The Fundamental Principle of Entrepreneurship
All successful entrepreneurs, throughout time have done one thing: Successful entrepreneurs make some group of people so happy that they are gladly given money in return.
This principle points to how the goal of entrepreneurship is always about creating positive emotions for others, not creating profit, product or technology. Entrepreneurial success always requires focusing on a specific group of people that are not as happy as they want to be or dream to be. Entrepreneurship requires you understand specific people, or work with somebody who understands them.
Being a successful entrepreneur is not about figuring out how to make a profit because profits only come from how happy you can make people. Entrepreneurial success does not come from being among the first to use a new technology because it only matters if that technology is used to make a lot of people happier than they already are.
As an aspiring or nascent entrepreneur, you need to make some group of people so happy that they gladly hand you money for the opportunity for them to own, enjoy or benefit from what you do. The biggest challenge in being a successful entrepreneur to make many people very happy—everyday—over and over again. Many people give up on implementing their ideas because they realize what they do not want to be responsible for doing what needs to be done every day in order to deliver great experiences to customers.
How to use this principle
Finding groups of people that you think you can make very, very happy is challenging. This principle helps you focus on what are your top priorities and how you plan to achieve each of them. This principle requires you can describe: “what group?” “how happy?” and “gladly pay how much?” We have organized the next few sessions on stepping you through how to crystalize your idea so you have confidence to crisply answer these specific questions.
You need to understand where you are with your idea now. Until you can prove your idea can make some group very happy, you must be skeptical of whatever idea you have now. It is easy to fool yourself. No entrepreneur’s first idea has ever been perfectly envisioned! Every successful entrepreneur throughout time has had to modify their idea to make it more exciting. Very often they have even had to change both their idea and which group their product or service is targeted at. Furthermore, entrepreneurs have always been surprised at how much or how little customers are willing to pay to own, enjoy, or benefit from their product or service.
Keeping this principle front and center improves your chances of success in a very reliable, productive and effective way. Here are some basic questions to get you to contemplate about the potential success of your idea.
What group of people do you plan to make happy?
How well do you know this group? Do you know everyone in this group or just some people in this group? If you only know some of the people, then who are the ones you know? If they are just friends and family then you are on very shaky ground. Entrepreneurs that have worked for other firms in the field have a leg up. They have seen and may understand how existing customers for that product or service evaluate which ones they gladly buy.
Why do you think that?
Why can you make this specific group very happy? Is it because they all share a frustration or some specific desire? There must be a reason, and you need to know it.
How happy can you make this group?
If you know the group, well then you know this answer.
Why do you think that?
If they are already content with what they have then why exactly do you think you make things materially better for this group? If you plan to use a new technology, what are you assuming about how it will work to create an emotional impact? People don’t like changing their routines or what they think, so what you deliver needs to more than compensate for any and all of these frustrations.
What exactly would you be doing to create this happiness? What will other people need to do to help enable you to do this?
How much of this happiness creation will you be doing and how much will you be relying upon others to help you to do?
Where and how will you find these other people to help you?
If you are only a small part of the plan, then you need to realize your plan needs to include how to find, train, support and ensure the success of the team of people who will be excited with the prospect of helping you succeed with your vision.
How much will this group gladly pay for your product or service?
You need to understand how the group you will be making happier equates their happiness with the assets they own and the money they earn.
How do you know that?
Again, individuals experienced in selling similar products and services to this group will have an advantage of knowing the answer to this question.
We can help you find answers and refine your answers in subsequent sessions.
How this principle applies to both for-profit and non-profit startups
As this diagram shows, non-profits startups should consider their donors to be their customers and the people who receive their services as their users. This is different from most for-profits where the customer is the user.
Relative to the Fundamental Principle of Entrepreneurship: non-profit entrepreneurs must make their donors so happy about how they take care of their users that the donors gladly give donations for them to do so.
Note that the non-profit business model is also the same as an advertising funded business model. Advertisers pay firms like tv stations and entrepreneurs such as influencers to make their viewers happy enough that they gladly engage with their content that features their product or service.