We need more entrepreneurship. Where does it come from?
In his book, "The Perfect Bet: How science and math are taking the luck out of gambling", author Adam Kurcharski writes, “Luck — good and bad — looms over our careers and relationships. We have to deal with hidden information and negotiate in the face of uncertainty. Risks must be balanced with rewards; optimism must be weighed against probability.” Risk isn’t a one-time decision but something that must be constantly managed. Success in uncertainty depends upon the people we mix with, our responses to stress, emotions, and failure, and our levels of preparation and experience according to author Kayt Sukel.
Entrepreneurship is all about managing uncertainty. It involves setting up businesses while taking on risk in the pursuit of great profit and success. If you don't like risk, you're not going to like entrepreneurship. There are, of course, many different types of companies and entrepreneurs. There are high-growth businesses that most commonly are powered exclusively by technology. But there are others who aren't so high tech. Content creators like Seth Godin. Product makers like Elon Musk. Even investors who take financial risks.
Entrepreneurs power the U.S. economy. From Silicon Valley startups to Main Street small businesses, nothing creates jobs and economic impact like entrepreneurship. Small and medium market companies continue to outpace corporations in their ability to grow revenue and create new jobs. In fact, startups and new businesses are responsible for nearly all of the net job growth in our country. But we have a significant problem: entrepreneurship is on the decline. Mark Zandi, chief economist at Moody’s Analytics, recently commented on the economy, "It all feels pretty good, but I think there are things to be worried about, and the state of entrepreneurship is one of those things.” The Kauffman foundation has been tracking these numbers since 1978. Entrepreneurship plunged after the recession in 2008, and numbers are lower than they have ever been in the last 40 years. We have still not returned to levels seen in the 1970's and 1980's. More simply put, entrepreneurship drives job growth, and it’s on a significant decline.
The good news is many people are trying to solve this problem. Never has there been more resources for entrepreneurs than today. The idea of a startup accelerator hardly existed 10 years ago. Today, new accelerator programs are launched almost everyday around the world. Things have recovered a bit as the economy recovers, but with so many resources, why are new businesses not booming? Capital is a bit tight but also more broadly accessible.
I wonder if we just aren't very good at accelerating entrepreneurship.
I've observed a significant amount of focus on companies, processes, and ideas when it comes to "developing entrepreneurs." Accelerators, books, incubators, and classes are all focused on how to form ideas and take them to market. I see lists of mentors on websites that don’t really mentor anyone. I see an immense amount of time and money spent on how to raise dollars and which methodology to use (are you lean yet?). I'm more convinced now that, in the end, none of that matters very much. I create brands and marketing for a living, so I don't say that lightly. Messaging does matter. The process does matter. But too much of this work is just hedging our bet and "de-risking" ideas — if that's possible. We have our food pyramid upside down. The foundation is not the process or the brand or the idea. It's the people. What if we developed great entrepreneurs over trying to develop ideas? We need more people that excel at taking risk and managing uncertainty.
Here’s one thing I know for sure . Great companies are built by great people.
What many miss about the likes of Zuckerberg, Jobs, Bezos, or Musk is their incredible leadership. They inspire us. They take us somewhere. Musk isn't the only one building an electric car. Zuck isn’t the only social media game in town. Jobs wasn’t the only guy peddling a computer. Great entrepreneurs don’t need the best ideas, they need the best execution. It's about the leader more than the process or the concept. Entrepreneurs are scrappy. They know how to win. They know how to execute and adjust. They know how to take risks intelligently. They’re smart, focused, disciplined, and trustworthy. They're coachable and confident. They're emotionally mature. Great entrepreneurs communicate well. They know how to deal with both failure and success. They have high levels of social intelligence.
There is a reason why money follows founders, even those who’ve had failed companies. No matter how much we want to "de-risk" an idea with a process, the best way to reduce risk is to bet on great people.
Why do we put so many resources towards accelerating ideas and so little towards accelerating people? I probably don't have the credentials to answer that question. Heck, I probably don't have credentials to be writing this at all. My opinion, though, is that developing people takes time. You can't develop an entrepreneur in a 90-day accelerator program. Places like Y-combinator are great accelerators because they get to choose from the best entrepreneurs, not the best ideas. Developing people is squishy. It's not very scalable, and it's not very fast. In a world often driven by rapid growth and quick wins, few have the patience for people development.
How do we bring about more startups and small businesses? Well, we need a lot of things. Ecosystems need capital and economies need stability. Focused areas need density and networking. Ultimately, we need more and better entrepreneurs. It's the backbone of our economy. Here on the Silicon Prairie, we have great opportunities to grow unique companies of all kinds. We need small businesses and tech startups, ag businesses and insurance concepts. What I don't see, though, is a lot of focus on people development.
The question I keep asking myself these days is, "How might I develop more people into great entrepreneurs?” That's a problem that gets me out of bed in the morning.