What It Takes to Run Your Own Show
The 1990s have seen thousands of Americans start businesses, and many more are considering it. But what qualities define an entrepreneur? Irv Grousbeck, founder of Continental Cablevision (now MediaOne) offers some insights. He is now a business professor at Stanford University in Stanford, Calif. These remarks appeared in Stanford Business earlier this year.
These are extraordinary economic times.
Despite a net loss of jobs in heavy manufacturing over the past 20 years, our economy is vibrant. New jobs are created each year. These positions are not the result of big companies expanding their operations; they arise largely from entrepreneurial efforts, because individuals had visions they pursued and people in the marketplace were willing to buy the products and services flowing from those visions.
Yet most of us feel that we're observers, that we're on the outside of this wave of entrepreneurism. We ask ourselves: How would I become an entrepreneur if I wanted to? Are entrepreneurs born, like .300 hitters in baseball, or can they be made? If you think you might want to own your own company, try matching your outlook with five attitudes we've observed in most entrepreneurs.
1. An unending dissatisfaction with the status quo. You're not happy with things as they are. You think that you can do something better than it is now being done and that you can build a business around that notion.
2. A healthy self-confidence. You are willing to be lonely, to make tough decisions, to stand on a level of the organization chart with no peers, and to have the buck stop with you.
3. What I would call "responsible competence." You feel good at what you do, you think you can do more, and you're willing to stretch.
4. A concern for detail. You are meticulous by nature or astute enough to find a partner who is. There are very few successful entrepreneurs I have seen who are broad-brush people in all aspects of their lives. They may be generalists in some respects, but in the areas that are critical to success, they're meticulous.
5. And finally, perhaps most important, a tolerance for ambiguity. You are willing to accept an uncertain future. You're not sure that you will have a job tomorrow; you're not sure that you will have an income tomorrow. You're willing to give up the corporate environment that you know - the peer group, the customer base, the daily routines - and ready to establish your vision of a venture in the marketplace. A tolerance for ambiguity should not confused with a love of risk, because the best entrepreneurs I know are constantly asking themselves how to shrink risk out of a situation.
OK, you've matched up your attitudes with those that I've described and you pass. Maybe not a perfect match along all dimensions, but a pretty good one. The question becomes: How would you begin to become an entrepreneur? How might you go from employment to self-employment? How could you get from here to there?
LET me begin by identifying one thing you should not bring to your own business: money.
Don't bring money, you say? How can capital be anything other than an advantage to a would-be entrepreneur? Well, one of the things we teach is that the functions of the entrepreneur and the capital supplier are very different. Nowhere is it written that an entrepreneur needs to supply capital. The disadvantage to an aspiring entrepreneur of having money is this: One tends to define the scope of one's venture according to the size of one's pocketbook.
As for the process, there's only one basic requirement: Figure out how to buy yourself some time.
If you're going to buy a company (and in my judgment, buying a company is every bit as entrepreneurial as starting one), establish a period of at least two years during which you can devote almost full time to finding and acquiring that company.
If you're going to start a company, prepare to live for some period of time - at least six months, perhaps up to two years - while your idea is being perfected and market-tested, and the resources are being assembled to get started.
You need to establish yourself apart from your present job so that you can use the morning of your energies on your new venture. Because, if you're going to work full time and have family responsibilities and any life outside your professional endeavors, you're only going to be able to give the evening of your energies to your new venture.
New ventures demand first-class energies, first-class enthusiasm, first-class intelligence and alertness, so you need to be able to leave your present position and live for perhaps six months to two years, depending on the nature of that venture, while it's being pursued. And if you think it's six months, it's probably a year, and if you think it's a year and a half, you'll probably need three.
At the Stanford Business School, we think of entrepreneurship not just as starting companies or buying them.
Rather, we believe it is an approach to general management that begins with an opportunity orientation. Our working definition of entrepreneurship is "the pursuit of opportunity without regard to the resources currently controlled."
We think that the important difference between an entrepreneur and an administrator is that the entrepreneur is opportunity-driven; the administrator tends to be resource-driven.
An administrator might say, "These are the resources under my trusteeship, and I should protect them." We believe that the entrepreneur is willing to rent resources, while the administrator wants to own them.
We think that a dissatisfaction with the status quo is often what impels an entrepreneur, whereas an administrator, even a forward-looking one, is often thinking in terms of evolutionary developments - of how he or she can improve the current situation at the margin.
Our basic entrepreneurship course starts by identifying opportunity. It then goes on to define the resources necessary to capture the opportunity, assemble those required resources, manage the operation, and distribute value. Our overarching objective in that course is to demystify the entire entrepreneurial process. Analysis is not something to be left outside at the doorstep; rather, it is a critical element in optimizing the odds of entrepreneurial success.