You must know your type.
Matters not whether you’re new and aspire to play the game of ‘entrepreneurship’ -- or are already playing it.
Smart entrepreneurs know the game they play, and most important their role in it.
Coming back from Eric Ries’ Lean Startup Conference in San Francisco, I was intrigued by something Steve Blank said.
“It’s important for entrepreneurs to ask themselves; ‘Who am I and who do I want to be?”
Now if you don’t know Blank, he’s an author (‘The Startup Owner’s Manual’), founder and investor of multiple companies and an expert on entrepreneurship in Silicon Valley. (You can also find him here on Forbes.)
And Blank’s right -- asking this question is akin to a human pilot making sure the autopilot is set correctly from the start of the flight. Set even 1 degree off in the beginning, that plane lands 1,000 miles sideways from its intended destination.
After having the opportunity to spend a few minutes with Blank, I flew back to Oregon and recalled his earlier conversation on-stage with Dino Vendetti, Founder of Seven Peaks Ventures, at the Bend Venture Conference.
At the Bend conference, Blank laid out the 6 types of entrepreneurship for all the world to see. And yes -- it’s your job to know the differences and choose the best match for who you are and who you want to be:
1. Lifestyle Entrepreneurs
Call them freelancers, solo-entrepreneurs or even one-man bands. The main purpose of this class of entrepreneur is to support a certain type of ‘lifestyle’. For example, if you shoot freelance photos in Hawaii for a living like Brandon Tabiolo because you desire the lifestyle of hiking at lunch, hanging out at the beach in the afternoons and snorkeling on weekends, you fall into this category. Blank said;
“These are people whose passion in life is not being an entrepreneur, but something else like an athlete, artist or outdoor enthusiast. These are great passions. There’s nothing wrong with this kind of entrepreneurship, but you’ve got to understand you’re never going to be Google, Facebook or even a $30 million company. You’ve made a decision to fit in a category that doesn’t have the potential to scale and will not raise venture capital.”
2. Small Business Entrepreneurs
Think owners of local grocery stores, printing businesses and independent coffee shops. The goal is not to take on the industry Goliaths and become the next Wal-Mart, Deluxe Corporation or Starbucks, but to simply feed the family.
“Small business entrepreneurs want to stay relatively small. I mean you actually want to go home at 5pm to see your family. You’re still an entrepreneur and might be going from $1 million to $3 million to $5 million. But you’ll never attract -- nor do you want to attract -- venture risk capital from Silicon Valley.”
3. Scalable Startups
Now this is where we do talk about Google, Facebook and the other media darlings splashed across the cover of Forbes, Inc and Fast Company magazines. Extreme entrepreneurship. No holds barred. Swinging for the fences.
“These are truly crazy people who wake up in the middle of the night saying; ‘I’m going to build a billion dollar business and take over the world. And I’m betting the mortgage, my kid’s college fund and my marriage, maybe even my third or fourth one, on this.' I’m not suggesting you need to be those people, but I’m suggesting you need to understand those are the people that get funded by big-time venture capital.”
4. Viable Startups
Entrepreneurs who start companies without needing a lot of seed capital, but have business models which are potentially scalable with the infusion of capital later, fall into this class. Think potential exits in the $5 million to $50 million range.
“Startups that don’t require millions of dollars of capital now and can be started on your laptop through the use of cloud based infrastructure fit here. If you ever want to scale, the capital is just deferred. And the exits can come sooner because you take a small amount of capital to allow you to flip the company to a buyer. But these still require an inane focus on building a long-term business.”
5. Social Entrepreneurs
Purpose driven entrepreneurs set out to impact the world for social good make up this class of founder. Mainly motivated by the purpose itself and less interested in creating vast amounts of personal wealth.
“Social startups are very hard and they come in a variety of categories. There are true non-profits and then there are for-profits who want to do social good. Managing the latter is easier because gaining accurate metrics and benchmarks for true non-profits is difficult. For example, you think your customers are poor people in Ghana whom you’re drilling wells for. Your donor wanted the wells drilled, but you didn’t understand the village chief was going to bury those wells because he was selling water to the villagers.”
6. Corporate Entrepreneurship
Big time entrepreneurship with big stakes at risk. Entrepreneurs like Mark Zuckerberg at Facebook fit into this crowd. Nimble as a startup, slightly bloated at a staff of 5,800. Global corporations struggle immensely with how to keep a culture of entrepreneurship.
“What they’re struggling with is trying to figure out how to continuously innovate while trying to keep existing business units going -- and the threat of being obsoleted by some small startup or some other large innovative company. Every major corporation will need to have a new VP (Vice President) that didn’t exist a decade ago. It’s called the VP of Innovation.”
Blank sums it up for each of us here in 35 words; “The problem is not having a clear understanding of what the game is and which one you want to play. And not understanding what the rules are confuses everybody; including you as the founding entrepreneur.”
So, what’s your type?