Why Be An Entrepreneur?

I have asked myself this question many times – when I thought about others, but also when I thought about what I want to do with my life. Let me begin by saying that I believe there is not a right answer. It is still worth discussing because the underlying visions and motivations are the key to understanding what drives entrepreneurs.

First, let’s quickly review what defines an entrepreneur and her doing. As early as 1803 Jean Baptiste Say proposed that „the entrepreneur shifts economic resources out of an area of lower and into an area of higher productivity” (Traité d’économie politique). Around 100 years later Joseph Schumpeter (1911, Theorie der wirtschaftlichen Entwicklung) describes entrepreneurship as a field that is about new factor combinations leading to new products, production methods or new markets. Essentially, it is about the famous term “creative destruction”. Based on this work, Peter Drucker (1985, Innovation and Entrepreneurship) stated: “[Schumpeter] postulated that dynamic disequilibrium brought on by the innovating entrepreneur, rather than equilibrium and optimization, is the ‘norm’ of a healthy economy.” In a nutshell, an entrepreneur uses resources in novel ways to produce value and, in doing so, she is the motor of our economy.

Today, the public views entrepreneur as people who lead cool, new tech-startups to glorious success and eventually into billion dollar IPOs. Of course, this is just the tip of the iceberg and a very disillusioned image. We tend to forget about the very long tail of hundreds of thousands of entrepreneurs who: (1) are not that successful financially, (2) are not that visible, because maybe they run a subtle B2B-model, (4) simply run a smaller business in a market other than IT, (5) fail once or many times, or face still other reasons that cause them not be on TechCrunch.

So what can be the motivations to deny a safe, well-paid job and start a risky venture instead? On the one hand, maybe there aren’t any jobs available. Just think of what has happened in Iceland ever since their economy crashed due to the country’s bank crisis in 2008 in the aftermath of the global economic crisis. Another example of entrepreneurship resulting more from economic necessity than voluntary decision-making are many of the countless agricultural and handcraft entrepreneurs in third-world countries. On the other hand, people may just WANT to be their own boss, face uncertainty, handle risk, and at least have the chance to hit the ball out of the park for a startup home-run.

Now, I’m sure some of you have heard this discussion before: Do people found companies because they can or because they have to? And, what should ideally be the reason? Some scientific research has found indications that forced entrepreneurship does not produce economic growth whereas opportunity entrepreneurship does. However, I argue that there is no better kind of entrepreneurship. Some people, especially but not exclusively in the developing countries, simply don’t have a choice. Limiting the discussion to first-world countries changes the perspective a bit. The correct question to ask should now be: Is entrepreneurship the means to an end or is it the end itself? Intuitively, it should be the means to achieve a goal, whether that is as noble as making the world a better place or as pragmatic as producing value that people pay good money for. People should found companies because they want to achieve something cool.

I have read an increasing number of articles lately which discuss Europe’s big idea problem or solutions to the decline in big ideas. Of course, I do understand the arguments: Big ideas are always better than small ones…BUT I argue that most entrepreneurship, no matter how big the idea, can be of value. For some people just being their own boss and having the freedom to decide what to do with their life may be most important. And, if you are like Eric Ries and believe “entrepreneurship can be learned which means it can be taught“, working on ‘just another app’, as some people would call it, prepares entrepreneurs for bigger things (I have all the respect in the world for app-entrepreneurs and I believe apps have the potential to change the world!). So step by step, we all might eventually be able to change the world a bit.

I say go out and try. I believe the best way to learn entrepreneurship is to practice it. So far, I have been a small-idea entrepreneur but I’m proud of it. I have made experiences with a small company and now feel ready for bigger ideas. What are your thoughts and opinions??

Over and out.

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One response to “Why Be An Entrepreneur?

  1. I agree 🙂
    Small ideas are just as important as the big ones when it comes to making the world a better place. Every big idea starts out as a small and fragile vision. Thus we need to go out there and practice !

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