Why Entrepreneurial Companies Outperform the Competition


Various traits differentiate entrepreneurs from non-entrepreneurs, making the former successful and the latter more likely to face failure in their ventures. Some of these traits include leadership skills, risk-taking initiatives, openness to organizational change, and perseverance in the face of challenges and failure. Two of the most accomplished entrepreneurs are Jeff Bezos, who founded Amazon, and Bill Gates, who co-founded Microsoft. These entrepreneurs have shown remarkable leadership and transformed their startups into some of the largest corporations in the world. They have achieved this feat by rallying their followers to support and implement their vision. This report has evaluated the traits and strategies used by Gates and Bezos and compared them with those used by non-entrepreneurs to develop important insights on what it takes to excel in entrepreneurship.

The report explains that successful entrepreneurs should be willing to take calculated risks, embrace strong leadership skills, practice perseverance, learn from failure, and engage in corporate social responsibility to strengthen their brands’ public image. Additionally, successful entrepreneurs should develop strong networks and create a continuous improvement and innovation culture to pivot and exploit market opportunities. However, non-entrepreneurs are known to be characterized by a fear of taking risks, weak leadership skills, impatience, lack of intense social and professional networks, and an organizational culture resistant to change.

Why Entrepreneurial Companies Outperform the Competition


Although entrepreneurs usually face challenges in the path to success, they can generally overcome the obstacles they face and transform their startups into large companies with a comprehensive market presence. Some of the globally-renowned entrepreneurs include Bill Gates and Jeff Bezos. They have excelled in entrepreneurship and are billionaires who have grown their companies from startups into multi-billion and trillion-dollar corporations. Therefore, it is essential to evaluate their entrepreneurship strategies and personal traits that differentiate them from non-entrepreneurs to understand what it takes to succeed. This paper will provide a background on these entrepreneurs and their crucial life lessons, analyze their entrepreneurial traits, how they innovate and overcome obstacles, and how they handle failure.

Outstanding Entrepreneurs and Key Lessons in Life

One outstanding entrepreneur is Jeff Bezos, the founder and former CEO of Amazon. His company focuses on e-commerce, digital streaming, cloud computing, and artificial intelligence (Amazon, 2020). He started the business in 1994 from his garage in Washington as an online bookstore and gradually grew it into a $1.71 trillion company by 2021 (Amazon, 2021). Currently, Bezos is the world’s richest person. One of the valuable key life lessons from Bezos is applying the “regret minimization framework.” This is a concept where people picture themselves at an advanced age, try to imagine their biggest regret in life during the old period, and then work backward to take actions that will prevent remorse.

Bezos applied this framework when deciding whether to quit his former job at Wall Street and start an internet company. He realized that he would regret missing out on entrepreneurship opportunities on the internet, so he quit his job and started Amazon (Bayers, 1999). Bezos used the same framework when choosing an appropriate leadership style, and he embraced transformative leadership, where leaders work with teams to create a vision and implement change (Fridson, 2001). Bezo’s actions show that successful entrepreneurs should not only embrace risk and follow their vision but they should also use leadership to inspire followers to adopt change.



Exhibit 1: Amazon’s Revenues

Source: https://www.statista.com/statistics/266282/annual-net-revenue-of-amazoncom/

The second entrepreneur is Bill Gates, the co-founder of Microsoft Company, which develops and manufactures computer electronics, computer software, personal computers, and other technology products. Gates and his co-founder (late childhood friend) Paul Allen invented the first product, the rudimentary computer, in 1972. Since then, he has provided leadership at Microsoft as CEO, and the company’s value surpassed the trillion-dollar mark and is currently worth in excess of $2 trillion. (See Exhibit 2). One of Gates’s most important life lessons is the importance of continuous innovation by taking risks and thinking ahead of time.

Gates had a vision of becoming the most successful software company. Despite intense competition from established firms such as IBM, he ventured into the competitive software industry when he released the software product Xenix in 1980 (Microsoft, 2020). He took a fundamental risk by dropping out of Harvard to create Microsoft Company in 2008 (Fridson, 2001). This demonstrates that successful entrepreneurs have a solid vision and are persistent in achieving that vision regardless of their circumstances or obstacles. Gates applies both autocratic and transformational leadership, required in the rapidly changing tech world where accurate decisions need to be made promptly.


