I had vowed never to write for the university student newspaper. The standard of student journalism is almost invariably dire and my past experience of the people who work on the “official” student rag has never been positive. But on this occasion, it was a favour for a friend who was organising a big series of events about entrepreneurship, and asked me to write a personal view.
Whither entrepreneurship?
19th January, 2008
Announcing that one intends to be an entrepreneur would probably not gather so much awe and envy as questions over one’s grasp on reality. Most people are simply not going to be successful entrepreneurs, and in many cases, it was probably blindingly obvious in the first place. So is it pointless for students to think about “entrepreneur” as a potential career option?
It is not even very easy to define what an entrepreneur really is. First of all, the entrepreneur must have some new or innovative idea, which people are willing to pay for. But I think the crucial test has to be that the entrepreneur must have made money from creating some product or service. Just simple inventiveness is not enough. Nicola Tesla had a mind arguably even more brilliant than that of Thomas Edison, but Tesla was the far inferior entrepreneur. Although his alternating current was better for distributing electric power than Edison’s direct current, Tesla eventually died alone and penniless, while Edison founded the company we now know as General Electric.
Moreover, does one need to be a serial innovator to be considered a successful entrepreneur? Few product or service markets remain static. There are usually ways for competitors to improve either the entrepreneur’s original invention itself, or to better its marketing and distribution. Witness the current, very expensive, next-generation DVD format contest between Sony and Toshiba, which has done little good for either company, or consumers. But it underlines how serious the business of staying ahead is. Sony probably remembers when it lost the Betamax/VHS format war, another example of how just creating a superior product does not automatically equals entrepreneurial success.
Take the entrepreneur to be a creative inventor, a good businessman as well as consistently keeping ahead of rivals in both of those areas. The minimum set of skills required to be a successful entrepreneur would be a good business idea, capital to start selling the idea, and once the money is flowing in a certain determination to keep it that way. None of these on their own are sufficient, nor can they be ranked in order of importance, since deficiency in any one ultimately results in the failure to make money one way or another, which has to be the ultimate criteria for judging an entrepreneur.
But talent is not enough, unfortunately. Money begets money, and not all entrepreneurs are created equal. This is one area where I do sympathise with budding entrepreneurs. There exists a certain degree of market failure that inevitably denies some viable business ideas the chance to come to market. By definition, Capitalism systematically benefits those with higher initial endowments. It may not be optimal individually or socially, but even with its inefficiencies, Capitalism still rewards the individual above all others. It is that which makes it the political economy most suitable for entrepreneurship. It levels the playing field somewhat, and history suggests that there is probably no better time to be an entrepreneur than at present.
Ultimately, any entrepreneur will need one more skill: the ability to face unpleasant facts. This will tell him when not to be an entrepreneur; and just as importantly, when to quit. It is far too easy to amalgamate the entrepreneur and his business. It therefore very important sometimes to realise that some business failures cannot be prevented, and a good entrepreneur should be just as apt at spotting opportunities as unavoidable threats.
Finally, I am thoroughly sick of the clichés surrounding entrepreneurs. The archetypal entrepreneur is as thus: leaving formal education at an early age, never went to university, started out with the one shop, and finally amassing a fortune through nothing but hard work. This is hopelessly unrealistic and misleading. Most entrepreneurs fail, and there is a huge survivorship bias in reporting by the media. But the press cannot be blamed entirely for inflating expectations, as one cannot deny that success stories are invariably more uplifting to read. Only the truly spectacular failures are reported. This distorts incentives and creates a permanent excess of supply of entrepreneurs. However, from a social point of view, this is perhaps no bad thing: one can always rely on someone else to be creative. The invisible hand strikes again.
There is help available, such as prize money from student entrepreneurial competitions. This development is to be welcomed. The potential upside – cash, and the even greater wealth that such capital can give birth to; the satisfaction of achieving success through one’s hard work; even just the competitive thrill of beating other people (nobody said it was a forgiving sport). I am not an entrepreneur, and I cannot promise not to laugh if you should come out and declare your ambition to be an entrepreneur. But those who want to succeed bad enough will not need my blessing, nor will they have needed to read this essay to have already signed up to every advantageous opportunity available.
Filed under: Uncategorized | Tagged: Commissioned, satire
