The history of entrepreneurship from ancient trade to the industrial age

7 min read
11 Dec 2018

rom the growth of trade routes to the creation of markets, humankind has achieved a lot over the course of history. But who were the world’s first entrepreneurs? And how did they come to create businesses?

This article was written by the original owner of, Ryan Allis, and published on his website in 2012. Read more about why Ryan was happy to hand over his website domain to us here.

The beginnings of trade

The original entrepreneurs were, of course, traders and merchants. The first known instance of humans trading comes from New Guinea around 17,000 BCE, where locals exchanged obsidian, a black volcanic glass used to make hunting arrowheads for other needed goods. These early entrepreneurs exchanged one set of goods for another.

Around 15,000 BCE, the first animal domestication began taking place, and at around 10,000 BCE, the first domestication of plants. This step toward agriculture was critical for the advancement of the human species. Now, instead of having to continually move around as nomadic tribes, seeking new places to hunt and to gather, we could settle in one place and form larger, stationary communities.

As more people moved into these settlements, one of the most important advances took place with the advent of specialization. Instead of each tribe hunting and gathering their food, different individuals within each tribe would become experts at certain tasks, such as farming, hunting, gathering, fishing, cooking, tool-making, shelter-building, or clothes-making.

As different people got better at different tasks, they were then able to exchange with one another for the various goods and services needed, increasing the benefits for all.

The early silk trade routes, dating from the Han Dynasty in 200 BCE.

As methods of agriculture improved, the first towns and cities were seen. Dependable food supplies allowed people to build permanent houses and settle in one area. As settlements increased in size, new social institutions such as religious centers, courts, and marketplaces developed.

The creation of towns produced further specialized skills in tool-making, pottery, carpentry, wool-making, and masonry, among others. The specialist created items faster and of a better quality than each family making its own, increasing standards of living.

When the last Ice Age ended around the year 8,000 BCE, the poles melted, sea levels rose, and a divide was created between Siberia and North America. This divide created two separate human civilizations for nearly 10,000 years, until European explorers reached the Americas again in the 15th century.

The first cities

The Middle East’s fertile crescent between the Tigris and the Euphrates had the right mix of plants and animals to sustain the foundations of civilization.

Around 4,000 BCE, people in central Asia tamed horses, giving them a major advantage in both agricultural work and warfare. By 3,000 BCE, the first settlements and cities formed in Sumeria (modern day Iraq).

During this timeframe, the city of Uruk along the banks of the Euphrates River was home to 50,000 people in an amount of space that would have previously supported just one hunter-gatherer. Humans had become much more efficient at generating the food and energy necessary to support their communities.

Human civilizations began to spring up near rivers like the Nile, the Tigris and Euphrates, the Indus, and the Yellow and Yangtze. In the first cities, writing was developed to keep track of crops. In this period, the first armies developed and the first city governments were formed. Agricultural settlements had put humanity on a rapidly developing path toward intellectual and scientific advancement.

Trade routes allow ideas to spread

Trade routes between the new cities soon sprang up. Donkeys, horses, and camels enabled trade caravans between civilizations, moving both goods and ideas. Ships were built to carry trade over the seas. Networks and hubs soon formed and more complex structures emerged. Great Pyramids were built in Cairo. Temples were built in Sumeria.

Around 2,000 BCE, iron was discovered, leading to advances in warfare and a consequently tumultuous few centuries. Around 600 BCE, human warriors with iron weaponry on horseback led to the creation of empires.

While some of these titans had questionable ethics, no one can deny that they were innovators.

Between 500 BCE and 117 CE, small cities turned into the Persian Empire, Alexander’s Empire, Han Chinese Empire, and Roman Empire with complex political systems and philosophies and beliefs. Judaism, Christianity, Hinduism, Buddhism, and Islam formed and became the world’s five major religions between 1,300 BCE and 600 CE.

Trade routes expanded. Salt from Africa reached Rome, rice traveled from China to Asia, and the secrets of making paper were transferred from China to Europe. Arab traders brought coffee, lemons, and oranges into Europe for the first time.

With the importance of Atlantic trade, power would shift toward the West in the coming centuries as Europeans laid the foundations for a globalized world. The reconnection of the hemispheres marked a major turning point for our species.

The invention of money

Early trade consisted of barter (one good for another). If Tom had twenty cows and Igor had eighty hens, and Tom and Igor agreed that one cow was worth four hens, then the trade could take place.

The problem with the barter system, however, was that in order for a trade to take place, both parties had to want what the other party had. This “coincidence of wants” often did not happen. Thus, the demands of growing business and trade gave rise to a money system.

Silver rings or bars are thought to have been used as money in Ancient Iraq before 2,000 BC. Early forms of money (called specie) would often be commodities like seashells, tobacco leaves, large round rocks, or beads.

The use of money, an accepted medium to store value and enable exchange, has greatly enhanced our world, our lives, our potential, and our future.

By the year 1100, the prevailing cultural system in the Western World was feudalism. It was a world of kings and lords, vassals and serfs, kingdoms and manors. Long-distance trade was expanding and new worlds of foreign spices, oriental treasures, and luxurious silks were discovered.

350 years later, after weathering a Black Death and the Hundred Years War, Europe emerged by expanding trade to new levels and building the foundation for the start of the competitive market economy we know today.

The creation of markets

With a population spurt starting around 1470, cities, markets, and the volume of trade grew. Banking, initially started by Ancient Mesopotamians, grew to new heights and complexities, the guild system expanded, and the idea that a business was an impersonal entity, with a separate identity from its owner, started to take hold.

Silver imports from the new world drove expanded trade, and bookkeepers created standardized principles for keeping track of a firm’s accounts based on Luca Pacioli’s accounting advances. Early entrepreneurs, called merchants and explorers, began to raise capital, take risks, and stimulate economic growth. Capitalism had begun.

The world would soon see that innovation could make lives better, and that efficiency was a path toward a higher standard of living. As Robert L. Heilbroner says in The Worldly Philosophers:

“The pre capitalist era saw the birth of the printing press, the paper mill, the windmill, the mechanical clock, the map, and a host of other inventions. The idea of invention itself took hold; experimentation and innovation were looked upon for the first time with a friendly eye.”

The start of the industrial age

The Industrial Age truly began in 1712 with the invention of Thomas Newcomen’s steam engine in Devon, Britain. But it wasn’t until James Watt’s steam engine in 1763 that things really got moving, enabling work to be done through the movement of pistons rather than the movement of muscle.

From the Industrial Revolution, the concept of mass production and economies of scale came about. Bigness, trusts, and vertical integration became the key to riches at that time. It was Andrew Carnegie and J. P. Morgan in steel, John D. Rockefeller and Frank Kenan in oil, and Henry Ford in automobiles.

While some of these titans had questionable ethics, no one can deny that they were innovators. They forged alliances, developed new ways of doing business, and created efficiency across industries.

It was the combination of energy and engine that freed man from the constraints of muscle power, making the Atlantic world the greatest military power. The telegraph and telephone connected humanity around the world. With electricity, we lit up the night.

While governing institutions are required for the effective functioning of capitalism, the market system has been one of the most significant innovations in the history of humankind.

Main photo: Unsplash/Nikita Andreev

*This article was originally published on October 17th, 2018 and updated on December 11th, 2018.