“All our dreams can come true, if we have the courage to pursue them.”Walt Disney
“Ideas are no one’s monopoly. Think big, think fast, think ahead.”Dhirubhai Ambani, Reliance Industries
Have you noticed how people react when you say you are an entrepreneur? They get excited and want to know all about your venture, and how successful you are, monetarily. Entrepreneurs are special a special breed. It takes substantial efforts to overcome numerous hurdles before you can join this elite group. The U.S. Bureau of Labor Statistics says about 20% of U.S. small businesses fail within the first year. Roughly 50% fail by the end of the fifth year and only a third survive after 10 years (I have not been able to find the statistics for India, but it is bound to be similar). When this is the case, why does everyone aspire to be an entrepreneur? The idea that anyone can work on an idea, build a business, and create wealth, is something that appeals to all of us.
Merriam-Webster defines the word entrepreneur as one who organizes, manages, and assumes the risks of a business or enterprise. The word entrepreneur first appeared in the 1800s. A French word meaning “undertaker” was coined by Jean-Baptiste Say to mean undertaker of a business. Say was in favor of competition and free trade. He is well known for Say’s Law of Markets which says the ability to purchase something depends on the ability to produce and thereby generate income.
From a kid having a lemonade stand or cookie shop, an individual who transforms an idea to create a small business, a few friends joining to form a venture and create a social app, or create a home computer in a garage are all examples of entrepreneurship. However, the way these ventures play out is not the same. Starting, funding, and sustaining each of these types of entrepreneurship have different journeys. For this reason, entrepreneurship can be classified into four types: small business, large company, scalable startup, and social entrepreneurship.
A small business could be a retail store, a restaurant, a plumbing service, a landscaping service, etc., where the entrepreneur is happy running these and keeping them small without any aspirations to grow them into a chain or franchise. The entrepreneur can make modest amounts of money if their business succeeds. An example of this type of entrepreneurship is your corner store retail shop or a boutique, selling apparel.
Large company entrepreneurship is sometimes referred to as “Intrapreneurship”. An intrapreneur is an employee of a large company who has an idea to create a new product or service and is supported by the company to innovate and launch it from within the company. Or the company recognizes the changing customer landscape and creates or modifies their existing products and services. Established companies such as Apple, Microsoft, Amazon, and Google all have ongoing entrepreneurship activities.
Scalable startups start as an idea and are built over time to scale. The high-tech businesses fall in this category and the media focuses a lot on this type of entrepreneurship because of the payback to the entrepreneurs when a startup is successfully scaled. Some recent examples of this type are Zoom, DoorDash, and Robinhood. An entrepreneur of this type dreams of his or her company becoming a Unicorn, a term used in the venture capital industry to describe a privately held startup company with a value of over $1 billion. In 2020, 11 Indian startups – Unacademy, Pine Labs, FirstCry, Zenoti, Nykaa, Postman, Zerodha, Razorpay, Cars24, Dailyhunt, and Glance — became unicorns.
Last, but not least, is social entrepreneurship. The social entrepreneur is interested in solving problems that affect communities or societies. These problems span climate, justice, and societal issues. They are more interested in the good their venture will bring about and not the profit they can generate from the venture.
While all these types of entrepreneurship are different, they all have one thing in common – the entrepreneurs – those who make it happen and the success of a venture is highly dependent on some key traits of these individuals.
Three Traits of successful entrepreneurs
There are three fundamental, critical, qualities that characterize entrepreneurs.
1. They take risks and are tenacious
When you see Elon Musk, you see an enormously successful entrepreneur. What you probably don’t know is that he had to overcome many failures to be where he is. Starting with his failure in the 1990s to get a job at Netscape in the 1990s, being asked to leave PayPal a company he founded 2000, having his first rocket launch exploding in 2006, he has had a number of failures. His companies Tesla and SpaceX were on the verge of collapse in 2008 and have seen enormous roadblocks. The media is full of the stories of his failures. Yet, Tesla now has a market cap of $572.99B (as of December 10, 2020).
