Three Myths About Entrepreneurs

In a recent survey of entrepreneurship (Global Heroes), the Economist proposes a narrow definition that I quite like (“someone who offers an innovative solution to a (frequently unrecognized) problem”) and identified five commonly held myths about entrepreneurs, at least three of which resonated with me. They are:

  • Entrepreneurs are “orphans” or “outcasts.” In fact, entrepreneurship is a social activity. While they may be more independent than the company player, entrepreneurs almost always need business partners and social networks to succeed. Related, entrepreneurship flourishes in geographic clusters, partly because entrepreneurship is a way of life in these areas and partly because infrastructure exists to support entrepreneurs.
  • Entrepreneurs are just out of short trousers. At least in the U.S., a recent study found that of 652 bosses of technology companies set up in 1995-2005, the average boss was 39 when they started. The numbers of founders over 50 was twice as large as that under 25. It will be interesting to dig up some figures both globally, and for the social sector.
  • Entrepreneurship is driven mainly by venture capital. Most venture capital goes into a narrow sliver of business: computer hardware, software, telecom, and biotech. The money for the vast majority comes from personal debt or “the three f’s:” family, friends and fools. Makes me wonder about the implications for microfinance and the social sector.

Obviously this is an incomplete picture – there are two more myths I found less helpful, and a much larger data set needed than a thumbnail sketch of entrepreneurial activity in the U.S. But its an interesting start. One of the bits that I’m interested in is the role that inducement prizes can – and likely does – play in encouraging entrepreneurial activity. TBC.

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