What are the traits of successful entrepreneurs? Businessman Wayne Huizenga started Waste Management, Inc., a leader in the waste and environmental services industry, by buying a single garbage truck in 1968. He expanded the company by buying other trash collection services, and by 1983 the company had grown into the largest of its kind in the United States. But Huizenga didn’t stop there. He also started Blockbuster Video, the video rental company, as well as AutoNation, the behemoth automotive dealer.14 How can some entrepreneurs like Wayne Huizenga begin successful businesses, whereas others have a difficult time getting their ideas off the ground? How do successful entrepreneurs see an opportunity niche and know exactly what they need to do to seize the opportunity and succeed?

Although luck and timing play a large role in entrepreneurial success, research has also shown that successful entrepreneurs have the following characteristics:

1. Are innovative and have a vision

2. Take risks

3. Are motivated to succeed

4. Are flexible and self-directed

5. Work well with others and possess good leadership skills

6. Are “system thinkers”—view the whole process rather than just its individual pieces

How are entrepreneurs innovative? Successful entrepreneurs see problems to be solved or opportunities that aren’t being addressed in the marketplace; they recognize opportunity niches. They also make improvements to existing products or systems, or they introduce something new and make profitable solutions out of problems. Renowned management and business thinker Peter Drucker noted that successful entrepreneurs “exploit change as an opportunity for a different business or a different service.” For example, Henry Ford turned his knowledge of engines into the first “horseless carriage,” which he later improved to become the Model T. His improvement was not only in creating a new machine but also in developing an assembly-line process by which his company could make multiple automobiles more efficiently. Ford’s innovative assembly process became the standard for efficient manufacturing.

Think about other entrepreneurs and the innovation behind their success. Mark Zuckerberg changed how we communicate and network with others by launching Facebook. Steve Jobs, arguably one of the greatest innovators of modern times, helped to bring personal computing to the home with the introduction of the Apple computer and more recently changed how we listen to music with the iPod and iTunes, how we use mobile phones with the iPhone and mobile apps, and how we access media information and entertainment with the iPad. Entrepreneurial doesn’t just mean that you start from scratch. Obviously, Jobs had the powerful resources of Apple behind him to launch some of these innovations, but nonetheless his products were innovative and radically changed many traditional processes. Figure 5.5 lists some other important innovations by entrepreneurs. What other innovations would you add to this list?

Figure 5.5

Entrepreneurial Innovations

How do entrepreneurs take risks? Because entrepreneurs are often creating new and innovative products, the processes they develop often are untried and therefore subject to many risks: The risk of failure, the risk of losing one’s career or reputation, and, of course, financial risks. Successful entrepreneurs are aware of the risks, recognize they can influence events but do not have complete control over them, and know they may fail. Successful entrepreneurs therefore take calculated risks—that is, they consider the likelihood of success before deciding whether to take a particular risk. In addition, successful entrepreneurs are not daunted by failure or bad outcomes. Most see setbacks as part of the process, deal with them, and move on.

What makes entrepreneurs motivated to succeed? Entrepreneurs are motivated by many different factors. Some entrepreneurs are motivated to provide for themselves or their families. These individuals may be driven to pursue multiple ventures before uncovering a successful idea. Other entrepreneurs are motivated to succeed by the personal fulfillment they feel after successfully launching a business.

The keen desire to tackle challenges and achieve success led one entrepreneur, Ted Kennedy (not the former Massachusetts senator), to start a company. Kennedy noticed that many participants in the Ironman Triathlon Challenge were corporate executives. He also noticed that they wanted above-average accommodations and enjoyed meeting and socializing with other CEOs before and during their competition. So, Kennedy formed CEO Challenges, a company that puts on sporting competitions specifically for CEOs. Although CEO Challenges initially only offered triathlons, it now offers cycling, hockey, fishing, golf, sailing, tennis, and other competitive adventures to executives and holds challenges in Canada and Europe.

Why do successful entrepreneurs need to be flexible and self-directed? Because new ventures are risky, entrepreneurs need to be able to react quickly to unexpected situations and downturns. Moreover, an entrepreneur must be able to wear many hats, acting not only as executive but also as sales manager, financial director, secretary, and mailroom person. Entrepreneurs also need to know when to sell or exit a business.

Why are people skills and leadership skills important to entrepreneurs? They may come up with the initial ideas behind their businesses, but entrepreneurs rarely work by themselves. As much as they have the capacity to wear many hats, at some point most entrepreneurs need other people with complementary skills to join them in their ventures. If their businesses expand, they must hire employees and other managers to help them run it, just as the Wahoo Brothers did when they decided to expand their restaurant business. Leadership and communication skills are therefore important traits of successful entrepreneurs who must motivate others to feel as passionately about the entrepreneurial enterprise as they do.

What does it mean for entrepreneurs to be “system” thinkers? Although entrepreneurs develop companies from an idea, they must focus on the entire process of turning their idea into a business to succeed. Successful entrepreneurs are able to see the whole picture when they establish their businesses. They determine how to resolve a problem or capitalize on an opportunity by developing a solid plan, including producing, financing, marketing, and distributing the service or the product.

