Chapter 1

Understanding Entrepreneurship

IN THIS CHAPTER

Understanding what entrepreneurship really means

Discovering the many types of entrepreneurs

Deciding to become an entrepreneur

The term entrepreneur has become so much a part of everyday usage that some of the key attributes that define an entrepreneur have been worn away. The faces of entrepreneurs have become familiar to us, as they host podcasts and show us how it's done on YouTube and TikTok.

It's not surprising then that entrepreneurs come in an amazing variety of types and styles. And they are a unique breed. The ventures they create disrupt the market. That's because entrepreneurs change the way you and I do things - usually for the better.

For example, Heather Ward, founder of Hyperion Global Energy in Ottawa, Canada, led the development of a modular system that captures CO2 from the smokestack emissions of heavy industry and uses the carbon to make materials. She and other cleantech entrepreneurs are one example of those who are taking on big, difficult problems that most believe can't easily be solved.

Any problem, even the most complex, can be broken into chunks, each one a smaller problem that may be easier to tackle. What you choose to tackle will depend on your reason for wanting to become an entrepreneur. We talk about that a bit later in this chapter.

Anyone Can Become an Entrepreneur

Now that's a bold statement. Anyone can become an entrepreneur? Yes, it's true, if they have the right mindset and certain traits that are common to entrepreneurs. Who exactly are these people at the center of entrepreneurship? In simple terms, an entrepreneur is someone who creates a new opportunity in the world of business and assembles the resources necessary - money, people, technology, and materials - to successfully exploit that opportunity. This admittedly is a broad definition that encompasses the different kinds of entrepreneurial ventures and many perspectives on entrepreneurship.

The growth in the number of entrepreneurs is a sign of changing times. In 2016, 25 million Americans were starting or running their own businesses. By 2019, 28 percent of American workers were engaged in some form of self-employment. Moreover, 83 percent of business owners started their companies from scratch. The United States is home to 8 million minority-owned businesses and 11.9 million small businesses owned by women.

Interestingly enough, the United States is not growing the fastest in number of small businesses. The country with the fastest growth rate, the Dominican Republic, has ten adults start a new business for every adult who owns an existing business. This is a common pattern in smaller countries, where jobs are few and entrepreneurship is the most promising road out of poverty. We do know that about 70 percent of entrepreneurs went to college, but that means that about 30 percent did not - which is still a sizeable number. Those who did not go to college likely found a way to take some business courses, maybe online, to help them understand the critical thinking, finance, management, and marketing sides of the business so they would be better prepared to run their companies.

Recognizing an Entrepreneurial Venture

People sometimes think of entrepreneurs only as big risk takers and shake-up-the-market types. For example, they look at what Uber did for the personal transportation industry. Uber's initial offering was ride hailing, but based on their success with that service they went on to offer food delivery, package delivery, couriers, and freight transportation. Uber found its opportunity at the intersection of smartphones, app stores, and customers' desire for on-demand work as part of the growing gig economy, something we talk about later.

It is also true that entrepreneurs invest in making improvements on products and services we're familiar with, from quick-service food to in-the-home health services. Entrepreneurs recognize customers' pain, and they know these pain points are associated with a compelling problem that is solvable. They know that if they can solve that big problem and take away that pain, the customer will be willing to pay a premium to get the solution. By identifying the solution for a problem where a real need exists, entrepreneurs can differentiate their solution from competitors' solutions and prioritize the resources they need to launch their business. Then, if they can move fast and run the business right (running it right is key), they can gain a foothold in the market niche, well before they have to go head-to-head with much bigger competitors.

The bottom line is entrepreneurs are ordinary people who do extraordinary things. They take everyday ideas and give them some magic. You don't need a lot of experience or resources to be an entrepreneur. You do need passion, persistence, and a creative mind. You have to believe you can solve a problem like no one else.

That was certainly the attitude of the founding CEO of Uber, Travis Kalanick. However, an effective leader of a new company must also display a bit of humility and realize that no matter who they are, they didn't get to where they are without the help and guidance of others. Every entrepreneurial venture has stakeholders - investors, partners, employees, board members, and customers - and those stakeholders need to be heard. It often happens that once a startup becomes a big company very fast, the founding CEO no longer has the skills required to effectively run that larger company and is asked to step aside in favor of professional management with more experience. In the case of Uber, we have a wildly successful startup whose founder almost destroyed the company to feed his ego. His lack of professional management skills nearly took the company down. Check out the excellent documentary film on Uber, Super Pumped: The Battle for Uber, which is on Netflix and is based on a book by the same name.

Entrepreneurs are as human as anyone else. If your goal is as ambitious as to build "the next Uber," make sure you ask yourself why. Your reasons will be a clue to whether you can actually go the distance and keep your eyes on building a sustainable company for the long term and for the employees you need to help you get there. Uber is a great example of disruptive entrepreneurship. It is also an example of how even the best new ventures can implode when the needs of the stakeholders are not addressed.

CHECK YOUR ENTREPRENEURIAL INSTINCTS

Take this little quiz to see if you have the right stuff to become an entrepreneur. But don't take the results too seriously. I assure you that your answers will not determine whether you can succeed as an entrepreneur, but they may help you decide if entrepreneurship is right for you. The choices provided are the most common answers given by entrepreneurs in general.

1. Are you:
   • Married or in a committed relationship?
   • Single?
   • Widowed?
   • Divorced?
2. Are you:
   • Male?
   • Female?
3. Why do you want to start a business?
   • To make a lot of money
   • To be independent
   • To give yourself a job
   • To gain power
   • To become famous
4. How comfortable are you with uncertainty?
   • Very comfortable
   • Somewhat comfortable
   • Not comfortable
5. To become successful as an entrepreneur, what will you need?
   • Money
   • Luck
   • Hard work
   • A good idea
   • All of the above
6. Concerning your willingness to take risk, are you:
   • A high risk taker
   • A moderate risk taker
   • One who avoids risk

Answers

1. The most common response is married. This doesn't mean that all entrepreneurs are married when they start their businesses or stay married for the duration. Most entrepreneurs are married or in a committed relationship by the time they start a venture, possibly because having a working spouse gives them a steady income while they're risking time and capital starting a new venture. However, these days, you notice growing numbers of single entrepreneurs starting dot-com ventures while still in their teens.
2. It still is true that more men start new ventures than women, but that dynamic is changing. Women are starting businesses at a much faster rate than men, typically while they're in their 20s before they get married and start families or after their children are grown.
3. The common reason entrepreneurs give for wanting to start a business is to be independent. For most entrepreneurs, money is a by-product of operating a venture they are passionate about. However, money does motivate a certain class of entrepreneurs. When the media touts the riches of successful entrepreneurs, people may get the impression that entrepreneurship is a means to quickly create wealth. But if there ever was the allure of quick riches, it is vanishing. Even among venture capitalists, the focus is shifting to non-Internet technology companies that create new value and make a profit in about three years.
4. Most entrepreneurs are comfortable with uncertainty, because they understand intuitively that uncertainty brings opportunity with it. In general, people who must have a high degree of predictability in their lives are uncomfortable in the world of the...