Characteristics of Successful Entrepreneurs

Although many behaviors have been ascribed to entrepreneurs, several are common to those who are successful. Those in new ventures and those who are already part of an entrepreneurial firm share these qualities, which are shown in Figure 1.1 and described in the following section.

1. Passion for the Business

The number-one characteristic shared by successful entrepreneurs is a passion for their business, whether it is in the context of a new firm or an existing business. This passion typically stems from the entrepreneur’s belief that the business will positively influence people’s lives. Making a difference in people’s lives is also the primary motivator behind many social enterprises, which are often started by people who set aside promising careers to pursue a social goal. This was the case with John Wood, who founded Room to Read and is the author of the book Leaving Microsoft to Change the World. Wood’s deep passion to help children in the developing world caused him to start cashing in small amounts of Microsoft stock to buy books and build schools, even before he left the company. In excerpts from an interview published by Forbes magazine, Wood said:

During my travels, I met so many children in the poorest parts of the world, lack- ing access to school, books, and libraries, that I began cashing in small amounts of stocks to help them. Two hundred shares of Microsoft stock was enough to build an entire school in rural Nepal.20

Wood eventually left Microsoft to work on Room to Read full time. Since its inception in 2000, Room to Read has built 1,450 schools, established 12,522 libraries, distributed over 10 million children’s books, and funded 13,662 long- term girls’ schlorships in developing parts of the world.21

Passion is particularly important for both for-profit and not-for-profit en- trepreneurial organizations because although rewarding, the process of start- ing a firm or building a social enterprise is demanding. There are five primary reasons passion is important, as reflected in Table 1.2. Each of these reasons reflects a personal attribute that passion engenders. Removing just one of these qualities would make it much more difficult to launch and sustain a suc- cessful entrepreneurial organization.

A note of caution is in order here: While entrepreneurs should have pas- sion, they should not wear rose-colored glasses. It would be a mistake to be- lieve that all one needs is passion and anything is possible. It is important to be enthusiastic about a business idea, but it is also important to understand its potential flaws and risks. In addition, entrepreneurs should understand that the most effective business ideas take hold when their passion is consis- tent with their skills and is in an area that represents a legitimate business opportunity.

To illustrate the importance of passion, as well as other factors that are critical in determining a firm’s success or failure, we include a boxed fea- ture titled “What Went Wrong?” in each chapter. The feature for this chap- ter shows how Prim, a laundry and pick-up and delivery service, ultimately failed in part because its founders were not able to remain passionate about their business idea.

2. Product/customer  Focus

A second defining characteristic of successful entrepreneurs is a product/ customer focus. This quality is exemplified by Steven Jobs, the late co-founder of Apple Inc., who wrote, “The computer is the most remarkable tool we’ve ever built … but the most important thing is to get them in the hands of as many people as possible.”22 This sentiment underscores an understanding of the two most important elements in any business—products and customers. While it’s important to think about management, marketing, finance, and the like, none of those functions makes any difference if a firm does not have good products with the capability to satisfy customers.

This philosophy is affirmed by Alex Algard, the founder of WhitePages.com. WhitePages.com started in 1997 to provide consumers a free, accurate, and fast online alternative to telephone directory assistance. It is one of the most trusted and comprehensive sources for consumers to quickly find relevant, ac- curate contact information in North America. When asked how he was able to grow WhitePages.com from a one person operation in 1997 to the multimillion- dollar company it is today, Algard’s reply reflected not only his feelings about the importance of providing value to both users and customers but also how a company measures if the value is being successfully delivered:

The philosopny that we as a company have always stuck to is that everything we build has to provide real value to both our users and customers. The best mea- surement of whether or not we are successful at delivering something valuable is if our customers, advertisers in our case, are willing to pay.23

A product/customer focus also involves the diligence to spot product op- portunities and to see them through to completion. The idea for the Apple Macintosh, for example, originated in the early 1980s when Steven Jobs and several other Apple employees took a tour of a Xerox research facility. They were astounded to see computers that displayed graphical icons and pull- down menus. The computers also allowed users to navigate desktops using a small, wheeled device called a mouse. Jobs decided to use these innovations to create the Macintosh, the first user-friendly computer. Throughout the two and a half years the Macintosh team developed this new product, it main- tained an intense product/customer focus, creating a high-quality computer that is easy to learn, fun to use, and meets the needs of a wide audience of potential users.24

3. Tenacity Despite Failure

Because entrepreneurs are typically trying something new, the possibility of failure exists. In addition, the process of developing a new business is some- what similar to what a scientist experiences in the laboratory. A chemist, for example, typically has to try multiple combinations of chemicals before finding an optimal combination that can accomplish a certain objective. In a similar fashion, developing a new business idea may require a certain degree of experi- mentation before a success is attained. Setbacks and failures inevitably occur during this process. The litmus test for entrepreneurs is their ability to perse- vere through setbacks and failures.