Exhibit 2: Microsoft Revenues



Source: https://www.statista.com/statistics/267805/microsofts-global-revenue-since-2002/

Traits Entrepreneurs Share Which Make Them Perform Better than Non-Entrepreneurs

Taking Risks

Entrepreneurs often take risks in their quest to pursue and achieve their vision. They tend to act quickly and decisively to make the most of the opportunities that they have identified. For example, Gates and Bezos took risks by leaving education and employment opportunities in prominent organizations to pursue their vision. When entrepreneurs take such significant risks, they are likely to work hard and remain focused on their image since failure is no longer an option. For example, Bezos knew that he had to make Amazon successful since he quit a lucrative job opportunity on Wall Street. He had to remain focused to achieve his vision and not have regrets in life at an old age (Bayers, 1999).

Persistence and Perseverance

Many entrepreneurs embody these two traits: aggressively work hard to pursue a vision and overcome obstacles they face in their path. Gladwell (2008), in the book Outliers, discusses the concept of the 10,000-hour rule, which states that people should perform deliberate practice for 10,000 hours before they can become world-class in a field. This entails pushing one’s skill as much as a person can in the quest to excel in a specific area. Gates, Bezos and Plank, have all accomplished the 10000-hour rule, which is a manifestation of their persistence and perseverance in pursuing their visions (Kouzes & Posner, 2007). Persistence and determination are closely related to handling failure, and many entrepreneurs who face loss will learn from it and improve their future outcomes.

Strong Leadership Skills

One of the most common traits associated with successful entrepreneurs is strong leadership. All entrepreneurs require strong leadership skills to rally their followers towards a shared vision and goal (Gladwell, 2008). Many successful entrepreneurs such as Jeff Bezos apply transformative leadership to build solid teams and use charismatic traits to inspire them to embrace transformative change. Bill Gates has been known to use the autocratic leadership style when making important, sensitive, and time-barred decisions. Ventures owned by non-entrepreneurs stagnate in terms of innovation, and they are unable to respond to the constantly changing needs of customers. Ultimately with this type of organizational behavior, such ventures fail.

Corporate Social Responsibility

Finally, many successful entrepreneurs implement corporate social responsibility (CSR). For example, Bill Gates created the Bill and Melinda Gates Foundation, the largest private foundation globally (Bill and Melinda Gates Foundation, 2020). It invests in health, social welfare, and education (See Exhibit 3). Bezos also contributes to charity, and for example, he made a $10 million donation to Seattle’s Museum of History and Industry in 2011 (Market Realism, 2020). Corporate social responsibility creates a positive public image of entrepreneurs’ companies and attracts consumers to a brand.

Exhibit 3: Bill and Melinda Gates Donations past 20 years


Source: https://www.gatesnotes.com/2020-Annual-Letter

How Entrepreneurs Pivot as Compared to Non-Entrepreneurs

Creating a Culture of Continuous Innovation and Improvement

Entrepreneurs usually pivot by creating a culture of continuous innovation and improvement within the company. Constant innovation ensures that a venture takes advantage of any market opportunities to improve the existing products, launch new products or target new market segments. Most successful entrepreneurs usually invest heavily in research and development to identify existing market opportunities and diversify their product portfolio. For example, Bezos has created a culture of continuous innovation at Amazon and has grown its brand portfolio to over 75.1 million products sold on Amazon as of March 2021. (See Exhibit 4). However, non-entrepreneurs usually fail to create a culture of continuous improvement, generally due to a lack of strong leadership. As previously discussed, weak leaders are unable to inspire followers to adopt change initiatives that create value. An example is Kodak Company, which failed to embrace digital photography opportunities since its culture was not receptive to change and continuous improvements, which led to its collapse (Buchia, 2015).

Exhibit 4: Estimate of the number of products currently selling on the Amazon US website:


Source: https://www.scrapehero.com/how-many-products-does-amazon-sell-march-2021/


“However, he viewed failure as an opportunity to learn from mistakes, and he implemented improvements when innovating new products in the future. (Haralambous, 2018).” Entrepreneurs recognize the importance of social and professional networks in enabling them to understand and exploit market opportunities

Many successful entrepreneurs surround themselves with people who complement their areas of weakness and better understand the industry they operate in. Moreover, one of Bill Gates’ well-known quotes is, “Surround yourself with people who challenge you, teach you and push you to be your best” (Buchia, 2015).

How Entrepreneurs Handle Failure

Entrepreneurs usually understand that they will experience failure at certain points in life and create an opportunity to better themselves for future initiatives. Entrepreneurs do not give up when faced with failure. Instead, they seek lessons that will help them achieve a better outcome in the future. Jeff Bezos has faced failure several times, and many products introduced to Amazon fail to be successful.


This report evaluates and highlights the strong traits of successful entrepreneurs such as Jeff Bezos and Bill Gates. Some of the main factors that differentiate entrepreneurs from non-entrepreneurs are their ability to exercise strong leadership, take risks, create a continuous improvement culture, invest in networking opportunities, and handle failure well. These leaders could transform their vision into reality, and they grew their startups into multi-billion and trillion-dollar corporations.

ENTR’s Quality Growth Proposition Is Getting More Attractive


Amid raucous market action, the bulk of which is being caused by rising Treasury yields, the ERShares Entrepreneurs ETF (ENTR) is becoming more attractive on the basis of price, while its underlying fundamentals remain sound.

ENTR tries to reflect the performance of the Entrepreneur 30 Index, which is comprised of 30 U.S. companies with the highest market capitalizations and composite scores based on six criteria referred to as entrepreneurial standards. ENTR primarily invests in US Large Cap companies that meet the thresholds embedded in their proprietary Entrepreneur Factor (EF).

See also: The Entrepreneur Factor: Distinguishing Characteristics of Dynamic, Disruptive Investing

There has been a significant shift in how companies conduct business over the last year, with many corporations transitioning their employees to the home as more stringent regulations become commonplace. With this shift comes a need for innovation, with companies like Ring, Crowdstrike, Tesla, and Fiverr embracing an entrepreneurial mindset. Investors looking to get in on the action can look to the issuer ERShares.

ERShares selects companies from all over the globe and across capitalization levels to create an eclectic and well-balanced mix in its funds.

ENTR 6 Month Total Performance

ENTR Standing Out from the Crowd

ENTR is comprised of 30 U.S. companies with the highest market capitalizations and composite scores based on six criteria referred to as entrepreneurial standards. The fund has exhibited excess return potential by taking into consideration factors that account for alpha generation, such as growth, size, momentum, and value, among others.

“Investors, or academics, that presume we are simply a ‘growth play’ or ‘momentum play’ are often surprised to discover that our Entrepreneur Factor is not only significant in explaining historical returns, but over the past 12 years has been, by far, the most significant factor,” according to the issuer. “The selection effect (Entrepreneur Factor) actually compensates for all the other factors, which in aggregate are actually negative during the time period. This is why the selection effect is even higher than the excess return itself.”

Why You (Still) Shouldn’t Sleep on Small Caps


Recent lethargy in smaller stocks could spell opportunity some investors looking to assets like the ERShares NextGen Entrepreneurs ETF (ERSX).

ERSX selects the most entrepreneurial, primarily non-U.S. small cap companies that meet the thresholds embedded in its proprietary Entrepreneur Factor (EF). ERShares’ ETF delivers compelling performance across a variety of investment strategies without disrupting investors’ underlying risk profile metrics. Their geographic diversity enables them to harness global advantages through additional returns associated with currency fluctuations, strategic geographic allocations, comparative trade imbalances, and relative supply/demand strengths.

Amid rising Treasury yields, smaller stocks briefly fell out of favor, but the 2021 set-up for the asset class remains compelling.

“Small-cap stocks have had a remarkable run during the pandemic. As a result of this growth, many traders have been left to question whether or not this trend will continue in the months ahead,” notes Schaeffer’s Investment Research. “According to Todd Salamone, the technical picture of Russell 2000 and ETFs like the iShares Russell 2000 ETF (IWM) does suggest that the rising trend will likely continue.”

ERSX 1 Year Total Return

Smaller Can Be Better

The small cap category has underperformed its large cap peers, notably those mega cap tech companies that benefited in the post-coronavirus environment. However, a broader market rally has helped small caps outperform in 2021, and even outpace the tech-heavy Nasdaq. Even with recent weakness, small caps are topping large- and mid-caps this year.

