Are entrepreneurs born or made?
By Allon Raiz, Raizcorp CEO

Many people who have business ideas feel in some way that they are not ready to take the plunge, and one of the most convenient excuses is that they feel that they “are not entrepreneurs”. But this doesn’t take away the business idea smouldering at the back of their minds. To try and resolve their dilemma, they start looking around for answers as to whether entrepreneurs are born or made. As a result, this is a question that gets asked of experts almost continuously.

After having witnessed various experts respond to this question, I’ve realised that they all give an answer based on where they’ve come from. Those in entrepreneurship education are far more likely to answer that entrepreneurs are made, therefore highlighting the need for entrepreneurship education solutions. Entrepreneurs, on the other hand, respond that they are born, different, unique, special; reinforcing their need to stand out and be different from those who took the route of employment.

Eight years ago, I read a piece of research from the US that stated that the most successful first-time entrepreneurs (those that have never been in entrepreneurship in their lifetime) were 60 years of age and older. On the surface this seemed like a nice-to-know fact to use in my understanding of the entrepreneurial space but, on deeper reflection, I realised it broke this commonly asked question in half.

If you had to meet one of these 60 year olds at the age of 55 (after having worked at IBM for 30 years) in the IBM canteen while having their coffee, and you asked “Was this person born an entrepreneur?”, the answer would certainly be no. How could they be? For 30 years they’ve been corporate. “Was this person made into an entrepreneur?” and again the answer would be no. The corporate environment didn’t train them to become an entrepreneur or employ them to be one. Yet, five years later they become part of the echelon of entrepreneurs with the lowest rate of failure. The question, “Are they born or made?”, doesn’t apply.

So this got me thinking and trying to analyse what it is that makes ordinary people precipitate into trading or successful entrepreneurs.

Many people have business ideas and do nothing about them. They may even go as far as registering a business, but never trade. These are the nascent entrepreneurs. For this argument, I’m not particularly interested in these entrepreneurs, but rather the ones that have actually moved to a point where they’ve been trading for six months or more. After a number of years of research and conversations, I have come to the conclusion that in order for an entrepreneur to precipitate from a nascent state (“I have an idea”) to an actively trading entrepreneur (“I’ve commercialised my idea and customers are buying”), the following five conditions have to be present:

1. An opportunity or crisis

Without fail, every entrepreneurial story has one or both. The entrepreneur perceives an opportunity, and/or a life crisis occurs (e.g. death, divorce, relocating). No entrepreneurial story can start without such a shift in conditions.

2. Your tolerance for pain

As entrepreneurs, we go out daily to sell our products or services and we get told: “You’re too old”, “… too young”, “… too black”, “… too white”. We’re always too something. The litany of rejection that we have to endure in order to achieve success requires a certain tolerance for pain. Entrepreneurs need to work through these high levels of rejection, especially in the early stages of a start-up.

Very often we receive negative feedback from people we look up to, like family and friends, who mean well and are trying to protect us from the risks associated with our “bizarre” ideas. Most people will give up after receiving negative feedback. Such feedback means that for an entrepreneur to precipitate from nascent to trading, they require a thick skin, self-confidence in reserve, and a high tolerance for pain and rejection. Without these they’ll give up. Entrepreneurs who succeed say they have done so despite early rejections (more on this in point 5). But there are cases where giving up is the right choice, because creating a better mousetrap may not be the right idea and the advice you’ve received may be spot on. Not one entrepreneur has precipitated without going through a baptism of fire.

3. Your tolerance for risk

You have two individuals: one is a 23-year-old single male who drives a paid-up second-hand VW Polo, and the other is a 45-year-old married male with two kids in private school and a bond on his house. Let’s say an opportunity presents itself to both of them; they both see it, and we can assume they have the same tolerance for pain. My hypothesis is that the 45 year old is far less likely to take the opportunity than the 23 year old. The reason for this is that there is a bell curve of risk from your early 20s, right through and peaking in your 40s, and then tapering down in your 60s. This very often has to do with your level of financial and family commitments. This would explain the 60-year-old’s increased appetite for risk because they are likely to have kids who’ve left the house, a house that’s paid off, and excess cash.

4. Your belief in your ability to muster resources

It’s not your ability to muster resources, but your belief in your ability to muster them.  Many entrepreneurs have been heard to say, “If I knew then what I know now, I wouldn’t have started my business.” This blind naivety and ignorance about the complexity of a problem allows entrepreneurs to take on an opportunity and start a business. An entrepreneur’s mind-set is that they have the ability and can put resources together in order to take advantage of an opportunity. My experience with successful entrepreneurs is that their belief is so strong that they actively go out and find the resources despite the pain they’re experiencing. They’ll move heaven and earth to put them together, and they’ll persist at convincing capital to invest and people to participate.

5. Your ability to learn and iterate

It is exceptionally rare that an entrepreneur’s business today would look exactly as she had initially envisaged it six months ago. Entrepreneurs that go to market and say, “Here it is, take it or leave it” don’t succeed. Those who are able to learn from feedback, process it to see if it’s valid, apply that feedback and adapt their products based on this learning, and iterate this entire process, are successful. No successful entrepreneurs go through a process without making adjustments along the way. They need to have an open mind and take feedback.

I don’t believe that entrepreneurs are either born or made. They precipitate only when these five conditions are met, which may occur at any point in their life. If you are 50 and reading this, you might not have started a business because you hold some belief that you need to be born with a special gene or need to have studied entrepreneurship. If this is so, I ask you to reconsider. Rather ask yourself, if all five of these conditions were present in your life, would you start a business?