One of the most important traits of an entrepreneur is the appetite for risk. All of us take risks in our lives. When my family left India in 1978 to come to the US, my husband and I took an enormous risk that we are going to be able to make it there. We all can look back on our lives and identify the times when we did something that now seems like a risky proposition. The article “You can teach yourself to be a risk-taker” says,
Our own experiences and our individual emotional histories will also affect how risky we’ll be. Your parents may have been particularly risk-averse during your upbringing, or you may have taken a risk in the past that didn’t pay off, making you cautious when you face your next “should-I-shouldn’t-I?” moment.
Entrepreneurs believe in themselves. They believe they can make a difference and can succeed. To be successful, it is not enough to take risks. You need to persevere. You need to keep going in spite of the failures you encounter. Successful entrepreneurs take calculated risks. They play the scenario of what happens when they don’t succeed at first and are prepared for that eventuality, and this brings us to the next trait.
2. They are flexible and they adapt
There are times when you need to acknowledge that no matter how much you persist, the outcome may not be what you want. Successful entrepreneurs recognize that sometimes no matter how much effort you put in, luck plays a big part in the success of the venture. They are resilient, learn from their failures, and move forward.
I co-founded the retail analytics company, Retail Solutions, in 2003. Our aim was to exploit the enormous amount of data generated by Radio Frequency Identification (RFID) and use it to solve business problems. We called the company T3Ci (The Tag Tracking Company Inc.). Walmart, a major retailer, had required all of its suppliers to place RFID tags with electronic product codes on their products. We developed software that would read and understand RFID data, and the analytical insights were used by retailers and their Consumer Packaged Goods (CPG) suppliers to improve sales, promotions, and out-of-stock (OOS) metrics. After receiving venture funding, we expanded our operations. We processed the billionth RFID tag-read in 2007 and by the end of the year, we had over thirty customers, including four of the top five CPG manufacturers.
What happened next was something we could not have predicted. Walmart ended the mandate. It seemed our startup’s life was short-lived. We could have closed the company at that time, but we didn’t. We pivoted from an RFID company to a retail data company. We quickly acquired VeriSign’s Retail Data Services business unit, and formed Retail Solutions Inc. Instead of analyzing RFID tags, we now focused on point-of-sale (POS) data from retailers. We formed partnerships with major retailers and went on to become a leader in retail analytics for CPG. We adapted.
The key to adapting is understanding what caused the failure. It helps you to see if you should indeed quit, or reframe the problem. In the case of Retail Solution, we reframed the problem as what existing data can help solve the retail business problems in the absence of RFID, and we built a successful business doing that. This is where being flexible matters. The practice of modifying your goals, or pivoting is quite common in entrepreneurship.
The Psychology Today article, 3 Ways to Improve Your Cognitive Flexibility, says by doing three things you can improve your flexibility:
- Do something you know how to do, but do it differently (and often). As an example, with my cooking, I try to vary a traditional recipe in many different ways to see what comes out.
- Pursue new challenges and experiences. If you have been resistant to traveling, try taking a trip. Attempt some adventure activities.
- Meet new people. During this pandemic, this means getting on those Zoom calls to connect with new people and having conversations on things that are important to you.
3. They have a great work ethic
The media highlights success stories of entrepreneurs which are the exceptions, not the norms. Not every venture is like Instagram, which was launched in 2010 and acquired by Facebook in 2012 for $1 billion in cash and stock. This is an outlier. Most entrepreneurs have to work hard for a long period of time before their venture becomes a viable, sustaining business. This long journey requires entrepreneurs to have a strong work ethic.
Inc magazine article says:
When asked by a Twitter user about the number of hours one needs to work each week to “change the world,” Musk replied that it can range from around 80 to over 100.
“Varies per person, but about 80 sustained, peaking above 100 at times. Pain level increases exponentially above 80,” he said.
