What Is Entrepreneurship: Our Interpretation

What is the definition of “entrepreneurship”? Here are some from the Internet:

  • the activity of setting up a business or businesses, taking on financial risks in the hope of profit

  • act of creating a business or businesses while building and scaling it to generate a profit

  • The capacity and willingness to develop, organize and manage a business venture along with any of its risks in order to make a profit. The most obvious example of entrepreneurship is the starting of new businesses. In economics, entrepreneurship combined with land, labor, natural resources and capital can produce profit. Entrepreneurial spirit is characterized by innovation and risk-taking, and is an essential part of a nation’s ability to succeed in an ever changing and increasingly competitive global marketplace.

We would suggest a somewhat different view of this word:

Entrepreneurship is the mindset, ability, and actions to solve people’s problems in systematic, scalable, and sustainable ways.

Build Your Team

Many experienced entrepreneurs say teams (not money, not technologies, not idea) are the most important factors to succeed. When you build a team, you need diverse talents.

What Is Wrong with “An Idea”?

One of the most common misconceptions of entrepreneurship is that “First of all, you need an idea.” It is wrong in many ways, to name a few:

  • It immediately locks a potential entrepreneur into thinking about something magic (“a great idea”).

  • The overemphasis of “an idea” gives the wrong impression that an idea is the most important component of success. It says nothing about execution or teamwork.

  • It encourages the person that conceives the idea to protect the idea without any discussion with potential customers, business partners, employees, or suppilers. As a result, nobody has a chance to critique the idea.

If an idea is not as important as some people believe, what is important then? A problem that is important to your customers and they are willing to pay for the solutions

In business terms, this is called the pain point. The concept about “an idea” is about a brilliant solution. However, most people do not care about how their problems are solved. They care about solving the problems.

Consider these examples: Most people take airplane flights not because these passengers love airplanes. They want to move from one location to another fast, affordably, safely, and comfortably. True, some people really love airplanes and they take flights for the purposes of flying. However, some people would be happy taking another solution (such as high-speed rail) if alternatives are available. Many people reserve hotel rooms because they need temporary space to spend one or several days, not because they love the concept of “hotels”. If you can offer comfortable space for temporary stay, people do not necessarily need to stay in “hotels” (Have you heard Airbnb?). You have a video call because you need to communicate with someone, not because you love talking to a camera and a computer screen.

How damage this “idea” thing has caused? Very much. Among many people we have talked to, almost everyone uses this word within the first three sentences. Surprisingly, very few people talk about “problems”.

Understand Mathematics

Back in grade school, you may have learned

\(0 \times 100\% = 0\),

and

\(x \times \epsilon > 0\), if \(x\) and \(\epsilon\) > 0.

What do they mean?

Over the years, we have opportunities talking to some potential entrepreneurs and they are so convinced that they have the greatest business ideas and do not want to tell anything to anyone. They are extremely concerned that others will “steal their ideas”. These people cannot find partners, employees, customers, …, because they are unwilling to talk about their great ideas. Their business can be described by the first question: The business has no value (i.e., \(0\)) even though they own 100% of it.

In contrast, true entrepreneurs understand that ideas are nothing without actions. Actions usually involve a team: engineers, sales, customer service, suppliers, …, These entrepreneurs aim to create values (and make \(x > 0\)) even though they may own only a small portion of the business (\(\epsilon\)). Since both \(x\) and \(\epsilon\) are greater than zero, the entrepreneurs actually gain something.

(YHL) This is a story in 2018. My friend, called X, called me to “discuss” a business idea. I asked the typical questions: “Who are your customers?” X said, “I cannot tell you.” I asked “What is your revenue model?” X said, “Secret.” I asked “How large is the market?” X said, “Billions of dollars a year.” I asked, “Who are your competitiors?” X said, “Can’t say.” I said, “Call me when you are ready to tell me anything.” Several months later, X called me and said, “OK. I will tell you the idea. You must not tell anyone. If you steal my idea, I will sue you.” I said, “Don’t tell me. I will not protect your ideas.” I hung up. Several days later, X called me again and said, “All right. I will tell you.” I said, “I don’t want to know.” Before I could hang up the phone, X said, “I want to sell music online.” I asked, “Tell me more. What is your plan?” X said, “This is it. It is my idea.” I asked, “Who are the musicians?” X said, “I have not thought about that.” I asked, “How do you publicize your website?” X said, “I need to work that out.” X said, “If I set up a website, musicians will upload their work and people will pay to download. I will make a few million dollars a month.” I asked, “What are you telling me?” X said, “I am sharing a business idea. You must assure me that you are not going to steal it and compete.” I said, “Good luck to you. I am not interested selling music online.” X has MS Computer Science from a good university and has been working in software companies for more than 20 years.