Myths about entrepreneurs
washingtonpost.com
washingtonpost.com
Our analysis of more than 500 companies in high-growth industries revealed that not even 11 percent of these companies took venture capital at any stage of their existence. The Kauffman Foundation ran a similar analysis of companies on the Inc. magazine 500 list and found that only 16 percent of them raised venture capital.
The results speak for themselves.
The key is really the misleading definitions at the beginning. He includes what we'd call lifestyle businesses as startups. Is a new carpet cleaner a startup?
Publish the raw data, Vivek, with the actual names of the businesses, their founders, their market caps, their sectors, and their revenue growths in a single publicly accessible, read-only Google Spreadsheet.
Because my feeling is that the actual businesses selected will differ strongly from the kinds of operations peoe on Hacker News are concerned with: Google, Facebook, Adobe, LinkedIn, Apple, Twitter etcetera, and the kinds of companies they acquire.
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Edit: here's the original study
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1431263
Note that this is a survey of 549 respondents across twelve industries. First, that is a relatively small sample to slice and dice on multiple axes simultaneously, though you can compare each attribute to the population at large.
More importantly though it is not a rank ordered survey within those industries. For example, identify the top N most profitable companies started in the last T years in the hardware sector, for different values of N and T. Who are their founders? What are their characteristics? They are going to look more like Jen Hsung Huang of Nvidia, another Stanford grad school product, than the demographic profile Wadhwa presents.
Is a new carpet cleaner a startup?
> 4. Women can’t cut it in the tech world.
Vivek throws out this straw man (straw woman?), but other than a rare sexist I don't hear anyone saying that. There may be observations that the number of women in tech is low - and a lot of speculation as to why - but no one's saying women can't cut it.
The thing about rare sexists is that they are not all that rare.
I could go next month and start an innovative book shop with a wine bar instead of just coffee drinks, but that's why we have the distinct term "startup" to mean a new business likely capable of exponential scaling once it proves product-market fit, the only kind VCs want to plug into, and not just a new small business that is likely always going to stay small or at best grow slowly, that will be fun and might pay the bills but would never be worth outside equity investment.
Wadhwa gives no indication that I could tell that he's made any attempt at that distinction, except in the negative with the very low VC rate of his sample group, and with the claim that they are in twelve "high growth" industries. Twelve entire industries is a pretty broad segment of the entire economy, and doesn't approach the defining distinction of startups.
EDIT TO ADD: his selection criteria were just involvement in any of fifteen (17 except two are listed twice) industries indicated as high-growth, and which include for example "engineering consultants", "health care facilities", and "audio and video equipment" though a little later it says some of the respondents were also from "other (non-technology)", so it's pretty non-selective. He also defined a "founder" as "an early employee, who typically joined the company in its first year..." so his definition of "founder" is also pretty loosey-goosey. Good thing he cleared up myths about startup founders.
That said, I think most of what matters can be taught!
1. Not a myth! Apple, Microsoft, Yahoo, Google, Facebook, Foursquare, ... There are counterexamples but certainly plenty of young ones. I'm 40+ now so no bias. :-) 2. Correct, myth. I could teach you to be an entrepreneur if you wanted to be one. 3. Myth 4. Myth. Gilt Groupe a good example. 5. Myth
For example I started a company in E.Europe, and here it's not clear at all what process you have to follow to succeed.
You may think that an entrepreneur has to figure that out, but that's not a good way to look at it. A good entrepreneur, since he's already involved in a venture with high overall risks, will minimize individual risks whenever possible. By following a model such as the YC/SV model, where he is advised, maximizes the inflow of information about his idea/BP etc, he can achieve that.
I think it's obvious that you don't need to be an ivy league drop out to run a successful start up. However, representing data this way portrays the image that this stereotype actually hurts the start up model - which I doubt is true. I'm not speaking quantitatively - just from my sense of logic.
If the goal of the article is to promote non ivy league drop outs to found companies, then I'm all for it. If it's trying to convince us that ivy league drop outs perform worse, then I don't buy it. People tend to drop out to start a company for a reason - and that reason is usually boredom.
I followed a couple of courses about entrepreneurship in a top B-school - not too many, though - and I am quite sure none of them turned corporate exec, engineers, consultants or lawyers into entrepreneurs if they were not ready for it in the first place.
Really?
You don't need to teach people to break all the rules. That's not what you want. You want people to take calculated risks, and break the rules that need breaking.
You could teach the history of rule-breaking, and explain how why those rules needed to be broken. Teachers could do that pretty well.
Teachers can tell stories about all of those, but they won't really "teach" them, since there are too personnal to be replicated.
"founders of tech companies tend to be highly educated."
Observing that the majority of successful founders have college degrees tells you nothing about the effect of not having a college degree. If 1% of students drop out, 99% do not drop out, and of the founders from the 1%, 80% are successful and from the 99%, 20% are successful, we would still see the vast majority of successful companies coming from non-dropouts.
A very poor analysis published by a man with a pro-education agenda.
P.s. are there anti-education agendas; i would be curious to read about it
It seems to me that media is absolutely in love with this notion. The scrappy, brilliant kid who's going to change your world (e.g. Diaspora). Why is that?
For me, it's been the difference between shipping and being stuck in development hell forever.
The older crowd wins hands-down.
Perhaps it's the opposite. If they turn founders into mythical characters, then it's much easier to disregard the idea of ever starting a business. They don't have to take responsibility for their own lives or accomplishments.