Money Productivity Work

The Three Types of Businessmen

I see a lot of people when they’re young say that they want to be a businessman or entrepreneur. They talk about it, but don’t really give it much thought. Insofar as I know, there are only three types of businessmen: builders, middlemen, and investors.

1. Builders

The classic example of a builder is Mark Zuckerberg. He takes a social networking idea from scratch and builds it out of his Harvard dorm room. On the other hand, Bill Gates is the type of person that takes a concept and runs with it. It’s well known that Mr. Gates didn’t come up with the Windows OS, but was smart enough to realize that if he controlled the operating system, he could build a company that would own the personal computing market. He then bundled the Microsoft OS with IBM computers, but also continued to license it to other people.

2. Middlemen

Middlemen are individuals who know different people and bring them together to make a business work. Sean Parker the co-founder of Napster is the classical example. Even though he’s known for being an early investor in Facebook, his most prominent work was in fact with Spotify. During his time on Spotify’s board, he brought in investors and negotiated with Warner and Universal Music Group on the company’s behalf, facilitating its launch in the U.S. in 2011.

3. Investors

Investors are businessmen who like to put money into businesses. They are very interesting because there are very few people on this earth who are willing to take a lot of money and give it to somebody else so that they can build a business with it. Peter Thiel is a classic example of an investor. He sticks his money into several companies and leaves it alone. He’ll give suggestions and brainstorm at the early stages of the investment, but he’s not going into the day-to-day operations. The moment he realizes the company is going down the tubes, he’ll yank his investment at a minor loss. However, if the company is making a mistake, but realizes that it is a minor mistake, he’ll leave it alone and won’t interfere. That kind of equanimity is very rare and is critical to being a good investor.

The Takeaway

You need to ask yourself if you have the soul of the businessman or soul of an employee. We lionize people who are entrepreneurs and look down on employees. However, some people, like myself, work better within a corporate structure or some sort of pre-existing business. There are very rich employees, people like Tim Cook (current CEO of Apple) or Sheryl Sandberg (current COO of Facebook). They’re not businessmen, but work within the framework of a corporate structure already created by others. The difference between the two is responsibility and the upside.

As an entrepreneur, you are on your own. Nobody is going to save you, and there’s no career path. You need to make it up as you go along. It isn’t particularly glamorous, and you are going to have a lot of sleepless nights. I would venture to say that guys who are employees of companies are happier because they have a steady job and the weekends are their own. However, the upside of being an entrepreneur is higher. The sky’s the limit, as you are responsible for your own success.

In addition, if you’re starting a business from scratch, it’s important to know what components you’re missing. For instance, most builders who are entrepreneurs run into the problem of knowing where to get the money and finding contacts within the industry to help them scale. The first one would be ameliorated by an investor, and the second by a middleman.

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