Do you have an entrepreneurial state of mind?
Everything I read and hear in the world of startups conforms to a particular notion of entrepreneurship. It’s the notion of starting something new, preferably something never done before—like Facebook, perhaps. You are considered an “entrepreneur” if you come up with an idea to build a product or service offering never built before, incorporate an entity, hire a team, build a mobile app, and get people to start using something new. You cross the threshold between success and failure if you raise VC money, expand, and get acquired (it’s uncool to go IPO). You’re still an “entrepreneur” if your business fails. This is a wonderful model, and we are fortunate to live and work in an environment that celebrates this culture.
However, is that all there is to the notion of entrepreneurship?
I just returned from a trip to Southeast Asia where I discovered this kind of an ecosystem simply does not exist in many fast-growing nations—such as: Thailand, South Korea, or Vietnam. At best, it exists in a very limited way, sometimes under very tight controls and monitoring by officialdom or big business conglomerates. Yet, these countries are practicing their own brand of entrepreneurship within their structures by incubating new ideas and bringing out the entrepreneurial spirit among dedicated employees to develop new products that create new markets within these economies, and take on big global businesses. Large western corporations are not much different, either. They make bets on new products within the support structure of the mothership so that financial risks can be managed; employees don’t have to risk their careers and venture into uncharted territories across the world for new markets and profits.
Consider these examples:
- Samsung’s line of Galaxy smartphones has been giving Apple a serious run for their money against the once unassailable iPhone. The Galaxy is as much an entrepreneurial success as the iPhone, yet we celebrate Apple as the entrepreneurial model, while we look at Samsung as just another big corporation.
- Many large corporations in the west—including the likes of GE, IBM, and P&G—routinely reinvent themselves and come up with great new products for their businesses (and suffer some painful and costly failures as well). IBM famously remade itself as a services company in the nineties under Lou Gerstner. More recently, Netflix effectively cannibalized its DVD mail-in rentals to invest aggressively in a streaming model.
- Russian oligarchs cornered the market in the privatization of the former Soviet Union’s state-owned enterprises in the nineties and became fabulously wealthy by acquiring controlling stakes in large natural resources companies (sometimes by questionable means). While this was unconventional, it nevertheless was a great example of seizing opportunities and demonstrates great entrepreneurial zeal.
In all of these cases, there were brilliant businessmen, engineers, and product strategists who: saw and seized opportunities, fearlessly made bold moves, overcame countless obstacles on the way, and relied on support from some form of a larger ecosystem for sustenance and guidance to ensure success.
So, “entrepreneurship” is far more prevalent and pervasive than merely being a sexy notion of starting something in a dorm room that grows into a multi-billion dollar corporation in 18 months. It manifests itself when a corporate R&D group invents a new product, an innovation team finds a new and disruptive way of increasing market share and profits, and a CEO decides to abandon an old business model to embrace a new one.
Reid Hoffman talks about the Startup of You, in which he argues you are your own entrepreneur. This reduces the notion of entrepreneurship to its lowest common denominator—namely, you. It makes perfect sense if you consider that “you” are an economic good, and you constantly seek to maintain and enhance the value of the good by making periodic and strategic investments, like a college education, an acquired skill or vocation, and hands-on experience. You seek to maximize what you are paid for you to increase the ROI of the investment in you. If you make the right investments, your value goes up, and “you” are hired, bought, or acquired at a premium (i.e. a high P/E multiple).
Whether you work in a large corporation or at a tiny startup, you are constantly striving to add value—and that is at the core of entrepreneurial principles. The only difference between a “startup” entrepreneur and a “corporate” entrepreneur is that, conceptually, the startup entrepreneur risks all to gain all, whereas the corporate employee risks less in return for a steady but limited return (think stocks vs. bonds). Even that is not necessarily a true statement because startup teams often risk everything personally but end up enriching VCs more than themselves. At the same time, corporate entrepreneurs often gain big upsides through stock options and bonuses for successful programs, while limiting downside risks.
Having seen both sides of the table, it seems to me that the key is to approach everything you do with an entrepreneurial mindset—whether in a large corporation or in a bootstrapped startup. It is a careful assessment of your own strengths and desires, combined with a cold, hard calculation of opportunity costs and risks, that should determine which model is right for you. America is a place that offers this choice and you not only have the option to choose one or the other, but also to move back and forth between corporate and startup environments…or even live in both !
Ultimately, as Reid Hoffman says, your startup is You. Entrepreneurship is a state of mind.