For the New Year, my message is this: there is a vital need for us to return to real entrepreneurship. What is it, and how can we do that?
It was wisely stated by Austrian political economist Joseph Schumpeter that the driving force of any economy is entrepreneurship. I’m a big believer in the Austrian School of Economics because, in the Austrian School, it is the entrepreneur, not the government, who is at the center of the economy.
The entrepreneur is willing to risk their own capital and resources. The risk factor is crucial for an entrepreneur. The entrepreneur lays out and raises the initial investment in a business, but the hard risk is to remain in business. Both risks have their own complexities.
Don’t Minimize Experience and Wisdom
The true entrepreneurial approach is being removed by today’s venture startup machine. I recently read that one of today’s prominent billionaire investors will only invest in companies when the main idea person is under 30 years old. What does that approach imply? That wisdom and experience don’t count. I believe this viewpoint is incorrect, and I regret that people with that belief sit in the driver’s seat. At the end of the day, it is wisdom and knowledge that a business needs. It is experience that it requires.
Much of the time, a person with experience and age has learned through failure. Failures, though, also happen through lack of experience, and people should also learn from more experienced people.
Responsibility and Risk
Yes, a startup is a real risk, given that up to 90 percent of them fail. “Risk-free” doesn’t exist in life. But today, I see an increasing number of people attempting to live risk-free. They require some kind of insurance for everything they do. These “risk-free” people count on someone else to invest the money, to assume the risk.
The thing about someone not having to invest their own risk, but count on someone else’s, is that they take far less responsibility. An analogy could be made to rented cars. When someone rents a car, they take little to no responsibility. Look at the condition of a car that has been in a rental agency for two years and compare it to one that has been privately owned for the same period. You’ll find the rental has experienced far more abuse.
It’s really a matter of gambling entrepreneurship. “If the idea doesn’t work out, it’s not my money. I’m only 27, I’m not losing anything. I got paid, I gained some experience, and now I move on.” They would certainly not have that attitude if they had ventured their own money. They wouldn’t gamble. They would care for it. They would use metricsMetrics Metrics are quantities that are measured and used to: to monitor the risk factors.
The learning curve is also a crucial part of ownership. That learning curve comes about through experience, which can include failure. But failure brings with it new experiences.
Experience is also a vital requirement for learning management. Management cannot be learned simply from reading a book. I know because, this coming year, I will have two people in my company who have been with me for twenty years and a lot more who have been with me for 10. I have learned to manage, and they are still with me.
Manipulation by Investors
From my view, only investing in companies with CEOs under 30 years of age creates unhealthy codependency. In such a case, the investor can easily manipulate the enterpriseEnterprise Enterprise (in the context of sales) is a relatively large organization typically composed of multiple levels, locations, and departments which need multi-layer software systems that support collaboration across a large corporate environment. in which they’ve invested because they have more experience and control the money. They can say something like, “The business needs to expand, but you don’t have the money to do so. Therefore, we will invest, but we will increase our equityEquity Equity means a common stock, preferred share or other forms of security that represent ownership interest in a company.. Your equity will be diluted; you will have less power and fewer voting rights.”
Some new entrepreneurs will hold fast, saying to their investors, “Go ahead and increase your investment, but my voting rights and equity do not change.” Most, however, lose out.
The Need for Patience
As we set off in this new year, another message I would like to share deals with the requirement for patience. There would be many more healthy organizations and services if we were a little more patient. The impatient person is much more vulnerable than the patient person.
By being patient, you realize that some goals have not been attained, but it’s not the end. There is always another opportunity.
Through numerous paths, it is wisdom that is attained through patience. Wisdom is a sorely missing factor today. Wisdom comes with age and experience.
Entrepreneurship in its True Form
It is real entrepreneurship that gets my vote. Where does real entrepreneurship come from? It comes from a real need being fulfilled with a solutionSolution Solution is a combination of ideas, strategies, processes, technologies and services that effectively helps an organization achieve its goals or hurdle its challenges..
For the many insane problems confronting us today, real entrepreneurs are needed. Currently, we have too many bad solutions. We have unhealthy food, unhealthy energy, unhealthy immigration, unhealthy health care, and unhealthy political situations, resulting in a war-torn world.
There are endless opportunities and options with which to greatly improve our world. Let’s stop falling into traps to “get rich quick” while we collapse businesses. This is not the route to actual experience and wisdom.
Let us restore real entrepreneurship!
