So what do the successes have in common?
On Tuesday, I detailed the results of several studies on entrepreneurship, all of which started with certain hypotheses—like, “entrepreneurs are risk-takers!”—but came up empty when actually putting those to the test.
After that post, you might, rightly, be wondering what entrepreneurs do have in common? They’re not risk-takers or go-getters—at least not any more than regular high-performing managers at big corporations are.
Researchers have had success finding behaviors and backgrounds—rather than traits—that successful founders have in common. There are things that entrepreneurs do that can heighten their likelihoods to surpass $1 million in sales or sell out in an IPO, in contrast to the things that entrepreneurs feel that we were looking at in the last post.
So what are the behaviors of entrepreneurs that hit the big-time? Read on.
They’re old, and they graduated from college.
Our romantic ideal of a successful entrepreneur probably looks something like Mark Zuckerberg or the guy in the photo at the top of this post. In reality, most entrepreneurs attend and graduate from college.
It’s a myth perpetuated by founders and venture capitalists themselves. Certainly, it’s true that you don’t need a college degree to start your own business, but that doesn’t obviate the fact that most entrepreneurs who perform well do have one.
And yes, this is even true among technology companies. A survey of 652 U.S.-born CEOs and heads of product development in 502 engineering and tech companies found that an overwhelming 92% had bachelor’s degrees. The Duke and Harvard researchers also found that 31% had Master’s degrees and 10% had PhDs.
Oh, and you know how everyone loves to knock an Ivy League education? About 8% of founders had degrees from those eight schools, which is kind of remarkable when you set that against the hundreds and hundreds of schools in the U.S.
They were also old when they started their companies. The median age of tech founders was 39, which admittedly isn’t ancient, but also isn’t the mid-to-late 20s ideal of a tech entrepreneur that you might have assumed was commonplace.
In case you’re wondering what these particular researchers counted as “success”, all of the companies studied had in excess of $1 million in sales, 20 or more employees, and company branches with 50 or more employees. Not too shabby.
You might have a vision of nutty professors or computer-geeks in darkened rooms generating fabulous inventions that turn into gangbuster businesses. It’s true that good products make for good businesses, but Stanford researchers have found that it’s generalists—that is, people who are as good at human resources as they are at technical skills—that have the most promise as new entrepreneurs.
Stanford professor Edward Lazear studied data from a 1997 survey of about 5,000 alumni of Stanford, and found that entrepreneurs were more likely than company men to have career experience that included many different tasks, rather than specialization. They also took classes in undergrad and graduate school that expanded the breadth of their knowledge, rather than diving deep into a particular specialization.
In other words, the typical entrepreneurial career path was not “computer programmer at Microsoft”, “senior programmer at Google”, “programming manager at Google”, then “founded Web 3.0 company”. Instead they’d have a cornucopia of differing roles—manager, programmer, recruiter, etc.—that gave them a sense of how businesses worked broadly.
They build good teams.
Good entrepreneurs aren’t loners. They find teammates that have skills that fill in their own gaps. A few Stanford professors studied 170 Silicon Valley start-ups for eight years to see if they could predict success or failure based on the backgrounds of the individual founders.
They found that the most successful firms were the ones with founders who not only had different functional backgrounds—i.e. people from marketing and accounting backgrounds in addition to engineering—but those who came from different companies. Businesses also did better if they continued to bring new people in to fill missing skills as the organization grew.
This is something venture capitalists have intuited for a long time. If you check out an entrepreneurship book from the library, you might find some that advocate good teams as being even more important than your idea for a product or service.
It also makes sense from a personal standpoint. Even for an endeavor as small as Pop Economics, I’ve found myself focusing way too much on the content creation, which I’m good at, at the expense of networking with other bloggers and connecting directly with readers, which is just as important, if not more important, for making it a success.
I’m the kind of guy who enjoys parties but finds them exhausting and feels like he needs to sit alone for several hours to recuperate. Not exactly a winning formula for a medium whose currency is literally connections (links) with each other.
Seems like it might be time for me to find a sociable partner. And if you’re thinking of starting a business yourself, it would be more useful to bring an accountant or a marketer on-board than to try to learn those skills by checking a few books out of the library. If you start a billion-dollar business, you’re not going to miss the shares you gave away to the teammates who made it happen.