17 June, 2011

5 myths of entrepreneurship

The Economist's special report on entrepreneurship lists 5 myths about entrepreneurs:
  1. Entrepreneurs are outcasts or social misfits. In reality, while most entrepreneurs have high independence of spirit, they also have excellent social skills - selling their idea to others, leading a team, and generally building networks of relationships.
  2. Entrepreneurs are young. While some entrepreneurs start young in software and web businesses, Harland Sanders started franchising Kentucky Fried Chicken when he was 65; and Gary Burrell was 52 when he left Allied Signal to help start hi-tech GPS company Garmin. “The Kauffman Foundation examined 652 American-born bosses of technology companies set up in 1995-2005 and found that the average boss was 39 when he or she started. The number of founders over 50 was twice as large as that under 25.“
  3. Entrepreneurs rely mainly on venture capital.  In reality, most entrepreneurs start out with minimal funding, mortgaging their own homes, raising funds from “friends, family and fools”, and bootstrapping business growth. Angel investors play the next most prominent role in funding growth, while VCs invest in relatively few businesses, and usually in very narrow fields such as high-tech.
  4. Entrepreneurs succeed by inventing world-changing new products. While occasionally someone does invent a completely new product or service, most entrepreneurs succeed through better ways of doing existing things (better mousetraps or new ways of making and selling old-style mousetraps), or simply executing better.
  5. Entrepreneurs cannot succeed in big companies. While many entrepreneurs achieve success by setting up their own operations, there are numerous large organisations who provide supportive environments to grow dozens and even hundreds of entrepreneurs in-house: 3M, GE under Jack Welch, Johnson & Johnson, to name but a few.
The article closes with this further encouragement:
Microsoft, Genentech, Gap and The Limited were all founded during recessions. Hewlett-Packard, Geophysical Service (now Texas Instruments), United Technologies, Polaroid and Revlon started in the Depression. Opinion polls suggest that entrepreneurs see a good as well as a bad side to the recession. In a survey carried out in eight emerging markets last November …, 85% of the entrepreneurs questioned said they had already felt the impact of the crisis and 88% thought that worse was yet to come. But they also predicted, on average, that their businesses would grow by 31% and their workforces by 12% this year. Half of them thought they would be able to hire better people and 39% said there would be less competition.
First posted April 14th, 2009

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