Realizing that the hamburger was the best seller in their California restaurant, the McDonald brothers, who started the McDonald’s restaurant chain, created an assembly line that allowed them to produce burgers quickly and inexpensively. Business boomed. It expanded even more when businessman and entrepreneur Ray Kroc, who was selling milkshake machines in California, convinced the brothers not only to use his milkshake machines but also to let him open another McDonald’s restaurant in Chicago. Seeing the opportunity niche in fast-food franchising, Kroc later bought the McDonald’s restaurants from the McDonald brothers, and has since turned it into a global, multibillion dollar operation.

Are there different types of entrepreneurs? Beyond traditional entrepreneurs described in the previous sections, other entrepreneurial categories exist:

1. Lifestyle entrepreneurs

2. Micropreneurs

3. Home-based entrepreneurs

4. Internet entrepreneurs

5. Growth entrepreneurs

6. Intrapreneurs

7. Social entrepreneurs and social intrapreneurs

8. Serial entrepreneurs

Although each category has its own unique characteristics, entrepreneurs don’t necessarily fit into just one. For example, there are home-based entrepreneurs who are also lifestyle entrepreneurs and Internet entrepreneurs. Let’s take a look at each of these types of entrepreneurs.

What are lifestyle entrepreneurs? Lifestyle entrepreneurs look for more than profit potential when they begin their businesses. Some lifestyle entrepreneurs are seeking freedom from corporate bureaucracy or the opportunity to work at home or in a location other than an office. Others want more flexibility in work hours or travel schedules. Take Richard Dahl, for example. He is traveling around the country in a travel trailer selling more than 300 items, including his flagship water filter system at trailer parks, campgrounds, and motor home shows.15 His business, The RV Water Filter Store, allows him to fulfill his passion of traveling around the country with this wife. Gary Veynerchuk started WineLibrary.com, a multimillion-dollar online wine store that married his passion for wine with his entrepreneurial spirit. Gary has since started several other businesses in addition to investing in other start-ups.

What are micropreneurs? Micropreneurs start their own businesses but are satisfied with keeping their businesses small in an effort to achieve a balanced lifestyle. For example, a micropreneur might open a new type of restaurant and be satisfied with running only that one restaurant instead of expanding as Ray Kroc did with the McDonald brothers’ restaurant. Micropreneurs have no aspirations of growing large or hiring hundreds or thousands of employees. Businesses such as dog-walking services, painters, and special-occasion cake bakers would all be considered micropreneurial opportunities.

What are home-based entrepreneurs? As the name suggests, home-based entrepreneurs are entrepreneurs who run their businesses out of their homes. Home-based entrepreneurs are often parents who like being able to stay home with their children while running a business. In addition to offering lifestyle advantages, such as being able to stay at home with children, home-based businesses offer several financial advantages. Staying at home eliminates commuting time and costs as well as office rent and other overhead expenses. Also, home-based entrepreneurs can take advantage of deducting from their taxes a part of their rent or mortgage payment, as well as other expenses such as depreciation, property taxes, insurance, utilities, household maintenance, and home repairs and improvements.

P. J. Jonas is a home-based entrepreneur. Jonas launched Goat Milk Stuff on her family’s farm after she started making natural soap so she could avoid using chemicals on her children’s skin. Jonas, her husband, and all eight of their children work in the business. In 2013, Goat Milk Soap won StartUpNation’s “Leading Moms in Business” competition.

What are Internet entrepreneurs? Advances in technology have spawned another type of entrepreneur, the Internet entrepreneur, who creates businesses that operate solely online. The early 1990s saw the first group of Internet entrepreneurs, but most did not survive the dot-com bubble and bust. Now, however, with the advent of Web 2.0 technologies (such as blogging and social networking), smartphone apps, contextual web-based advertising (such as Google Ads) that help to provide revenue, along with faster broadband connections, a greater number of successful online businesses are being established. Some of the most famous Internet entrepreneurs include Mark Zuckerberg (Facebook), Jeff Bezos (Amazon), Pierre Omidyar and John Donahoe (eBay), Sergey Brin and Larry Page (Google), and Jimmy Wales (Wikipedia).

Youth may have an advantage in this entrepreneurial genre because success requires little investment, some spare time, and a good understanding of what their peers are looking for. For example, David and Catherine Cook and their older brother Geoff started MeetMe (formerly myYearbook.com) over spring break in 2005. The social networking site invites members to meet new people through playing games, chatting, and sending virtual gifts purchased with Lunch Money, the site’s virtual currency. Members are also given the opportunity to donate Lunch Money to their favorite charity through their charity application. In 2013, MeetMe launched two new dating apps, Choosy, which quickly became the top new app in the social category of the Google play store, and Charm, which uses videos rather than photos, like the social networking site Vine does.

