Defining The 5 Classes of Entrepreneurs I’ve been thinking a lot lately about what makes a great entrepreneur and the motivations behind why someone tries to become one. People have been asking me for advice on starting companies or raising money, and I’ve been giving talks at various events about my humble experiences as an entrepreneur. I found myself often struggling to answer broad questions and provide blanket statements about what works and what doesn’t work, without some sort of “situational contextâ€. By situational context, I mean if you’re trying to start the next Google or if you want to start a new shoe company. After a bit of thought, I’ve come to the conclusion that there are really 5 “classes†of entrepreneurship with different motivations for each. I hope to spur some discussion on the topic, so I’ll dive right in: The Five Classes of Entrepreneurs I. Opportunist – Class I Entrepreneur II. Lifestyle Entrepreneur – Class II Entrepreneur III. Problem Solver – Class III Entrepreneur IV. Visionary – Class IV Entrepreneur V. Game Changer – Class V Entrepreneur Maybe I’ve been hearing too much talk about “Magic the Gathering†cards in the office lately, but I organized the “types†of entrepreneur into Classes. In my opinion each “class†represents a different level of goal, motivation, and outcome, and it is certainly possible for people to progress from one level to another. I. The Opportunist Entrepreneur (Class I): The Opportunist recognizes that a particular situation presents an opportunity to make money and goes for it. The opportunity could be selling umbrellas on a rainy day, offering ice cold bottles of water in the middle of summer, or jumping on a hot and timely trend and offering some sort of related service. Many entrepreneurs get their start this way, as the best “opportunistic†opportunities often do not require much start up capital and often have a sense of urgency about them. An experience I had as an Opportunist was during college. It was the early 90’s, and people were using usenet newsgroups as the web was still in the lynx/mosaic phase. I was a big fan of sportscards (baseball cards etc) and recognized an opportunity to take sportscard inventory from local card dealers for teams and athletes that were locally not in demand (eg. 49ers cards in Boston don’t often sell well) and sell them over the Internet. I was able to pay for a lot of my college expenses with this little hobby business. My desire to start a website that would enable me and my friends to trade goods online is a whole other story, however Skill required: 3 / Endurance required: 2 / Foresight: 4 II. The Lifestyle Entrepreneur (Class II): The Lifestyle entrepreneur wants to build a business to be his or her own boss, work with his or her friends/family, or pursue an engaging but not all-consuming business opportunity while still maintaining balance in ones life. Many Lifestyle businesses are bootstrapped to begin with, because if there was outside funding in the business, there would often be outside pressure to build the business faster or achieve some sort of a financial exit. A lifestyle entrepreneur could be doing anything from running a successful (and fun) restaurant to operating a software business. Perhaps the critical defining characteristic about a lifestyle business is that it is run to solve for the benefit of work / life balance or personal gratification rather than for growth. I worked for a Lifestyle Entrepreneur once and it was an eye opening experience where I learned about people’s different motivations and goals. I personally can totally respect people who seek lifestyle business balance. How much money does a person really need? And at the same time, not everyone wants to be retired at 35, so why not try to do stimulating or fun work and still get to play around as well. Requirements: sustainable business; life goals. III. Problem Solver (Class III): The Problem Solver case starts with a person who can’t seem to get his/her mind off a problem until they’ve figured out a way to solve it. And then they cross into becoming a Class III entrepreneur when they resolve to do something about it. Many companies get their initial start with the goal of solving 1 problem. This fact is significant. To me, when friends or friends of friends ask me about business ideas or starting companies, and they have all these different ideas or solutions thought up – I get concerned. Pick one problem and start from there. If you can solve that problem (and enough people have that problem) then you’ll likely have a business of some sort. Visible Measures got started this way. When we sort of figured out a problem we wanted to attack (understanding user behavior) we narrowed it down to the field of online video as a way to hopefully be able to build up some traction and expertise. To get going as a problem solver takes focus; to create and grow a problem solving business takes all of the traits of an entrepreneur. Defining trait: Hunger for improvement IV. Visionary (Class IV): The Visionary thinks they can see the future, a future world that is more efficient or more open or more collaborative. Since the Internet first rose from academic curiosity to phenomenon to business critical infrastructure, there are been several visionary companies who were ahead of the curve including Napster (P2P and freedom of music), 6Degrees (social linking), Altavista (parallel search), Friendster (social networking), and Second Life (virtual worlds). All of these companies share several common traits: strong visionary entrepreneurial roots, game changing impact and potential, and a struggle to cross the chasm into long term viability. In some ways, the Visionary does the most to help the entrepreneurial community because so many of us draft behind the trailblazers who innovate and forge ahead in front of us. Legacy: The world (or at least people’s perception of what is possible in it) has changed. V. Game-changer (Class V): The game-changers are the entrepreneurs that we read about every day, and are often people long-admired by students and fans of business innovation. For me, I have always been amazed by the accomplishments and drive of leaders like Steve Jobs, Bill Gates, Michael Dell, Larry Ellison, and others. Not withstanding whatever debate there may be about a person’s or company’s business practices, Class V entrepreneurs have not only taken products, technologies and even industries to another level on the innovation curve, the ones I respect the most have done it day in and day out for years. Larry & Sergey are now in these ranks and Mark Z. is definitely on his way. To me, a critical factor in going from Class IV to Class V Enterpreneur is the notion of "sustained innovation". To burn brightly only to flame out a few years later doesn't make the cut in my opinion. If Facebook has 500 million members a few years from now and is the dominant social networking platform on the planet, then Mark Z has clearly achieved "game-changer" status. I think about how Steve Jobs once said that the death is the destination we all share – so “have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.†Longevity: At least a decade of sustained innovation. Impact: Wow. Those are the 5 classes of Entrepreneurs that I came up with. I’m curious to hear what you think. And as Steve Jobs once said: Stay Hungry. Stay Foolish. (or try to be “hungry yet humbleâ€) - Brian http://brianshin.posterous.com/defining-the-5-classes-of-entr