It was a second-wave dot-com boom that lasted five to six years, when money was so readily available (many have referred to it as the Age of the Unicorns) that it felt like anybody could get in on the "become-an-entrepreneur" game. People believed that raising several millions of dollars for a business meant that they were a successful entrepreneur.
But the fact is this: So many of these businesses are not going to succeed, and so many of these companies were launched by people who are just not entrepreneurs. Nine out of ten startups will fail and according to Bloomberg, eight out of 10 entrepreneurs who start businesses fail within the first 18 months.
The current misjudgment in the business ecosystem — that raising money means you have achieved something or is something to celebrate — is insanity to me. As the economy gets tighter, these businesses will start to disappear. Some will become acquired by other companies, but rarely does that mean anyone actually made any money.
Usually it just means you get jobs. Big Company A launches, it fails, investors lose money, and now they work at Big Company B instead. It is branded as an acquisition, but the reality is very different. It's an acqui-hire.
Both the rise in the sense of entitlement over the last couple years and the belief that becoming an entrepreneur is possible for anyone have a big role to play in this "fail and get acquired" practice. A business ecosystem that essentially says "If you read about it and work hard, you can do it" is bulls---. How do we fix that?
There now needs to be a reset around how we look at entrepreneurship as a skill and talent and what it takes to start and lead a successful company. Most people think entrepreneurship is a skill that can be developed, and it's just not.
When the NBA meets an MBA
If someone plays a few games of pickup basketball, they don't automatically believe that they're ready for the NBA. But the same understanding of skill and talent just doesn't seem to be applied when we talk about entrepreneurship. So many "entrepreneurs" over the last five years are people that one day decided they're just going to "become an entrepreneur" and expect it to be something they can pick up and learn. Build a company. Raise some money. Done, no problem.
We all know how hard NBA players work on their craft to get to that professional level. They are taking shots and practicing their ball handling everyday for hours on end, for years and years. But we're also equally aware of the massive amount of athleticism and talent that they were born with to harness and execute against.
Imagine if the NBA opened up tryouts to everyone and anyone who tried out made the league and became an NBA player. That's basically how we've been treating entrepreneurs and the start-up culture. Someone shows up to tryouts and they're automatically referred to as an entrepreneur and someone who builds businesses.
Why don't we apply the same perspective, how we view the talents and skill sets of our best athletes, to how we teach entrepreneurship and becoming an entrepreneur? So little thought is given to that fact that just like the top athletes in the world, entrepreneurs who build successful businesses come from a certain breed. They have an entrepreneurial DNA that allowed them to hone in on their business skills in the first place.
Because the fact is this: Entrepreneurs are born, not made. Of course, anyone can maximize any skill set, but it doesn't necessarily make them successful at it. I could maximize my singing with vocal lessons, but I'll still always just be a mediocre singer. To win at the very top of the chain, to make it big in the business world and in any arena, you have to be born with talent.
An entrepreneur's characteristics and skills
So what are the characteristics and skills of a good entrepreneur? What's the "it" factor that makes for a great entrepreneur? To be a basketball star you would most likely be extremely tall, fast, athletic, and have real hops. But the qualities of a great entrepreneur are more abstract or illusive for someone studying entrepreneurship and business. From my experience, I believe there are five major traits that mean you have the chops when it comes to building a business and living the life of an entrepreneur.
- Salesmanship. The ability to sell something is absolutely necessary to knowing how to run a business at any stage. Whether you're starting out on the floor like I did selling a physical product or the CEO of an agency selling the talented employees, you need to know how to make a sale.
- A chip on your shoulder. Yes, I'm serious. And that can come in two forms. Either you were born with nothing, zero, and you're just hungrier than the average human. Or, it's the reverse: you born into a lot of wealth and opportunity and you want to prove that you don't need it, and can do it on your own. In either case, some kind of chip can push you a long way, especially for the amount of hours and energy you'll need to put into your business.
- An independent spirit. Being an entrepreneur means you rely on yourself and no one else. At the end of the day, you need to be 100% comfortable with making the final call, being able to trust yourself and your intuition.
- Understanding consumers and consumer attention. Zuckerberg is a fantastic example of someone who truly understands and trades consumer attention. He got it with his product: Facebook. He held onto it by identifying and acquiring Instagram. And he saw it with Snapchat too, but that deal didn't pan out. In any case, the lesson is that not only knowing where the consumer is, but also where they are going, is crucial.
- Patience. It can be a slow and lonely climb to the top. If patience is a trait you don't currently possess, but you want to play in this world, I recommend developing it as much as you possibly can.
