An Attempt to Explain the Most Difficult Concept in Entrepreneurship

Most people think the purpose of entrepreneurship is to build and sell a product. That’s wrong. The purpose of entrepreneurship is to capture a market opportunity. The building and selling of products is a mechanism entrepreneurs can use to capture market opportunities. This may seem like a subtle distinction, which is part of what makes it difficult to grasp, but all great entrepreneurs understand the difference. If you want to become a great entrepreneur, then you need to learn the difference, too.

Why entrepreneurs focus on their products

Prior to launching their own ventures, all aspiring entrepreneurs have the same relationship with businesses as everyone else in the world: they experience businesses as consumers. Whether the restaurants our parents took us to as toddlers or the first time we pointed toward a toy in a store and said, “Mommy, I want that,” our formative relationships with businesses are as consumers of their products. Because we spend most of our lives purchasing and consuming products, we tend to think products are the focal point of every successful business, and everything else about the business orbits around the product.

Think of your relationship with businesses like your relationship with our solar system and the broader universe around it. As a person living on the planet earth, your perspective of the solar system is one in which you and your planet are the things around which the rest of the solar system revolves. For thousands of years, this perspective — called the geocentric model — caused humans to assume the earth was central to everything in the universe. However, as science eventually proved (to most of us, anyway) the earth is not the center of everything.

Six hundred years ago, if I asked you to build your own universe from scratch — an admittedly strange request, but humor me — you probably would have started by creating some sort of earth-like planet and then built outwards from there. Meanwhile, the 21st Century version of you would think you were ignorant, point at you, and laugh.

Similarly, aspiring entrepreneurs — like everyone else — grow up interacting with businesses by using the businesses’ products. As a result, when launching…