As I’ve mentioned often, 1999 was the year that I “retired”. Not that anybody would know that, given the schedule that I’ve kept since.

(It’s funny. When you’re running a business, you really keep heads down to the point where you don’t know anything else that’s going on in the world. I often tell the story of Elvis Presley being dead for two and a half years before I knew about it. If you’re doing it right, stories like this happen all the time. You’re oblivious. I’m STILL oblivious to what’s going on.

But in 1999, I decided to “throttle back”.)

(…and if want a good read about “throttling back”, check out a great article by my good friend and Duquesne colleague Chris Allison in the current issue of Pittsburgh Quarterly. He talks about his retirement as CEO of Tollgrade. Very thought-provoking.)

Since my “retirement” and the beginning of my “throttling back”, I’ve had the opportunity to rub shoulders with a whole bunch of “entrepreneurs”.

If you’re reading this, you know my definition of an “entrepreneur”, right? An entrepreneur, as I see it, is a person who creates something that has never existed before. This is unlike a traditional small business owner, who may open a restaurant or a beer distributorship or a salon or an ad agency or a sales training course, etc.

Those are all businesses that exist. If you spin them a certain way or bend them a different way, you go from being a “small business owner” to an “entrepreneur”.

As an example, I like to use “Chuck E. Cheese.” At its core, it’s a restaurant. A really bad restaurant, but it’s a restaurant….a place where you can go eat and drink. However, they twisted it, and really turned it into a sanctuary for children. They sell it to the parent. When you walk in with your child, you can sit back and relax and enjoy your “meal”. Your kid’s not gonna get snatched out from under you, and he or she is going to have a ball playing around (as long as you keep those tokens coming.)

So THAT’S the difference between a small business person and an entrepreneur. Entrepreneurs are people who take something that was nothing and turn it into something. The entrepreneur has discovered a niche or an area where he/she is alone with the product/service concept. At that point, the entrepreneur has a “mini-monopoly”, and with nobody competing with you, you can have fat margins, and, subsequently, you can have the world on a string.

Because it’s a lot easier to find “nichedom” inside a clean, fresh, new technology, this is why so many tech-based businesses put up big headlines and big numbers. (Not always big PROFIT numbers, but big numbers nonetheless.)

Think about it. Every Saturday morning in the local papers (at least ONE of them) and every Friday afternoon in the hard-core business newspaper, there are uplifting stories about what I call the high-tech cyclers. These are the self-perpetuating and asymmetrically-rotating apparatus that breathes in investment capital and excretes one-line spreadsheets, hyperbolic press releases, and lots and lots of wine and cheese parties.

These are “techies”. They take in capital and spit out everything except profits (usually). The overall net result of this is oftentimes vast sums of cold and hard cash to the investors and company founders.

I used to be able to ignore this – the V.C. set. But frankly, I’m getting really tired of trying to teach my young acolytes at Duquesne that there’s more to life than just a one-line spreadsheet. That the success of a business is measured by a lot more than just “internet activity.” Or that what goes on in California doesn’t necessarily mean the rest of the free world will all fall in line.

Pick up any magazine or newspaper. Flip to the business section. What do you see? You’ll see a story or an article about some ultra-driven dude who “came up the hard way”, worked his way through the finest schools in the world, and then met some other like-dude who perfectly fleshed out the picture. Together, these two guys built something that they were able to take to the adoring public market.

The punchline here, of course, is that these guys never once have to worry about the expense line. Since they almost never have to worry about EXPENSES.

Think about it.

Imagine having a business where you never have to worry about the revenue line. You never have to worry about cash coming in. This may seem like a very simple concept, but the truth is actually something that came out in a conversation last night that I had with a fellow CEO and longtime buddy.

He said, “Ron, why is it that these guys that build these venture capitalized companies, companies that have oodles of money, get all the ink, all the accolades, and oftentimes big rewards when they’ve never had to deal with generating revenues?”

It reminds me of a course that I teach at Duquesne. It’s a business simulation course where, essentially, we tell the students, “OK, here’s $350,000. Here’s a plastics manufacturing business. Go run it. Go forth and prosper.”

The $350,000 just materializes out of nowhere. Nobody had to go out and sell that or create those dollars. But for a typical entrepreneur (i.e. a non-funded or underfunded entrepreneur), every single day, he or she has to worry about where the bread is coming from. Where is the FUEL coming from?

But the guy that builds a business where he has raised tremendous amounts of money never has to worry about that, so I say to you, “What are we developing in that case? Are we developing a true businessperson, are we developing somebody who only knows how to spend? Somebody who only knows how to hire people or how to buy desks or buy computers and create whatever product it might be?

(I know that you’re probably nodding your head in agreement with me as you read this. You’re probably thinking “Yeah, if only I had a hundred thousand dollars…”)

I know guys who get a million dollars….two million dollars….even TEN million dollars…written to them by people. Sometimes it’s in return for equity (usually a SMALL amount of equity) and they’ll get the check and proceed to merrily build the business, unencumbered by the fact that most businesspeople actually EARN their money.

It’s nothing new. It’s nothing I haven’t discussed before, both here and on the radio show. It’s just something that crosses my mind from time to time. When I talked to my buddy last night, we discussed a few individuals in the region…men and women who are generally anointed as THE hotshots and THE businesspeople. You look at them and ask yourself, “What did they really BUILD?”

They didn’t really “build” anything. What they did was take a bunch of money, hire a bunch of people, and THOSE people built the company.

Show me the guy that can build a company while also building revenues, and THEN I’ll take my hat off. That’s the way it SHOULD be done.

Don’t misunderstand me. There’s nothing wrong with raising money. But people will call my show or they’ll call my office and say that you HAVE to have money. I’ll tell them, “No, you don’t.” I’ve started eleven companies, and I’ve NEVER had to borrow a dime. I know people get tired of hearing me say it, but I say it so much because it CAN be done.

And these weren’t just little tiny companies. They were high tech startups. But if you go to your customers and you work it right, you can get money without having to sell your equity or take out a huge debt load. It CAN be done.

The difference between the guy who does it and the guy who doesn’t is that the guy who does it, in my mind, is desperate, and therefore, creative. People are at their most creative when they are desperate, and they’re most desperate when they have NO resources.

Think about it.