“I hate it when people call themselves ‘entrepreneurs’ when what they’re really trying to do is launch a startup and then sell or go public, so they can cash in and move on. They’re unwilling to do the work it takes to build a real company, which is the hardest work in business.” — Steve Jobs
Currently, two types of business leaders serve as role models for the next generation — both call themselves entrepreneurs, but in my view, only one deserves the title.
Merriam-Webster defines entrepreneur as “one who organizes, manages, and assumes the risks of a business or enterprise.”
I don’t normally quibble over dictionary definitions, but sometimes semantics matter. When it comes to the term entrepreneur, I take seriously the part about assuming risks.
I view entrepreneurship through the eyes of the “bootstrapper” — the person who invests their own money in a dream — an enterprise for which they have a real passion. Something so compelling that they’re willing to assume all the risks, wear every hat and endure sleepless nights wondering how to make payroll. To finance and grow my company, I sold my house, signed personal guarantees for office buildings, credit lines, and ground and hustled and labored to create something from nothing with no outside help. And I persevered in the face of heavy odds.
Is my story unique? No. There are countless other small businesses throughout the country, and the world, who live this story every day — who fight to make success happen.
I’ve been fortunate to have built a successful company by growing and reinvesting and encouraging innovation. Is this a good path to follow?
For some people.
There are definitely easier ways to make money, and I don’t dislike people who take the path described by Jobs. However, I believe these businesspeople are more accurately described asescape artists rather than entrepreneurs.
Merriam Webster defines escape artist as “someone … unusually adept at escaping from confinement.” In this case, they are adept at escaping not from steel cabinets wrapped in chains, but from the very organizations they have just begun to build.
Once you enter the high-stakes world of venture capital, people tend to yawn at consistent profitability and growth. It doesn’t really excite them.
What they seek is massive growth rates — even if that growth causes the firm to lose money year after year. Then, if the company can grow fast enough and capture a large enough market share (even while bleeding money), someone will “figure out a way” to be profitable later. In other cases, the goal is to quickly capture market share, raise visibility, and basically give away the products or services in the short term in the hopes of attracting prospective buyers or IPO investors.
Is this a “bad” strategy?
Are these businesses successful?
When they make money, the stories of escape artists capture the imaginations of some people. Huge valuations. Unicorn companies. No revenues or profits, but quick riches for some investors.
“It’s no trick to make a lot of money” My view is best summarized by Mr. Bernstein in the movie Citizen Kane: “Well, it’s no trick to make a lot of money … if what you want to do is make a lot of money.”
If quick riches is the goal, then follow the route of the escape artist. But if you have a higher purpose in mind — if you want to achieve something beyond fast money, the path of “most resistance” is the right choice.
It’s the bootstrappers who start companies in their spare bedrooms and garages — the people who grind and hustle and squeeze every penny — who are the real heroes of American business. In my opinion, these are the only entrepreneurs and success stories worth emulating.
By no means am I against raising money or recruiting investors under the right circumstances. But I have little respect for companies that rely on money infusions with no intention (or true plan) for achieving sustained profitability — just an escape route to a big payout. If you want to call yourself a true entrepreneur you have to be willing to take the tough road not the easy way out.
Originally published at www.huffingtonpost.com on November 20, 2017.