The buzz of entrepreneurship is all around us these days.
By Daniel Isenberg
High-profile startup movements have launched in dozens of countries. Social media companies are sprouting from nowhere to impact—or impinge on, depending on your perspective—our personal and professional lives. Millions of people in dozens of countries are participating in celebrations such as Global Entrepreneurship Week. Each summer in the United States, tens of thousands of schoolchildren take part in Lemonade Days, a program organized to teach the young students how to do business. In almost every nation on every continent, presidents and prime ministers have the word entrepreneurship on their lips, usually in the same breath as job creation.
What does this mean for you and me? At home, entrepreneurship touches many of us even more directly: maybe you have started a venture or worked for someone who did. Maybe, instead of continuing to work for your current employer, you have the urge to take that great idea your marketing department trashed and try to bring it to market yourself. Perhaps, ignoring the advice of family and friends, you want to attack some frustrating need, solve a big problem, or build a new product that no one had the sense to have made and sold already. Maybe you and a college mate have a zany idea that has grown on you, and you can’t wait to get working on it. Or, you have a relative who went out and took over a ragged little business that the owners or banks had written off as hopeless, and is growing it. Or, you might just be reading these words during a rare break from 18-hour days, getting your own nascent venture off the ground, dealing with the “tough bloody shit” that you will read about later in this book.
With certainty, none of these ventures has been, or will be a cakewalk. Spouses are naturally worried about the fallout at home in case you fail. Customers are few and hard to convert into sales. Investors are picky and don’t even return phone calls or emails. Getting a ready-for-prime-time product to market takes more sleepless nights than you had imagined, making this the best year of your life and the worst at the same time.
Why is that? The main reason is that you are swimming against the market’s existing current, going against the grain. All entrepreneurs do that. If that were not the case, it would not be entrepreneurship. Because if you or your friends are entrepreneurs, you are doing something novel, bringing to the market a product or service that doesn’t exist yet, except perhaps in your mind’s eye. You are trying to tell people that what they are currently doing or buying is not good enough, that they need to change their behavior and to pay you in order to make their lives better.
That means you almost surely will be butting up against anything from apathy to scorn. But, if you succeed in scaling that wall of resistance, you will have proven that your new product or service has value.
This adverse process is the norm for entrepreneurship, not the exception. It is a contrarian process that repeats itself in one form or another countless times a day all around the world. Its ubiquity underlies a key question at the heart of this book: how do people with contrarian ideas succeed in creating and capturing value that is extraordinary? And, is it somehow possible that more of us are capable of this than we think?
Snapshots of Five Contrarians
As the global and diverse cast of characters below illustrates, successful entrepreneurs see and realize value where others think there is none, and act in ways that are contrary to what almost everyone else thinks is worthwhile. Thus, I see entrepreneurship as the contrarian perception, creation, and capture of extraordinary value. To create and capture that extraordinary value, you must see or sense value in things that many other people see as worthless, impossible, or stupid.
- At a recent conference on business opportunities in Brazil, one of the speakers summed up: “In a word, Brazil is juicy.” He was not referring to the juice of electricity, but in Sorocaba, 25 miles west of São Paulo, Bento Koike and the venture he founded, Tecsis, have shipped more than 12,000 50-meter wind turbine blades that operate 24/7 in the wind farms of North America and Europe. Virtually all of Koike’s critical raw materials come from the Northern Hemisphere, and all of his customers are there as well. The value—the real juice—is created and captured in Brazil.
- Six thousand miles away in Reykjavik, Iceland, a few dozen Actavis executives power the activities of the world’s fourth-largest generic pharmaceutical maker, selling more than 1,000 generic drugs from Boston to Beijing. Between 1999 and 2007, Actavis grew a hundredfold when entrepreneur Robert Wessman and partners took over the small, insolvent drug maker. Investing his life savings, his mortgage, and his reputation, Wessman created an extraordinary amount of value for himself and other shareholders, and brought needed, inexpensive drugs to 40 world markets.
- Another 6,000 miles farther in a Tokyo hospital, a 50-year-old patient is swallowing a miniature video pill that will identify the source of gastrointestinal (GI) bleeding in her small intestine. The video pill is a self-guided mini-missile that travels down patients’ GI tracts and has created a mini-revolution in health care—it has been used more than 1 million times and literally has saved thousands of lives. The PillCam was invented and commercialized in Israel by two Gabis, Gabi Meron and Gabi Iddan, creating unique value for doctors and patients around the world, and along the way allowing shareholders in the new venture, Given Imaging, to capture hundreds of millions of dollars in gains.
