I have been a small business owner for more than 20 years. In that time, my company has managed to sell to virtually every major organization, from Amazon to Google. Powerhouse CEOs like the late Steve Jobs, Elon Musk, or Jeff Bezos are generally regarded as being among the greatest business minds of our time. But should they be considered entrepreneurs? Keep reading because I have an interesting response to this question. Actually, let me get straight to the point: I do not believe they should be grouped together with traditional entrepreneurs. The following are 10 reasons why people like Jeff Bezos and Elon Musk should not be called entrepreneurs:
Traditional entrepreneurs start their businesses without an attorney. There simply is no budget for legal services when starting out. For the non-traditional group, there is always an attorney involved. Founders who choose the venture capital route may have to spend thousands on attorney fees before they can move forward with their venture partners.
Traditional entrepreneurs start their businesses with a limited budget. For most, everything is self-funded. For others, there is a war chest. The money from the war chest comes from venture partners, which consist of wealthy families, the one percent (actors, athletes), banks, pension funds, and other sources. So, they are funded by the type of people and organizations that are typically not available to traditional entrepreneurs.
A traditional entrepreneur is often the sole decision maker in the business. For the non-traditional group, the ideas are vetted via a team of specialists, which is sometimes referred to as a decision-making unit.
Traditional entrepreneurs can’t make any mistakes. The business has to succeed the first time or it’s over. For the non-traditional group, multiple can failures occur, but adversity is negated by way of access to capital.
Next, traditional entrepreneurs might only have a general idea of how to run a business and make money. When starting out, there is usually no instruction manual or formal plan. The others have a highly sophisticated, very forensic, and proven system in place to generate income.
How much money did your family and friends chip in to help with your dream of business ownership? Traditional entrepreneurs don’t get any handouts to help start the business. There is no rich dad. In comparison, the non-traditional group often has someone in their immediate family who was either an engineer or banker.
With traditional entrepreneurship, the owner is unknown. Often there is no public persona. With the non-traditional group, the CEO is essentially manufactured or propped up to create a positive public image. This is all by design. I can remember when Jeff Bezos first came on the scene in the 90s, he was presented as the unconventional CEO; the fun CEO. This was to get the general public to view both him, and by extension, Amazon, as likeable from the start.
With traditional entrepreneurship, the owner has to be the perform all tasks within the business due to budget limitations. Conversely, non-traditional owners are able to hire for all positions from the start: the sales team, the researchers, legal, engineers… and this is because they are starting with a massive capital base.
Traditional entrepreneurs must be profitable almost immediately upon starting a business. However, non-traditional owners can strategically take losses for years. This, again, is due to financial backing.
And finally, traditional entrepreneurs often choose to become business owners as an alternative to corporate life. Sometimes it is because they need more flexibility and freedom. Getting rich is usually not the initial goal. They just want to be modestly successful. By comparison, non-traditional owners enter the game to make the most money possible. Profit is of most importance because they have to deliver a substantial return on investment to their investors.
Is a business owner with no employees still a CEO?
When I first started my business, I was only 19 or 20 years old. But I never referred to myself as a CEO because I always felt that expression should be reserved for larger companies. Plus, I started with a small business that I could run while still serving in the United States Air Force. For the first 8 years, I was the only employee in the company. So, instead, I would refer to myself as either the owner or the president.
There's a difference between traditional entrepreneurs versus venture-backed founders.
There are significant differences in business structure and ownership. One starts off as a team sport (venture capital) financially backed by banks. The other is a solo operation; sometimes the whole way through. This is why I do not believe those like Jeff Bezos or Elon Musk should be called entrepreneurs. Instead, this group is unique and should be called something else like venture capitalists or maybe even non-traditional business owners… anything that delineates and makes clear that there are major differences in business ownership. Technically, they do fit about half the definitions of the word “entrepreneur.” Still, my argument is that there should be a re-evaluation of the terminology used when referencing venture-backed businesses versus the more traditional approach to starting a business.
The ones who I believe to be the true embodiment of entrepreneurship are the small business owners. Most of which make less than a million a year. The wealthiest people in the world are often mediocre entrepreneurs. Sadly, we have been programmed to think otherwise. We are trained to think primarily in terms of wealth. Jeff Bezos and Elon Musk are not necessarily the extraordinary businessmen you think they are. As I see it, their actual strengths have very little to do with traditional entrepreneurship. They are instead master resource allocators and task delegators. Their primary skills include things like borrowing ideas, team building, delegating tasks, and hiring extraordinary talent to both make them look good and make their shareholders happy.
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