The world of entrepreneurship has a case of “zoology envy” at the moment, with a proliferation of animal terms used to describe different types of companies. This zoological inflation of labels should prompt us to wonder just how helpful different labels are when it comes to boosting entrepreneurship and innovation.
In the 1970s and 1980s, Jeffry Timmons used the term “brontosaurus capitalism” in a book about new venture creation. Around the same time, David Birch coined the term “gazelles” to describe fast-growing companies.
Adopting “gazelle” meant that non-gazelles needed to be distinguished, so “mice” and “elephant” companies were identified, too. In the 1990s, gazelle was deemed insufficient and so a new term, “cheetahs,” was used to describe high-growth companies.
The latest linguistic tussle involves hooves. In Silicon Valley, the idea of “unicorns” has become all the rage — these are the companies that achieve, at minimum, a $1 billion valuation. (Never mind how they perform subsequently.) Inevitably, “unicorn” has prompted some to distinguish “horses,” and others calling attention to “zebras.” Many of these creatures, moreover, reside in the Silicon Valley “rainforest.”
What might come next? Ocean creatures are underrepresented (although I suppose we do have Shark Tank), and so are birds. Since we’ve already got unicorns, we’re probably not too far from minotaurs and griffins.
These animal labels are an attempt to capture a real distinction between different types of companies, and extend a broader debate about the meaning of entrepreneurship. There is no shortage of attempts to categorize businesses, although not every label is objective.
We have concepts like “lifestyle” businesses and “Mom and Pop” shops. There are “transformative” and “innovation-based” businesses. And, don’t forget “replicative” firms and the more generic, “small- and medium-sized enterprises.”
Does it matter?
From a pure data collection perspective, yes. When sorting out the economic activities and contributions of different kinds of businesses, it helps to draw lines by employment size, revenues, age, sector, and organizational form. But, subjectivity makes labels less useful.
It’s as if we’re seeking a clean, Linnaean taxonomy that will express some central truth about entrepreneurship — yet this central truth may be as mythical as an actual unicorn. Category confusion matters today because of the rapid proliferation of entrepreneurship education and training programs and the general cultural zeitgeist around entrepreneurship. The way we describe entrepreneurship has implications for how we and promote it and support it.
The nice thing about entrepreneurs, however, is that they might not fit in our zoological boxes and subjective categories. Take the companies on the Inc. 5000 list of the fastest-growing private companies. Unquestionably, these are gazelles or cheetahs or any other fleet-footed quadruped. But, they would also be the “horses” and “zebras,” and could even be described simply as small businesses. Most Inc. list companies, even after their period of rapid growth, employ fewer than 100 employees, and many wouldn’t meet the criteria for “innovation-based.” Some people might even call these “mice.”
Clearly, that’s an inapt description, and does a disservice to the important economic contributions of these firms. In his book, The Origin and Evolution of New Businesses, Amar Bhide has observed that many high-growth founders did not begin with world-beating ambition: they had an idea, or wanted to work for themselves, or saw a need. The subjective animal labels we want to apply to different companies often have little bearing on reality.
Labels don’t slow down company founders, either. Entrepreneurs solve problems, and their vehicle is a new organization. They move economic assets from low-productivity uses to high-productivity uses. And they do this with whatever resources they find at hand. These characteristics can apply to high-tech businesses, or they can apply to a restaurant. They can apply to a health care software firm, or a family-based manufacturing business.
Because of this, many entrepreneurs don’t always think of themselves as “entrepreneurs” at the beginning of their journey. Many entrepreneurship education and training programs, however, suffer the zoological problem: to be a unicorn, do this; to be a gazelle, do that.
If we’re going to promote more entrepreneurship, we need to focus on cultivating problem-identification and problem-solving skills. As venture capitalist Jeff Clavier has pointed out, the process of answering questions, not necessarily the final answer, is what matters. These abilities, not more labels, will boost entrepreneurship and economic growth.
Of course, maybe we just haven’t come up with the right label yet. I nominate griffin.