1.1 Process of Entrepreneurship

Welcome to Career Readiness by UCI Extension. My name is David Standen, and I’m very excited to be bringing you this course on the Essentials of Entrepreneurship. If you’re watching this right now, it’s probably because you are considering being an entrepreneur, or you know that you are an entrepreneur, that you wanna go out there and start a business, that you wanna do something, create something. But maybe you’re not quite sure how to go about it, or, or maybe you’re interested in to as to what we teach in entrepreneurship in a university. What are the essentials of entrepreneurship? Let’s back up a little bit, even though that’s pretty far back. Let’s go back even a little bit further. Who is an entrepreneur? What is an entrepreneur? Cuz if you’re gonna take this course, you’ve gotta be able to get something out of it. I’ve gotta be able to teach you something or show you something that you currently maybe don’t know, or aren’t ultra familiar with. So what is an entrepreneur and how does an entrepreneur operate? The academic world still does not have a, a a common definition for the entrepreneur. Academics fight over that all the time. Even entrepreneurship. What is entrepreneurship? Is it just starting a business, starting a company? Or is there a difference between entrepreneurial and enterprising? Well we’re actually, as an overview course, we’re gonna stay out of these arguments. But I do want to speak to the things that I know you’re going to deal with. How do I know these things? Because I’m an entrepreneur myself. I have started several businesses. I am currently the President and CEO of, of my own business based in Laguna Beach, California. And I have been through the ups and downs and the turmoils of entrepreneurship and starting a business, growing a business and operating a business. Entrepreneurs don’t just have to start businesses, we’ve also gotta grow them and keep them running. So entrepreneurship really, in my opinion, is at the very heart of business. And an entrepreneur has to be a very well-rounded business person. So that’s the journey I wanna take you on through this course. A lot of times, entrepreneurs, especially in the beginning, don’t think of themselves as business people. They think of themselves as someone with an idea. And maybe that’s where you are. Maybe you’ve got an idea, or an inkling of an idea, or you think you might be able to find an idea, all right? And so you’re in this course and you wanna see how you can take this idea and transform it into a company, how you can be an entrepreneur, someone who has, operates and runs their own company, okay? Definition of entrepreneur, I’m gonna stay away from, but I really do like this quote by Ludwig von Mises, who talks about some of the characteristics that an entrepreneur is gonna have. And specifically, in the realm of how they view the world. A lot of times, people think us entrepreneurs are crazy and we see things different than everybody else. I like what von Mises said about the fact that entrepreneurs, we don’t see a different past. We don’t see a different present. We don’t live in la-la land, as we say, right? We see the past like other people see the past. I see the present as anybody sees the present. But sometimes, in fact, maybe often, I view the future in a different way. Why is that? Why would I have a different view of the future? Why would you have a different view of the future in respect to the business or the idea or the project or the product that, that you’re currently working around with in your head? Why do you think the, the future can be different than those around you? We’re gonna look about, at that a little bit in the next section. What is an entrepreneur? What is entrepreneurship? Well again, we’re not gonna touch that one. Well, we’ll touch it, we’re not gonna go too deep, though. What I do wanna bring out is, entrepreneurship is a process. It is a process and where that process starts is really anybody’s guess. And I have been in entrepreneurship enough in my life and I’ve been in enough entrepreneurial processes and scenarios to see people enter at every, at every point of entrance in that process. I’ve seen people that simply had an entrepreneurial culture because they came from a family of entrepreneurials, right? I’ve seen people not from an entrepreneurial culture just starts to engage in entrepreneurial behavior, doing the things that entrepreneurs do. And this is interesting that I talk about behavior, right, because a lot of the thought on what makes an entrepreneur an entrepreneur has to do with what they call entrepreneurial awareness, or the cognition of an entrepreneur. This is very debatable as to whether entrepreneurs think so incredibly different than other successful managers. But what we do know is, entrepreneurs do different things. So it’s behavior that we really wanna get into. You know, entrepreneurial behavior by definition begets innovation, right? And that’s why famous entrepreneurs continue to innovate and do more and more innovative things. Cuz that’s part of the process. Innovation by definition creates competitive advantage. Competitive advantage gives superior performance which can be harvested or reinvested into the entrepreneurial process, right back into that entrepreneurial culture. So entrepreneurship, whatever it is, is definitely a process. Entrepreneurship is also a management paradigm. It’s a way of being managerial. And we can express it in several different ways. In fact, in what we call, what we frequently call the four pillars of entrepreneurship, the four types of entrepreneurial ventures. Now, regardless of the pillar or the type of venture that you engage