Unicorn Entrepreneurship: The 3rd And Best Model Of Venturing
Entrepreneurship education today focuses on two models – small business management and venture-capital-based.
But is a 4-year business school degree really needed to start a small business? Small businesses, that mainly serve a limited area, need fewer skills that can be taught in a few weeks. On the other hand, and from the perspective of society, we need more growth ventures that can export from an area and import wealth to the area. Marketing to wider areas means competing against more sophisticated companies, requiring more skills that business schools can teach. Should B-schools eliminate small business classes and switch the resources to growth ventures?
Also, should B-schools focus on the Opportunity-based VC when:
· VC is only available to 100/100,000 ventures and mainly to ventures in Silicon Valley and Boston. What are the other entrepreneurs to do?
· Most VC-funded home runs, and therefore the top 20 VCs who earn most of VC profits, are in Silicon Valley. What are other areas to do?
· 80% of VC-funded ventures fail – so, contrary to current beliefs, getting VC does not mean success – it means failure 4 times out of 5. Could these entrepreneurs have succeeded with skills and without VC?
· VCs mainly add fuel to a hot take-off – and hope for the best.
Most importantly, VC is not available before Aha, i.e., before there is evidence of potential. Entrepreneurs need to bridge the gap from idea to Aha and prove their venture’s potential without VC. But most business schools, and incubators, focus on the capital-intensive opportunity-based VC model, when few benefit from VC.
The Need – The 3rd Way: Can business schools serve entrepreneurs better by teaching finance-smart strategies to take-off without VC? After take-off, entrepreneurs have options. So business schools that really want to help their students and the communities they serve should focus on the third way – unicorn entrepreneurship.
The key reason to teach unicorn-entrepreneurship is this: no one can look at someone else’s eyes and see potential. Even the great Steve Jobs was rejected by about 10 VCs, including Tom Perkins of Kleiner Perkins. Teaching unicorn-entrepreneurship can help every growth-seeking entrepreneur bridge the gap from idea to Aha when all financial options become available. Small businesses, family businesses and stalled ventures can find their growth groove and become big – if they want to do so by using the secrets of unicorn-entrepreneurship.
94% of billion-dollar entrepreneurs used skills and smart strategies to take-off without VC, including the founders of Microsoft, Facebook, and Amazon.com, and 76% avoided VC, including the founders of Best Buy, Boxycharm, Fastenal and Walmart. Unicorn-entrepreneurship can benefit all. Growing your venture does not have to be based on the availability of venture capital.
Unicorn entrepreneurs mainly used 3 skills to start their business:
· Technical skills to start the venture, such as coding if the venture is in IT. Otherwise someone like Zuckerberg could appropriate your idea.
· Sales skills to get customers, and these could be one-on-one, in stores or online. Joe Martin built Boxycharm.com with $375 because he is a genius at selling online.
· Finance skills to take-off without angel capital or venture capital. About 90% do not get angel capital and about 99.9% do not get venture capital. So you need to know how to do more with less and avoid or delay VC, i.e. unicorn entrepreneurship, like Walton, Gates, Schulze, Kierlin, Chesky, Bezos, and Bloomberg.
So should we be teaching unicorn skills and strategies, or small business or VC? Can business schools show why they focus on small business or on VC?
MY TAKE: It is surprising that unicorn skills and smart strategies, that can create growth ventures and big businesses, are not being taught in business schools. The misguided focus on small business, that offers limited benefits, needs to change. So does the even more misguided focus on the opportunity-based VC method that offers benefits to few.