How Do You Define Entrepreneurship?
Everyone, it seems, is an entrepreneur these days.
Every barrier is falling. It’s never been cheaper to start a business. So start something that resembles the possibility of being a business; almost anything, and—guess what?—you’re an instant entrepreneur, right?
All of your friends will tell you what a great idea it is and shower you with praise. Moreover, entrepreneurship is everywhere. Not just in Silicon Valley, New York, and Boston, but every city and college town in the U.S.
And it’s not just for twenty-somethings, anymore. The number of recently retired and laid-off people disrupted by the financial crisis have started their own business is up 60 percent between 2008 and 2013, according to the Wall Street Journal.
But what exactly is entrepreneurship? How has the definition changed now that everyone is doing it?
The classic definition is over 35 years old. Back in 1983, Howard Stevenson, business professor at the Harvard Business School, wrote:
“Entrepreneurship is the pursuit of opportunity without regard to resources currently controlled.”
That’s a great definition and difficult to improve on, but let me try. After all, one of the key elements of entrepreneurship is the conviction that you can improve upon the status quo.
But first, let’s look at the dictionary definitions of entrepreneur.
• “One who organizes manages and assumes the risks of a business or enterprise.”
• “A person who organizes and manages any enterprise, especially a business, usually with considerable initiative and risk.”
• “The capacity and willingness to develop, organize and manage a startup or new business venture along with any of its risks.”
These are all decent definitions, but remarkably they miss two essential components: filling an authentic need (recognized or visionary) and doing so at a (future) profit.
Without the former, you don’t have paying customers.
Without the latter, you have a hobby, not a business.
Real entrepreneurship does not happen until an unmet need is identified and that need is filled at a profit.
Meeting either of those conditions is exceedingly difficult and getting harder by the day.
Entrepreneurship Starts with Leadership
My definition of entrepreneurship starts with leadership:
“An entrepreneur is a leader with the motivation, business sense, and absolute conviction they are creating and executing on a superior customer solution at a profit.”
The entrepreneurs I back don’t talk about desires or intentions; they are always firmly in the moment.
Oh, and it’s great for entrepreneurs who need financing to indicate they are thinking of their eventual exit. That’s the only way angel investors and VCs will see a return on their investment, and we expect the most-bankable entrepreneurs to respect that reality.
So show me great leadership, a superior solution, a cohesive team with the ability to execute, customers ready to be served at a profit, and an opportunity of an eventual exit and you’ve got me in your corner.
I listen to many presentations.
Many of the presentations are brilliant. The ideas literally take my breath away. But many brilliant presentations suffer from a common problem.
They don’t describe a fundable business.
But show me great leadership, a team that can execute, the outline of a fundable idea, and just the germ of profitability. That’s the definition of entrepreneurship I’m willing to back.