Thursday, February 19, 2009

Another Definition of Entrepreneurship

In that conversation from Monday I mentioned, I heard one of the best definitions of entrepreneurship yet. The professor said, "When transactions that should occur are not occurring in the market, that is where entrepreneurship happens." What a perfect way to describe something. Often people see a need unserviced and think, "I can start a business and make money to serve that need." Some businesses (like the one I presently work in) are formed out of the need for middle men in a marketplace - brokers, as they are most often termed. Brokers facilitate the meeting of two sides of a transaction - a buyer and a seller of real estate, a truck needing a load and a shipper needing freight moved, or simply a consumer wanting a product and a producer needing a way to get it to them. Retailers are brokers in that way. They stock goods for producers so that consumers can purchase them. Most (if not all businesses) grew out of an observation that transactions were being missed, for lack of a better term.

One of the most enjoyable class discussions I've heard on this subject was with the man who created the Multi List Service (MLS) for realtors. He had a friend in real estate, and he noticed the box of listings that seemed extremely unwieldy when it became necessary to find a type of home in a given area. He asked his friend, "Do you think people would be interested in a catalog of those listings?" His friend knew they would be, and so MLS was born. He knew nothing about printing at all, nor was he much of a photographer (the idea was to take a picture of a home and put it in a book with its relevant information on location, size, and numbers of bedrooms and bathrooms). He had a friend who took the pictures for him, and he went to work learning how to run a printing press, mostly on a trial and error basis. When he was just about to sign a one-year contract with the realtors board in his area, they asked very casually in a meeting, "Can you make it in color?" He agreed, but in his own words, "If printing in black and white is like walking across this room, printing in color was like flying to the moon." Still, he learned how and he produced his catalog in color. One lesson he said he learned was to get a contract whenever possible. That gave him the chance to screw up a few times without losing the business altogether. Some years later, he sold MLS for an undisclosed sum (most likely tens of millions). He kept the amount unpublished so his children would never know how much he had and therefore they would not lose their drive to make something of themselves.

I am now reading an article by the professor who gave me that wonderful definition. I look forward to finding more of his work, and perhaps to getting the chance to work with him soon.

-- Robert


C.Flower said...

"He kept the amount unpublished so his children would never know how much he had and therefore they would not lose their drive to make something of themselves."

Really? If this is true, I'd almost call it commendable. But if the MLS family is living in the total lap of luxury, then it's like: "Clearly Dad's loaded. We just don't know how loaded." ;)

Robert said...

No, he never let them know even by how he lived. He, like many multi-millionaires, never let it change his lifestyle too dramatically. That's what he reported to us, anyway. He truly hated the idea that his success would damage his chance for his children to have the same joy of success.