November 29, 2019 by Fred Haney
Entrepreneurship vs. Executive Management
“All our dreams can come true, if we have the courage to pursue them.”— Walt Disney
If you have read “The Fundable Startup: How Disruptive Companies Attract Capital,” you know that I have struggled to understand the difference between “entrepreneurship” and being a successful CEO, I know that entrepreneurial studies programs try to teach students how to build businesses, but I have always felt that there is a disconnect between the essence of entrepreneurship and the essence of the processes involved in building a successful business. Let’s look at the definitions.
An” entrepreneur” is a person who organizes and operates a business or businesses, taking on greater than normal financial risks in order to do so.
A “CEO” is a chief executive officer, the highest-ranking person in a company or other institution, ultimately responsible for making managerial decisions.
To “manage” is to be in charge of (a company, establishment, or undertaking)
“Startup” is the action or process of setting something in motion.
We know these words, but in day-to-day usage they have connotations that reach beyond their dictionary definitions. Venture capitalists like to invest in founders who are entrepreneurs with great vision and passion. But they also want their companies to be managed by CEOs who have proven their ability to get the job done. And looking back at successful startups, it is clear that some mix of the two was involved.
So, what’s the difference? Where does entrepreneurship stop and management start? What is the difference between being a successful entrepreneur and creating a successful startup? Or being a successful CEO? After making a keynote speech about The Fundable Startup, I received some questions that prompted me to pursue a novel thought process. I decided to research online articles about entrepreneurs, CEOs and startups to find out what words, or connotations, are most frequently associated with each concept.
What Makes a Successful Entrepreneur or CEO?
I performed an experiment that, while not highly scientific and controlled, offers some interesting insights. I searched on-line for the following phrases:
- “What it takes to make a successful entrepreneur”
- “What it takes to make a successful CEO”
- “What it takes to make a successful startup”
I captured approximately 12,000 words on each topic. This was not the total available, but it represented approximately the first 12,000 words for each topic and generally the first two pages of search engine results. Then I counted the number of occurrences of some important words in each category and I identified the words more frequently associated with each category—as well as different combinations.
This analysis focused on 61 words that are used to describe “successful entrepreneurs,” “successful CEOs” and “successful startups.” They appear a total of 1,816 times in the three sets of articles. Forty one percent of the words appear in the “successful startup” articles. Thirty five percent of the references appear in the “successful entrepreneur” articles. But only 23% of the references appear in the “successful CEO” articles. I believe this variance is a result of different styles in writing about the three subjects. Articles about entrepreneurs and startups are packed with jargon specific to those topics. The articles about CEOs are written in much more general, process-oriented language.
Summary of Results
The table below summarizes the number of references to each of four key words in the three article categories:
In a highly distilled way, these articles tell us that:
- Successful entrepreneurship is largely about passion (20 references vs, 2 for CEOs)
- Successful CEOs are about “management” and “process” (48 references to “manage” and 14 to “spreadsheet”)
- Successful startups are about “markets (93 references)
The entrepreneurial focus on “passion” is not surprising. But successful CEOs do not talk about “passion.” They are more focused on dispassionate management. The CEO articles mention “manage” 48 times and the entrepreneur articles only mention it 6 times. This seems to suggest that concepts of “management” are de-emphasized in the entrepreneurial world. Finally, the word “markets” is mentioned 93 times in the articles about “successful startups” and only 10 times in the “successful entrepreneur” articles and 9 times in the “successful CEO” articles.
The results, summarized in this manner, not only confirm my suspicions about the differences in the way the words “entrepreneurship” and “management” are used; they highlight the differences between these concepts in a way that I find very useful. Another way to summarize the outcome is:
- Entrepreneurial passion is not enough by itself to create a successful business
- A heavy dose of management and process experience are also required
- A successful startup must have an extremely keen sense for its markets (and competition)
This confirms my suspicion that much of the focus in entrepreneurship is on passion, perseverance, and determination. A prized award at the USC Greif Center for Entrepreneurship is Professor Bill Crookston’s “Pound the Pavement” award, which encourages student to go out and find the people who can help them succeed. We often hear talk about “entrepreneurial drive.”
This is almost exactly the message that “The Fundable Startup” arrived at in a different way. This is where I think Steve Jobs’ Law runs out of gas. Entrepreneurial passion is great, but someone has to “manage” the business. Venture capitalists like founders with entrepreneurial “drive” and determination, but they also understand the need for strong management in their companies. Some of the best startups have a technical founder—with a clear vision of how a market will evolve—teamed with an experienced CEO who has a history of success. This is frustrating to many first-time entrepreneurs, but it’s a fact of life for investors that want to control their risk and be successful.
The contrast here is pretty clear. In day-to-day usage, the distilled version of an entrepreneur is someone who is pursuing a business opportunity with passion and determination, whereas the distilled version of a successful startup CEO is someone who is busy using the tools and processes of “management” to build a successful company.
