Entrepreneurship Taxonomy, Which to Invest in?

This article is written by Mohammad Eslim, a Contributor Author at Startup Istanbul.

Dr. Erhan Erkut received a BSc in Industrial Engineering from Bogazici University in 1980 and a Ph.D. University of Alberta School of Business during 1985-2005. He is a member of the Canadian Operational Research Society. Dr. Erkut has established a Center for Excellence in Management and Management.

Steve Blank is a Silicon Valley entrepreneur based in Pescadero, California.

Blank is recognized for developing the Customer Development method that launched the Lean Startup movement, a methodology which recognized that startups are not smaller versions of large companies, but require their own set of processes and tools to be successful. His Lean Launchpad class (taught as the National Science Foundation Innovation Corps) has become the standard for commercialization for all federal research. They were both at Startup Istanbul, where they talked about pivoting in entrepreneurship.

When you speak about entrepreneurship you think it has a definition that everyone knows it as the book says and there is where you are wrong. Once you think you know what entrepreneur is and what is startup you will be surprised how many different interpreted terms to describe what they are to different people, while you still think entrepreneur is a person who wants to start a billion-dollar business or go broke. And due to that, there was a need to help people acknowledge all types of entrepreneurs you can find in your environment. You will be surprised!

One sort of entrepreneurs is the type that their life isn’t about startups or business on the wide range of it, it’s about something else that they love to do their whole time. This sort is more prevalent in the United States and there are a lot of examples of what they turn to do, if we are talking about people who love to surf in the waters and ride the waves all day but still find themselves in need to pay the bills, then you will find them opening their own business, a surfing shack on the beach that says “teaching how to surf 7.30-10.30 am.” Those are entrepreneurs with startups who have no interest in building it into a business. 

The second and oldest type of entrepreneurs are the small-business entrepreneurs, they have been there the whole time, exists in every country and they are the majority of the entrepreneurs in any country. These are the people who want to open a grocery store, dry-cleaners and perhaps build websites or work as designers or database consultants. 

This certain type of entrepreneurs is a big confusion for every country, and it’s important because the teams are different, financing is different, scale is different, how you teach them is different, how the government supports them is different and it’s not that anyone is right or wrong they are just different. They want to feed the family and maybe their extended family or buy a car or a house, but they have no interest, nor the capacity, to take over the world.

The most interesting type, at least for me, is the fourth category which we call a scalable startup. Why I find it interesting is because scalable startup is a crazy person who wakes up with thought on how to change not the local market in the city, not the market in the country, but the whole world! Elon Musk, Steve Jobs, Zuckerberg and a lot of brilliant names that have a global view and will build a team of extraordinary people with a vision that encompasses billions of people and will figure out how to raise the capital to scale, attracting this capital with huge potential. 

Today almost everybody could start their own startups under the limit of their credit cards on their laptops in their dorms, so that explosion of entrepreneurship on platforms and devices allows us to think about another class of startups which we call viable startups where they can, with an affordable cost of entry, exit for anywhere from a couple of million-dollars to billion-dollars. 

Corporate entrepreneurship is the yet a new type of startups, that is where a company or a corporate that is struggling to do continuous innovation and find the way to innovate through this hard structure.  

This variation and differences are what screw up investors, governments and educators without having a taxonomy about what kind of a startup they are talking about, which one to invest in, how to support them, what are the right tools to do so and what the best investment strategy is because in the end, investors shouldn’t treat startups as a mature companies. 

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