[via Abhay Bhagat] Inc (Feb 2000) has an interview with Amar Bhide, author of “The Origin and Evolution of New Businesses”, a book which I’ve just started reading (and would recommend to anyone wanting to be an entrepreneur). Excerpts:
Most successful entrepreneurs start without a proprietary idea, without exceptional training and qualifications, and without significant amounts of capital. And they start their businesses in uncertain market niches.
Most are started by someone who is working for another business, who sees a small niche opportunity — one in which the company he or she is working for is already taking advantage of, or one in which a supplier or customer is involved. And the person jumps in with very little preparation and analysis but with direct firsthand knowledge of the profitability of that opportunity — and pretty much does what somebody else is already doing, but does it better and faster. These entrepreneurs don’t have anything that differentiates their business from other businesses in terms of technology or in terms of a concept. They just work harder, hustle for customers, and know that the opportunity may not last for more than six or eight months. But they expect to make a reasonable return on those six to eight months. And along the way they’ll figure out something else that will keep the business going.
I think we have to distinguish between risk taking and a tolerance for ambiguity. Going to Las Vegas and taking a bet on a roulette wheel requires a lot of risk taking, in the sense you must be prepared to lose what you put up. But a tolerance for ambiguity, which is a characteristic of successful start-up entrepreneurs, is a willingness to jump into things when it’s hard to even imagine what the possible set of outcomes will be. It means going ahead in the absence of information and in the absence of having much capital and in the absence of having a novel idea. In fact, just by looking at the amount of capital that people put on the table, you can see that those entrepreneurs don’t have a lot of financial risk, and because most of them are young, their opportunity costs are not that great.
Most founders of promising companies do not start out as innovators or risk bearers.