Arnold Kling  

Predicting Success in Entrepreneurs

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Via various people, Paul Graham identifies characteristics of successful business founders.

First is "determination." I have a cousin who got into a business in which he had to make 150 cold calls a day, and if he was lucky he got 3 or 4 leads that he could follow up with later. How many of you think you could persist with doing that? I know I couldn't. But I did a lot of cold-calling in my entrepreneur days. I took a lot of rejection, but I should have been willing to take more--that is, I should have named higher prices and been willing to take more rejections.

Next is flexibility.


The best metaphor I've found for the combination of determination and flexibility you need is a running back. He's determined to get downfield, but at any given moment he may need to go sideways or even backwards to get there.

I like the running-back metaphor. Inside a big organization, an innovator is likely to feel that most of the guys on your own team are trying to tackle you. That's why you quit to start your own firm.

Next is imagination. That is probably where I had the most strength as an entrepreneur. I saw possibilities before other people saw them. One of the first comments I got on my web site when I started it in 1994 was, "Congratulations. You've set up your lemonade stand on the moon. Now you just have to wait for the astronauts to get there."

Next is a "naughtiness," or a willingness to spurn norms and rules.


ask about a time when they'd hacked something to their advantage--hacked in the sense of beating the system, not breaking into computers.

I had plenty of that, as well. Had I been asked this question, I could have gone back to my high school days, when we figured out the password to the demonstrator number for a time-sharing computer service, so that we could use it for free.

The last is friendship. In my case, I was a lone founder, which was a real problem until I found partners. The partners were close friends with one another, and after a while they took me in as a friend, too. In any case, when I interviewed entrepreneurs for Under the Radar, my first book, I found many examples of what I called "the early divorce," where friction between founders was impossible to overcome. So I can see where friendship is important.

Below the fold, I will list the characteristics that I thought were important when I wrote my book.

1. Charm. If people don't like you, they won't work with you.

2. Talent-scouting ability. I can think of one founder who had everything going for him except this. He simply could not bring in top caliber people to work for him. Fatal.

3. Information sponges. I think this is what feeds imagination.

4. Ability to stand up to the bear. This is the ability to demand a high price, while being willing to risk rejection.

5. Beginner's mind. This is the ability to ignore established customs in an industry--may be related to what Graham calls "naughtiness."


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CATEGORIES: Business Economics



COMMENTS (7 to date)
Hyena writes:

What was your business?

Rebecca Burlingame writes:

"I saw possibilities before other people saw them" - timing should have been among your numerical list! Beginner's mind is really important to me even if I never equated it with naughtiness.

T writes:

What do you mean by "Information sponges" please?

Lauren writes:

T asks a good question:

What do you mean by "Information sponges" please?
I think what Arnold meant is being willing to read or listen to or absorb everything or anything, directly related or not, that might contribute to the project you as an entrepreneur might want to pursue. The experiences of failed similar projects or the information provided by researchers whose views oppose yours and ordinarily might not be views you'd read about are all potentially fruitful sources of contribution, challenge, and excitement worth listening to and absorbing.

You could get a great idea that solves a problem that has stymied you from reading a novel, from talking to a neighbor, or from studying the marketing plan of a failed project that bears only slight resemblance to yours. Sometimes the key connecting idea that carries your entrepreneurial thought forward comes from a surprising source. The more you read--books, articles, blogs, newspapers, library materials--and the more you watch or listen--via TV, radio, podcasts, local, national, or international news or other broadcasts, even in other languages you may know, or even the ideas or experiences remarked on by friends and neighbors--the more you can garner ideas that may contribute to your own entrepreneurial success. New ideas that solve problems you have encountered often come from astonishingly different fields and sources. Staying open, actively pursuing, and positively absorbing everything you encounter--being an information sponge--is part of the experience of the successful entrepreneur.

Rebecca Burlingame writes:

Lauren,
Cool explanation of an information sponge. One has to be an extreme information sponge nowadays to make sense of what contributes to the issues of our time.

JimChiang writes:

Unfortunately, I just don;t think there is a formula for entrepreneurship. There are the usual good qualities, but I'm not sure any of them actually contribute to being there are the right time.

Jim
http://www.neocontext.com
Blog: http://blog.neocontext.com

Tom Grey writes:

"naughtiness" -- what a nice euphemism.
Desire to succeed so strong that one is willing to break laws, or bribe others, to be successful.

Even a willingness to, literally, murder the competition. (Too naughty for this Boy Scout.)

That level of naughtiness seems to be shared by many ex-commies now successful business people.

How many Russian bankers were murdered in the 90s?

Peter Drucker identified (in 1956) how often the successful entrepreneurs came in pairs; far higher likelihood of success (though perhaps less frequent superstars).

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