What Is Entrepreneurship? [part 1]

by The TECHdotMN Team

By design, words have semantic significance and they carry weight. We use words to succinctly convey deeper meaning, then we string them together in the form of sentences — the basis of communication structure relating to every aspect of our individual human being and shared cultural existence.

Words come with associated subconscious assumptions, often interpreted and applied in such a way that shapes our understanding of things that make up the world at large.

Yet what happens when a word becomes so casually woven into our collective vocabulary that it loses shared value and intended significance? Can a word, used in a context or capacity, mean different things to different people?  Or, could a word as ubiquitous as entrepreneurship get lost in translation?


 

As the narrative of entrepreneurship continues to rise among mainstream vernacular, it’s about time to take a big step back and wonder:

What is entrepreneurship?

 
We began asking people what they mean, specifically, whenever they use this word — and were amazed the range of responses; take it to the blog, we were told!

So while we (as in TECHdotMN) have our own internal orientation of the term and where the boundaries lie, it’s clear that usage can imply different things depending on the source.  And in light of the myriad of things designed around and for entrepreneurs, a focused perspective is helpful to ensure that our audience is on the same page.

In asking you, we aspire to foster open discussion and drive towards a clearer meaning of the word entrepreneurship going forward.   Once established and articulated, we can further dissect and expand upon what it means to be an entrepreneur by definition, the varying types + degrees of entrepreneurship and — most importantly — how those who relate with with a given definition can identify their peers.

As an experiment, the next time you hear someone use the word entrepreneurship (or entrepreneur), simply ask: what does that mean to you?

Because it’s through clarity and communication that we can all learn…

Comments

  • Matt Otterstatter

    I’m looking forward to seeing the differences in the definitions that people use….especially the ones who are part of public policy and economic development.

    • http://tech.mn Jeff Pesek

      Kick it off Matt – what’s yours?

      • Matt Otterstatter

        I believe there are 5 necessary and sufficient conditions to call someone an entrepreneur:

        1–They build scale. Entrepreneurs don’t sell their time as a freelance consultant does, because that resource cannot scale. Maybe they start out doing everything with their own time, but they actually seek to replace themselves by hiring other people or automating processes to remove themselves as a bottleneck on the organization’s growth.

        2–They create value. They don’t simply extract value from a system. Clever people can exploit government regulation or nefarious business models like pyramid schemes or drug rings, but I don’t consider them entrepreneurs. Successful entrepreneurs create value first, and then extract part of that for themselves (often a very large part, but at least they created value for society).

        3–They try to change something about the world. You could own a chain of laundromats across the city (scale + value), but the world keeps on spinning just the same. To me that’s the difference between a small business owner and an entrepreneur that is trying to “put a dent in the universe” with innovative technology.

        4–They actually do the work. I’ve met a lot of local companies that have a management team with little economics in the business, because the actual owners/founders wanted somebody else to implement their vision. That’s fine, but those founders shouldn’t call themselves entrepreneurs, as they are really just wealthy startup-pimps.

        5–They take a risk. If you do all of the above, but you stay in the comfy confines of a corporate job, you are not yet an entrepreneur. Only after cutting the cord and flying on your own power are you an entrepreneur.

        Note the one thing I’ve left out of my definition is profit. A lot of for-profit companies don’t make any profit at all, and a lot of non-profits make a ton of revenues (just not technically profit). If you create value at scale, you will have an easy path towards revenues. What you do with that is your business, but it doesn’t make you more or less of an entrepreneur if you took a risk to build something that changed the world in a valuable way. I’m just as inspired by the entrepreneurs that started non-profits like Teach For America, Charity:water, Endeavor, and Kiva.

        • http://tech.mn Jeff Pesek

          Thanks for sharing, Matt. Also, per your comment, I’m going to reach out to those people and groups concerned with public policy/economic development to hear how they perceive it.

          • http://tech.mn Jeff Pesek

            Here’s what DEED Commissioner Katie Clark Sieben had to say in the context of a recent event called “Entrepreneurship & Economic Development” (https://www.eventbrite.com/e/supporting-entrepreneurship-driven-economic-development-in-minnesota-tickets-20116303405) –

            “Entrepreneurship is more than idea generation – it’s the innovative approach to solving the world’s problems. Entrepreneurs are those who believe that we can always be doing better, and are able to put the collective steps together in order to initiate change. In many ways, entrepreneurship is a collection of risks being built towards a greater reward: altering the “norm” and changing the status quo.

