At Acton, we classify entrepreneurs into three categories: Bootstrap Tortoises, Asset Foxes, and MBA Hares. These categories aren’t meant to rank the quality of entrepreneurs, but rather help people find business models that best fit their temperaments.
Animal analogies are all well and good but they don’t really paint the whole picture. So, since I’ve noticed a couple of stories in the news lately that illustrated these archetypes, I thought now would be a good time to discuss. Plus, we have a new quiz on the Acton School of Business website that can show you what type of entrepreneur you are.
Both Bootstrap Tortoises and Asset Foxes build their businesses step by step. Bootstrap Tortoises typically start with customers while Asset Foxes start with something tangible, like property. Bootstrap Tortoises build their companies one satisfied customer at a time, staging investments so that they risk as little as possible until demand is proven.
Travis Kevie, a rodeo cowboy and vagabond, isn’t who you’d normally think of at the mention of entrepreneurs. But the California man has proven himself to be a Bootstrap Tortoise. The Valencia Club was a landmark bar in Penryn, having been around since the 1930’s and the northern California city’s only watering hole. But early this summer, the bar closed its doors. Travis Kevie had been on the bar’s cleaning crew and decided to stay behind. Not only did the homeless man tidy up the place, but he also walked to the convenience store across the street, bought a six-pack of beer, and stuck an “open” sign in the bar’s window. With the property manager gone for Memorial Day weekend and lots of thirsty customers, Kevie’s bar became a reality. He started with one customer, who had seen the open sign from the road, and used the profits to buy more alcohol and serve more customers. Word spread fast, and soon he was serving about 30 patrons a day. He was so successful that the local newspaper did a story on the bar’s re-opening, not realizing it was a sham. A police detective saw the story in the paper and got suspicious. In the four days he ran the bar, prior to getting arrested, Kevie managed to make hundreds of dollars in cash and buy several bottles of liquor — all of which were confiscated at the scene. (CNN)
Asset Foxes prefer to acquire, improve, and trade one asset at a time. Maybe you remember hearing about Kyle MacDonald. In 2005, he posted a picture of a red paperclip on his blog and asked if anyone wanted to trade something bigger or better for it. After making 14 trades, he was the proud owner of a house in Saskatchewan. He’s an Asset Fox. So is seventeen-year-old Steven Ortiz. A friend gave him an old, junky cellphone. Instead of throwing it away, he posted an ad on Craigslist and traded that phone for a better phone, which he then traded for an i-Pod touch. A series of dirt bikes, a MacBook Pro, a 1987 Toyota 4Runner, a more valuable dirt bike, a streetbike, and a couple more cars later, Ortiz had the keys to a 2000 Porsche. It took him two years and several hours a day scouring Craigslist for good deals, but now he’s the only kid in his school with a high-end convertible. Ortiz explains that he uses his knack for fixing small electronics and eye for good deals to get people what they want. People are looking for a way to get rid of an item they don’t need in exchange for something they do, often getting a better deal than if they had just sold the item for cash. “A lot of people don’t have money right now, in this economy. So they think, `I really need a new phone, but I don’t have the money. Here I have this CD player lying around that I don’t use anymore, maybe I can trade,”‘ his father says. (Mercury News).
MBA Hares write business plans and raise war chests of venture capital, believing that the sooner you launch and the faster you grow, the sooner you can have an IPO and make lots of money. The MBA Hare’s strategy is the one taught at most business schools. (At Acton, we tend to focus more on the other two types.)
Jive Software has been following the MBA hare archetype. The firm’s software gives large companies like Nike and Intel a way to collaborate with their own employees and with customers. Last week, headlines read, “Jive: Aiming for IPO, Palo Alto startup wins $30M from Kleiner, Sequoia.” Tony Zingale, Jive’s CEO and 30-year Silicon Valley veteran, said he’s never seen a marketplace move at the rate of the social media marketplace. With new backing from two top venture capital firms — bringing the total raised by Jive to $57.5 million — and explosive customer growth, Zingale thinks his company could be ready to go public as early as next year. The company currently has 3,000 customers, like Nike and Netflix, and about 15 million users. In the last year, its workforce has more than doubled to 275 employees. “Our goal is to grow as fast as we possibly can,” Zingale said. (Portfolio)
So, what type of entrepreneur are you? Do you think that some people are just better suited for using certain types of business models? When wouldn’t you go with the archetype that best fits you?
Photo courtesy of Edmund Yeo.
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