1.1.4. Profile of the Entrepreneur

Welcome to this session on Profile of the Entrepreneur. When you start looking into entrepreneurship, you hear a lot of different opinions about the what and the who of what an entrepreneur is. For example, you might hear that an entrepreneur is a business leader. You might here that an entrepreneur makes a concept viable. You might hear that an entrepreneur organizes and manages a business undertaking. Or you might hear that an entrepreneur runs their own companies. It can be any of these definitions or more that we’re hearing on the street. Given all the opinions that are out there, who really is the entrepreneur? Is there a clear profile? Can we predict who will actually be successful? Is there truly one type of entrepreneur? Is there one type of mindset that is most suited for entrepreneurship? We often hear something called the entrepreneurial mindset and this asks the question, are some people more adept or predisposed to entrepreneurship because of their personality?
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What we find in research is that this is not true, people actually fall prey to something that researchers call the Fundamental Attribution Error. What the Fundamental Attribution Error is, is assuming that behaviors are caused by someone’s disposition even when circumstances are the real explanation. Take, for example, a driver who is speeding. We might assume that the driver is speeding because they’re irresponsible rather than assuming that there is some sort of emergency. This type of error is particularly seen in Western culture such as the United States, where values are more individualistic and the explanations fit into our world views about fairness, such as the fact that good people should get rewarded and there should be equity.
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When we think of entrepreneurs and the entrepreneurial mindset, we tend to think of successful entrepreneurs. People like Bill Gates and other famous entrepreneurs, rather than thinking of the local guy starting a coffee bar, for example. And so, what this does is we tend to attribute these famous people and link them with success and underestimate the survival and success rates of the more general population of entrepreneurs. We tend to admire these attributes that came as a result of this success, as well, such as the charity work that Bill Gates might be doing or other factors that are unrelated to why they became entrepreneurs in the first place. There are a few things that we do know from research and entrepreneurship however. We do know for example that there are some evidence that entrepreneurs are more likely to exhibit overconfidence. So in studies that have looked at social capital, incognition, and entrepreneur opportunities, we see that entrepreneurs are more likely to demonstrate some optimism, some levels of optimism that are over and beyond the general population, as well as overconfidence. But on the whole, most research has produced mixed findings on particular traits and attributes that might define an entrepreneur. Findings related to other traits are really mixed. For example, risk propensity. There is some research that suggests that entrepreneurs are more likely to tolerate higher levels of risk, but other findings show that there’s no difference in terms of risk propensity at all. Same goes for personality traits, and same goes for passion. We tend to hear about entrepreneurial passion very often, but in fact, we don’t actually know what’s encompassed in entrepreneurial passion. And so these findings suggest that there’s not one type of personality or one type of attribute that distinguishes entrepreneurs from non-entrepreneurs.
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Okay, regardless of these findings, we do find that individuals tend to fall into three main types of entrepreneurs. They do tend to fall into
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categories that we can attribute some specific characteristics. These categories are serial entrepreneurs, parallel entrepreneurs and non-traditional entrepreneurs. We’re going to go into each of these in some detail. To begin with, serial entrepreneurs. A serial entrepreneur is someone who focuses on starting multiple businesses one after another. Their focus is to found one new firm, typically selling that firm first and then starting their subsequent firm. An example of a serial entrepreneur is Steve Jobs. We also have parallel entrepreneurs. A parallel entrepreneur is someone who manages to run more than one successful business at the same time. Steve Jobs incidentally was also a parallel entrepreneur when he was running both Pixar and Apple at the same time.
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Elon Musk is someone who is both a serial entrepreneur and a parallel entrepreneur. To begin with, in 1995, he founded Zip2, which was a web based city guide for newspapers, and he subsequently sold it for 307 million to Compaq. After that, he founded X.com which was an electronic payment service, and eventually through mergers, it became PayPal.
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He’s now CEO of Tesla motors, and at the same time, he’s the founder of SpaceX, which is the world’s leading private space launch provider. In his spare time, he also serves as chairman of Solar City, the second largest solar installer in the US. So as you can see, he’s running multiple businesses at one time. On a more typical scale, you might think about a retail shop owner who finds that he has time to run both an online store and also help his children launch their own start-ups in his spare time.
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We might also find that workers need to run more than one job at the same time to pay bills, and so micro-entrepreneurs find that they’re doing this often to offset difficult economic times. The third category includes non-traditional entrepreneurs. These include people who create jobs for themselves in a variety of idiosyncratic ways by establishing businesses on their own. This often results because as the global economy has evolved, lots of multinational corporations have significantly redistributed the production and services to take advantage of cheaper labor.