            As the risks mounts for entrepreneurs, so does the need for support. This
            is where the public sector can help – we have a number of programs that support startups and small businesses that are working to better our communities and drive innovation. I would encourage all those who are working to initiate change via entrepreneurship to learn more about our programs at: mn.gov/deed.”

          • http://tech.mn Jeff Pesek

            Here’s what John Stavig said on behalf of the Carlson School of Management & Gary S. Holmes Center for Entrepreneurship:

            “For educational purposes, we tend to start with broad
            definitions of entrepreneurship – the process of securing resources and
            managing risk to identify, develop and realize opportunities to create
            value through a new venture.

            This creative and iterative process to
            solving problems can take place in large corporations, mission-driven
            organizations, public entities or new startups.

            We have a range of
            classes that cover one or more elements of the process in different
            settings (corporate entrepreneurship, new venture financing, innovation,
            creative problem solving, customer development, social venturing,
            technology entrepreneurship, business feasibility and planning, scaling
            high-growth businesses, experiential courses, etc.)”

  • Al Baker

    Ah, Geeze, let me answer this after I get done raising, recruiting, partnering, groveling, networking, managing, financing, testing, researching, groveling, pro-forma-ing, and loving it.

    • http://tech.mn Jeff Pesek

      Aha, sounds like you’re living it Al. Want to take a stab at defining, in general?

      • Al Baker

        I think it is generally an individual who takes on a significant amount of opportunity cost and financial risk at the chance to create a business that solves a particularly difficult problem for people and businesses.

        Also, let’s not forget the wise words of President George W. Bush:

        “The French don’t have a word for Entrepreneur.”

        • Frank Jaskulke

          Which is funny because Meriam-Webster the origin of the word is French:)

  • http://minnovation.co Joe Serrano

    Feels like there is a spectrum:

    lemonade stands < sole proprietor lifestyle biz < kid who got seed funding from rich parents < franchisees < empire builder who came from less than nothing and changed the way the planet lives… and everything in between…

    I had a conversation regarding "innovation" and "disruption" recently along the same lines. We seem to project whatever we have read, experience, expect, or want to expect into these vessels of semantics.

    We need many more words. Eskimos have 50 words for snow. The same can be said for Entrepreneur. Perhaps the minimum is as Drucker states: creating a customer?

    • http://tech.mn Jeff Pesek

      50 shades of entrepreneurship?

      • http://minnovation.co Joe Serrano

        Seduction. Expectation. Sado-Masochism. Bondage. Discipline. Obsession. Glorification of abuse. Punishment. Reward.

        Pretty apt description Jeff!

  • Don Ball

    Ok, I’ll bite.

    As a baseline, let’s just agree that anyone who starts a venture of any kind is taking on risk and gets my admiration. And those who know our work at COCO will know that we actively support all kinds of ventures, as well as collaboration amongst all kinds of founders. Diversity of practice is good.

    That said, I like to have language to describe different kinds of ventures, because each type of business entails a different kind of game, and the founders have to abide by different rules of engagement.

    I’m largely on board with using the word “entrepreneur” to describe someone at the farthest end of the risk/reward continuum. They are foregoing any kind of security or short term compensation and taking on the highest risk of failure in order to build a scalable, for-profit venture that will ideally be sold for multiples, whether that’s via acquisition, acquihire, IPO, etc. It’s delayed gratification in the extreme.

    I don’t tend to lump other venture types (professional practices, consultancies, non-profits, etc.) into the “entrepreneur” category, as that clouds the waters. But, again, that’s mostly for the sake of clarity. I wouldn’t take anything away from the challenge and struggle that goes into creating, say, a successful freelance practice.

    Of course there are some gray areas, such as B-Corps, social ventures (orgs that use market forces to create a business that performs a social good), consultancies that sell time and create products (GoKart Labs, Monkey Island).

    Eager to hear other folks weigh in on this!

    • http://tech.mn Jeff Pesek

      Interesting response, Don, thanks for sharing.

      You use the word “venture” consistently. What does that mean to you and is a non-profit entity a venture in your view?

      Do you consider a for-profit company that teaches people skills and provides them with employment to be a social venture?

  • Frank Jaskulke

    Great post and great discussion so far! I’m out of the public policy and the economic development world (and a business where 2/3’s of the votes are pre-revenue firms).

