I was scrolling through LinkedIn yesterday, and
I think I finally hit my saturation point. Oh,
yeah. With what? It just feels like every third
profile, I'm not even kidding, regardless of
what the person actually does, has the same headline.
Entrepreneur. Ah, yes. The magic word. It's everywhere.
It's in Instagram bios. It's on government policy
white papers. You see it plastered across magazine
covers in every airport lounge. It's become the
buzzword of the century. It certainly has a lot
of cultural cachet right now. It really evolves
into this catch -all term for success or ambition
or just hustle. Exactly. Hustle. If you have
a side gig, you're an entrepreneur. If you have
an idea for an app. Boom. Entrepreneur. And that's
where the problem starts. The word gets stretched
so thin it almost loses its meaning. And that's
the issue. It feels so deluded. I mean, on one
hand, we use it to describe someone like Elon
Musk, who is, you know, literally trying to colonize
Mars. The highest possible stakes. Right. And
on the other hand, we use it for someone opening
a really lovely but very traditional boutique
bakery down the street. And we're using the same
word for two fundamentally different economic
activities. We are. So the mission for us today
in this deep dive is to cut through all that
noise. What are we actually talking about when
we say entrepreneurship? Is it just owning a
shop? Is it inventing the future? Or is it something
else entirely? That is the definition dilemma.
And honestly, the confusion isn't new. It goes
back centuries. To really understand it, we have
to leave the whole Silicon Valley narrative completely
behind for a bit. Okay, I'm ready. Where are
we going instead? We need to look at French dictionaries
from the 1700s, medieval German guilds, and this
is my favorite part, perhaps most surprisingly,
literal sea pirates. Pirates are on the agenda.
Okay, I am very ready for that. But let's start
at the beginning. The word itself, the etymology,
it feels like it's doing a lot of heavy lifting.
It's French, obviously. It is. It comes from
the verb entreprendre. Which means? It translates
simply to undertake. Pretty straightforward.
The word first appeared in a French dictionary
way back in 1723. But even before that, in Britain,
they used a different word that I actually think
captures the spirit a bit better. What was that?
They called them adventurers. Adventurers. I
like that. It implies a journey into the unknown,
which feels much more accurate than, say, founder.
A founder just starts something. Yeah. An adventurer
explores. It really does capture the spirit of
it. But if we strip away the romance for a second
and look at the raw economics, the core definition
rests on two pillars. Value and risk. Value and
risk. At its most basic level, entrepreneurship
is the creation or extraction of economic value.
It's about identifying an opportunity to deliver
a product or service that people want. But, and
this is the absolute key, it requires considerable
initiative and it must, must bear risk. Okay,
value and risk. That sounds straightforward enough,
but this is exactly where the bakery versus Elon
Musk distinction comes in. Because opening a
bakery is definitely risky. Of course it is.
You're finding a commercial lease. You're buying
thousands of dollars of flour and ovens hiring
staff. You could absolutely fail. But we generally
instinctively distinguish that from entrepreneurship
in the high growth sense. We do. And it's a distinction
that often gets lost in casual conversation.
But it's vital for economic theory. There is
a fundamental difference between a small business
and entrepreneurship. Let's unpack that distinction
because I think it can hurt feelings sometimes.
People feel like their hard work is being downgraded
if it's just called a small business. And it's
not about downgrading the effort at all. The
effort is immense in both cases. It's about the
intent and the underlying economic mechanism.
So what's the difference in intent? A small business
like a local dry cleaner or that wonderful bakery
usually offers an existing product or service.
They aren't trying to reinvent the wheel or,
you know, disrupt the global bread market. Their
primary goal is stability to make a good living.
Exactly. Making a living for the owner, providing
a few local jobs, becoming part of the community.
They don't typically aim for explosive exponential
growth. Their success is measured in years of
stable operation. Right. The baker wants to sell
good bread to the neighborhood. They aren't trying
to franchise to the moon or create a bread as
a service app. Precisely. Whereas entrepreneurship,
particularly in the way economists and investors
view it, is aimed squarely at growth, innovation,
and scaling. It's about creating something genuinely
new, a new product, a new process, a new market,
and scaling it up as rapidly as possible. And
that's where the outside money comes in. That's
the telltale sign. This is the type of venture
that usually seeks venture capital or angel funding
because the upfront costs of that innovation
and scaling are so high. It's not just about
creating income for the founder. creating massive
wealth through scale and eventually an exit so
to use an analogy the small business is playing
a known game with known rules trying to win a
local match the entrepreneur is trying to invent
a new sport entirely That's a very strong analogy.
