I see a lot of people say that they want to be a businessman or entrepreneur. They talk about it, but do not really give it much thought. Insofar as I know, there are only three types of businessmen: builders, middlemen, and investors.
Classic examples are Mark Zuckerberg and Bill Gates. Mr. Zuckerberg takes a social networking idea from scratch and builds it out of his Harvard dorm room. On the other hand, Mr. Gates took a concept and ran with it. Though he did not come up with the Windows operating system, 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 not only bundled Microsoft with IBM computers, but also licensed it to other people.
Middlemen are individuals who know different people and bring them together to make a business work. Sean Parker, co-founder of Napster, is a classical example. He is known for being an early investor in Facebook; however, his most prominent work was in fact with Spotify. During his time on Spotify’s board of directors, he brought in investors and negotiated with Warner and Universal Music Group on the company’s behalf, facilitating its launch in the United States in 2011.
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 money into several companies and leaves it alone. He may give suggestions and brainstorm at the early stages of the investment, but Mr. Thiel will not run the day-to-day operations. The moment he realizes the company is going under, he will yank his investment at a minor loss. However, if the company is making a mistake, albeit a minor mistake, he will leave it alone and will not interfere. That kind of equanimity is very rare and is critical to being a good investor.
You need to ask yourself if you have the perchance to be a businessman or an employee. We lionize people who are entrepreneurs and look down on employees. However, some people work better within a corporate structure or pre-existing business. They are very wealthy employees, think Tim Cook of Apple or Sheryl Sandberg of Facebook. They are not businessmen, but work within the framework of a corporate structure created by others.
As an entrepreneur, you are on your own. Nobody is going to save you, and there is no career path. 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 trillion dollar company is the limit.
In addition, if you are starting a business from scratch, it’s important to know what components you are 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 problem would be ameliorated by an investor and the second by a middleman.