The 5 Levels of Entrepreneurship

Entrepreneurship is a complicated, challenging, and intensely personal line of work. That’s what makes it so compelling as a profession. It’s akin to playing multiple games of chess in a beautiful park, facing an ever-changing range of decisions-actions-and-events, interpersonal, and industry dealings. The learning opportunities for entrepreneurs are limitless, especially when you consider the range of these daily activities and interactions.

Based on the precepts of Zen Buddhism, I believe there are five levels of entrepreneurship achieved over time. Unlike Zen, an entrepreneur can go from Level One to Level Five in less than twenty years. While you can bypass certain trial and error situations, and avoid some turmoil and frustration, you still can’t skip out on the work necessary to progress through the ranks.

My five levels of entrepreneurship are as follows:

Level One – achieved in the first years of being an entrepreneur.

• Level One is about learning the basics, to include:

  • the full practice and implementation of “Treating Cash Like Your Mother Check in Daily” (TCLYMCID)

  • ABS (always be selling)

  • hiring smart decathletes as co-founders and employees

  • closing your first or subsequent round of financing, and

  • your first product market fit that translates into a product, and

  • making other key milestones

Comment: Not only do you know nothing about entrepreneurship at this Level, you also don’t know what you don’t know, and you probably don’t even know that you don’t know that don’t know.

Comment: At this level your friends typically do not provide the best advice for you and the company. Instead, seek mentorship and coaching from wizened entrepreneurs and former executive officers.

• Level Two – achieved after you’ve passed some early, important milestones.

  • These may include:

    • three seed rounds before a Series A

    • firing your early employee(s)

    • operating in the aftermath of a successful trade show

    • following your first couple of Board Meetings

    • hiring a couple of super-star engineers.

  • This is where you come to embrace “One Size Fits All” solutions for business challenges or management situations.

  • A certain amount of arrogance sets in. You have come to believe that there’s one management solution or strategic initiative for each problem and that you can fix anything.

  • You don’t listen too well. You are convinced that your way is the only way, and the only way that your startup will succeed. This frequently translates into micromanagement. To a founder or CEO (or both) with a hammer, every problem is a nail and only you know exactly the right way to bang it in!

Comment: At this level you know more than Level One but you still don’t know what you don’t know.

• Level Three – only achieved after multiple (read: years) of financings, major sales, hires and board meetings. You accept that people are unique and that you need different “tools” to help them realize their potential. You understand that each stage of company development has unique requirements that must be balanced against personnel and their experiences, skills, and ways of operating.

  • You spend a lot of time thinking about:

    • Skills

    • decision making

    • speed and quality of execution

    • strategy and tactical development

    • attitude

    • leadership

Comment: You understand that bringing in leaders who are stronger than you will help you achieve success. They are not over-priced talent or threats.

You think you can see around corners even though you can’t. You are still very dependent of wizened executives, board members, and others to help you see over the horizon.

• Level Four – achieved after your first significant exit. Many times, this is the “No Surprises” entrepreneur, but in reality life happens and surprises are inevitable. Very few problems or challenges at this level are stumble-blocks or show-killers unless you lose disproportionate bets. You have the requisite experience and skill to see problems well in advance and can proactively take steps to avoid them. You may publicly say that you have no regrets (to quote Edit Piaf: “Non, je ne regrette rien."), but you harbor them secretly.

Comments: You are more diplomatic in your interactions with everyone. Your friends are different at this level. They are more like you and provide better advice than you received in Levels One or Two.

• Level Five – Here, you reach new heights of personal and creative insight. You don’t need 24/7 hands-on startup formation and support. You advise, mentor, teach and collaborate with other entrepreneurs, CEOs, investors, and board members to help them solve startup problems, set strategy, fill in gaps and share the future of the business. You can accurately see around corners. You share, learn and collaborate as a team in order to help accelerate learning and evolve.

Comment: Also at Level Five you can analyze multiple alternative outcomes related to past problems. For example, I think through “what if” scenarios related to my experience recruiting investors in Black Duck’s Series A. This is not a fool’s exercise. It can make a difference to the teams and companies you currently coach, collaborate, and invest in.

The Five Level paradigm is one I’ve deduced after decades of starting, growing, and selling various entrepreneurial ventures, and they make both intuitive and considered sense to me. I think they offer an accurate lens through which to examine the life-cycle of any entrepreneur, serial or otherwise. I’d be interested to hear what you think about this model, and especially how you see it (or don’t) reflected in your own past practice and experience.