The 3 Types of Entrepreneurs at the Core of Technological Innovation

Matthew Hartman

April 25, 2013 · 5 minutes read

Uncategorized

I’m still refining this point of view, but I’ve noticed three types of people at the heart of our economy and at the core of technological innovation. All three are important in different ways.

1. The Inventor

The first type of person is the inventor. This is the avante-guard researcher who has a crazy idea and wonders, “Is this even possible?” The inventor uses scientific method and getting a negative result is usually as informative as a positive one (although, not as gratifying) and leads to new experiments. He or she chases down clues and is unsure where the path leads.

The inventor is the basic researcher who spends all day trying to “see if it’s possible.” Each experiment informs the next. Pavlov’s experiments in the gastric function of dogs led him to notice that they would salivate when he walked in the room as a response to his keys jingling (because the dogs associated the sound with being fed). This observation informed an entirely new study and became the cornerstone of classical psychological conditioning–not the cornerstone of research on gastric functions of dogs. Pavlov noticed something unexpected in an experiment, chased it down, and uncovered an entirely new area of psychology.

Although these types of researchers may or may not technically be entrepreneurs, they are the ones creating the inventions that lead to massive technological breakthroughs. Research on radar technology led to the invention of the microwave, which has provided my dinner for the last 30 years.

2. The Pure Capitalist

There is another extreme: the entrepreneur whose sole purpose is to generate revenue (and profits).  I mean this literally and not negatively. A positive example is someone who opens up a dry cleaner. This entrepreneur is likely not motivated by some deep-seeded passion for dry cleaning. He or she does not wake up one morning and say “aha, people want their clothes cleaned and pressed!” (with the possible exception of the very first dry cleaner).  The dry cleaner is motivated by a whole host of reasons, but I think it’s fair to assume that the primary purpose of running the dry cleaning business is to earn a living.

Another example of the entrepreneur whose sole purpose is to generate profits is the fast follower. Rocket Internet, the German company that has replicated successful businesses by others (they started a Groupon clone, which Groupon then bought) has a pure profit motive. I don’t know them personally, so I can’t attest to their motives, but the primary goal of the firm is to copy successful businesses, launch them in new markets, and then sell them. There is nothing inherently wrong with this. From an economic perspective, it’s great for customers and consumers because it drives down the margins for the market leader, taking power away from a central player.

3. The Ben Franklin Entrepreneur

This brings me to the third type of entrepreneur. This is the person who has the creativity to understand technological innovation (so has much in common with the inventor), but also has the understanding of market needs to turn it into a business. The best way I can think of to illustrate this type of person is through a story about Ben Franklin.

Ben Franklin noticed that when he put a very small drop of oil into a very large pond, he was able to calm the small waves in the water. This was so surprising that he used to do a magic trick where he would say he had the power to calm waves and would wave his hand (and a cane with a false bottom) over a large pond and would secretly dispense a few drops of oil from the bottom of the cane, and the ripples would calm.

So, Franklin the scientist noticed something surprising to himself and others. Had he been a pure scientist, in the first category of people described above, he probably would researched further and would have used the volume of oil, divided it by the surface area of the pond, and have been able to estimate an upper limit to the size of an atom.

But Franklin wasn’t Isaac Newton. Instead, he drew up designs for a way to dispense oil from a ship so that it would calm the waves when the ships faced storms.  Now, that didn’t end up working so well and was never adopted, however it perfectly illustrates the type of entrepreneur who sees something surprising and takes the route of practical application as opposed to pure scientific research.

Entrepreneurship As Art

Let me digress for a moment. I went to the Jean Paul Gaultier exhibit at the de Young museum during a trip to San Francisco. Gaultier was a fashion designer, but the exhibit included some pretty neat technology (see this video). I came for the tech, but left with a sense of how Gaultier changed the landscape of fashion.  Gaultier was extremely successful, designing clothes for the fashion industry and for films.  Everyone who knew him or his work conveyed the sentiment that Gaultier had the ability to show the unconventional and the beautiful simultaneously.

Creating something different and new is important to anyone who considers him- or herself an artist. There is a tension, though, between creating something truly novel and something that has broad appeal. The kind of companies I find most interesting are those where the founders had some fundamental observation that seemed surprising or counter-intuitive.

Some founders have a hunch that seems counterintuitive—a hypothesis there that might be proven false.  A core part of Warby Parker’s initial product was the hypothesis that consumers would like home try-ons. Birchbox hypothesized that people would pay for free beauty samples. Where Galtier was able to produce clothing that was at once unconventional and also appealing, some entrepreneurs are able to take an unconventional product or business model and understand how it can be beneficial for consumers and companies.

Just as Galtier was able to surprise people by being able to create the unconventional but also appealing, an entrepreneur who can predict and iterate to discover what others will like in a way that is expected not to be appealing will have a significant lead over competitors.  Almost any unconventional vision that doesn’t yet exist is in some way art.  And I’d argue that the third type of entrepreneur is as much an artist as Galtier.

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