Why Not Socialize for High Growth Entrepreneurship?

I was talking about the "entrepreneurship socialization factor" yesterday with a great female venture capitalist. In short, socialization is the set of beliefs about something that we consciously and subconsciously gather from our community and general environment. In the U.S. we tend do a bad job of socializing people for business ownership in general. The socialization that does tend to occur overwhelmingly socializes individuals towards small business ownership versus high growth entrepreneurship, the differences I will point out in a bit. Not only is small business socialization dominant, it is then reinforced by the systems that we create to grow businesses. For example, business plan classes, micro-lending, traditional business lending, management, marketing and operations training, etc.

Why is this important? Well, small businesses are super awesome, of course, but by while over socializing for small business ownership, we have under socialized for high growth entrepreneurship. This is important, especially in minority communities and among women. High growth entrepreneurship generates the most net new jobs in the nation, and generates high levels of wealth for the owner. By improving high growth entrepreneurship across groups that are much less likely to pursue this form of entrepreneurship, you empower those groups economically and politically.

Now is a good time to point out the distinctions between small business ownership versus high growth entrepreneurship.

Small business ownership focuses on creating and selling a product to generate revenue in order to create recurring income over long periods of time for the owner. The small business owner tends to think this,

"I am going to start a business, sell my product, it is going to make money that I am going to live on". 

This is a materially different way than most high growth entrepreneurs that attract angel and venture capital think. High growth entrepreneurs often look at entrepreneurship as creating a product solution to address a market need, creating proof of concept, acquiring capital investment, scaling up, then selling the company and reaping significant wealth.

The high growth entrepreneur tends to think like,

"I am going to start my business, acquire venture capital to scale, then I am going to sell my business". 

In short, small business owners build a company to sell the product, high growth entrepreneurs build a company to sell the company.

Now obviously everything is not as black and white as I made it, there are nuances and overlaps to everything. However, this is a good way to frame the socialization factor that pushes many people into small business when they could be high growth entrepreneurs.

Here is were my argument kicks in.

If you think about it, we do a pretty bad job of both socializing and educating for small business ownership in general. This is especially true in minority communities. Relatively speaking, most people do not know anything about being in business. This deficit of knowledge gives us a tremendous opportunity to engage communities and begin to develop socialization around high growth entrepreneurship. We literally can build it into our community psyches, processes, and education models a system that produces a high growth entrepreneurship mindset. This is not to the exclusion of traditional small business ownership models, but as a much needed addition.

In conclusion I have a terminology quiz that you can take. Also, I want you to estimate how many small business owners you know can define what the terms mean. These are just a few of the terms that are floating around in the high growth entrepreneurship world. If you cannot answer most of them, do not feel bad, I could not either, and I have taught "small business" for over 15 years.

Private Equity

Venture Capital

Accredited Investor

Angels

Accelerator

Seed Investor

Corporate Venture Capital

Financing Round

For the answers check out this cool site called A Beginner’s Dictionary of Venture Capital

We have an opportunity to evolve how we socialize, teach, and ultimate help create more high growth businesses. Let's do it!