Allos Ventures

In search of resource marshallers

12.9.10 by Dov

What is an entrepreneur anyway?

We had a long discussion around the office about this the other day – it’s actually surprised us a bit that it was so difficult to come to a consensus on exactly what it is that characterizes someone as “entrepreneurial”.

We had started with two simple examples. First, a child who is going to a candy store and takes orders from friends to bring them back (i.e. sell them) candy upon his return. And second, a high school student who writes software games for her own use.

We think most would agree that the first is more entrepreneurial than the second. But why? They’re both creating something (a small business in one case, a software product in the other). And it’s clearly not just the financial aspect. Someone who creates a new not-for-profit venture is still an entrepreneur, right?

One suggestion around the table was that it was “identifying a need in the market and filling it”. That definitely differentiates the two situations above (because the software was being used only by herself), but there are also lots of people who work for large companies in roles where they identify and fill market needs every day, but which most people still wouldn’t consider entrepreneurial – someone in product marketing, for example.

So then we thought perhaps it’s about risk. You have to take risk to be an entrepreneur. But then what about our candy-store visitor? If he has taking pre-orders (cash up front), he’s not really taking any risk, is he? And it doesn’t seem like that makes him less entrepreneurial. It just means he came up with a great business model. The other issue with risk is that it changes with circumstances. So, while a recent college grad living at home who can’t find a job might decide to start a company. That same individual, 15 years later, might not be willing to leave a job when he or she had a spouse and children to support. Were they more entrepreneurial when they were younger? Or did their earlier circumstances just enable them to start a business (the prototypical entrepreneurial activity) without actually taking much risk – because they didn’t have much to lose? And does that mean that “serial entrepreneurs” don’t really exist? Because after a first success, it’s certainly less risky to start your next venture.

That doesn’t seem right – we don’t want our definition to exclude people just because their circumstances allow them to create new ventures while taking little personal risk, do we? But how do we come up with a definition that captures the candy store, the college grad starting a company, and the serial entrepreneur, but excludes the large-company executive? It was then proposed that the answer lie in entrepreneurs “marshalling resources” to create something. Now we’re getting somewhere. Clearly, this covers anyone who starts a business – regardless of the risk level, ultimate success, or profit/not-for-profit status. And while it doesn’t cover our high school software developer, it would if she enlisted the help of a friend to complete it – and that seems right, too.

So – is there a definition that perfectly matches with your sense of what an entrepreneur is? Or do you just “know it when you see it”? Leave us a comment and let us know what you think.

Subscribe in a reader