    I have no clue how to define the word operationally. The MW dictionary says, “a person who starts a business and is willing to risk loss in order to make money” First used in 1852
    I’ll be reading this one intently. Thank you for starting a good discussion.

  • http://www.sparkstarter.com Benjamin Hohl

    I think there are nearly limitless ways you can slice and dice it, but I find the core of entrepreneurship to be quite simple: attempting to solve a human problem.

    Whether the human problem is the necessity to eat and the desire to have pizza delivered to my apartment door at 2 a.m. (hello, Dominos), or it’s the compulsion to binge watch all 13 episodes of House of Cards season 4 in a single sitting (thanks, Netflix), entrepreneurs arise to save the day through the creation of their ventures.

    In my definition, “ventures” are not limited to for-profit, venture-backed startups, but rather applies to any individual that is actively seeking to solve a human problem.

    • http://tech.mn Jeff Pesek

      thanks for sharing, Benjamin.

      “any individual that is actively seeking to solve a human problem”

      does it count if I help my neighbor move their couch from the truck to the living room?

      • http://www.sparkstarter.com Benjamin Hohl

        If you charge that neighbor 20 bucks, then most definitely!

        • http://tech.mn Jeff Pesek

          i asked for 20, they gave me 10 :/

          what you’re saying though, is that there is a monetary component to the definition.

          • http://www.sparkstarter.com Benjamin Hohl

            In most typical forms of entrepreneurship, yes, but I don’t think it’s required.

            For example, an entrepreneur that finds a problem to solve and decides to build a non-profit organization that is funded by government grants is still an entrepreneur in my book.

            To push it to a further extreme, if Bill Gates comes up with his next breakthrough idea, call it X, that will save Y lives, and decides to spend his fortune giving X away for free, that would still constitute entrepreneurship.

            Point being, I don’t think a monetary exchange (or alternative funding mechanism, such as grants) whatsoever is necessary to fulfill the entrepreneurship definition.

          • http://tech.mn Jeff Pesek

            hmmm. so back to helping my neighbor move their couch – that’s entrepreneurship, even if there’s not money involved, since i am an individual that is solving a human problem?

          • http://www.sparkstarter.com Benjamin Hohl

            It’s tough to break down something to such a granular level and really define it as anything, but yes, you moving that couch one time for your neighbor is an act of entrepreneurship.

            The same goes for Markus Frind when he started PlentyOfFish; if you broke his time down to 20-minute segments (roughly how long it might take to help your neighbor move his couch), and say he wrote 15 lines of code in that amount of time that eventually contributed to millions of matches and a >$500 million acquisition, that 20-minute segment was also an act of entrepreneurship.

            Individual actions (couch moving, writing code) that contribute to the goal of solving human problems constitute entrepreneurship.

            To continue with your couch moving example… perhaps your neighbor is really impressed with your lifting abilities and charismatic attitude. Because of this, he starts telling all the other neighbors, “Guys, when you’ve got a couch to move, you’ve got to talk to Jeff. He’s the guy.” Well, now you’ve found yourself as “Jeff: The Couch Guy” and you’re moving 30 couches a day as your demand soars, as there’s clearly a human pain point in moving. Whether you decide to charge and turn your services into a for-profit venture and scale up to a national couch moving empire, or you continue serving the community out of the good of your heart, either way, you have found a human problem and have provided a solution that people desire.

            “Jeff: The Couch Guy” is an entrepreneur in my book.

  • conorop

    For me, an entrepreneur is someone who builds something from scratch, which provides value to other people. I agree with @motterstatter:disqus that the entrepreneur takes on the risk, and is selling more than just personal time. I also agree with @disqus_6OjPs1wsJz:disqus – that there is probably a spectrum.

    I think a car wash owner, startup founder, and chef/restauranteurs are all entrepreneurs. They all created something that didn’t exist before and have more at risk than just their time.

    One existential question I have is, “Do you have to show success to be an entrepreneur? If only failed ventures or little risk, do you merely have the ‘entrepreneurial spirit?'”

    • http://tech.mn Jeff Pesek

      thanks for sharing Conor, its a good question!

    • Matt Otterstatter

      No doubt small business owners identify with risk and the reward of creating value for people. To me, the purpose of a distinction has never been about which one is “better”, or more respectable. Both are important and make America awesome. Rather, I see value in having a laser-focused definition for the purpose of planning out the strategy of a region’s economic development and future viability.