“Speaking on small caps holistically, Salamone singled out the iShares Russell 2000 ETF (IWM) as offering diverse exposure to the small cap segment. The ETF is comprised of stocks throughout 11 different sectors, with the five biggest areas of exposure being a mix of growth and value segments like health care (the largest), consumer cyclicals, industrials, financial services, and technology (the smallest),” notes Schaeffer’s.

ERSX isn’t a traditional ETF. It blends domestic and international exposure, which is relevant at time when many markets are betting international smaller stocks will top U.S. equivalents. Non-U.S. equities are poised to take flight, and it’s possible that this asset class is in for a substantial period of out-performance.

Joel Shulman: “It’s a Buyer’s Market,” Especially in High-Growth Tech


As inflation fears recede and investors shift back toward risk asset classes once more, opportunities are emerging in both growth and value stocks, said Joel Shulman, founder and CEO of ERShares, in a recent interview with Cheddar’s The Open.

In the interview, he offered his viewpoints on the prospect of rising inflation, the strong potential for tech stocks in the latter half of the year, and why investors should avoid Bitcoin.

“Inflation… has been the story all year”

So far, the worst of inflationary fears have not yet materialized in the market, said Shulman. “In terms of inflation, what we’re focusing on are wages which are still below July 2020 levels, (and) we’re seeing the most job vacancies ever,” he said.

He also pointed out that food prices, a significant indicator of real inflation, were only up 2.2% last month.

Shulman did caution that the Federal Reserve could potentially end up overextending itself with bonds.

Currently the Fed is committed to buying $120 billion worth of Treasury bonds and mortgage-backed securities per month, which is keeping interest rates artificially low. If the Fed were to reduce or cease its purchasing program, Shulman says, “we’re going to have some problems.”

“We think tech is well-positioned for the second half of the year”

Tech stock prices have been oscillating a lot lately, many having reached highs in February before dropping at the end of the month; only to follow the same pattern in March through May.

“We are optimistic going forward with tech, especially high growth tech because we think they’re good opportunities now,” Shulman said.

With value stocks falling off of recent highs, Shulman sees an opportunity for high-growth stocks, especially in tech.

He clarifies: “It’s a buyer’s market but it’s very hit-or-miss” when it comes to investing in value versus growth stocks.

Shulman disagrees that interest rate increases could dampen tech stock prices because they’d need to be discounted more. He argues that tech stocks already have a high discount rate built into them by analysts because they are priced over a long period of time, and moving basis points don’t do much to affect the tech stocks.

“It’s the growth of these tech stocks that really drives their valuation, and the growth is still there,” Shulman added.

Speaking specifically about the fintech sector, Shulman believes that Square Inc. (NYSE: SQ) stands out. Square was up around 20% in April, and while it got hit hard in May, it is rebounding strongly.

Square is “a great growth story for a number of years…and I think it’s a good opportunity to buy right now,” added Shulman.

Bitcoin: “Volatile and it has a lot of problems”

Shulman expressed concerns about Bitcoin as an investment, adding that investors should “stay away” across the board.

He believes that “digital gold” is not an accurate moniker for Bitcoin. Gold has been used as a default currency for thousands of years. “It’s not a store of value,” he says of Bitcoin.

Shulman goes on to explain that the lowest volatility for Bitcoin historically “has never been below the highest level for gold.”

What’s more, the environmental impact of cryptocurrency mining is extreme; Bitcoin “is not ESG friendly,” Shulman said.

The offer of miners to change their protocol to become more environmentally friendly is concerning because in changing the protocol, miners could also decide to make the supply of Bitcoin unlimited. It is currently capped at 21 million tokens. Creating an unlimited supply of any cryptocurrency “can basically destroy the value overnight,” said Shulman.

If miners are able to change the protocols in one area, such as ESG, they could also change the protocols in other areas as well.

The propensity for Bitcoin to be involved in illegal activities is yet another reason to stay far away from the digital assets. Because of the extortion surrounding the Colonial Pipeline, which was shut down by hackers, and the subsequent ransom payoff in $5 million in Bitcoin, “the FBI is now looking into bitcoin and how they can better regulate this.”

Shulman goes on to warn: “it’s not a question of if but when they’re going to regulate.”