Listen, everybody is born with some capability to run a business. But 90% are born with the capability to run a business into the ground. There is an amazing amount of entrepreneurs who can make $80,000-$90,000 working for themselves running a small e-commerce shop around a personal interest of theirs. And the opportunities to do that have never been more available. If you want to do that, do it. It was the main thesis statement of my first book "Crush It." I am all about that life and I support it.
But let's be clear about entrepreneurs and the businesses they run: there are levels to this sh--. The higher you climb and the more the business grows, the stakes become a lot bigger. More and more people are depending on you to make the right decisions for them and the company. The league you're playing in and the skill set required jumps from pickup ball to NBA very quickly.
Sure anyone can start a business, but only the top 25% will actually grow into multi-million dollar companies with more than one employee. To see what I'm really talking about, check out this infographic on how small businesses operate:
The talent and skill set required to make it to the big time are crucial. Real entrepreneurs are born and prove out their DNA with hard work. What I'm saying is this: Only a handful of people have what it takes to truly run a million-dollar business.
It’s a common topic for group discussions and MBA interviews. ‘Entrepreneurs are born not made. Discuss.’ says the moderator and the shortlisted candidates (who’ve never had any exposure to entrepreneurship) take off on a passionate and agressive spiel. If you’ve ever see the MTV Roadies audition rounds, you can visualise what’s happening.
Unfortunately, the evaluation process encourages and incentivises applicants to take a clear (often, black or white) stand. Even more ironic is the fact that these guys who are fighting hard to make a point will never take up entrepreneurship after they complete their MBA. Read this post –> MBA Entrepreneurs: Why many bschool grads may never launch a startup.
So we thought it might help to know the views of someone who has been a successful entrepreneur for a long time. Cambridge MBA and entrepreneur Neeraj Agarwal (who first got a dhamakedaar introduction on our blog here –> Please come back to India. Your country needs you) is back. In this new series on entrepreneurship and startups, he will share his experience and knowledge with aspiring entrepreneurs.
Are Entrepreneurs born or made?
by Neeraj Agarwal
Some very strong arguments have been made from both the camps of this decades old debate. The ones who believe that entrepreneurs are born cite examples of several high profile entrepreneurs like Richard Branson, Steve Jobs or our very own Dhirubhai Ambani all of whom were school dropouts and went on to build large corporations. Apart from the fact that many of them became successful without receiving any formal training, a lot of them also displayed entrepreneurial traits from childhood and had started their first venture at a very early age.
Entrepreneurs are born not made
As a child, Dhirubhai Ambani set up a stall to sell bhajias at the village fair to supplement the meagre earnings of his family[Ref 1].
While still in high school, Steve Jobs started selling ‘blue boxes’ that would allow you to place free calls (let’s not get into the legalities of that), to fellow students[Ref 2].
Richard Branson started a youth-culture magazine at the age of 16.[Ref 3]
Most of those with an innate desire to create their ventures are very headstrong, driven, filled with energy, flooded with ideas, extremely passionate, are risk takers, gregarious and persuasive.
According to John Gartner, author of ‘The Hypomanic Edge’, the condition that defines their unique personality traits is called hypomania, a term defined as “a mild form of mania, often found in the relatives of manic depressives. Hypomanics are brimming with infectious energy, irrational confidence, and really big ideas.
They think, talk, move, and make decisions quickly. Anyone who slows them down with questions “just doesn’t get it.” Hypomanics are not crazy, but “normal” is not the first word that comes to mind when describing them. Hypomanics live on the edge, between normal and abnormal.”[Ref 4]
Given these arguments one can easily be forgiven for considering that all entrepreneurs are born and not made.
However, for every Richard Branson, Steve Jobs or Dhirubhai Ambani there are several others who transformed from being employees.
Entrepreneurs are made not born
According to an Ernst & Young report ‘Nature or nurture? Decoding the DNA of the entrepreneur’,[Ref 5] out of 685 entrepreneurial leaders surveyed, more than half described themselves as “transitioned” — meaning that they had some experience outside of the world of entrepreneurship before launching their ventures.
The report further states that ‘although there are notable examples of entrepreneurial leaders who left college to form hugely successful businesses, such as Bill Gates of Microsoft or Mark Zuckerberg of Facebook, these are very much in the minority.’
Among the survey respondents, some form of business experience was considered a vital foundation that increased the chances of future entrepreneurial success and about 45% of the respondents said they had started their first venture after the age of 30.