in, the paradigm is very similar. It, it, the paradigm still goes through its, the same steps. The significance of those steps or the details of those steps can be different, okay? Now the four pillars of entrepreneurship, the way that we tend to see them today. There’s what we call the Independent Venture, and this is what most people think about when they think about entrepreneurship. This is the lone entrepreneur, right? This is Steve Jobs going off to start Apple. This is this is Michael Dell in his college dorm room you know, starting Dell Computers, the independent venture, right? What we often called the self-made man. Now at some point in your entrepreneurial venture, you’re probably gonna get to a point where you hate to hear that phrase because you’re really in the, in the grind of it. You’re going through what we all have to go through, okay? And you’ll think about these self-made men. Myth number one of entrepreneurship. There is no such thing as a self-made man. We all get help. We’ve all had help, right? Once they succeed, sometimes they say, hey, this person helped me. Sometimes they hide it and try to say they’re a self-made man. There is no self-made man. There, that’s why you’re here today, okay? You’re getting help, you’re, you’re, you’re getting knowledge, you’re getting input, you’re getting some advice, right? No self-made men, no self-made women. There are independent ventures, people who take it upon themselves to start a business, the first pillar of entrepreneurship. Then there’s Corporate Ventures. Now there’s a silly little phrase in English that a lot of people use to describe corporate entrepreneurship. I’m not gonna use it here. Although we don’t have a solid definition for entrepreneur or entrepreneurship yet in academia, I take entrepreneurs and entrepreneurship very sim, very seriously. And the word means something. So rather than cut it up and make it cute and funny, I’m just gonna say, corporate entrepreneurship. This is people in businesses, in existing businesses that want to or that see new ways that that company or that business can create value. And so they create new businesses within businesses, right, being entrepreneurial within a corporation. This is entrepreneurship. The next one is Family Ventures, people that come from family businesses. And again, these have issues all their own. And it’s very interesting what we can consider a family venture, and there is no consensus on that either, right? What is a Family Venture? And in some, in the most liberal sense, a Family Venture is, it is, is any corporation or any, any business entity in which the family, the founding family, still exerts sufficient control, all right? Call that as, as you may. And so many, what we might call Corporate Ventures, are also Family Ventures, okay? There’s also the Social Ventures, and this is becoming more and more popular these days. Social entrepreneurship. This is not necessarily not for profit. There’s Social Ventures out there that are for-profit organizations, but they’re still socially minded, okay? The number one goal of that venture is not necessarily to make money, but to achieve something in society. So Social Ventures, which many times of course, are not for profit, okay? Now, the four pillars of entrepreneurship. There is a process of entrepreneurship that runs across all four of those pillars, regardless of which one you’re engaging in. The first thing you need to do is, you need to recognize an opportunity. Find, recognize, create, however you wanna call it, there needs to be the opportunity. Once that opportunity is identified, there’s a planning process, a valuation, evaluation, business planning processing. Which, once completed, if it’s favorable, there’s what we call Resource Marshalling, getting together the necessary resources, funds, people, equipment, the things needed. And then Managing Growth and Change. All four of these steps are intricate to being entrepreneurial. Now depending which pillar you’re in, these steps might manifest themselves differently. The best example I give of that is , let’s look at Resource Marshalling. So you got an idea, you got your business plan together and you’re gonna go get, you need to go get the money. For example, you wanna get an investor. Well this is an independent venture. You wanna start a company, so you go to a bank and give them your business plan. The bank looks at it, they say no. Go to bank number two, they say no. Number three, they say no. You go to 99 banks and you get 99 nos. You go to bank 100 and the guy looks at it and says, yeah I’ll give you the money. You’ve got your business, right? For an individual venture, 99 nos mean nothing if you get one yes. One yes, you’ve got your business. Now, what if it’s a corporate venture right? You work for a business and you think, hey, you know what? We could make a lot of money if we did this. And you put together a little business plan for it. And you take it to your boss and you say, hey, I think we should do this. And he looks at it and he says, hey, that’s a great idea. Gives it to his boss and says, wow, I think that’s a great idea. Gives it to his boss and says, man, I think we should do this. 99 bosses. It’s a big organization. 99 bosses, all the way up. The CEO looks at it and says, no, I don’t wanna do that. 99 yeses mean nothing if you encounter one no, right? Same process, same thing going on here, but a different nature, depending on which pillar you’re in, right? And therefore, it’s important as we go into entrepreneurship that we understand the nature of our pillar, right? The nature of the kind of entrepreneurship we’re engaging in, so that we can operate in each of these four steps effectively.