Successful entrepreneur Mark Cuban is quoted as saying:
“Don’t get caught up in how many hours you work. Judge success based on having goals and measuring your results. Hard work, and lots of it, is certainly needed, but focus on what you get done. What do you need to do to deliver for your client? To land the next customer? To expand within your customers? . . . .”
Entrepreneurs will have to work hard, but they also have to work smart, doing whatever it takes to get their venture to succeed.
Some of the components of a strong work ethic include: being reliable, being punctual, doing work that matters, putting in the time and effort to get a job completed, having a positive attitude, and having a growth mindset.
For Students Aspiring to be Entrepreneurs
If you are currently an engineering student who dreams of being an entrepreneur, ask yourself these questions:
1. Why do I want to do this?
If money is the motivation, think again. The majority of businesses barely make it. You have to have a motivation that is different from becoming a billion-dollar business and you should be willing to take financial risks. You need to be passionate about an idea that will make an impact.
2. Do I have a great work ethic?
You should be prepared to dedicate yourself to your business completely at the expense of everything else in life. You should be willing to commit substantially long periods of your life to start the business and scale it.
3. What are my strengths and weaknesses?
You should identify what you are good at, and what your constraints are. Once you have taken inventory, you should spend the time to enhance your strengths, and overcome your constraints. You don’t need to do your entrepreneurial journey alone. Find those who complement your strengths and enlist their partnership.
If your communication skills are weak, consider improving your skills by joining a public-speaking club. Toastmasters is a great way to improve your communication skills. If your networking skills need improvement, attend as many entrepreneurial gatherings as possible. During this pandemic, many of them are online. Start developing your network from the time you join the college by connecting with the alumni.
If you are wondering what entrepreneurship is all about, take a course offered by your college. Today, when everyone has internet resources at his or her fingertips, it is quite easy to search for videos related to entrepreneurship. For example, YouTube has a video on advice from 50 entrepreneurs. However, attending classes and watching videos will not make you an entrepreneur. You should explore the activities going on in the college with respect to entrepreneurship and actively participate in them, and start working on your ideas.
By studying engineering, you are learning to think logically and solve problems. This, combined with some of the traits mentioned earlier already puts you at a great advantage to become an entrepreneur.
To quote Mark Twain:
“Twenty years from now you will be more disappointed by the things that you didn’t do than by the ones you did do. So throw off the bowlines. Sail away from the safe harbor. Catch the trade winds in your sails. Explore. Dream. Discover.”
- What Percentage of Businesses Fail and How to Improve Your Chances of Success https://www.lendingtree.com/business/small/failure-rate/ accessed on March 29, 2021
- The many failures of Elon Musk, captured in one giant infographic https://www.marketwatch.com/story/the-many-failures-of-elon-musk-captured-in-one-giant-infographic-2017-05-24 accessed on March 29, 2021
- You can teach yourself to be a risk-taker https://www.bbc.com/worklife/article/20170606-you-can-teach-yourself-to-be-a-risk-taker accessed on March 29, 2021
- Retail Solutions Inc. https://en.wikipedia.org/wiki/Retail_Solutions_Inc. accessed on March 29, 2021
- 3 Ways to Improve Your Cognitive Flexibility https://www.psychologytoday.com/us/blog/wild-connections/201912/3-ways-improve-your-cognitive-flexibility accessed on March 29, 2021
- The Story of Instagram: The Rise of the #1 Photo-Sharing Application https://www.investopedia.com/articles/investing/102615/story-instagram-rise-1-photo0sharing-app.asp accessed on March 29, 2021
- Elon Musk Says You Need to Work at Least 80 Hours a Week to Change the World https://www.inc.com/business-insider/elon-musk-says-you-need-to-work-80-hours-a-week-to-save-the-world.html accessed on March 29, 2021
- 10 Great Business Lessons from Mark Cuban https://www.bradaronson.com/mark-cuban-business-lessons/ accessed on March 29, 2021
- 50 Entrepreneurs share priceless advice https://youtu.be/QoqohmccTSc accessed on March 29, 2021
This essay first appeared in the IEEE CS R10 Newsletter Apr-Jun 2021 issue.