My Definition of Entrepreneurship
A famous, but false, anecdote about entrepreneurship is when George W. Bush told Tony Blair that the problem with the French economy is that they don’t have a word for entrepreneurs. This would have been funnier if it were true, but this French word has grown in popularity over the years, being used to describe a whole of people and activities. There are university programs, continuing education programs, and just about every Instagrammer or Tik Tok content creator that hopes to one day make some money will refer to themselves as entrepreneurs. We have created ‘intrapreneurs’ to define entrepreneurs inside of existing firms. We have social entrepreneurs who create new social efforts or non-profits. Overall, this work has been splayed out in a way where the definition has become dilutive. Personally, I’m torn between trying to reclaim it and just avoid it altogether.
Officially, there is a definition, and it’s this: a person who organizes and operates a business or businesses, taking on greater than normal financial risks in order to do so. In my opinion, there are 3 keywords that make up the essence of this definition: organize, operate, and risk. Let’s examine each one.
Organize is what happens in order to get you to the starting line. Having a thought or an idea is a part of it, but only a small part of it. You might recognize a need, a gap in the market, an unserved or underserved customer, or you just have an idea that you think is neat. That’s wonderful – good for you. But people have these thoughts every day. What’s the next step? Is the idea feasible? What’s needed to make it happen? What help do you need? The starting line might not be the launch or generating revenue, but it does mean you’ve put together your effort with, well, organization. I don’t love the word organize, because it feels fairly mundane given how difficult this phase is. However, this phase is a combination of lots and lots of mundane tasks along with a whole bunch of strategic, creative, and inspired moments along the way.
Operate comes next. I can’t tell you how many entrepreneurs I’ve met who don’t want to talk about their idea (even when they’re pitching me to invest) because they think the idea is the value, but the ability to execute the idea is where most of the value is created. That’s why I think the team is a more important investment criterion than the idea itself. The world is filled with great ideas that couldn’t gain traction because of a lack of execution, just as it is filled with slightly less great ideas that came to fruition through superior execution. This is what happens after you cross the starting line. Thomas Edison is credited with stating that genius is 1 percent inspiration and 99 percent perspiration (although the history of him saying this exact quote is muddled, he certainly expressed the sentiment). This phase still requires strategic thinking, creativity, and lots and lots of learning, but the grind of execution is what leads you to operate something worth creating.
Risk is also a keyword, and perhaps the word most often ignored when tossing about the entrepreneur moniker. “Opportunity cost” is not risk. Saying that you could have done something else with your time, whether for money or enjoyment and therefore you risked something, is not what this means. It means that you are at risk for loss. Traditionally this means capital, but there are other forms of loss. This is where people with nice (and sometimes incredibly valuable) side-hustles or getting paid for their talents in any form of the gig economy is not the same as building something that requires risk. I had a founder coming to me to invest in their startup. I asked them how much capital they had put in, and they explained that they liked their house and had kids in college, so they weren’t willing to give that up, which is why he was raising money from others. In my opinion, this disqualified him as an entrepreneur, I did not invest, and the business failed to achieve the promise. I don’t care if you only have $5 in your pocket, you better be willing to put $3 into your idea. Risk is a signal of commitment and conviction, and essentially your motivation to press on when facing adversity.
There are fewer entrepreneurs in the world than Instagram and LinkedIn would suggest there exists. That’s ok. There is nothing wrong with the pursuits that don’t meet this measure, just like there is absolutely nobility in doing a job for a company. But an entrepreneur, who builds companies that often last and employ others because of the criteria above, is something specific, and something special.