About This Episode
Our guest for this episode of Brilliant Thoughts, a SUCCESS magazine podcast, is Derek Lidow, a successful entrepreneur and Professor at Princeton University. After selling his company and being invited to teach younger generations about entrepreneurship, Derek devoted himself to researching the foundations and history of what it means to be an entrepreneur.
He’s written several books such as Startup Leadership, studied the profiles of timelessly successful entrepreneurs in his book Building on Bedrock, and his most recent book that dived deep into the history and foundation of entrepreneurship—THE ENTREPRENEURS.
What are the criteria to be a successful entrepreneur? How can we tap into our creativity to spark innovation? How can we effectively deal with changes and failures? These are just some of the questions we talked about in this conversation. I really enjoyed it, and I learned a lot from Derek.
Let’s dive right into it.
If we trace back history, some of the earliest entrepreneurs are hunter-gatherers. Some groups hunt together, and during winter, they will use teeth and bones to make beads and necklaces that they use to exchange for goats and other food sources with other groups.
According to Derek, entrepreneurship isn’t as modern a phenomenon “that came into its own in the last 40 years or 50 years in Silicon Valley” as most people probably think.
So, what makes an entrepreneur?
“…The dictionaries often say an entrepreneur is somebody who starts a company or runs a company,” Derek says. “And that’s good, you know. It works today. The problem is that the whole notion of ‘a company’ is a pretty modern concept—and it's a concept that's embedded within the society.”
In order to define a phenomenon, Derek says, “You need a set of criteria that works everywhere for all time. you need something that allows you to spot an entrepreneur in an archeological rubble. You get a pile of stuff on an archeological site, and you have to be able to, you know, figure out, was there an entrepreneur working here?”
And there are three criteria. Entrepreneurs are:
- People who are self-directed. They are dedicated to taking care of themselves and running their lives. Not someone from the ruling class or military, but a normal citizen with a drive to be self-directed.
- They are practicing a skill that others—their neighbors and people close by—think is valuable and innovative, and they want to get a part of it.
- Skilled at enticing people into exchanging something of value in return for delivering their innovative and special skill.
Entrepreneurship is more than a skill of exchanging money or raising profit; value could be anything such as skill, time, effort, or product.
“We think of entrepreneurs as, you know, people that seek profit—and they do—but they're not profit maximizers,” Derek shares.
Innovation and Entrepreneurship
In every part of history, whenever there is innovation and some form of revolutionary modernization, entrepreneurs are at the center of it. You see innovation hubs in historical records and archaeological sites—villages where things such as the copper tool-making industry and similar feats seem to have originated.
Entrepreneurs historically work collectively in swarms. When an idea or concept is born, they are constantly watching each other and copying what works, all the while adding their personal twist to it. They improvise to make up for a lack of tools or materials and see what works and what doesn’t. And in that relentless copying, and producing things a bit better, we see a massive accumulation of scale and innovation.
That scale and innovation serve as the foundation for the next set of innovations, the way tools evolved from being made out of rocks, teeth, and bones to the invention of making tools out of metal and steel.
“So, you get this massive scaling both in scope and in innovation. And that's how entrepreneurship works,” Derek says.
In ancient times, this innovation is focused on proximity. That’s why similar engineering is witnessed in civilizations that are near each other, and these tools and artifacts are clustered in hubs.
But in today’s digital era, where information and transportation are faster than ever, innovation can occur almost simultaneously in real-time on a global scale.
So how can the modern entrepreneur find innovation?
Derek’s advice is to start with what we know and love. Find something you are intrinsically motivated to study and develop skills.
“Throughout time, it's sort of a fundamental principle of entrepreneurship: …that it's about making somebody or some group so happy that they give you something of value and more value in return,” Derek says. “Start from where you know how to make people happy. You might not end there, in terms of what you actually decide to turn into a business, but you can't lose by starting there.”
Innovation vs. Creativity
What, then is the difference between creativity and innovation?
Creativity is the capability to come up with a new idea or concept. Everyone has some level of intrinsic creativity. Innovation is the ability to take that idea and come up with a design that is simplified, can be scaled, and that other people accept as a new best practice.
Dealing with Change and Failures
“Entrepreneurs are the best innovators at figuring out how to make more and more of something or how to deliver more and more,” Derek says.
Entrepreneurs are great at scaling up supply and production, but they are also good at generating and scaling up demand. In ancient times, it is the equivalent of gifting a new masterpiece to a noble or ruler to generate demand. Today, it is Facebook engagement and influencer marketing.
But regardless of era, an entrepreneur is brilliant at innovating. “If you're really good at scaling up, you're really good at creating demand and keeping demand ahead of your supply… and figuring out how to simplify control,” Derek shares.
To keep up with change, we need to understand our business and figure out how to intervene more effectively and faster.
Of course, entrepreneurs are also no strangers to failures.
If innovation begins with “copying” and doing what others do, only slightly better and faster, then it is safe to assume that there will be entrepreneurs who will get left behind.
“It's the nature of swarms that not everybody can keep up,” Derek tells us. The entrepreneurs who do succeed are those who either didn’t give up until they succeeded or the ones that managed to pivot and adapt.
But the most important thing, especially for the modern entrepreneur, is to take responsibility for the unintended consequences of our innovations (such as deforestation, health risks, or inequalities) because sooner rather than later, the population will demand that something has to be done for it. Those whose businesses aren’t aligned with their responsibilities can’t keep up with the modern demands of the current population.
Growing the “Swarm”
According to Derek, the entrepreneurs who are able to observe the changing demands of the market and the quickest to adapt gets to grow the swarm. In order to do that, we must be prepared.
In order to provide the needs of the consumer and deliver a product or service that really makes a difference, we need both luck and skill. Entrepreneurs must keep pushing to work on their skill set and doing the right things, so that when opportunities come, they can respond—because they were at the right place, at the right time, already doing the right things instead of still scrambling to get things done right.
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DISCLAIMER: The people interviewed are well-trained experts and highly skilled in their areas of practice. They take many safety precautions prior to attempting the activities described. The activities or research discussed in these podcasts should not be attempted without qualified supervision and training with professionals.