The Work of an Entrepreneur - Believe in Value When There's No Money

While I was writing responses to emails I received this week, I realized there's an idea Ian and I talk about often in-person and find useful, but it comes up rarely on this blog.

It's this: often, the most important job of an entrepreneur isn't to make money, but to understand value.

There's a related story in my favorite Paul Graham essay:

Suppose you own a beat-up old car. Instead of sitting on your butt next summer, you could spend the time restoring your car to pristine condition. In doing so you create wealth. The world is-- and you specifically are-- one pristine old car the richer. And not just in some metaphorical way. If you sell your car, you'll get more for it.

An important aspect of the know-how of entrepreneurship is seeing the potential future of your work, and sustaining belief in its benefits while deferring income (and sometimes having to be a broke-ass entrepreneur). You have to believe that others will value the energy you put into the car, and part with money to buy it.

Entrepreneurs excel at seeing future value that is not yet agreed upon by the market, and so can't yet be traded for money (or not yet efficiently). For the value to be understood and traded for money, it requires a significant input from the entrepreneur-- not simply money but time, effort, and often, soul.

Strangely, sometimes it's easier to focus on value in the early days of a business, when you're still dreaming. "Wouldn't it be valuable if there were a better way to slice bread?" 

As your business gets momentum and starts making money, many forces pressure us to focus on it alone.

One reason to stay focused on value, when money is easily had, is to avoid profitable, but short term concessions. Compromises that could hurt your long term ability to create value at greater scale. Potential customers will offer you good money to slice bread the old way, and they'll encourage you to get started immediately (of course, you could take the money to slice the bread and develop your fancy new bread slicer in the evenings).

The distinction of value vs. money is not only problematic with potential customers, but with investors and mentors. Money seems so legible, and so it's easy to have opinions about what should be done with it. But what lead to the money, and how to make more of it, often isn't clear at all.

Some suggest that money is the only way to truly validate an idea, and persisting with building value without testing if people will buy is a fool's errand. And for those with minimal experience, it often is. For ambitious entrepreneurs, though, this isn't always a possibility. Some types of value need scale, momentum, or significant ramp-up before it can legible to others.

Knowing intuitively that something is valuable, and persisting in the world to build it and make it legible to others, all while resisting temptation to cash in or give up, is the work of an entrepreneur.

Seeing, creating, and ultimately harvesting value, when most everyone around you only sees money, is rare.

And that's why it's valuable.

Cheers,

Dan

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