An example of the degree of tenacity it sometimes takes to launch a suc- cessful firm is provided by Jerry Stoppelman and Russel Simmons, the found- ers of Yelp, the popular online review site. The original idea for Yelp, which was founded in 2004, is that when people are looking for a new restaurant, dentist, or plumber they normally ask their friends for recommendations. Yelp was launched to give people the ability to e-mail a list of their friends and ask for a recommendation. The message included a link that allowed the friend to easily respond. The business plan didn’t work. People started complaining that they were getting too many e-mail messages from friends who often didn’t have a recommendation to provide. Yelp could have died at this point. Instead, Stoppelman and Simmons demonstrated the tenacity it often takes to keep a business alive. Curiously, the one aspect of Yelp’s business plan that did work was the ability to write your own review—a feature that had been included by Stoppelman and Simmons almost as an afterthought. Rather than responding to a friend’s request for a recommendation, people seemed to enjoy sharing in- formation about their favorite restaurant or hair salon without being asked. In 2005, Yelp pivoted and revised its business plan. The new plan dropped the “e- mail your friend idea” and focused on providing a platform for people to proac- tively write reviews of local businesses. Today, Yelp is one of the most popular review sites on the Internet.

An additional example of tenacity, which involved all the employees of Pandora,25  is provided in the boxed feature titled “Savvy Entrepreneurial Firm.” In each chapter, this feature will provide an illustration of the exem- plary behavior of one or more entrepreneurial firms or will provide an example of a tool or technique that well-managed entrepreneurial firms use to improve their performance.

4. Execution intelligence

The ability to fashion a solid idea into a viable business is a key characteristic of successful entrepreneurs. Commonly, this ability is thought of as execution intelligence.26 In many cases, execution intelligence is the factor that deter- mines whether a start-up is successful or fails. An ancient Chinese saying warns, “To open a business is very easy; to keep it open is very difficult.”

The ability to effectively execute a business idea means developing a business model, putting together a new venture team, raising money, estab- lishing partnerships, managing finances, leading and motivating employees, and so on. It also demands the ability to translate thought, creativity, and imagination into action and measurable results. As Jeff Bezos, the founder of Amazon.com, once said, “Ideas are easy. It’s execution that’s hard.”27 For many entrepreneurs, the hardest time is shortly after they launch their firm. This reality was expressed by Jodi Gallaer, the founder of a lingerie company, who said, “The most challenging part of my job is doing everything for the first time.”28

To illustrate solid execution, let’s look at Starbucks. The business idea of Howard Schultz, the entrepreneur behind the success of Starbucks, was his recognition of the fact that most Americans didn’t have a place to enjoy coffee in a comfortable, quiet setting. Seeing a great opportunity to satisfy customers’ needs, Schultz attacked the marketplace aggressively to make Starbucks the industry leader and to establish a national brand. First, he hired a seasoned management team, constructed a world-class roasting facility to supply his outlets with premium coffee beans, and focused on building an effective orga- nizational infrastructure. Then Schultz recruited a management information systems expert from McDonald’s to design a point-of-sale system capable of tracking consumer purchases across 300 outlets. This decision was crucial to the firm’s ability to sustain rapid growth over the next several years. Starbucks succeeded because Howard Schultz knew how to execute a business idea.29

He built a seasoned management team, implemented an effective strategy, and used information technology wisely to make his business thrive.30 These fun- damental aspects of execution excellence should serve Schultz and Starbucks when it comes to dealing with the competitive challenges facing the firm in 2014 and beyond. In mid-2014, over 21,000 Starbucks’ locations had been established in 65 countries.

Source: Barringer Bruce R, Ireland R Duane (2015), Entrepreneurship: successfully launching new ventures, Pearson; 5th edition.