Will the real entrepreneur please stand up?
Common sense suggests that an entrepreneur is the lynch-pin of a startup. At the recent TLA Investor Showcase 2.0 event, for example, investors repeatedly talked about the entrepreneur as being synonymous with startup and scale-up; the person they look to invest in. But are they right?
The Oxford English Dictionary defines an entrepreneur as 'a person who sets up a business or businesses, taking on financial risks in the hope of profit'. We can think of business builders who have created multi-billion dollar businesses, such as Mark Zuckerberg, James Dyson, and Bill Gates. But are they really entrepreneurs? Compare them with people like Richard Branson, Alan Sugar and Simon Cowell, the success of whom has been down to their ability to successfully spot the opportunities and build on them.
The truth is, entrepreneurs are not necessarily the best business builders. After all, every startup begins with someone having that initial bright idea, and someone else deciding what to do with it. So what, then, is an entrepreneur? What do they really look like? And where exactly do they best fit within a startup’s leadership structure?
Bags of confidence
Fundamentally, entrepreneurs are the eagle-eyed scouts of the innovation ecosystem; the ones with first sight of the most interesting, exciting and viable opportunities, and a good idea of how valuable they may be. They’re the Sean Parkers of the startup world rather than the Mark Zuckerbergs.
Perhaps more importantly, they have the network of contacts, the resourcefulness and the determination needed to turn these opportunities into reality. In short, they’re action-oriented wealth-creators with bags of confidence in their instincts. So, if anyone best fits the profile of an entrepreneur it’s actually a startup’s investor, not its founder.
That said, every startup will set up its core executive team in its own way; some may even find that the most entrepreneurial individual in the team is the one that works most effectively at the helm.
Eye for an opportunity
If a business is to bring out the best in an entrepreneurial leader, it’s important to play to their strengths.
An Innovator will often begin with a good idea, and then work out what the opportunity is. An entrepreneur on the other hand, will first look for a gap in the market and then build out a solution to fill it. This approach means they’re more likely to land on the big opportunities. They have the capacity to spot an opening and then connect people around it.
There does, of course, need to be a balance of both leadership types for a startup to work – the entrepreneur needs the Innovator and their ideas just as much as the Innovator needs the entrepreneur’s eye for an opportunity.
I’ve seen corporate executives and investors, for example, who are excellent at identifying the potential in others, and who want to build their own startup as a result. They haven’t found that golden idea, however, because they’re waiting for the perfect blend of opportunity and innovation to come along. Indeed, it’s rare for people to be able to spot both on their own – that’s why a startup needs both its entrepreneur and an innovator.
Perseverance and resilience
While an entrepreneurial leader is clearly an asset, there still needs to be someone on the team who can help that person achieve the level of focus they need to see the opportunity through.
It may be a stereotype, but CharacterScope data has found that entrepreneurs tend to be low on perseverance and grit than most other leader types. They typically have a butterfly mindset, constantly flitting from one opportunity to the next. There’s a real chance they’ll get bored once they reach the testing stages of building a company that come after the initial idea that inspired it. Building out a product can often be a tough process for entrepreneurs, for example; a continuous process of iterative development requires significant time and patience.
Resilience, too, is an essential quality for any startup. The philosophy of 'fail and fail fast' is core to the startup process – you’re constantly failing until the market decides you’re succeeding. It’s important, therefore, to be able to rebound quickly from any setbacks.
Entrepreneurs are disproportionately likely to have low levels of resilience, however. Even though they may be overflowing with enthusiasm, they’re emotionally affected by failure, which is not something many of their team members might be aware of. There’s a risk that, having been knocked back, they’ll move on to the next new idea, before being knocked back again. And so the cycle continues.
Striking a balance
Self-belief and risk-taking lie at the core of every entrepreneur, and the emotional hit they suffer when things don’t go to plan can be easily overlooked. That’s why it’s important for startups to dig a little deeper into their relationships with their team, try to understand their toughest challenges and core strengths, and encourage an environment that helps to nurture the latter.
There’s no doubt every startup needs an entrepreneur, but there’s a balance to be struck between tempering their emotions and giving them free rein to do what they do best. It makes sense, for example, to have a strategist working alongside them, absorbing their ideas, and thinking about the next step. At the same time, though, it’s important not to constrict them, and make them constantly edit their own ideas.
After all, you want them to be out in the market, spotting new opportunities and connecting you to them. It’s what entrepreneurs do. Finding the best way of encouraging this will help put a startup on the road to success.