There’s no such thing as an Entrepreneur

Recently Chris Dixon wrote an interesting post on the problems of pattern recognition. In it he writes:

If you look at the hugely successful startups of the last decade, the founders have many similarities that are easy to observe. When they started, many were male, young, unmarried, computer programmers, dropouts of elite universities, etc. As a result, a lot of investors look for founders with these characteristics. But without an understanding of the deeper reasons these founders succeeded, these observable characteristics could just as well be the color of the sky and not the tanks.

His main point is that investors might be developing wrong patterns for judging investments by focusing on simple observable traits such as age and sex. I don’t just agree with Chris, I actually want to take it one step further. There is no prototypical Entrepreneur.

Simply Googling for “characteristics of an entrepreneur” will give you a ton of articles, some scientific, some entertaining, of what characteristics you have to have in order to be an entrepreneur. And if you don’t have these characteristics you’re out of luck, you will forever be doomed to a life as a mindless peon.

Bullshit!

An entrepreneur is an entrepreneur because (s)he is an entrepreneur. To illustrate: a dancer is simply a dancer because he or she dances. If I get my ass out of my chair now and start jumping around the room to the latest Lady Gaga, I am a dancer. That’s all there is to it. The same with being an entrepreneur, there is no set of defining traits that separates the entrepreneur from the rest of the population, an entrepreneur is an entrepreneur because he or she acts entrepreneurial.

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Entrepreneurship, Venture Capital and Social Networks

No. I’m not going to talk about Facebook, Twitter or LinkedIn, what I do want to talk about are actual social networks, the connections between people who know each other. Oh, and my graduation research project, but more on that later.

I hope we can all agree with with that rascal Schumpeter that innovation and entrepreneurship are important and powerful forces that shape the economy and society, especially high-tech entrepreneurship which combines the two.

High-tech new ventures often require significant investment in order to create a new product or service and even more money to grow. Banks usually will not supply financing of this level because the risks involved are too high. Luckily there are individual investors and Venture Capitalists (VC) who have a slightly higher risk tolerance and are willing to finance such new ventures in exchange for equity.

For an entrepreneur who is willing to make the effort to look into it, it is fairly clear what is important for an investor in a new investment opportunity. Often things such as the founding team of the venture, the potential market size, etc are of interest to the investor or VC.

And its also fairly easy to get in touch with investors or VCs, they can be googled, LinkedIned (is that a verb yet?) or if you’re old-school, called. Plus they regularly attend events frequented by young new companies.

But how come a lot of high-tech entrepreneurs still find it challenging to actually get investment? Is it because most new venture ideas are crap? Probably. Is it because there is a lot less capital available than qualified investment opportunities? Of course. But that’s not the whole picture, I believe that a lot of young companies fulfill all the criteria needed for investment and are not afraid to pick up a phone and dial for dollars. So why do they still find it difficult to find investment?

Because its also the social network that counts, how did that VC get to know you? Who does that VC go and talk to that he trusts will give him honest information about your company? Everyone knows Entrepreneurs have a tendency to be a tad… overconfident… about their new business’s prospects. And what is the role of universities and incubators in this ? Is there are role for them?

All these questions are interesting. That’s why I’m not going to answer them. Well I can’t answer them. Yet. Right now I’m starting my graduation research project and during this project I intend to create a better understanding of VC investment in High-tech start-ups and the parties that play a role in this by investigating the social network in which such investments happen.

If you have any tips or advice, let me know!

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How to be an asshole

I’m an asshole. As any goodhearted Dutch person I try to be direct and honest in my dealing with other people. However, in most social interactions directness is a sign of insensitivity, a sign of being a dick. But, as many of my friends can attest, I don’t mind being an insensitive dick. I think it runs in my family.

Yesterday I had the unpleasant fortune of having to tell someone that I did not want them to join in an upcoming social event. I won’t go into details on why I didn’t want her to join, that doesn’t need to be shared with the rest of the world.

The problem was, I share a large social circle with her and I do not actually dislike her, it’s easy enough to be direct and honest with someone you dislike, less true if you don’t want to put their head on a stick and burn their innards. To cut a long story short, my attempt at being tactful (and operating within what I consider a shared social paradigm) was unsuccessful. To put it mildly.

Lessons Learned

  • Being direct and being tactful can have the same end result.
  • Maybe I’m not an insensitive dick after all. Maybe.
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Entrepreneurship is only sexy if you’ve never done it before

I honestly believe that most people who haven’t started their own businesses yet underestimate some of the emotional swings that the pendulum of entrepreneurship throws at people.

But Spencer Fry puts it a lot more eloquently than I’ll ever be able to:

One day you’re on the top of the world — you’ve hired the person you dreamed about, you received your first term sheet, you pocketed your first revenue, etc. — and the next moment the world feels like it’s crumbling down around you — traction is slowing, you have to fire an employee, revenue is slowing, employees are losing morale, your shipping deadlines are not being met, etc.

Read the rest of Spencer’s excellent post here: Startups: Stress and Depression.

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