What Kind of Entrepreneur Are You?

The other day I read an interesting book called Entrepreneurial DNA, by Joe Abraham, the founder of BOSI Global, an operating partner to venture-backed and owner-operated companies. The book is based on Joe’s study of over 1,000 entrepreneurs. The research confirmed the discovery that all entrepreneurs are not all wired the same way. The book suggests entrepreneurs fall into four distinct types of entrepreneurial DNA’s that leverage unique strengths, weaknesses and tendencies typical in each specific type of entrepreneur:
1. The Builder: You have a drive to build highly scalable businesses very fast. When this DNA is high in an individual, they break past $5 million in revenue within two to four years and keep going to up to $100 million. That's because these individuals measure success through a very unique lens: infrastructure. It drives the decisions they make and the strategy they build and deploy. They aren't satisfied with a certain amount of personal income or goodwill toward man. They are Pied Piper-like individuals who are master recruiters of talent, investors and customers. Builder DNA activates certain behaviors like a controlling temperament, leading to a Dr. Jekyll and Mr. Hyde like demeanor in the office. Individuals with high Builder DNA tend to struggle most with personal relationships and typically have a revolving door of talent in their companies.
2. The Opportunist: Picture Sir Richard Branson and you have a pretty good idea of what Opportunist DNA is all about. Individuals wired with this DNA are highly optimistic master promoters. They enjoy marketing and selling. They are wired to sniff out well-timed money making opportunities, jump in at the right time, ride the wave of growth up and (hopefully) jump out at the peak. Opportunist DNA measures success based on the amount of money they make (or will make) when they aren't working. So they are drawn to business opportunities where leverage can be used to create residual and renewal income. This behavioral preset in entrepreneurs makes them impulsive decision makers, especially when it comes to money-making opportunities. This trait can serve them very well or be the source of their demise.
3. The Specialist: This DNA activates in the experts of our world. No sooner does an individual go through years of schooling, apprenticeship or on-the-job training, does this DNA activate, driving the corresponding behaviors. Specialist DNA drives one to be very analytical, relatively risk-averse and anti-selling. Specialists generate most of their new business from referrals and networking. They measure success based on their personal income. Their businesses tend to grow fairly well in the startup and early growth phase, but as soon as their personal income hits preset targets, their internal thermostat kicks in and they go into customer service mode. Research found that most Specialist-owned businesses plateau in revenues well below $5 million. The ones that get past this level take significantly longer to get there than Builder DNA companies -- often decades.
4. The Innovator: Picture Mark Zuckerberg in the movie The Social Network and you'll see Innovator DNA at work. Like most Innovators, he was doing something he loved, when a business opportunity popped up. The breakthrough discovery typically drives this entrepreneur in the "lab" of their business -- where they want to invent, design and tinker. They would much rather be in the lab of their business than at the cash register or in the business office. They find operating a business draining. They measure success based on the impact their product or service is having on mankind. "It's not about the money," you'll hear them say. "I'd do this for free for the rest of my life if I could." Individuals with high Innovator DNA control most of the great intellectual property of our time. Unfortunately, they hide in dungeons and find it hard to engage in business discussions.
For centuries the approach to entrepreneurship has been -- what worked for one entrepreneur will work for every entrepreneur. But research has proven that entrepreneurs are all different. Some of us are Innovator-Builders. Others are Specialist-Opportunists.
Knowing your DNA and the DNA of those surrounding you is critical to selecting the business, strategy and team best suited for you. Just because it worked for Richard Branson (Opportunist-Builder) or Bill Gates (Specialist-Builder), doesn't mean it will work for you.

Startup Entrepreneurs Have Confidence. Duh.