A simple homework assignment for a class at Stanford University, referred to as the “Facebook Class,” spawned many successful companies and ideas. Student teams were to create applications for Facebook, the popular social networking site. Many of the apps had a short life span, but their creators went on to create other apps for the newly released iPhone or to begin other Internet businesses, such as the social networking site Friend.ly, or have sold their businesses to companies like Zynga. The class, now called “Startup Engineering,” can be taken for free on Coursera.org.

What are growth entrepreneurs? Growth entre­preneurs strive to create fast-growing businesses and look forward to expansion. The companies that these types of entrepreneurs create are known as gazelles. Typically, a gazelle business starts with a base revenue of at least $100,000 and experiences at least 20 percent sales growth every year for five years. In other words, over the course of the five years, the firm doubles its revenues. It is hard to recognize a gazelle business during its rapid growth period, though companies such as eBay, Google, and more recently, Tesla, can clearly be identified in retrospect as having been gazelles in their early years. Gazelle companies also help the economy. Although they only represent approximately 15 percent of all businesses, they have been credited with generating about 50 percent of all new jobs.16

What are intrapreneurs? You don’t necessarily have to leave your company to have an entrepreneurial experience. Some companies are good at fostering intrapreneurs—employees who work in an entrepreneurial way within an organizational environment. Because its success depends on its ability to develop creative solutions to household problems, developing intrapreneurs has been important to the home appliance company Whirlpool. Instead of relying solely on the traditional research-and-development process, Whirlpool taps the creative juices of its employees by encouraging them to generate ideas that will enhance the company’s existing products. Although employees are not separately compensated for their ideas, they are pleased that the company asks for their ideas and have responded enthusiastically.

Technology companies are well known for fostering intrapreneurial creativity. Microsoft encourages employees to work on their own projects in the company’s “Garage,” a facility with various tools such as three-dimensional (3D) printers they can tinker with. At Google, employees are encouraged to spend 20 percent of their time working on their pet projects. Gmail and GoogleAds are two products that were developed as a result of this policy. Other examples of products generated from employee innovation include Post-It Notes, the Sony PlayStation, the Java programming language, and ELIXIR guitar strings.17

What are social entrepreneurs and social intrapreneurs? Just as a business entrepreneur tries to create innovative solutions that satisfy an unfulfilled corporate or consumer need, the idea can be extended to society at large. Social entrepreneurs are entrepreneurs who create innovative solutions designed to solve social problems. For example, Mimi Silbert founded Delancey Street Foundation, a residential education center that teaches substance abusers, former felons, and the homeless the skills necessary to lead productive lives. The foundation runs on income generated by businesses created by the foundation that act as the training ground for program participants. It has been called the most successful rehabilitation project in the United States.18

Similarly, social intrapreneurs build and develop ventures within a company that are designed to identify and solve large-scale social problems. In an effort to create a “social corporate enterprise,” eBay, for example, gathered 40 employees to discuss ways to make the company more environmentally aware. What resulted were a myriad of projects, ranging from ride-sharing programs and community gardens to the largest installation of solar-power generators in San Jose, California, at the company’s corporate headquarters.19

Previously we mentioned Wayne Huizenga, the entrepreneur who started Waste Management, Blockbuster Video, and Auto Nation. Wayne, like other serial entrepreneurs, seems to like the process of building and growing a business and doing it over and over again. Other successful serial entrepreneurs include Ted Turner (Turner Broadcasting System, CNN, and Ted’s Montana Grill), Richard Branson (Virgin Records, Virgin Airways, and Virgin Mobile), and even Oprah Winfrey (O, The Oprah Magazine, OWN network, and Harpo Productions). Some might even consider Ben Franklin and Thomas Edison as our earliest serial entrepreneurs. Would you agree?

What if I don’t have all the skills to be an entrepreneur? Look at the list of entrepreneurial traits described in this section. In addition to being innovative, motivated, and self-directed, an entrepreneur initially may need to fill the role of executive, sales manager, financial director, secretary, and mailroom person. If you don’t possess all of these traits, it doesn’t preclude you from starting your own business and becoming a successful entrepreneur. If you have an idea and really want to make it happen, you might want to reach out to others who can do what you can’t or don’t want to do and assemble an entrepreneurial team.

What is an entrepreneurial team? An entrepreneurial team is a group of qualified individuals with varied experiences and skills who come together to form a new venture. The skills of the entrepreneurial team members complement one another so that as a group the team has the necessary skills and traits to manage a successful project. For example, brothers Lucas and Lee Brown along with Lin Miao and Andrew Bachman, came together to form Tatto Media, a successful Internet marketing company that changes how advertisers pay for display advertising. After selling Tatto Media, the Brown brothers went on to form HasOffers, an advertising performance analytics group.

Entrepreneurial teams are also great for those who want to run their own businesses but perhaps lack the personal experience. For example, college and business school students often form entrepreneurial teams to get their first projects launched. Students from Stanford University have come together to create well-known companies such as Google, HP, Cisco, Imagen, and Yahoo! Many schools run entrepreneurial challenges, such as the Big Bang competition at the University of California–Davis. During the yearlong competition, students, alumni, staff, and faculty join forces to construct and test their business plans, which serve as the springboards for new companies.