Sunday, March 16, 2008

Who is the Greatest Entrepreneur?

I'm an entrepreneur. I've been one since my first startup in 1983, my stint at Microsoft notwithstanding. But my own accomplishments certainly pale in comparison with the greatest entrepreneurs. Recently, I've been thinking about someone who might be considered the greatest entrepreneur of all. Is it Steve Jobs? Bill Gates? Jeff Bezos? Sergey Brin or Larry Page? Or maybe it's someone from a previous generation ... Andrew Carnegie? Thomas Edison? Henry Ford? P. T. Barnum?

Literally, "entrepreneur" means "one who undertakes." On the web, you can find almost as many different definitions for "entrepreneur" as there are entrepreneurs. The dictionary definitions are pretty narrow. Merriam-Webster defines an entrepreneur as:

One who organizes, manages, and assumes the risks of a business or enterprise.
Even Wikipedia's definition isn't a good description and partially defines it as a personality type. I guess I'm not surprised. After all, entrepreneurship partly defies description. Here are some traits that I've culled from a variety of web sites:
  • Someone who starts a business.
  • Someone with the talent for seeing opportunities and the abilities to develop those opportunities into profit-making businesses.
  • Someone who undertakes opportunities without regard to the resources currently available.
  • Someone who starts a business to follow an inspiration or vision.
  • Someone who sees a niche that needs to be filled and builds a business to fill it.
  • Someone who develops new markets, introduces new technologies, new industries and/or new products.
  • Someone who is an educated risk taker.
  • Someone who continually seeks opportunities and/or different methods of operation.
  • Someone who will do whatever it takes to be successful in business.
  • Someone who invents a business that works without them.
These traits are not mutually exclusive and you can decide for yourself which you agree with and which you don't. It's the last one, borrowed from this blog post about author and business guru Michael Gerber (pointed to me by my friend Mohit, also an entrepreneur), that inspired this post.

I think that we in the technology world are biased toward those entrepreneurs that introduce new technology. But it seems to me that the heart of an entrepreneur is building a business and the details of that business are less important. The entrepreneur must build something that they understand. And that's the point that leads me to think that perhaps the greatest entrepreneur is ...

Warren Buffett

Warren Buffett built Berkshire Hathaway from a tiny company to one of the world's largest. But the home office has just five people in it. I'll skip the usual superlatives about his success. Just look at the list above and you'll see that Buffett scores on almost every one. About the only one he misses on is the "visionary" one, but I personally don't see that as essential for an entrepreneur since I've known plenty of successful entrepreneurs who weren't visionaries.

In a large sense, Buffett created value out of nothing and, unlike all the ".com" entrepreneurs we're constantly hearing about, Berkshire has intrinsic value -- its continuing value isn't based on having Buffett around. If you don't understand what intrinsic value is, I recommend reading an annual report from Berkshire's very spare web site. It's pretty different from the typical annual report. The owner's manual is also a great read.

You can certainly argue that Buffett has plenty of resources available today, though he doesn't run his business like he does. He didn't stop being an entrepreneur just because he's been successful. His only real indulgence, an airplane, was divulged in his annual report in mock tiny print and named the Indefensible.

Being entrepreneurial gets harder the more resources you have, so Buffett does things a little differently. He looks for people who know how to build businesses and have built them. He looks for businesses that have been built to fill a niche and he buys them, giving them extra strength to fill the niche. He looks for other entrepreneurs. Of course, by Berkshire Hathaway standards, these entrepreneurs have to be running billion-dollar businesses.

Buffett was the richest man in the world for years, until Bill Gates passed him. But, Buffett passed Gates again this year. Buffett has committed to giving away 85% of his wealth, in annual installments of 5% each year, and guess where it's going -- to the Bill and Melinda Gates Foundation. In typical Buffett fashion, he said that he wanted to give the money to experts at giving.
"Compare what I'm doing with them to my situation at Berkshire, where I have talented and proven people in charge of our businesses. They do a much better job than I could in running their operations.

"What can be more logical, in whatever you want done, than finding someone better equipped than you are to do it? Who wouldn't select Tiger Woods to take his place in a high-stakes golf game? That's how I feel about this decision about my money."

That's good advice for any entrepreneur.

Update: Corrected misspellings (thanks, Scott).