Arnold Kling  

From Poverty to Prosperity Watch

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The Kauffman Foundation conducted a survey of entrepreneurs. The findings can be inferred from the table of contents.


Experience, Management, and Luck: The Keys to Success
Professional Networks, Education, Funding, Personal Networks: Important
Location, Investor Advice, Alumni Networks, and Regional Assistance: Not so Important
Entrepreneurs Perceive Very Few Obstacles for Themselves.
Entrepreneurs Believe Entrepreneurship is Very Risky and is Hard Work
Using Personal Savings is the Norm, Venture Capital Comes to the Experienced, and Friends and Family are Always There
Other Success Factors
Entrepreneurship is Believed To Be Stressful, With Unanticipated Challenges

As an issue of methodology, the survey is assuming that entrepreneurs are correct in their perceptions of the sources of their success. Self-deception and the lack of a control group could be problems.

I personally would emphasize a desire to sell. If you cannot overcome your fears and insecurities about selling (and who doesn't have those fears and insecurities?), then you are very unlikely to be successful. The notion that you can have such a great idea that it will sell itself (or "go viral," as they say) is very seductive and in my view almost always wrong.

From Poverty to Prosperity turned out to have a big focus on entrepreneurialism, in part because of interviews with Edmund Phelps, Amar Bhide, and William Baumol. I created a list of entrepreneurial temperaments and found that when I reversed them--creating an "anti-entrepreneur"--the resulting personality is in fact a typical bureaucrat, colorless and rigid.


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COMMENTS (11 to date)
Lord writes:

Perhaps better is the notion the idea sells itself to the entrepreneur who then has no difficulty selling it to others because they don't even consider it to be selling, but only explaining it.

Dain writes:

My own experience tells me that entrepreneurs - especially those that embrace the term and hold some kind of philosophy surrounding it - are dull Republicans with philistine tastes. Though not especially 'rigid.'

On the other hand, most the fun, colorful and non-rigid folks I know either work for the state or a small, struggling business that is very self-conscious about coming off as a pushy heavy seller.

There's been some sociological work on this kind of thing, right? In France, for example, I think it's almost a rule that artists and fun lovers desire a state job because it secures a paycheck with lots of time to devote to hedonism and, well, a colorful existence. This fits my Sacramento and bay area California experience well.

Mike writes:

What is the entrepreneurial temperment? What's the bureaucratic temperment?

Seriously, aren't, say, Ted Turner, Bill Gates and John D. Rockefeller all examples of successful entrepreneurs? And aren't all of them very different from each other in their personali

Robert writes:

Not related to this post, but here is a recalculation-related article that you've probably already seen:

http://www.voxeu.org/index.php?q=node/4231

AJ writes:

Having, LKEE ARNOLD, completed Ph.D. in economics at M.I.T., been an academic/teacher/research oriented economist, then a career as entrepreneur, then returned to being an economist...

I'd agree about selling,

I'd agree with their perceptions and the survey,

But I'd also wax philisophical about the unexpected changes and need to reinvent. Nothing works the way you expect. Nothing works the way "it is supposed to." There is a constant need to adapt ideas and reinvent that evolves the business towards success. For human activity to succeed, an organization or a goal cannot be programmed so easily. The need to succeed entrepreneurially gives one a different relationship to reality. This is one reason that entrepreneurship of any sort is so important to the society/economy. Having a job, mononopoly, and government programs all allow illusions and self deception to persist. The same distinction has been made about investing and the resulting importance of having citizens who have investments. I think there is an ontology difference in the two worlds -- the opposite one being a world which gives rise self important ideas which cannot be tested, victimhood and blame.

In essence, when you are an entrepreneur, every day is a scientific test of your thinking about intereactions, customers, suppliers, resources, etc. Boone Pickens used to say this about investing which is why he thought everyone should make investment or commodity wagers every day.

AJ

AJ writes:

This work gives rise to an altnernative view of economics to the multiple-markets paradigm that we all think in -- the Value approach to economics. All economic activity, business structures, business models are oriented around 1) creating value and/or 2) capturing value.

This is not the forum to go into detail, but this paradigm puts the organization of business activity in a lot more important light then the invisible hand of the market model.

AJ

Colin K writes:

Dain:

I know a good deal of state workers and all many of them want to talk about are the Red Sox and the @&$!s on the new bartender. Most are conformist to a fault. Around here (boston) the oddballs seem to end up working in colleges mostly.

I'm an entrepreneur and suspect I come off as you describe to some people. I'm higher on openness but lower on agreeability and wear dockers and a polo shirt many days. You have to get to know me better to see past that.

Dain writes:

Colin,

Yea, there's no way my assessment isn't tainted up and down by selection bias.

Josh writes:

Kling's sentiment that ideas rarely sell themselves was corroborated by a venture capitalist who I heard a few years back. The memorable quote, "I would rather have an A team with a B product than a B team with an A product."

Of course before hearing this, I always thought that, if you came up with a great idea, all you had to do was cash the check.

Jim writes:

We could have fun with Dain's reply.

If nihilism and general narcissism is the definition of fun, then perhaps he is correct.

If making your goals and partying towards them in any self enlightened manner is more your thing, then my business friends are by far the most interesting and fun loving people I've met.

Tracy W writes:

Dain, I think there's a different value system going on here. The older I've gotten and the more experience I've gotten, the more I've started to value conscientiousness. People who are focused on being fun and colourful make for a lot of work for other people to fix up.

If you work for the state you don't need to worry so much about getting things right as long as you avoid negative news coverage, and are not in a job where you could be killed if you get things wrong, (as exceptions to the state-employee rule, I've noticed that military guys tend to be obsessively non-fun about things like storage of explosives and firefighters tend to be obsessively non-fun about fire safety.)

So it doesn't surprise me that colourful, non-fun folks would tend to work for companies that are small and struggling, I suspect that you and I have different priors about which way the causal link runs.

And then of course philistine tastes are in the eye of the beholder. One of my side interests is bellydancing, and I quite enjoy being able to shock that social group by mounting a defence of mainstream culture.

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