And to really understand why we make this distinction,
we have to look at the history of the idea itself.
Because entrepreneurship wasn't always just about
making money. It has this surprisingly deep intellectual
history involving three specific economists who
really shaped how we see this figure today. I
was looking at the notes on this. We've got Cantillon,
Say, and Spanter. It's interesting. They almost
feel like they're describing three completely
different people. They're describing three different
functions, really, each one built on the last.
The first one takes us way back to the 18th century.
An Irish -French economist named Richard Cantillon.
Cantillon. He's the one who introduces the concept
of the risk taker. And Cantillon is so interesting
because he completely shifts the focus from the
owner. To the decision maker. It's not about
who has the money. It's about who has the guts.
That's the absolute crux of it. In his text,
C 'est sur la nature du commerce en général,
which was written in the 1730s, he defined the
entrepreneur as someone who buys at a certain
price and sells at an uncertain price. Yeah.
Okay, give me a practical example of that. Think
of a farmer. The farmer knows the cost of his
seeds, his land, and his labor. That's the certain
price. He has to pay for all that up front. But
he has absolutely no idea what the wheat will
sell for at the market next month. A drought,
a flood, a sudden glut from another region. And
as Christ collapses. Right. That's the uncertainty.
Cantillon saw the entrepreneur as the person
who willingly stands in that gap. They make decisions
about obtaining and using resources while personally
absorbing the risk of the enterprise. So it's
not just the person who owns the farm, the one
with the capital. No, and that was his key distinction.
He separated the entrepreneur from the mere owner
who just provides the capital. The owner takes
a financial risk, sure, but the entrepreneur
takes the operational risk of actually navigating
the unpredictable market. So it's basically gambling,
but with a business plan. Calculated gambling.
Yes. It's about making judgments under uncertainty.
So that's our first layer, the risk taker. Then
we move forward to the early 19th century and
meet Jean -Baptiste Say. Also a friend. Also
from the French school. Yes. And he saw the entrepreneur
not just as a risk taker, but as the optimizer.
Say's definition feels very modern, almost like
a management consultant. He talks about shifting
resources around. He does. Saeed's big contribution
in his treatise on political economy was that
the entrepreneur shifts economic resources out
of an area of lower productivity and into an
area of higher productivity and greater yield.
So it's not necessarily about inventing a brand
new gadget from scratch. Not at all. It's about
rearranging the existing pieces on the board
to make them worth more. Like an economic conductor.
Taking the same instruments that are just making
noise and arranging them to create a symphony.
That's a fantastic way to put it. Think of it
like this. You have a pile of wood. As raw timber
or firewood, it has a certain low value. But
if an entrepreneur takes that same wood and organizes
the labor, the tools, and the skill to build
a violin, they have shifted that resource into
an area of vastly higher productivity and value.
That active combination, that shift, that's entrepreneurship,
according to say. That makes a lot of sense.
It's about spotting inefficiency. You see a resource
being wasted or underutilized and you're the
one who intervenes to fix it. Exactly. So we
have the risk taker and the optimizer. But then
we get to the 20th century and we meet the most
famous and maybe most misunderstood name in entrepreneurship
theory. Joseph Schumpeter. Joseph Schumpeter.
And he basically blows the whole thing up. Schumpeter
is the creative destruction guy. This is the
definition that Silicon Valley and every tech
bro has really latched on to. The idea that you
have to break things to make progress. He absolutely
is. Schumpeter saw the entrepreneur as the innovator.
For him, it wasn't enough to just bear risk,
like Cantillon said, or to optimize, like Say
said. The entrepreneur's core function was disruption.
He famously described the gale of creative destruction.
It's such a violent image for economics. It is,
but he believed it was the essential fact about
capitalism. He argued that a healthy economy
is never in equilibrium. It's always being upended.
