Redefining entrepreneurship

If we are truly serious about wanting to reach the 2030 global development goals, we need to start taking some extreme measures. Even before Covid, I was talking about the need for redefining entrepreneurship, moving away from our fixation with unicorns, personal success and measuring success in invested money. 

However, according to the latest UN SDG report, Covid has put us back almost two years in our development leading me to emphasize even more the need for us to redefine our image of entrepreneurship.

 

We are so fixated with steroid growth and big numbers, that we forget about what creates prosperity and healthy societies.

The problems I see are the following: 

The narrative is wrong

The past 15-20 years we have been teaching generations of new entrepreneurs about lean startup, bootstrapping and design thinking. All of which is good, but at the same time we have also taught the same entrepreneurs to develop a novel business idea, ask for a lot of money and start chasing growth. And growth at all cost in many cases. More and more venture capital is pumped in during this quest for this mystical unicorn, during which all investors want to make their money back so they pass the hot potato on to the next investor, leading to an IPO being the only way the investors are ever going to get their money back. So we have a bunch of companies that are racing to cash in so they can make their money and become ridiculously rich, and in the end it’s our pension funds that bail them out (50% of all stock is owned by pension funds). 

We are so fixated with steroid growth and big numbers, that we forget about what creates prosperity and healthy societies. And it’s not an ultra-rich 1%. There is no trickle-down effect. It is the 100s, even 1000s, of owner led companies that run solid, profitable businesses and employ 50-500 employees. They are our workhorses. Not the sexiest animal on the farm, but they get the job done, day after day. In Germany this is called Mittelstand, the middle ground, the 1000s of often family owned businesses that are the backbone of German economy. 

And as long as we measure success by how much money we have raised, we are completely missing the point of what running a business is all about. 

We need to encourage workhorses, not unicorns. 

The entrepreneurship narrative is still not about starting a solid business, making money from doing good work that employs 100 people on good terms. It is still about bootstrapping, cutting corners, creating platform economies that utilize underpaid gig workers so the entrepreneur does not need to take any responsibility for employees or their welfare. 

Or with fintech solutions making it even easier to overconsume so the customer can get their purchasing fix as fast and often as they like, and at the same time creating even more personal debt and more societal misery, but hey, there’s an app for mental unhealth as well, right? And then we can charge them twice! 

And as long as we measure success by how much money we have raised, we are completely missing the point of what running a business is all about. 

Raising money is not sound business, it is borrowing money in the most expensive way possible, by actually trading a part of your company away for a short term win. 

There is this huge misconception that one first should make money and then use that money for good.

And to add to that, there is this huge misconception that one first should make money and then use that money for good. A reasoning that might look good on paper but in reality it never works. So first you get to make a huge mess but get really rich doing it, and then you use 1% of that fortune for “doing good”. 

We need to make it, if not sexy, then at least really important and cool to start a successful business that makes its own money and that can employ a good deal of people on good terms. A company that makes actual money from the start, from doing good things. 

Workhorses, not unicorns. 

If you aren’t socially oriented as an entrepreneur, then you are not only not doing good, you are in fact doing bad.

The definition of good is wrong

With the rise of social entrepreneurship, we are making three very dangerous mistakes. 

One, by calling the do-gooders “social entrepreneurs”, we give the other 95% of “normal entrepreneurs” carte blanche to do what they want. 

If you agree with the statement that NOT interfering with a crime in progress is almost as bad as committing the crime itself, then you should also agree with my statement of that if you aren’t socially oriented as an entrepreneur, then you are not only not doing good, you are in fact doing bad. 

Two, social entrepreneurs think they are good all the way through however when doing a full SDG assessment, it often shows that just by focusing on helping one spot might even be harmful for another. So take care, because it’s not only about what you are trying to fix, it’s just as much about what you need to try to avoid breaking by fixing it. 

And three, I still meet people that call themselves social entrepreneurs in some kind of misguided will to avoid having to talk about profitability and making money. 

ALL entrepreneurship needs to be sustainable, equal and socially responsible.

Here’s the thing – to be sustainable, to be able to sustain yourself, you have to be able to make your own money and be profitable. You do not have to be for profit, but you need to be able to make your own money. Being a charity that lives off donations and grants is not a sustainable organization.
Just like raising another round of investments isn’t good business, it’s just another very expensive loan. 

So yes, we need to redefine entrepreneurship. 

ALL entrepreneurship needs to be sustainable, equal and socially responsible.

It is NOT enough to leave saving the world up to the few “social entrepreneurs”, we need everyone on board if we are going to even TRY to reach the UN SDGs by 2030.  

If you are not aiming for, or aligned with, the UN 17 SDGs and follow the UN Global Compact 10 principles for ethical business, then you are part of the problem that created the mess we are in the first place. 

Donnie Lygonis has been working with new ideas and innovation for over 20 years, both starting his own companies as well as helping others start or develop theirs. At SHIFT 2020, he will expand on the need for a new definition of entrepreneurship and how the current idea of “startups” is flawed.