What Is Entrepreneurship? Who Counts as an Entrepreneur?

In the spring of 1553, 240 people in London each put in 25 pounds to invest in a sea they had never seen. The plan was audacious: to find a sea route to China by sailing around the north of Europe and through the ice. Nobody knew whether such a route existed.

In May three ships set sail from London. Near Norway's Lofoten Islands a storm scattered them. The two ships under Sir Hugh Willoughby's command were forced to winter at the mouth of a river on the Kola Peninsula. The following spring, Russian fishermen found the ships. Not one member of the crew had survived the winter. For a long time it was thought they had died of cold and hunger; today some historians argue they may have been poisoned by carbon monoxide after sealing up the chimneys against the cold.

The third ship, Richard Chancellor's Edward Bonaventure, reached the White Sea. Chancellor crossed more than a thousand kilometres of snowbound road by horse-drawn sledge to reach Moscow and was received by Ivan the Terrible. In 1554 he returned to London with a letter promising English merchants trading privileges. The route to China had not been found, but a whole new market had opened up. The Muscovy Company, which received its royal charter in 1555, is remembered as one of the first great joint-stock companies in history.

In the word that also appears in the company's full name, those 240 investors were "adventurers": people who put their money into a voyage whose outcome was unknown.

What is entrepreneurship?

Entrepreneurship is taking on a venture whose outcome is uncertain. It means bringing together money, effort, knowledge and relationships and setting out towards value that no one has seen yet. Risk is not the decoration on this definition; it is the core. The Muscovy investors' money and Willoughby's life were staked on the same uncertainty.

Two founders building an app today, a shopkeeper opening a café in their neighbourhood or a manager launching a new product inside a company all face the same question: does this road lead anywhere? And if it does not, is there another door that opens along the way? Chancellor did not find China; he found Moscow. In entrepreneurship you often arrive not at the harbour you were looking for, but at the one that turns up on the way.

Who counts as an entrepreneur? Three economists' answers

The question is old, and the answer depends on whom you ask.

Cantillon: the one who lives on uncertain income

The Irish-born banker Richard Cantillon was the first to put the entrepreneur at the centre of economics, in his "Essai", written before his death in 1734 and published in 1755. In his view, apart from the prince and the landowners, everyone in a country fell into two groups: those who work for fixed wages and entrepreneurs who live on uncertain income.

An entrepreneur was someone who bought at a known price and sold at an uncertain one. Cantillon drew the definition so broadly that he counted chimney sweeps and water carriers as entrepreneurs, and wrote that even beggars and thieves belonged to this class.

Say: the one who turns knowledge into work

The French economist Jean-Baptiste Say gave the entrepreneur a new role in his "Traité d'économie politique", published in 1803. The scientist knows, the worker produces; the entrepreneur works out how knowledge can create something useful and brings labour and capital together. Knowledge alone does not create value; it needs someone to apply it.

Schumpeter: the master of new combinations

Joseph Schumpeter raised the bar in his "Theory of Economic Development", published in the early 1910s. For him, what made an entrepreneur an entrepreneur was putting "new combinations" into practice. He listed five forms: a new product, a new method of production, a new market, a new source of raw materials, or a new way of organising an industry. Chancellor's journey to Moscow was exactly the third: opening up a market nobody had entered before.

Can anyone be an entrepreneur?

These three definitions can be read as a ladder. For Cantillon, the simit seller (simit being the sesame bread ring sold on Turkish street corners) is an entrepreneur too, because they do not know what the dough bought in the morning will sell for in the evening. For Say, the entrepreneur is an organiser. For Schumpeter, without innovation there is no enterprise.

Rather than arguing over which one is right, it is more useful to ask yourself: which rung of this ladder is your business standing on, and what do you need to change to climb to the next one? If you are wondering why companies built to grow fast get a name of their own, have a look at our article what is a startup.

The hand inside the word

The word used for "entrepreneur" in Western languages is the French "entrepreneur", from the verb "entreprendre": "entre" (between) and "prendre" (to take, to hold). The word means "to undertake", to take a task between your two hands. The root of "prendre" is the Latin "prehendere": to seize, to grasp.

In Ottoman Turkish the word that did the same job was "müteşebbis". Its root, "teşebbüs", derives from an Arabic verb meaning to hold on to something, to cling to it and not let go. Today's Turkish word, "girişim", comes from the verb "girişmek": to put your hand to a task, to plunge into it.

Three languages describe the same movement: reaching out, grasping, not letting go. Entrepreneurship starts with an idea but does not stay there; it means taking something in your hands and carrying it all the way.

A final word

In one of his letters to his friend Lucilius, Seneca wrote:

"Non quia difficilia sunt non audemus, sed quia non audemus difficilia sunt." It is not because things are difficult that we do not dare; it is because we do not dare that they are difficult.

In 1553, 240 people each put 25 pounds into a sea that was not on the map. Which sea on your map has not been drawn yet, and when will you put in the first money, the first hour, the first step?