The idea is that new innovations don't just add
to the economy. They destroy old industries.
The classic example being the automobile. Right.
The car didn't just compete with the horse -drawn
carriage. It annihilated the entire industry.
Ferriers, stable owners, whip manufacturers,
all gone. But in doing so, it created a massive
new transportation network. Oil and gas industries,
suburbs. It remade society. It remade society.
And Schumpeter believed this dynamic disequilibrium
is what drives all real progress. So for Schumpeter,
if you weren't fundamentally upsetting the status
quo, you aren't an entrepreneur. You're just
a manager running a business. That was his very
strong view. However, it's important to note
there is a counterpoint to all this high drama.
An economist named Israel Kersner had a slightly
quieter take. OK, what was his view? Kirzner
argued that entrepreneurship doesn't always have
to be a gale of destruction. It can be incremental.
It can be about alertness. Right. The alertness
theory. Sometimes you just make a slightly better
mousetrap. You don't have to blow up the entire
house to do it. Precisely. Kersner pointed out
that a lot of very real innovation is just noticing
things that others have missed, like realizing
that people want a coffee shop on a specific
corner that doesn't have one or replacing paper
straws with plastic ones. Or nowadays, the entrepreneurial
opportunity is shifting back from plastic to
paper or bamboo. That's not destroying an industry.
No. Kersner would say it's actually nudging the
market towards equilibrium, filling a gap rather
than Schumpeter's disruption, which blows the
equilibrium apart. So we have this whole spectrum.
The risk taker, the optimizer, and the destroyer.
It's fascinating. But this is all very Western,
very academic. I was really struck by the example
in the research from the Ashanti Empire. It shows
that this concept of the big man who generates
wealth is universal, but how different societies
treat them varies wildly. The Ashanti example
is fascinating because it shows a society that
formalized and institutionalized the status of
the entrepreneur. What do you mean by that? In
the 18th and 19th centuries in West Africa, they
had a concept called abirimpon, which translates
to big men. These were successful entrepreneurs
who accumulated significant wealth, usually through
trade in gold or slaves, unfortunately. But the
state, the Ashanti state, didn't just tax them
or ignore them. They brought them into the fold.
They did. If these entrepreneurs performed heroic
deeds and accumulated enough wealth, they were
given formal political recognition by the state.
So they were effectively knighted for being good
at business. In a way, yes. The research mentions
they were rewarded with a mena, which was an
elephant. tale, and it served as a kind of heraldic
badge. It was a very clever way for the state
to integrate these powerful, wealthy individuals
into the political hierarchy rather than letting
them become a rival power center. That's the
tension, isn't it? Societies throughout history
have always tried to figure out what to do with
entrepreneurs. Do we celebrate them? Do we fear
them? Do we try to regulate them into oblivion?
And that regulation aspect is crystal clear in
the history of Germany. Medieval Germany had
the guilds, which were incredibly restrictive.
To be a master craftsman, you had to get this
thing called the Kleiner Befagungsnachweis. Which
translates to proof of competence, right? A certificate.
A small proof of competence, yes. You needed
this certificate just to be allowed to train
apprentices. But the really interesting part
in how this fluctuated over time. For a long
time after 1871, Germany had Gewerbefreiheit,
basically freedom of trade. You didn't need a
certificate to start a business. It was a free
-for -all. For a while. But then in the 1930s
under the Nazis and then again in West Germany
in the 1950s, they reintroduced stricter rules.
You needed a master certificate just to set up
a new business in dozens of different crafts.
That's a huge barrier to entry. We argue about
this very thing today with occupational licensing.
Do you really need a state license to braid hair?
Do you need a license to be an interior designer?
It's the exact same debate. The argument for
the certificate is quality control, consumer
protection, and stability. The argument against
it is that it kills entrepreneurship by making
it too hard to start. It protects the incumbents,
the existing masters, from any new competition.
So we've established that this role, this adventurer,
has existed for centuries, and societies have
oscillated between trying to control them and
celebrate them. But let's fast forward to the
human element, the psychology of it all. Because
I feel like we have a very specific and very
stubborn image in our heads of what a founder
looks like today. A hoodie. The garage, the college
dropout. The Mark Zuckerberg, the Steve Jobs,
the Bill Gates archetype. We are constantly told
that entrepreneurship is a young person's game.
