A New Definition of Entrepreneurship

Professor of Business
Entrepreneurship is the pursuit of opportunity beyond the resources you currently control.
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TRANSCRIPT

Howard Stevenson: Entrepreneurship is often thought of as starting a new business or creating innovation.  But in reality entrepreneurship, in our view, is the pursuit of opportunity beyond the resources you currently control.  Now what does that mean?  It means you have to persuade customers they’ll be better off buying your product.  You have to persuade employees that they might be better off if they work with you rather than with an established company.  And you have to persuade investors and other people that provide the resources that this is a real opportunity.  So entrepreneurs have to be able to convey a future vision of the world and then help people believe that vision of the world is possible.

I think selling is about helping people believe that what you’re doing is important.  Because obviously it’s hard to raise money for a lemonade stand.  But why is it important?  What are the proof points that can say that somebody is going to allow you to perform a cashectomy upon their wallet.  The second thing is you’ve got to persuade people that they’re well managed.  That you’re not gonna waste their resources.  Most people who are investors they may not be in love with money but they know how hard it is to get and therefore they want to make sure it’s not wasted.  They also want to know that the amount of money is sufficient to get you to the next stage, whatever that stage is.

You know, with a startup it’s simply a proof of concept. At some point you have to be able to prove to people you’ll get to cash flow break even because in entrepreneurship happiness is a positive cash flow.  And then the last thing you have to somehow do is persuade them that, in fact, their experience working with you will be good.  I know as an investor if I ever see a sign of somebody that is willing to cheat the government or cheat the customer or cheat their wife or whatever, I want to run away as fast as possible because I know as an investor I will never be able to monitor as completely I need to if the person doesn’t have a strong moral background.

Morality is a very tough thing.  Some people would say you have to tell everyone everything they would need to know in order to come to a decision based on their values.  Say, “Well I don’t know if this person hates people who drive a Porsche.  I happen to have a Porsche.  Do I have to disclose the car I drive, the color I wear and religion?  I don’t think so.”  On the other hand you probably do need to be reasonably forthright about the risks and the opportunities.  And many people gloss over the risks.  But, in fact, I think the credibility comes when you say I’ve thought about the risks and here’s the way I will overcome them.

Then there’s a question of sort of have I engaged in full disclosure and that’s a very, very complicated thing.  What I would say to my students is. “This is a world where you don’t want chalk on your shoes.  That is to say you don’t want to get so close to the line that somebody will think that you’ve stepped over the line.  Because ultimately people will forgive you failure if the world just turns against you but they don’t forgive you moral failure.  And their view of it is often colored by the outcome.

Directed / Produced by Jonathan Fowler and Elizabeth Rodd