- About 1,500 miles from Israel, Sandi Cˇeško has built a retail empire in Slovenia based on TV shopping. In all of Studio Moderna’s 20 Central and Eastern European markets, where TV shopping had been viewed with deep suspicion, Studio Moderna came along and changed their views. After 20 years of being ignored and then spurned by powerful private-equity groups, Studio Moderna is generating hundreds of millions of dollars in revenues, which have allowed Cˇeško and other shareholders to sell a piece of the company, creating extraordinary value for shareholders as well as valuable products for their customers.
- Peter Diamandis, chairman and CEO of the X PRIZE Foundation, a nonprofit that runs competitions to encourage technological development, describes an important aspect of the winning innovations: “All significant breakthroughs have looked crazy the day before they became breakthroughs.” With the PillCam, Meron established an entirely new diagnostic category. No one imagined that this was possible, certainly not Given Imaging’s arch competitor Olympus. Neither could anyone have anticipated Koike’s success in founding a wind turbine blades market leader in Brazil. Cˇeško’s foray into selling lower-back pain devices on TV in Slovenia was greeted not just with disbelief, but with derision. And Wessman, the “not most likely to succeed” (according to high school classmates), brought Actavis from nowhere to join an elite team of generics market leaders.
Many people from all around the world see hidden value in situations where others do not (see sidebar). These people then use that perception to successfully develop valuable products and services that customers usually initially don’t think they want, and ultimately go on to realize extraordinary value for themselves.
I have seen this kind of entrepreneurship in every one of the 40 or so countries I have visited or worked in. I have come to believe that entrepreneurship is part of the human experience, like art, music, theater, and literature. Although it may be statistically unusual (like the statistical rarity of the good artist), entrepreneurship can and does occur in virtually every society, not just the mythical hot spots (e.g., Silicon Valley).
A paradox: despite their statistical rarity in creating extraordinary value, many entrepreneurs will strike you as ordinary people like you and me. The differences between them and us are less a matter of who they are or what resources they have than of what and how they think.
Entrepreneurship and entrepreneurs in general have always been a pretty puzzling phenomenon, and the entrepreneurs are no exceptions. They make us wonder where their aspirations come from, what they are striving to accomplish, what keeps them going, and, in many cases, how they actually achieve those extraordinary results.
There are a lot of recipes out there for entrepreneurs and their champions. Some are quite good, and a few are based on broad research and practice. But, ultimately, recipes for entrepreneurs are oxymoronic because of the nature of entrepreneurship itself. The phenomenon of entrepreneurship is about contradicting our expectations, and so codification of the right or better or best way to be an entrepreneur will always possess an intrinsically elusive quality. The instant that we think we have it, the entrepreneur’s job is to prove us wrong. The potentially extraordinary value resides precisely in showing how violating (or simply ignoring) the common prescriptions can work, sometimes, amazingly well.
Indeed, in addition to the impressive amounts of money involved, one of our fascinations with entrepreneurs lies precisely in their defiance of our expectations and our subsequent surprise. The entrepreneurial record is writ full of entrepreneurs who should succeed but don’t; those who shouldn’t succeed, but do; those who almost crashed and burned, only to barely survive and to take off; and those who were taking off, only to suddenly lose altitude and fall. Entrepreneurs’ defiance of our expectations is so prevalent that it always has a surprising quality—if it weren’t a surprise, typically greeted by a great deal of skepticism in the early stages, someone would be doing it already.
Entrepreneurship—extraordinary value creation and capture—is possible even though it is extraordinary.
Aspiration is a funny thing. I can’t shake a silly joke I heard as a child; it went something like this: “Last night I had a dream that if I concentrated really hard, I could fly. It was so vivid that when I woke up, I concentrated really hard to try to fly. Alas, I could only get a few feet off the ground.” Aspirations are not usually formed out of the blue; at least in part, they are inspired by our perceptions of what is in the realm of the possible. We aspire to what we think we can achieve, and what we think we can achieve is influenced by what we see others achieving. Conversely, we often dampen our ambitions if we think that something is unattainable or undoable. The thought of becoming a professional basketball player at the age of 60 and at 5 feet 10 inches doesn’t even cross my mind; if I saw someone succeeding at it, my aspirations might change.
Sociologist Kurt Lewin is attributed with the statement, “There is nothing as practical as a good theory.” So we must clarify murky concepts of entrepreneurship by reframing the phenomenon in terms of value creation and its capture, rather than business ownership per se. This reframing will in and of itself make it easier for practitioners and policymakers to have an impact. There are quite a few important implications of this reconceptualization; these include the relationship between entrepreneurship and income inequality (they go together, to some extent), the role of the government and how it bears on the entrepreneur (not necessarily making entrepreneurship easier), and the minimal relevance of youth and inventiveness.