You need the boundless energy of a 20 -year -old
and, you know, the naivety to not know what's
supposed to be impossible. It's an incredibly
compelling narrative. It makes for great movies.
The problem is if we actually look at the data,
specifically a massive study by the U .S. Census
Bureau and researchers at MIT, that entire image
is statistically false. Okay, bust the myth for
us. What's the reality? The average age of a
successful startup founder is 45. Not 25, 45.
That's not old by any means, but it is definitely
not the coding in a dorm room narrative. Not
even close. Yeah. And it gets more interesting.
The data consistently shows that the probability
of success actually rises with age well into
your late 50s. A 50 -year -old founder is significantly
more likely to achieve a successful exit or hit
high growth targets than a 30 -year -old founder.
So you're telling me my best years are still
ahead of me. I don't have to be 19 to have a
good idea. That's what the data says. And when
you think about it, it makes sense. People ask,
is it about resources? Capital. Yeah, that would
be my first guess. You have more savings at 45.
Capital is part of it, for sure. Older founders
can bootstrap more easily. But the bigger factor
is what economists call human capital. Meaning
experience. Experience, management skills, deeper
industry knowledge, and crucially, better networks.
When you're 45, you've been working for two decades.
You know who to call to get a supply chain. fixed.
You know how to hire, how to fire, how to read
a balance sheet. When you're 20, you're figuring
all of that out from scratch on the fly. Okay,
so the age myth is busted. What about the college
dropout myth? The idea that school just gets
in the way of building things. Also largely a
myth perpetuated by a few very famous outliers.
Research by two economists, Macalachi and Shimardi,
shows a direct and positive relationship between
higher education and entrepreneurial success.
So more school is better. Generally, yes. And
their insight is key. You might not need a university
degree to start a business. Anyone can go online
and register an LLC for $100. But college provides
the complex problem -solving skills, the analytical
frameworks needed to operate that business at
a higher level as it grows and faces more complex
challenges. It's the difference between starting
and scaling. The dropout might have the initial
spark, but the education helps you manage the
fire once it gets big. That's a perfect way to
put it. Now let's dig into the personality traits
because this is where the research surprised
me the most. We have this image of entrepreneurs
as diehard optimists. And you have to be, right?
You think so. To start a business is on some
level an irrational act. Most of them fail. So
you have to possess this optimism bias, this
illusion of control. You have to believe you're
the one who is going to be. the exception to
the rule. And many do. But a fascinating study
by Goodmanson and Lechner looked at the long
-term survival of firms, and they found that
firms led by distrusting entrepreneurs were actually
more likely to survive than those led by optimists.
Distrusting. That sounds counterintuitive. We
usually associate distrust with being toxic or
being paralyzed by fear and unable to act. Right.
But in this context, think of it less as paranoia
and more as defensive pessimism or just healthy
skepticism. OK. The researchers found that this
trait of distress leads to something they called
sensible task selection. Sensible task selection.
So while the optimist is on stage visualizing
success and manifesting your destiny, the distrusting
founder is in the back room visualizing the lawsuit.
Essentially, yes. The distrusting entrepreneur
reads the fine print on every contract. They
don't just assume the client will pay on time,
so they get a significant deposit up front. They
analyze the risks in a new market more thoroughly.
The optimist sees a red flag and thinks, ah,
that won't happen to me. I can fix that. I'm
special. And a distrusting entrepreneur. The
distrusting entrepreneur sees a red flag and
immediately prepares a contingency plan for when
it inevitably catches fire. In the long run,
that rigorous failure avoidance is what keeps
the company alive when the optimist company runs
out of cash. It's almost the anti -manifestation
mindset. It's survival through pragmatism, not
just positive thinking. It reminds me of that
Andy Grove quote, only the paranoid survive.
It's the perfect summary of it. And while we're
looking at where these traits come from, we have
to touch on the nature versus nurture debate.
Are entrepreneurs born or are they made? The
father factor data stood out to me here. It's
a 2025 study, I think. that showed nearly 75
% of male entrepreneurs start a firm in the same
or a very closely related industry as their father.
