Entrepreneurs, Why they get paid

When it comes to money, there is no career that pays more than entrepreneurship. When successful, the amount an entrepreneur can make is virtually unlimited. Even prior to success, a savvy entrepreneur can convince investors to pour millions into his hands with a fraction of that capital going to his salary. This means that an entrepreneur can be well paid and have millions of dollars at his command even prior to success. 

Since the financial privilege of entrepreneurs can be astounding, it is logical to ask ourselves why. Why do they get paid so much? What makes entrepreneurs so valuable? Why do investors pour millions into someone with an idea? I plan on addressing these questions in this two part article. 

Entrepreneurs are indispensable for three reasons. 1) They possess market insight. 2) They know how to organize labor. 3) They have connections. Let's analyze each of these points in section. 

Entrepreneurial Insight.jpg

Market insight.

Out of all the attributes that makes an entrepreneur valuable, market insight is by far the biggest. Market insight is a fancy word for saying you know something about a market that others do not. Since this information is not mainstream knowledge, it offers exploitable opportunities. 

I have met many entrepreneurs, and 98% of them had no market insight whatsoever. They might have identified a need, or have a great business idea, but rarely do I meet an entrepreneur who has an insight on a particular market he or she wants to serve.

What entrepreneurs tend to have is product insight. Meaning he or she knows the weaknesses of products already serving a market and would like to compete by offering a better one. Although product insights can be useful, it is far less valuable than market insight. 

Market insight is when the entrepreneur has identified an underserved community, has studied their needs and culture, and have built communication channels to reach them. An entrepreneur should know his market more than anyone else. He should know what that community values, where they hang out, form relationships with its leaders, and create communication channels for his messages to reach them. 

Since the entrepreneur is the customer expert, and controls communications with them, employees and investors alike cannot do without him. In other words, no entrepreneur means no customers. This statement is especially true for early stages startups whose name is unknown and thus the company relies on the founder for initial business. 

As he wins customers and the business name matures, the entrepreneur, who is now an executive, begins to play a different role- he organizes labor and manages connections. We will cover these points in part two of this article. However, the main takeaway to remember is that valuable entrepreneurs have market insight. They identified an underserved market, learned their values, and have established ways of communicating with them. Entrepreneurs are tribe leaders.  

If you found this article useful, please support me by subscribing. I put out empowering information all the time. 


Thank You!