      Is “entrepreneurship” just a buzzword to these folks, or is there a real strategic reason for wanting to foster more of a very specific kind of activity? Having a precise definition will guide the allocation of resources and increase the odds of success.

      • conorop

        I can get onboard with that POV. From an economic development point of view, there is much greater societal upside to a massive new company, or even potentially a whole new industry.

        What if the distinction is Enterprising Entrepreneurs vs Local Entrepreneurs?

  • http://paulprins.net Paul Prins

    I’ve thought about this for a few days and came back around to add my 2 cents into the mix. For me an entrepreneur is anyone who takes the risk of creating something, and brings it into the market with the goal of selling it. My start up puts me in contact with a lot of nonprofits who provider services at no cost, and I seldom hear the term entrepreneur used in that context (there are other words used like activist, advocate, organizer, champion and others depending on the area their nonprofit serves). The selling aspect seems critical to entrepreneurship.

    The creating part I mentioned is a bit difficult to wrestle down as well. Ideally I’d love to restrict the use of entrepreneur to individuals/groups who create something from nothing and bring it to market. But there are people who are gifted at seeing needs and finding existing solutions to scratch the itch. While not creating the solution they are creating the bridge between the problem and answer. Good on them. My bias is towards wanting to see the term (along with the term startup) be used more exclusively for those people creating new products and services who then bring them to market (not just new marketing or means of delivery). Yet I don’t think that would be a general understanding of the term.

    There does seem to be a point where many people begin to see themselves as small business owners over being an entrepreneur. It seems to be around the time where continuing to take incremental risks and pushing their business has lost it’s appeal. This could be because they were able to realize the dream they had when they started, or they reached a point they were comfortable with along the way. It seems the ongoing pursuit of growth, expansion, and to see their solution in front of more and more people is a key. Entrepreneurs have a drive that might very from time to time, but must always push forward. /2-cents

    • http://tech.mn Jeff Pesek

      thanks for sharing, Paul.

  • Bill Bushey

    Sorry I’m late to the discussion, and thank you Jeff for starting it.

    I tend to think of ‘entrepreneurship’ very broadly, as operationalizing a vision for change in the world that is widely accessible. As many have already said, doing this requires some mix of creativity, risk, and actually doing something. As many have also said, I think general entrepreneurship is not limited to a particularly type of organization structure or sector. In fact, I think it is important for an entrepreneur to keep a variety structural options on the table, so as not to limit the tools available to help one achieve their vision.

    Inspired by the comments already here, I have a few unorganized ideas to add to this discussion:

    – Is it worth thinking about subsets of entrepreneurship? The broadest definition applies across all kinds of organizations and structures, and an ‘entrepreneur’ is generally being creative both in product and service ideas, and in the delivery and operationalizing of those ideas. But entrepreneurs who work primarily in a specific structure or segment (e.g. for profit startups, new non-profits, changes in government operation) develop expertise that can be invaluable when actually executing a strategy. It might be worth thinking about the skills and values that connect entrepreneurs very broadly, to support discussions and networking across all of the vehicles and segments of creative change, and to identify subsets of entrepreneurship to support communities with specific, valuable skills.

    – Risk: what kind, and whose? I think there’s an assumption that the risk involved in entrepreneurship is personal financial risk. I think that is almost universal true, and I could be persuaded that some form of it is a requirement for entrepreneurship. But should other forms of risk be considered when defining ‘entrepreneurship’? Most entrepreneurs also take on relationship risks, career risks, in some cases physical risks, etc. And scaling an entrepreneurial idea usually involves convincing others to take on risk for your idea and operation. Equity investment, loans, grants, donations, and government supports all represent risk being assumed by individuals, organizations, or entire communities in support of a delivery of a new idea.

    – Entrepreneurship is emotional. Emotion doesn’t need to be part of a definition of entrepreneurship, but I think it’s an interesting lens to look at entrepreneurship through. The emotional journey and tightrope of entrepreneurship is fascinating: having the conviction to think you can make the world different while having the humbleness to act on criticism and advice; the confidence to lead a new initiative, but also the awareness of your own limits, flaws, and the need to ask for help; balancing a professional passion that is very personal with those parts of your life that are not about your entrepreneurship.

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