75 %! That is an absolutely overwhelming number.
It suggests that entrepreneurship is almost a
trade you learn at the dinner table. It completely
demystifies the process. If your dad comes home
and complains about supply chains every night,
you learn the vocabulary. You'll learn that business
isn't some black box of magic. It's just a series
of problems to be solved. It lowers the psychological
barrier to entry. It feels normal. And there's
also the peer influence factor that supports
this. Research by Jesper Sorensen found that
if you work in a company with a lot of former
entrepreneurs, you are significantly more likely
to become one yourself. The if he could do it,
I can do it effect? Precisely. It normalizes
the path. But there's a fascinating flip side
to this nurture argument. The Teenage Rebellion
study by Levine and Rubinstein. paints a slightly
more chaotic and frankly more interesting picture
this one was great tell me about it so they analyzed
a huge data set and found that successful entrepreneurs
were on average disproportionately white male
wealthy and highly educated fitting the privilege
profile you might expect right no surprises there
But this is the kicker. As teenagers, this same
group was also disproportionately prone to aggressive,
illicit and risk taking activities. So they were
the smart kids, but they were the smart kids
who were also like smoking behind the gym or
selling fireworks out of their locker. Exactly
that. They scored high on aptitude tests, but
they had a history of breaking rules. And if
you think about it, that combination is incredibly
potent for an entrepreneur. You need the raw
intelligence. to build and execute, but you also
need that rebellious streak, that willingness
to challenge the status quo. A fundamental disrespect
for the way things are done around here. That's
it. If you are a strict rule follower who always
colors inside the lines, you are probably going
to be a fantastic employee or manager, but you
might not be the one to disrupt an entire industry.
Disruption requires a bit of delinquency. It
seems so. And speaking of mental states, we should
briefly touch on the concept of flow, Mihaly
Csikszentmihalyi's famous idea. Being completely
in the zone. Right. Being so thoroughly engaged
in an activity that you lose all track of time,
of your surroundings, even of yourself. Csikszentmihalyi
linked this psychological state directly to breakthrough
innovation. But what's really fascinating is
that he connected it all the way back to early
education, specifically the Montessori method.
Oh, interesting. I went to a Montessori preschool.
I just remember a lot of wooden blocks and being
told not to interrupt people. Well, that's the
core of it. That prepared environment in a Montessori
classroom is designed specifically to let children
engage in deep. uninterrupted concentration on
a task of their own choosing. Six at Mahali suggested
that this type of early conditioning builds the
neurological capacity for flow later in life.
You learn early on that you can control your
environment and lose yourself in productive work.
Wow. And that is a foundational skill for a founder
who needs to maintain intense focus amidst the
constant chaos of a startup. That connects the
dots all the way from building blocks to building
companies. That's incredible. Now. I want to
bridge this psychological discussion of risk
taking back to the economics because we throw
the word risk around so loosely. Oh, that's a
risky move. But in economics and specifically
in entrepreneurship theory, risk is a very specific,
very technical term. It is. And the distinction
is absolutely crucial if we want to understand
what an entrepreneur actually does. This framework
comes from Frank Knight, an economist working
in the 1920s. He distinguished between risk,
ambiguity and true uncertainty. We often just
call the last one nice and uncertainty. Okay,
let's break this down for everyone because I
think people, myself included, tend to conflate
them. The jar of balls analogy is perfect here.
Okay, picture a jar full of colored balls. Scenario
number one. I tell you there are exactly 50 red
balls and 50 white balls in the jar. You don't
know which one you'll pick out, but you know
the precise probability distribution is 50 -50.
That is risk. Okay, so risk is measurable. You
can calculate the odds. Insurance companies and
casinos, they operate on risk. They know the
math. Exactly. They can price it. Now, scenario
two. I show you a jar. I tell you it contains
100 balls, and they are all either red or white,
but I don't tell you the ratio. Maybe it's 99
red and one white. Maybe it's the reverse. You
know the possible outcomes, but you don't know
the odds. That is ambiguity. Harder to bet on
for sure, but you at least know the basic parameters
of the game you're playing. Right. Now, scenario
three. I just show you a closed jar. You don't
know how many balls are in it. You don't know
what colors they are. You don't even know for
sure if they are balls. Maybe they're cubes.
Maybe the jar is totally empty. That is true
uncertainty. That is the world of the entrepreneur.
That is the very definition of their operating
environment. Frank Knight argued that true economic
profit is the reward for navigating true uncertainty.
Because if the odds were known, if it was just
risk big banks or established corporations with
huge analytical departments would just calculate
the math and do it themselves, they would arbitrage
all the profit away. They'd turn it into a commodity.
Instantly. The entrepreneur's unique job is to
step into the situation where no one knows the
odds because the market doesn't even exist yet.
You're creating the game from scratch. That's
such a powerful distinction. Big corporations
manage risk. Entrepreneurs manage uncertainty.
You aren't just rolling the dice. You're inventing
the game while simultaneously trying to figure
out if dice are even involved in the first place.
Precisely. And this leads us to look at who is
willing to step into that kind of uncertainty.
We talked about the standard white male profile
earlier, but the real spectrum of entrepreneurship
is so much wider. In fact, for many groups throughout
history, entrepreneurship isn't a glamorous choice
about disruption. It's a raw survival strategy.
This brings us to the topic of ethnic and cultural
entrepreneurship. It's kind of a dry academic
term, but the stories behind it are literally
the fabric of our culture. I mean, the fish and
chips story absolutely blew my mind. It's a perfect
example of immigrant innovation. Fish and chips
is seen as the quintessentially British dish
right up there with the Sunday roast. But the
entire concept of frying fish in a batter was
brought over to Britain by Sephardic Jewish immigrants
fleeing persecution in Portugal and Spain in
the 16th century. No way. Yes. And the first
proper fish and chip shop, the one that combined
fried fish with chips, was opened in London by
Joseph Mallon, a Jewish entrepreneur. in the
1860s. And it wasn't just a one -off thing. Not
at all. The first sit -down fish restaurant with
seating was opened by Samuel Isaacs in 1896.
He grew it into a massive chain. So this dish
that is a cornerstone of British national identity
was actually an ethnic startup. And we see the
same pattern with the brand Slaziger, right?
The famous sports brand. Yes, one of the world's
oldest sports brands. Founded by Ralph and Albert
Slaziger Jewish Brothers in 1881, they have been
the official supplier of tennis balls. balls
to the Wimbledon Championships since 1902. So
what's the underlying pattern here? The pattern
is what sociologists call the blocked mobility
thesis. When minority groups arrive in a new
country and face discrimination or barriers in
the traditional labor market, you know, we don't
hire your kind here, they turn to self -employment
and entrepreneurship as a way to integrate economically
and build wealth. If I can't get a job at the
established bank because of my last name, I'll
start my own shop and work twice as hard. Exactly.
We see it with Cuban -Americans in Miami, with
Indian -American motel owners across the U .S.,
with Chinese business owners in communities all
over the globe. However, we have to look at the
data honestly here. While these groups are highly
entrepreneurial, there is often a gap in the
type of industries they enter. What do you mean?
The data still shows that white men are statistically
more likely to be self -employed and high - high
prestige, lucrative industries like finance and
tech. Minority entrepreneurs are often pushed
into lower margin sectors like retail or food
service. So the playing field isn't quite level,
even if the entrepreneurial drive is there in
spades. What about generational shifts? We always
hear that millennials and Gen Z are the ultimate
hustle generation, you know, with the gig economy
and the side hustle. But the data you found seems
to paint a very different picture. It's one of
the great ironies of the digital age. We call
millennials digital natives and we just assume
they're all in their basement starting the next
Facebook. But the hard data shows they are surprisingly
less likely to engage in true firm creating entrepreneurship
than prior generations like the baby boomers
or Gen X were at the same age. Why is that? Is
it a fear of failure or is it a financial thing?
It's largely structural and financial. The number
one anchor is debt. If you leave university with
six figures of student loan debt, you simply
cannot afford to step into nice and uncertainty.
You need a guaranteed paycheck to service that
debt. You can't bootstrap if you're already starting
underwater. You can't. And this is a generation
that came of age during major financial crises,
the 2008 crash, the long recovery, the pandemic.
That kind of economic trauma tends to make a
generation more risk averse. They might do a
side hustle like driving for Uber for extra cash,
which is a form of small business. But they are
much more hesitant to quit their job and go all
in on a high growth, high risk venture. We're
also seeing the very definition of what a therm
is begin to change. We have this rise of project
based entrepreneurship now. Right. What's often
called the Hollywood model. Exactly. A producer
who is the entrepreneur in this case. a specialized
team for one project, a movie. They bring in
a director, actors, a cinematographer, editors.
They work 16 -hour days for six months. They
finish the product, and then the company essentially
dissolves. Everyone moves on to the next project.
And we're seeing that model bleed into so many
other sectors, high -end construction, software
development, management consulting. It's the
pop -up company. It allows for extreme agility
and brings the best talent to a specific problem,
but it offers absolutely zero long -term job
security. Then there are the more values -based
shifts in what entrepreneurship can be. You mentioned...
Biosphere entrepreneurship and feminist entrepreneurship,
these feel like a direct response to that destructive
winner -take -all Schumpeterian model. They are,
absolutely. Biosphere entrepreneurship asks a
radical question. Can we generate value for the
ecosystem rather than just extracting value from
it? Can the business model itself actually improve
the soil or clean the water or sequester carbon?
And feminist entrepreneurship. That challenges
the hyper -competitive, aggressive mentality
of traditional business. It prioritizes things
like cooperation, workplace equality, and mutual
respect over ruthless zero -sum competition.
It aims to improve the quality of life for women
and communities, not just maximize shareholder
value. Which brings us to the absolute opposite
end of that moral spectrum. If feminist entrepreneurship
is about cooperation, this next group is about
taking what you want by force. But you argue
they are still, technically, entrepreneurs. Pirates.
It sounds like a joke, but in 2014, some serious
academic research was published linking the principles
of entrepreneurship to the golden age of piracy
in the Caribbean. The idea is if you strip away
the morality for a moment and just look at the
organizational mechanics, pirates were early
disruptors. Okay, you have to walk me through
the business model of Blackbeard. Think about
it from a purely operational perspective. They
operated completely outside the law, meaning
they had zero state protection or contract enforcement.
They had to organize capital ships, cannons,
weapons. They had to recruit and manage a very
difficult workforce. They had to manage extreme
risk every single day, storms, starvation, the
Royal Navy. And they had to solve the classic
principal agent problem. How do you, as the captain,
get a crew of violent criminals to not just kill
you in your sleep and steal all the loot? Exactly.
And how did they solve it? With radical innovation
and governance. They had written constitutions,
the pirate code. They had democratic voting for
the captain. They had a flat compensation structure
with prescribed shares of the booty. They even
had workers' compensation. Wait, really? Yes.
If you lost a leg or an eye in battle, you got
a specific guaranteed extra payout from the collective
haul before the rest was divided up. The argument
is that pirates teach us how organizations form
and manage risk in a vacuum when there is no
government to enforce contracts. It's violent
entrepreneurship, but from a structural standpoint,
it's entrepreneurship. That is a wild but surprisingly
compelling lens. Yeah. It's organization born
from pure chaos. But let's pivot from that to
the modern version of gathering a crew and finding
treasure. Funding. This is the big debate for
any founder today. Do you bootstrap or do you
take the VC money? This is the critical fork
in the road for any startup. Bootstrapping is
when you use your own personal savings. You run
up your credit cards. You rely on sweat equity.
You only grow as fast as your sales allow. It's
slow and it's painful. But you own it. 100%.
You have total control. The moment you take that
first check from a venture capitalist or an angel
investor, the entire incentive structure of your
company shifts. Because the VC isn't buying your
product, they're buying an exit strategy. Correct.
They are not a customer. They are an investor
who needs a liquidity event, a sale to a bigger
company or an IPO, usually within a five to seven
year window. They need to get their 10x or 20x
return to make their funds math work. But maybe
you, the founder, want to build a sustainable,
profitable legacy business to pass on to your
children. Or maybe you have philanthropic goals
that eat into the short -term profit margins
that they need. The conflict is baked into the
model from day one. If I take the money, I ultimately
work for the people who gave me the money. And
founders often forget that or they choose to
ignore it in the excitement of getting that big
check. They do. And bringing in VCs often means
you lose control over strategy, over hiring,
and eventually even over your own job. Boards
fire founders all the time. I mean, Steve Jobs
got famously fired from Apple. It's a classic
Faustian bargain. You get the rocket fuel going
incredibly fast, but you might lose control of
the steering wheel. Which brings the government
right back into the equation. Because if you're
trying to sell a company or aiming for that massive
IPO, the tax implications define the entire strategy.
There's this persistent political belief on one
side of the aisle that lowering corporate taxes
is the magic switch to unleash a wave of entrepreneurship.
Does the data actually back that up? The data
is surprisingly mixed and much weaker than you'd
think. It's not the slam dunk that politicians
often make it out to be. How so? What does it
say? Well, some studies suggest that high corporate
taxes can actually incentivize certain types
of entrepreneurship. That sounds completely backwards.
Why would high taxes make me want to start a
business? It's about tax arbitrage and avoiding
double taxation. If personal income tax rates
are very high, it might become advantageous for
a high earning individual to incorporate their
work, pay themselves a smaller salary and leave
the profits in the corporation, which might be
taxed at a lower rate. It can become a kind of
tax shelter. On the other hand, other studies
have linked more progressive income taxes to
higher rates of sole proprietorships. So people
are starting businesses partly to game the tax
code, not necessarily because the low taxes unleash
their inner creative genius. In part, yes. But
the main, most consistent takeaway from researchers
like Bruce and Mosen is that the elasticity is
very low. The response to tax changes is small.
What does that mean in plain English? It means
it would take a massive, almost politically impossible
tax drop, we're talking like 50 percentage points,
to move the needle on entrepreneurial activity
by just 1%. So all the political fighting over
a 2 % or 3 % corporate tax cut is, in terms of
its effect on startup rates, essentially just
political theater. From the perspective of creating
new entrepreneurs, the evidence suggests it's
largely theater, yes. Things like culture, access
to education, social safety nets, and the availability
of early stage capital matter a whole lot more
than marginal tax rates. So we've covered a lot
of ground here. We've gone from 18th century
French dictionaries to Ashanti elephant tales,
from the psychology of paranoid founders to the
corporate governance of pirate ships. When you
boil it all down, what's a big takeaway? I think
the biggest takeaway is that we need to respect
the complexity of the word. Entrepreneurship
isn't one thing, it's a spectrum. It's the risk
taker, the optimizer, and the creative destroyer
all at once, and sometimes all in the same person.
It's a vital economic function, but it's also
a deeply, deeply human one. It's that fundamental
drive to reshape the world, whether that's by
baking a better loaf of bread or by trying to
colonize Mars. Exactly. And as we look forward,
I want to leave you and everyone listening with
a final provocation, something to think about
based on that biosphere entrepreneurship concept
we touched on. The idea of restoration. not just
extraction. Yes. Think about the definition we
started with, the creation or extraction of value.
For centuries, entrepreneurship has been almost
exclusively about extracting value from the earth,
from labor, from attention, to create private
wealth. The question for the next century is,
can that definition evolve? can entrepreneurship
become primarily about the restoration of value?
So instead of Schempeter's creative destruction,
it would be, I don't know, creative restoration.
Perhaps. As we face global challenges like climate
change, biodiversity loss, and resource scarcity,
is it possible that the most successful, most
celebrated entrepreneurs of the future won't
be the ones who extract the most? but the ones
who put the most back, the ones who clean the
oceans or reforest the land or build circular
economies? Will the very definition of profit
itself have to change to include social and environmental
capital? That is the trillion -dollar question.
If you can invent a business model that solves
that, you won't just be an entrepreneur, you
might just be a savior. And perhaps that is the
ultimate true uncertainty that the next generation
needs to navigate. On that rather profound note,
I'm going to go analyze the risk distribution
of my launch options. Thank you so much for this
deep dive. This was fascinating. It was my pleasure.
And to you listening, go find your own inner
pirate or your inner baker. Just make sure you
know which game you're playing. Thanks for joining
us.