as in cash) at all, the key trait is ability (and desire) to build something and getting the backing to do that, is part of the skill of doing that.

(Andy Wootton) #5

I don’t think I used “chancer” for someone who brings experience, skills, hard work or investment to the table. I certainly didn’t intend to. When I said “I don’t think they need to have the skills necessary to do that”, I didn’t mean that they weren’t allowed to, just that if they brought the idea or the money, they might be excused.

I asked the question because I was surprised by the Google/Apple/OED definition. That sounded like ‘investor’ to me. Is your definition ‘someone who is willing to work below market rate for the chance of higher reward later’? That’s most businesses, isn’t it, except contracting which is ‘get loads of money now for having your skills allowed to get out of date’? I’ve done that.

(Andy Wootton) #6

A ‘social enterprise’, using ‘social capital’? In that context, what does “value” mean? Are those organisations making a financial profit for anyone? Are the salaries at appropriate market rates? I think there are good people doing good things but there seems a lack of transparency about the flow of money around some of these organisations. I’m concerned that some are wolves in sheep’s clothing, using the terminology as a marketing tool and getting people to work for nothing.

e.g. As an example of a possibly innocent lamb, I’m aware of a shop that provides opportunities for released prisoners to get work experience. That is their social mission. Let us say that the owners plough 50% of profits back into the mission, as suggested in the PDF. Would that be to start opening a chain of shops? Who do those shops belong to if the business decides to change direction and become a conventional business? Is that simply cashing in the social capital you have earned for a handy cash lump sum? Would that be OK? Obviously they could have kept 100% of profits in the first place, without the social enterprise but would they have had the same community support? Would they have invested 50% of profits in new shops anyway?

(Philip Wattis) #7

I like the definition provided here: http://www.businessdictionary.com/definition/entrepreneur.html

I think it is interesting to note that entrepreneurs aren’t necessarily motivated by profit. The most exciting entrepreneurs that I have had the good fortune to meet talk far more about the value they can create than the money they will make. Similarly, the ones I have met who seemed most focussed on ‘getting rich’ are the ones who appear least likely to succeed.

(Andy Wootton) #8

Again, @PhilW what do you mean by “value”? Is that “A Good Thing” or does it have a currency sign attached, as something like ‘shareholder value’ and feeling you created a business? Obviously that might be A good Thing too because it might provide employment or revitalise an area and provide new hope for a community.

I’m not writing a book to get rich (though that might be nice) but because I scratched an itch to investigate an area I didn’t understand. If no-one wants to read it, I’d be a bit disappointed but I won’t feel I completely wasted my time.

(Philip Wattis) #9

I mean specifically about the value they can create for the customer (or potential customer). This may be in the form of an original idea or product, an evolution of something that already exists, or simply offering something that already exists but at a much lower cost (or even for free). Creating value for the customer is the very essence of business.

Shareholder value (or profit in other words), is only ever a consequence of other actions taken. That’s why I feel when an entrepreneur places value in profit ahead of other concerns, they increase the likelihood of failure.

(Andy Wootton) #10

But you feel that most entrepreneurs are driven to achieve good mouse-trap sales figures not just the thrill of providing the world with a better mouse-trap? That must be the geek/entrepreneur boundary.

There’s obviously an additional geek/nerd boundary beyond which the trap is for zombies or wizards :smiley: It doesn’t work for mice but would have done with a bit more work. They couldn’t be bothered, once the basic design was proved worthy.

(Philip Wattis) #11

I can’t speak for others but I get excited about making businesses work, and profit is ultimately a necessity. It’s just another form of problem solving. If someone gets excited at building a better mousetrap, they’ll also be excited about building a better mousetrap2 or something entirely different. If you don’t build a successful business, the finances to live and to fund future ventures simply won’t be available.

If an entrepreneur is driven by providing value, or a solution to a problem, it probably holds true that the more people he/she can provide it to, the better. This again involves growing a business.

(Greg Robson) #12

There was a story on Midlands Today this week about a teenager who had sold tax disc reminders and made £100,000 and then bought a field that developers wanted to pay millions for. They described him as an “entrepreneur” and made the usual Apprentice/Alan Sugar comparisons.

However… he wanted to study drama and didn’t really have any interesting in going further!