Pssst. Want to know a secret? Entrepreneurs are insanely confident.
Of all the data points released about the economy week after week, perhaps the least helpful nowadays is the Kauffman/LegalZoom Startup Confidence Index. With apologies in advance to the Ewing Marion Kauffman Foundation and online legal-advice company LegalZoom – both of which I have no doubt carry the best intentions and otherwise do good work – and, with an additional shout out to John Calvin, tracking startup confidence seems an exercise in predestination.
You will never, ever find a time when startup confidence, as measured by this survey, is not high. Ever. Startup owners are confident, so confident that, well, they started a company. One needn't waste human hours tallying numbers to express that.
Let's take a deeper dive into the numbers themselves, released this morning. Despite what the companies call “ceaseless uncertainties in Washington” and “mixed signals” on the economy, it turns out the confidence of owners of startups is at a new high of 86 percent.
Put aside that the “new high” isn't all that significant since the survey has only been tracking sentiment since the first quarter of last year. There are other, more significant problems with the survey and the results:
The life of the businesses surveyed is too short. In ordered to be surveyed, you had to have started a business within the past six months. This is the biggest problem with the data compiled: You are talking to people who felt optimistic enough about their own abilities to quit their jobs and start a business. It puts to mind what Reed Hastings said, that to be an entrepreneur “you have to feel like you can jump out of an airplane because you're confident that you'll catch a bird flying by.” Entrepreneurs may succeed or fail, but confidence never flags.
It asks the wrong question. The lead question is a simple one: “How confident are you that your business will be more profitable in the next 12 months than it is today?” Well, most businesses are not profitable in year one, let alone in the first six months. So, since you are asking people who are trying to turn losses into a viable business whether or not they think they will be more profitable, isn't the answer always “yes?” And, if not, does that matter? Many tech startups have multi-year business plans that call for many quarters in the red. That doesn't make them any less successful, particularly since they probably have raised a war chest of cash to burn.
The survey tracks respondents by age. According to the latest figures, 95 percent of 18-to-30-year-olds and 94 percent of 31-to-40-year-olds feel certain about near-term profitability. That the youngest group should feel more confident again shouldn't be a surprise, because they lack long-term experience in being able to judge consumer demand. There is some evidence that younger entrepreneurs are less successful than older ones.
It is not a predictor of future startup activity. One would think that entrepreneurial confidence would lead to a higher rate of startup creation among the younger demographic groups. In fact, it hasn't. Just look at Kauffman's own Index of Entrepreneurial Activity, which showed the share of startup activity by people between the ages of 20 and 34 fell from 34.8 percent in 1996 to 26.2 percent in 2012. At the same time, the share of companies started by people aged 55 to 64 rose from 14.3 percent to 23.4 percent. So, if confidence is higher among the younger entrepreneurs, why is the growth rate for new business creation so much higher among older entrepreneurs? Well, it is because the population is aging. It has little to do with changes in confidence.
It is reliant on LegalZoom's customers. This is an email survey sent only to those people who used LegalZoom products. LegalZoom has some fantastic tools for small businesses, allowing owners to save money on the reams of documents they need to file in starting or managing a business. But, as businesses grow, and the stakes get higher, businesses typically drop software for actual counsel (and curse incessantly over the concomitant billable hours). As a result, you are asking a very small subset of the overall entrepreneurial population – both in absolute terms and size of business – for opinions. Statistically and economically, that isn't a good enough sample off which to make any bolder a declaration than “LegalZoom customers agree...”
There is too much turnover in respondents. This is a quarterly survey of people within six months of starting their business. For those not good at math, that means that you are asking a lot of different people the same questions. Particularly when it comes to something as tough to measure as confidence, it is more helpful to hear how respondents' thinking evolves over time. Being a startup owner is great, but growing that business into a multinational, big-money enterprise is even better. That kind of experience is lost when you look at people's sentiment at just the starting line.
So, is looking at confidence a waste of time? Not at all. Consumer confidence is a nice way of judging potential sales. Looking at the customer – rather than your peers – has a bigger impact on business planning. And, even gauging sentiment among business owners is helpful when you are asking a wider range of questions to a bigger group of companies, as the National Federation of Independent Business does with its Small Business Optimism Index.
For its part, Kauffman, in a statement, says the report “helps illustrate the resilience of the American economy and the way in which new business creation constantly creates a new economic future, even as the surrounding economy appears stuck.”

Signs You Might Be a Terrible Leader (Yes, You)

As a business owner, leadership is more than just telling others what to do. Leadership is about the investment we make into others and the responsibilities we accept for being the voice and direction that others count on. Every great leader knows that his or her role comes with responsibility for those who follow him or her, and in ensuring they provide value in return for their loyalty.
Sometimes entrepreneurs -- either by nature or habit -- are bad leaders. Perhaps you lack the understanding of the social responsibilities that come with leading others. Or perhaps you've fallen into a routine and your leadership abilities have suffered for it.
Recognizing poor leadership is a vital skill to help you achieve greatness. Here are signs that you are a bad leader, exhibiting traits that you don't want to be following:
You make empty promises.
Poor leaders motivate those following them with false promises of promotions, success and a great tomorrow, but rarely deliver on those promises. Leaders who do this can be manipulative and often hold the goals and aspirations of their follower's hostage in order to get them to comply.
As a business owner you need to be aware of what effect this has on your staff. If you commit to something but don't follow through it can send the wrong message to your employees, who you are pushing to deliver the best results.
You fail to follow up.
Poor leaders tend to lack the understanding that their followers are counting on them to handle issues that they are not able to fix on their own. Leaders can forget to follow up on these issues as they might be of little importance to them. Months can go by with little or no change.
Following up is an important part of leadership as it is our ability to hold ourselves accountable. When you make a promise, not only is your word on the line, but so is your integrity, so follow up with a "yes it's completed" or "no, but here is when I commit to it being completed."
You're fearful of confrontation. 
Poor leaders often try to avoid confrontation, especially when involving performance. This is typically due to either a lack of knowledge on the topic at hand or an urge to be intentionally blind to the truth -- deciding to act unaware about a situation rather than dealing with it.
While business leaders want to drive results, they can be at a loss when they don't attain them through those who work for them. They often go around those tough conversations by trying to empower others to have them so that they don't have to.
As opposed to avoiding confrontation, focus on outlining exactly what is expected in every partnership or transaction you engage in. That way, when there is a discrepancy, it's easy to recognize.
You don't hold yourself accountable.
Nobody likes to be held accountable when things fail, especially poor leaders. They will often justify their need to hold others accountable rather than themselves. They don't self-reflect and improve.
Because confrontation scares them, poor leaders can also be hesitant to hold others accountable outside of talking about doing so. As a result, they end up talking in circles and shifting blame from person to person out of fear.
A simple way to keep yourself accountable is to eliminate the word "sorry" from your vocabulary. When acknowledging your broken agreement, acknowledge in a way that suggests that you realize you broke your word and will commit to a change in action as you move forward.
When you acknowledge that your word is your most important asset, "sorry" becomes an easy way out. Great leaders take ownership of what they say and do.