Two Types of Entrepreneur: "Alpha" and "Beta"
Published by Matt March 23rd, 2008 in Entrepreneurship
A friend introduced me to a noteworthy line of thinking recently. It went something like this: “There are two types of entrepreneurs in this world: alpha entrepreneurs and beta entrepreneurs. Alpha entrepreneurs are the guys that are naturally risk tolerant, even irrational dreamers; they’re charismatic and marshal folks around them to develop a company that’s viable. Alphas take the first step. Beta entrepreneurs, on the other hand, are very execution focused, basically rational when it comes to risk, and bring to bear a learned skill set. They take problems and set about methodically solving them. Betas make entrepreneurship work.”
So, my friend says, “We need to stop encouraging alpha entrepreneurship. You can’t teach someone to be an alpha. What we can do is teach folks to be betas. A community doesn’t need a ton of alphas, but it needs lots of betas.”
For me, this classification and accompanying recommendation resonate in certain ways. Execution builds businesses. And loads of multi-million dollar businesses are built without a real visionary or need only a creative kick-start.
I do have a couple counterpoints, though: (1) lots of individuals have had their natural alpha suppressed by risk-averse upbringings and a little encouragement can go a long way; (2) a startup’s potential may turn on creative, risky adaptation (in other words it’s not just about a visionary getting the ball rolling; consider Facebook’s application API ingenuity).
Incidentally, the market tends to place a higher value on end-user execution than ingenuity. Consider invention licensing contracts (pretty favorable to the licensee) or content creation vs aggregation/distribution value allocations (pretty favorable to the aggregator/distributor). These examples are driven by monetization control but the point holds, I think.
I suspect that my friend has a strong argument from an economic development standpoint. To “teach betas,” I’d add, “attract alphas.” Creative juice and leaps of faith are integral aspects of the game, and I’d hate to lose sight of that. Irrational risk compasses are a precious commodity.
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That’s an interesting topic, Matt, and one to which I can relate as someone who has assuredly had some alpha tendencies suspended for a while. Masquerading as a beta for the last few years, however, has helped me grow and learn tremendously.
I appreciate all you’re doing with Forge to get the alphas and betas together. It certainly takes both to create and nurture successful ventures.
Thanks, Nick!
A further exploration would describe what’s clearly a continuum of alpha/beta in any given entrepreneur.
Best,
Matt
Great stuff.
I think most of us focus on ideas because it’s so easy; we can look at some business, and tell its entrepreneur within seconds what she’s doing wrong. But, if you work with that entrepreneur on a daily basis, you’ll see the complexities associated with her business, and how a two-second idea doesn’t really resonate with what she’s trying to accomplish with her resources. I think most people start out as alpha entrepreneurs, but once they’re in their daily grinds, struggling with the brutal realities of running a business, they transition to beta entrepreneurs (i.e. if they’re still in it).
Ben - yes, and rarely the other way around (a largely beta developing creative insight to help reinvent or transition a business). Love your “biz journal.”
Best,
Matt
well at least now i know the name of my affliction. i have been working on developing the beta side without knowing its name but it does not come naturally. i think i realized about a year ago that a business cannot survive on alpha alone. helps with clarity to give things a name. dude - you rock.
Very interesting topic. It seems like a natural observation that should be talked about more frequently. At the last Forge Louisville event, Andy Swan made a fantastic point about ideas versus execution, noting that each of us have a dozen ideas, so we must focus on the execution of the best one(s).
I think that Ben has a great point. Alpha entrepreneurs will turn into Beta entrepreneurs because they have to become better at execution in order to stay in the game. Perhaps the trick is to harvest that Alpha spirit inside Beta-stage entrepreneurs. I have known (and been inside of) each camp, noticing that the Alpha entrepreneur doesn’t seem to see what they are missing on the execution side of things. Perhaps there is a way to “teach” Alphas about execution without destroying the ingenuity that drives them.