The conclusion that can be drawn from these two countering arguments is that just as there are so many different entrepreneurial ideas, there is no one route to entrepreneurship. While there are some who are born with a desire to create ventures and have inherent qualities that make them successful entrepreneurs, there are others who learn and acquire them along the way.
So what are those qualities that make a successful entrepreneur and can they be learnt? Before I answer this question I would like to share my own entrepreneurial story.
How I became an entrepreneur
I come from a community that is known for its entrepreneurial talents. It is said that business runs in the blood of Marwaris and almost everyone who belongs to this community has a rags to riches story. Over a hundred years ago, my own grandfather travelled thousands of kilometres from a small village in Haryana to a remote hill station called Darjeeling which not many had heard of then.
Road conditions were tough and he had to face several hardships before finally reaching his destination. He started his new life as a bookkeeper at a local business, but very soon saved enough to rent a small shop and start his own garment retail business. The rest as they say is history.
He invited various other family members from the village in Haryana to join him and expanded the business, establishing the family as an integral part of the community. All five of his sons, including my father who despite being a qualified lawyer followed on his footsteps and diversified the business further.
Growing up in such an entrepreneurial environment, one is bound to be influenced. But somehow I never once thought that I would get into the world of business. I was never the one to sell ‘bhajiyas’ or start my own magazine while in school.
In complete contradiction to the family tradition, I took up Science instead of Commerce, studied computers and started working as an IT professional. However not too long into the job and I saw a gap in the market for computer education in smaller towns. I quit my job, found a couple of co-founders, took up a franchise of India’s leading IT education company and went on to create a network of one of eastern India’s largest IT training centres.
I subsequently did an MBA from the University of Cambridge, mentored start-ups and am now in the process of launching my next venture called Tea People which aims to use tea as a medium for bringing a positive social change.
So while I do believe that entrepreneurship can be taught and learned over years of experience, most successful entrepreneurs do share some common personality traits and are usually blessed by a supportive environment. For me, the supporting factors were the guidance, encouragement and mentoring I received initially from my father and later from a senior business partner too.
What are the personality traits of successful entrepreneurs?
It is tough to have a general list. But the personality traits that led to my success are:
Persistence and tenacity: When I first approached the IT training company whose franchise I wanted to take, they refused by saying that their model wasn’t suited to smaller towns and that they didn’t want to dilute their brand image.
I took this as a personal challenge. I conducted a market research, joined hands with two very senior business professionals and went back to them. This time they agreed. However, this wasn’t the only hurdle. There were countless others who tried to dissuade me by saying that big brands didn’t have a place in smaller towns and that people wouldn’t be willing to pay the higher fees commanded by the big national players.
I simply ignored all the negative comments, followed my instincts which had been further calibrated by my research and proved all of them wrong.
Passion: I was immensely passionate about bridging the IT divide that existed between cities and smaller towns. It was this passion that drove me to reach out to as many smaller towns as I could. We ended up becoming a master-franchisee appointing sub-franchisees in a large number of very small towns and becoming one of the largest franchise groups in the area.
Ability to spot opportunities: When I was doing my computer course in Kolkata, I saw that a large number of young people enrolled there had come from smaller towns and were spending a lot of money and time doing nothing else but a part-time computer course. I immediately spotted an opportunity for taking those courses to their doorsteps and filling a gap in the market.
Appetite for risk and personal belief: While I don’t consider myself to be a high risk taker, a certain appetite for risk is necessary to be a successful entrepreneur. I wouldn’t have been able to leave my job and get into a completely uncharted territory if it wasn’t for my ability to take risk.
However along with the risk appetite I also had a strong belief in self. I have always believed in my ability to define my own destiny. This personal belief in a way helps me overcome any fear involved in taking up new challenges and putting myself in what most would consider a risky situation.
So, are entrepreneurs born or made? Who cares!
In conclusion, it doesn’t matter if you have never started a business before, or have started and failed, or come from a non-entrepreneurial family or background. If you feel you might have some of the above traits, have a business idea or are simply attracted by the prospect of starting out on your own, just go ahead and do it. You may even surprise yourself by discovering talents in yourself that you had been unaware of.
If you have been going back and forth about launching your startup, stop bothering about questions like whether entrepreneurs are born or made…or dropped from the sky by scientists carrying out genetic mutation experiments.
Stop thinking. Roll up your sleeves and DO something. Neeraj has been a mentor to many startups. Interact with Neeraj on our entrepreneurship forum to get advice and feedback on your startup.