Successful Entrepreneurs Are Great at Capturing Value
Most would say entrepreneurs are job creators. Businesses and companies they build, employ workers and drive the economy. You could also say entrepreneurs are value creators. Their ventures create and deliver value to their customers.
In my mind, an entrepreneur is someone who is exceptionally good at identifying gaps in the market, fills it and captures the resulting value of this exchange.
As an example, Bill Gates realized every home will eventually have a PC and wanted Microsoft to be part of this revolution. He managed to get IBM to license an Operating System from him even though he didn’t have one yet. He then sourced around, found one and repackaged that as MS-DOS. Yet, that wasn’t even the most important part of the deal. He was also able to retain the rights to sell MS-DOS to other PC manufacturers which eventually paved the way for him to become the richest man in the world.
Identifying The Gaps
If you aspire to be an entrepreneur, the first skill you need to master is how to identify opportunities and gaps in the market. Entrepreneurs are opportunists and they are constantly on the look out for a chance to provide value.
They are aware of the trends and market developments happening around them. However, this does not mean they are reacting to them. As an entrepreneur, you ultimately decide if you want to ride on a current trend or start one yourself.
Delivering The Solution
Once you get really good at identifying opportunities, the next thing you have to do is to deliver the goods and make it happen. This is the time where your resourcefulness and creativity will be put to the test.
Entrepreneurs are hustlers and they will do everything in their power to turn their idea into reality. They might be going at it alone at the start but entrepreneurs think big and plan to eventually lead a team towards world domination.
Capturing the Value
Merely providing solutions to problems you have identified doesn’t make you an entrepreneur. You may be a problem-solver, but to be an entrepreneur, you must learn how to capture at least some of the value provided to your customer.
The simplest way to capture value is to charge a fee for the services you provide. A trader marks up the price of goods to cover his service of sourcing, transporting and delivering it to you. A barber charges extra to pay for his rent and equipments.
Sergey Brin and Larry Page developed the PageRank algorithm as a better way to rank websites when they were in Stanford. This was the beginning of Google and even in the early days, they were already providing value by being a better search engine. However, it was only when Google began to sell advertisements in the form of AdWords that it grew into the tech giant we know today. AdWords was their strategy (and still is) to capture the value created by Google’s search engine.
To be a successful entrepreneur, you must learn to identify the gaps, figure out how to deliver the goods and most importantly, have a plan to capture the value you have created. If you can’t capture value from the service you provide, then you are not running a business. You are running a charity.