For me I see entrepreneurs as people who:

  • Habitually seeking new ventures and/or have multiple ideas on the go
  • Always commit 100% to pushing ideas forward
  • Don’t get dissuaded if ventures fail.

If you don’t meet those criteria, then you’re either self-employed or a small business owner, and they are both noble titles to hold in their own right :slight_smile:

(Andy Wootton) #13

I think I meet those requirements (as long as you don’t mean 100% committed to one idea at a time, and even that is deliberate and part of ‘a bigger idea’) but I’m not currently any of those things. I don’t even believe categories are fixed. I don’t know why I asked the question :smiley:

(Andy Wootton) #14

Going through the pile of paper on my desk, I just found Mrs. Woo’s copy of ‘Management Today’, Dec 2016-Jan 2017. I kept it because ARM had been selected as the most admired UK company of 2016. By the time the magazine was published they’d been bought by Chinese SoftBank for £24.3bn. In these times of nationalism, that seems at odds with stated government strategy but to The Point:

In a column ‘At the back’, Thomas Chamorro-Premuzic discussed whether women might make better entrepreneurs than men but he said, “If one defines creativity as the ability to generate novel and useful ideas, and innovation as the practical implementation of such ideas (into services, products, or buisinesses)… most organisations have no shortage of creative ideas: what they lack is people who can turn them into actual innovation. You can think of entrepreneurship as the process whereby creativity becomes innovation. This requires persistence, networking skills and a meaningful mission.”

Putting it another way, it is very hard to sell an idea for what it’s worth. You have to convert it into a patentable product or establish a dominant default service, ahead of competitors. You have to capture (imprison?) your idea to exploit its value.

He went on to say that after launch, growing a business may require different skills.

(Marc Cooper) #15

From observation, one of the things 20+ employee companies sometimes do is stifle innovation with process or, sometimes, blunt authority. If they continue to grow, they later struggle to understand why they can no longer innovate; failing to grasp that they smothered the culture long a go.

re: changing skills’ requirements: One to a handful is easy. Difficulty can happen around 20. Things are serious by then, and making payroll is definitely a thing. The next blip seems to be around 100, when informal communication can start to become overwhelming – remote-friendly and distributed companies should win here, though genuine autonomy helps a lot too. It very much depends on the business, of course.

(Andy Wootton) #16

Is 20 an agile team of 6 +/- 3 and the maximum overhead they can carry? :slight_smile:
Roman soldiers worked in squads of 8 per tent too. Exponential growth in number of relationships. 100 is probably something similar, if not due to Dunbar’s Number which appears to be about 150 this week.

A couple of months ago, I’d have suggested you meant ‘procedure’ not “process”, because the process is whatever you do and procedure is how you do it, but I’ve decided they are continuous not a binary. I now think it is important to ensure that the sum of your process/procedure network is a function that self-modifies to maximise value, in response to changing business context, over time. Blame Clojure’s higher-order functions and the scientific method.

(Greg Robson) #17

You reminded me of an interview excerpt I read in Tools of Titans compiled Tim Ferris:

The rule of 3 and 10. Basically, large organisation shifts happen at 3, 10, 30, 100, 300, 1000 etc… must be hard for some startups as they can break through 10, 30 and 100 in a short space of time!

(Andy Wootton) #18

I decided to come back to this, after @kathpreston’s post about the rail workshop.

In my comments there, I think I “complected” (thanks, Rich Hickey): idea inception, filtering and development; observation, analysis, problem recognition, problem solving, product development and the other parts of ‘entrepreneurship’, if we take that to mean “making it happen”, once we have some idea of what ‘it’ is. That starts to sound like a job for a team, doesn’t it?

There seems very little chance of finding the skills to be passionate about solving a problem, then dispassionate enough to throw it away because it won’t be profitable, or gritty enough to push on through when the going gets tough in a single person. I’m wondering if I could map the innovation and entrepreneurial process (not procedure, I imagine that is different every time - the things which must be achieved, not how to do them.)

I used the word “grit” due to a couple of recent posts on LInkedIn. One suggested that ‘grit’ is a better indicator of career success than IQ, the other that ideas are worth very little (I think it suggested $20,) only delivering. Since I think most people in our ‘tech community’ are intelligent ideas butterflies, I probably shouldn’t plan on a career in motivational speaking :smiley: