The beauty of entrepreneurship is that it’s the opposite of conformity. If you’re just like everyone else then you blend into the crowd.
You’re allowed to be polarizing, eccentric, and different.
This can leave people confused about the right path to take. There is no right answer to that but there is the best answer depending on the type of entrepreneur you are.
Without understanding the types of entrepreneurs, it increases the likelihood of joining the ranks of people who started but ultimately failed.
When you understand your specific situation, you’re able to take action on improving your weaknesses and building a team that compliments you.
This article looks at the types of entrepreneurs in the world and the strengths and weaknesses of each one.
Types of entrepreneurship
I want to be clear that there’s a difference between types of entrepreneurship and the types of entrepreneurs.
There are four major types of entrepreneurship which are:
- Small business entrepreneurship. Believe it or not, this is the bread and butter of entrepreneurship. It makes up 99% of all companies and employs more than half of the non-government workforce. These are the people you see in your community like plumbers, carpenters, grocers, pharmacy owners etc. and either don’t have the skill or motivation to expand their business. As a result, they’re usually barely profitable.
- Scalable startup entrepreneurship. This is the type of entrepreneurship you hear about in the news and also where Silicon Valley investment tends to flow. Their mission from day one is to find a business model that’s scalable. Not all of them are successful in that regard which is why investors have to bet big and often to make up for the losers. It looks like they’re the most common but they’re not, they just attract the most press.
- Large company entrepreneurship. This entrepreneurship from within huge conglomerates that already have established customer bases and market share. Why would they need entrepreneurship? Over time, consumer tastes change and products are no longer in vogue. If the large company doesn’t innovate then they die a slow death. Think about the manufacturing industry in the United States.
- Social entrepreneurship. This is relatively new. Though they’re still out for profit and sustainable business, they create products and services that solve social problems. For example, TOMS Shoes and their One For One campaign.
Another big difference is that entrepreneurship refers to the business itself and not the entrepreneur behind it.
Think of the types of entrepreneurs like a management style that takes into consideration specific strengths, weaknesses, and preferences.
Types of entrepreneurs
These types are in every industry across the world. Most people will be a mix of many different types. The key is to understand where you have the most similarities and take action accordingly.
These are the types of entrepreneurs we tend to see on the news. Elon Musk and Mark Zuckerberg are what we’d refer to as innovators.
They take problems that may have a solution already and make that solution an order of magnitude better. Mark Zuckerberg took the concept of social networks from MySpace and built Facebook.
Elon Musk took the concept of cars and built Tesla. He also worked with a talented team to create PayPal and change the way we send money to friends and family.
They’re characterized by passion, drive, and a strong will to succeed. They also tend to have strong technical knowledge about their product.
At the same time, there’s a dark side to innovators – obsession. They want their idea to succeed so badly that they can burn a lot of bridges in the process.
Advantages of innovators
- Move quickly
- Attract investment fairly easily (investment is never truly easy)
- Durability when the hard times set in
Disadvantages of innovators
- Can be obsessive and alienate their friends, family, and team
- Not everyone understands the utility of the new version of the product
- Imitators spring up after you see a bit of success
At first glance, visionaries appear to be the same thing as innovators. That’s not the case. Where innovators take a product and made it 10x better, visionaries build new industries.
For example, the person who started the internet is a visionary. They’ve created something people love and can’t live without. Another example of a visionary would be Steve Jobs and the iPad. There was no such thing as a tablet device before they came along.
They’re characterized by a deep understanding of trends and how they’ll affect consumers going forward. People flock to their side because they want to be part of shaping the future.
They can also be polarizing because their vision is so out there. It encounters pushback from people who feel threatened.
Advantages of visionaries
- Attract some of the best talent in the world
- It takes a long time for the competition to catch up because you’re creating a new product class
- Understand the needs/wants of consumers on a deep level
Disadvantages of visionaries
- Takes a lot of education to get customers on board
- large amounts of capital are needed for research and development
- People are resistant to change
A hustler has both positive and negative connotations. It can mean you’re doing something shady or below board such as fraud.
These days the word has positive connotations. In essence, a hustler is someone who does more work, puts in more effort, and sees results because of it.
These are the entrepreneurs who start small, learn essential skills on the go, bootstrap their way to success, and seem to explode on the scene. In reality, they’ve been doing it for a long time.
The prime example of this type of entrepreneur is Gary V. He advocates coming back from work and then putting in time for your projects until the wee hours of the morning. Though it worked for him, it may not work for everyone.
There are real risks involved in working all day every day. Not everyone is built for that life.
Advantages of hustlers
- Amazing work ethic
- Learn a wide range of skills to move the business forward
- Accept the eventual pitfalls as normal steps on their ladder to success
Disadvantages of hustlers
- It can take a long time to see success
- They may burn out in the process
- Push their own work style on everyone around them
This type of entrepreneur tends to get a bit of hate because they don’t invent anything new. Unless they’re very successful, they’re not acknowledged often.
This is also where the bulk of entrepreneurship lies. There are business models and industries with a lot of potential and you don’t need to invent anything.
For example, the founder of Walmart, Sam Walton, didn’t invent stores. He just used his skill with logistics and negotiation to create one that turned into a billion dollar empire.
Real estate tycoons didn’t invent housing complexes. They build new developments and turn a profit. There is absolutely nothing wrong with this type of entrepreneurship. In fact, it’s necessary for all the other types to thrive.
They’re the ones who push the hustlers, innovators, and visionaries to create new product classes which we all benefit from.
Advantages of imitators
- Tap into a proven business model
- There is measurable demand and customer base
- Learn from past mistakes
Disadvantages of imitators
- No true competitive advantage
- Easier for more competition to spring up and take market share from you
- Considered second best
This entrepreneur is concerned with understanding all aspects of a business before starting.
They’re the ones who talk to customers, do deep dives into their market, and employ customer development strategies. They’re thorough and meticulous. Of course, everyone is supposed to do this but few do.
Even the ones that do it only perform topical research at best. The researchers are almost obsessive about the amount and quality of the data they collect.
It’s hard for them to start a business on a whim because they don’t like outlandish risks. It goes against every fiber of their being.
It’s a double-edged sword for them. They take fewer risks and save themselves years of effort in case the idea was a dud but they also lose the advantage of speed and being first to market.
Advantages of researchers
- Deep understanding of their market
- Able to spot gaps where they can differentiate themselves
- Less prone to taking risks that don’t pan out
Disadvantages of researchers
- Moves much slower
- May dismiss ideas with potential because of the higher risks involved
- Numbers become more important than people and relationships
Buyer entrepreneurs walk a fine line and it’s easy to mistake them for investors. The buyer type may have had a business before and successfully sold it or they got their wealth from some other means.
They buy into businesses with a proven track record and work at the helm to improve it. What defines this type of entrepreneur is that even though they buy, they’re active in growing their investment.
They don’t buy and hand it off to someone else immediately. Even though they may eventually hand off leadership to someone else, they always maintain an active part in their businesses.
Advantages of buyers
- Buy into an already established business with proven
- Can focus on expanding the brand and networking
- Built-in market share and customer base
Disadvantages of buyers
- It’s much more effective
- You may have to break the bad habits of the current team and staff
- It’s possible to encounter problems that can’t be solved
This type of entrepreneur is closely related to the buyer type. They also have a lot of resources at their disposal but it’s usually not their personal wealth.
An investor raises funds from a group of backers and finds businesses with enough potential to give them an attractive return on their investment. Their business is investing in other businesses.
Because of their unique position and interaction with multiple companies and entrepreneurs, they have a unique perspective. Investors help their portfolio companies with things like operations, networking, and customer development.
It’s important to note that even though investors will help their portfolio companies out when they need it, they take more of a passive role. Their core competency isn’t to be your advisor; it’s to find more businesses to invest in.
Advantages of investors
- Don’t have to build a business from scratch
- Access to proprietary data of multiple companies
- Large amount of capital at their disposal
Disadvantages of investors
- Portfolio companies may fail
- Only see a return when the company sells or goes public
- Money tied up for long periods of time
It doesn’t matter what type of entrepreneur you are. What matters is that you understand your strengths and weaknesses and act accordingly.
If you’re a hustler then find a co-founder to help you innovate. If you’re an innovator then find a hustler to get your ideas in front of the right people.
No one can be the total package. Don’t look at it as a downside, look at it as a way to make the best of what you have and partner with the right people.
Let me know what type of entrepreneur you are in the comments and don’t forget to share.