What type of entrepreneur are you? Here are 6 archetypes and how each can limit your success.by Derek Lidow The word entrepreneur is used in so many different contexts these days that pinning it down is virtually impossible. Everyone has their own definition, and the one you adopt—or unconsciously accept—can determine your aspirations, dictate your behavior, and in some instances cause you to underperform or fail outright. It’s a classic self-fulfilling prophecy—you’re likely to get what you expect to get. Among the many definitions of entrepreneur, six currently loom large in the popular imagination. Each definition, in its own way, can be both empowering and constraining. Here’s what to look out for: The Noble FounderThis would appear to be the simplest definition of all: if you start a business, you’re an entrepreneur, regardless of whether it succeeds. Today, there are over 16 million people attempting to start over nine million businesses in the U.S. But even this apparently simple definition brings with it some significant psychological baggage. People who associate themselves with this definition often feel a deep sense of pride in their willingness to even try to start a business. But that understandable pride in taking on the struggle can also mean a too easy acceptance of poor results. Inside the noble founder lurks the noble failure. The Self-Made SuccessSome definitions bestow the title of entrepreneur only upon people who have started a successful business, or at least one from which they earn a decent living. People who see themselves this way can feel a bit proprietary about the definition. Only 30 to 40 percent of startups ever achieve profitability. In the world of Silicon Valley high-risk startups, the chances of reaching profitability plummets to less than one in a hundred. The self-identity of people who feel success is an essential part of what it means to be an entrepreneur are proud of the self-sufficiency they achieve or at least seek. They are more likely than noble founders to keep their eye on the bottom line, but they also can be overly fearful of risk and often underperform in terms of innovation. The Entrepreneur by TemperamentIn this view, entrepreneurship is a state of mind. It can apply equally to people starting a business or people working in corporate settings. It’s all about mindset: such people “make things happen,” “push the envelope,” or refuse to stop until they get what they want. It is the broadest of definitions. In fact a famous economist, Ludwig Von Mises, theorized that since we all subconsciously assess the risks of our actions relative to the rewards we expect to receive, we are all entrepreneurs. Because this definition can apply to everyone, anyone can delude themselves into believing they are an entrepreneur. You don’t even have to start a business. You just have to behave a certain way and let the chips fall where they may. The Opportunist Par ExcellenceFor at least a century, entrepreneurs have described themselves as having the ability to “smell the money.” There are indeed many entrepreneurs who proudly identify their ability to spot money-making opportunities. Many management academics identify the core of entrepreneurship as opportunity identification. Entrepreneurial education today is often targeted at teaching opportunity identification skills. What is interesting is that there is no strong evidence, after several different studies, that entrepreneurial education actually results in students or attendees having a significantly higher chance of reaching profitability. Making groups of people happy appears to have a stronger correlation with entrepreneurial success than just an ability to smell money. The Risk-takerAbout 100 years ago, an influential economist drew an illuminating distinction between risk and uncertainty. With risk you can predict the probability of various unknown outcomes of business decisions. With uncertainty you not only don’t know the outcomes but also you don’t know the probability of any particular outcome occurring. In other words, risk can be managed, with insurance policies and financial options, but uncertainty is uncontrollable. Many economists argue that to succeed as an entrepreneur, you must seek out uncertainty. Today, few entrepreneurs know this distinction, but many proudly describe themselves as “risk-takers.” This identity usually leads to taking on more risk than necessary. This is especially true when you see all risk as good and see yourself as an adventurer into the unknown. You would be better advised to think of your adventures as a series of small calculated experiments that turn the greatest uncertainties into knowable risks. The InnovatorYet another group of economists describe entrepreneurs as innovators who participate in the creative destruction that destroys old economic arrangements and replaces them with new ones. This fetishizing of disruption has led many entrepreneurs to invoke the concept of innovation in support of whatever they want to do, no matter the effects it might have on society. Entrepreneurs with this identity pass over opportunities to create valuable and socially beneficial businesses that were less than truly disruptive. They also create businesses that benefit some at the expense of others, like creating a “gig economy” of low-paid workers. Seeing yourself as an innovator and regarding innovation as an unquestioned good is arguably one of the most dangerous definitions of all because it simultaneously encourages great boldness and justifies equally great moral blindness. All of these definitions of entrepreneur are self-limiting. How you define yourself as an entrepreneur defines what actions you’ll take to view yourself as deserving of the title. As we describe in Sprint 1, there are only two things academics have ever been able to show conclusively correlate to entrepreneurial success (measured generally) are years of schooling and having implicit, core motivations that align with feeling good about getting things done (known as “need for accomplishment”). Pinning your identity to any of the current definitions of entrepreneur will only set you back. The bottom line is: Ignore the title, Be who you are, Constantly learn new skills associated with leading people and delivering products that make people happy, and finally, Stay focused on making some group of people so happy that they gladly give you money in return
With gratitude, Derek and Ben P.S. If you like what we’re doing, please consider recommending this newsletter to another person you think would benefit from us. It really helps us build out our free content platform.
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