Lecture 1: What is Entrepreneurship

What this lecture covers

The lecture opens Bill Aulet's course by asking what entrepreneurship actually means, since the word is used loosely for very different activities. It draws a line between small and medium enterprise (SME) entrepreneurship and innovation-driven enterprise (IDE) entrepreneurship, arguing that they require different skills, capital and risk tolerance even though both count as "starting a company."

After watching, you should be able to tell the two apart in a real example and understand why the course, and the 24-step framework it introduces, is built around IDEs rather than local service businesses.

Key ideas

• SME entrepreneurship: small, often local businesses such as a dry cleaner or restaurant that grow roughly linearly and stay under owner control.
• IDE entrepreneurship: innovation-driven ventures aimed at global or super-regional markets, built on a unique innovation.
• Cash flow pattern: IDEs typically lose money early, then grow exponentially if the model works, unlike the steadier cash flow of SMEs.
• Ownership structure: SMEs usually stay owned by the founder or family; IDEs bring in shareholders and outside capital.
• Different skill sets: Aulet compares the two to basketball and baseball, since success in one does not guarantee success in the other.
• Job creation pattern: a small number of successful IDEs can generate a large number of jobs, while SMEs need to exist in large numbers and stay more geographically spread out.

Before you watch

• No prior lecture is required; this is the first video in the course and sets up terms used throughout.

Check your understanding

1. What distinguishes an SME from an innovation-driven enterprise in terms of target market?
2. Why do IDEs typically show negative cash flow before they show exponential growth?
3. Why does Aulet compare the two types of entrepreneurship to basketball and baseball?
4. Why can a small number of IDEs create a large number of jobs compared to SMEs?