I wonder if entrepreneurial students are somewhat oversold on the importance of “passion” and undersold on the importance of “management expertise” and understanding their “markets.”
The following is more detailed analysis of other words that reveal differences and similarities between the three categories.Words for Successful Entrepreneurs
“Only the paranoid survive.”—Andrew Grove. Former CEO of Intel
The words used most in the “entrepreneur” articles are shown below in comparison to the word counts for the “CEO” articles:
In addition to the entrepreneurial focus on “passion,” these results show a preoccupation with “funds” as in fundraising and “customers” as in getting the first few. These are perfectly understandable.
I was mildly surprised at the difference in mentions of “goals” between the entrepreneur articles and the CEO articles, as CEOs are shown to be highly process-oriented and the CEO articles contained many mentions of the word “plan.”
Words for Successful CEOs
“Leadership is inspiring people. Management is keeping the train running on time. —Andy Dunn
The most remarkable words in the CEO articles are shown below:
It’s not surprising that the word “manage” would be mentioned in articles about CEOs. In contrast, it is telling that the word “manage” is used only 6 times in the “Successful entrepreneur” articles. It was somewhat surprising to me that the CEO articles mentioned “success” more than 6 times as much as the “successful entrepreneur” articles. You would think that entrepreneurs would be concerned about their ultimate success. It is not surprising that CEOs would be fixated on achieving “success,”
Words Referring to “Successful Startups”
“If you’re starting something on your own, you better have a passion for it because this is hard work. Sallie Krawcheck, Co-founder of Elievest
Interestingly, the articles about “successful startups” use the word “market” 93 times while the articles about “successful entrepreneurs” and “successful CEOs” mention “market” only 10 and 9 times respectively. How do we explain this?
Not all “successful CEOs” are necessarily building startup companies. But you would still expect CEOs to have a healthy respect for the demands of the markets they are serving.
But isn’t it fascinating that the “successful startup” articles mention “market” 93 times to only 10 for articles about “successful entrepreneurs,” Again, this says to me that something is missing in the “entrepreneurial” equation. The focus on passion and determination seems to overshadow the importance of identifying and carefully studying the markets a startup intends to pursue.
Words Common to Successful Entrepreneurs and Successful CEOs
Not surprisingly, there are some words that are relatively balanced between the articles about entrepreneurs and CEOs. After all, at some level they are trying to do similar things. The table below shows 7 words that appear in relative balance between the two categories of articles:
The words “ask,” “problem” and “network” are all involved in problem solving. Managers “ask” for help in solving “problems.” They “network” to find people who can help solve problems.
All managers, whether entrepreneurs or CEOs, must manage risk in order to have clearly defined direction, all organizations must have “vision.” Finally, even though the “successful startup” articles contained many more mentions of the word “market,” entrepreneurs and CEOs valued it about equally.
Not surprisingly, the articles about successful CEOs reference the word “manage” 48 times as compared with 6 references in the articles about successful entrepreneurs. In keeping, the “successful CEO” articles mention the work “spreadsheet” 14 times, while the articles on “successful entrepreneurs” have no such references.
As you might expect, there are some words that are used roughly equally in two or three of the articles.
For example, the word “customer” appears 49 times in the “successful entrepreneur” articles, but only 7 times in the “successful CEO articles. I don’t think this means that successful CEOs don’t think about customers. I do think it suggests that an entrepreneur is a person trying passionately to find a first customer. The “successful startup” articles mention “customer” 47 times, reinforcing the importance of finding first customers in a startup.
A similar situation exists with the word “plan.” It is referenced 31 times by the “successful entrepreneur” articles and 44 times by the “successful startup” articles. Entrepreneurs seem to understand that they will need a plan in order to build a successful startup.
Given the apparent management and process orientation of CEOs, you might think that there would be more mentions of the word “plan” in the successful CEO articles. I don’t think we can conclude that CEOs are not interested in “plans.” I attribute this difference to the more general and process-oriented approach of the “successful CEO” articles.
Two other words that appear in relative balance across all three article categories are the words “problem” and “vision.” It’s pretty clear that having a clear vision of business objectives and understanding the importance of problem-solving are critical to entrepreneurs, CEOs and startups.
“By words we learn thoughts, and by thoughts we learn life.”—Jean Baptiste Girard
Words are important. They have meanings and connotations. They create expectations. This informal study demonstrates to me that there is some disconnect between the expectations of:
- Startup company founders seeking to be successful entrepreneurs and
- Venture Capitalists seeking to invest in companies with proven management teams.
Many founders believe that their passion and determination are sufficient to build a successful company, But they are often disappointed by venture capital investors who choose to put their money in companies backed by seasoned “managers,” There are ways to bridge this gap, but perhaps the starting place is to recognize that the disconnect exists.
About the Author
Dr. Fred Haney is the founder and President of the Venture Management Co., a firm that provides assistance to high tech companies. He is the author of “The Fundable Startup: How Disruptive Companies Attract Capital,” published on February 6, 2018, by Select Books of New York. Download the first chapter for free below: