- Starting a business isn’t as exhilarating as it can seem, experts say.
- The rise of “entrepreneurship porn” is luring many ambitious young Americans into launching their own companies, when they might be better off joining a more established organisation.
- If they do decide to found a company, these entrepreneurs should at least be adequately prepared, instead of simply diving in headfirst. Entrepreneurship isn’t just about risk-taking and passion.
Tomas Chamorro-Premuzic has been teaching MBA students for more than 15 years.
When he first started teaching, all his students wanted to work for corporate giants like Goldman Sachs, IBM, and Unilever.
A decade later, Google, Facebook, Apple and Amazon were the big draws.
“Now,” he told me when we spoke by phone in July, “the vast majority tell me, ‘You know, I’m going to be a startup guy. I’m launching something. I’m going to create the next big X, Y, Z.”
“Who are we to crush their spirits?” Chamorro-Premuzic said. “But I think we have a responsibility to inform people that the probability of attaining that is really, really, really low, and that to actually attain it, they’re going have to sacrifice so many things.”
Today, Chamorro-Premuzic is a psychology professor at Columbia University and the chief talent scientist at Manpower.In one of the opening chapters to his 2017 book, “The Talent Delusion,” he explains why many ambitious young Americans today would be better off working for an established company than trying to build their own business.
And yet many of these young Americans are hypnotized by stories of entrepreneurs who, against the odds, made it big. Even if they’re not prepared – personally or professionally – to launch a business, they forge ahead anyway.
“People feel like, ‘Oh, I have an idea. I don’t like the idea of having a boss. I’m going to be the next Elon Musk,'” Chamorro-Premuzic said. “It’s not that easy.”
Telling people you’re an entrepreneur is ‘sexy’
The rate of new-company failure in the US is unclear. In 2017,USA Today highlighted data from the Bureau of Labour Statistics, showing that about 20% of new businesses survive longer than one year. In fact, according to BLS data, that number hasn’t budged since 1995.
But “entrepreneurship” is notoriously hard to define. Do mum-and-pop businesses count? Or is it just high-potential ventures? “Failure” is even harder to define: What if a startup pivots or downsizes?
Still, Chamorro-Premuzic’s observations about entrepreneurial overeagerness are echoed by academics and business people alike.
Morra Aarons-Mele, the founder of Women Online and The Mission List, appears to have coined the term “entrepreneurship porn” in a 2014 Harvard Business Review article, to describe “an airbrushed reality in which all work is always meaningful and running your own business is a way to achieve better work/life harmony.”
In the article, she makes the point that entrepreneurship is hardly as liberating as it can seem: “Starting a company doesn’t mean being freed from the grind; it means that the buck stops with you, always, even if it’s Sunday morning or Friday night.”
When Aarons-Mele launched her companies, “I just wanted to make a living,” she told me, and she knew that “I just never wanted to go an office again for 10 hours a day.” But a couple years in, something changed.
“I drank the Kool Aid,” Aarons-Mele said, “of being not just an entrepreneur, but a woman entrepreneur. It was sexy.” She started going to conferences and speaking at events for founders.
“It was only after I realised that I did not want to scale, that really becoming this sort of entrepreneur with a capital ‘E’ would make me have to live a lifestyle that I didn’t want, that I became a happy small business owner instead.”
Aarons-Mele knows firsthand that the word “entrepreneur” can sound infinitely more appealing than “small-business owner.” She suspects that can play a big role in people’s desire to scale their company, and quickly. That is to say, entrepreneurship can be as much about the founder’s ego as anything else.
“It’s a very American thing to be an entrepreneur,” Aarons-Mele said. “‘Small business’ implies small. It’s a lot of what ambitious people might even want to escape versus create.”
Too many aspiring founders think entrepreneurship is about ‘diving in’
Then there’s the problematic notion that starting a business is all about taking risks.
“There’s something a little bit inherent in a lot of founders’ psyches of, ‘You’ve just got to dive in,’ that it’s the type of thing that you can’t go and learn about before you do it,” said Noam Wasserman. The common misconception is that “you have to fail, learn from that, pick yourself back up.”
Wasserman is the founding director of the Founder Central Initiative at the University of Southern California’s Marshall School of Business. When we spoke by phone in June, he told me that this myth “heads off at the pass any of that inclination to go and learn before you go and dive in.”
Wasserman’s observations recall those of Wharton professor Adam Grant. In his 2016 book, “Originals,” Grant wrote that, contrary to popular belief, the most successful entrepreneurs don’t quit their day job to start a company. One University of Wisconsin study found that entrepreneurs who kept their day jobs were 33% less likely to fail than those who don’t.
Recent research also reveals just how important it is to wait until you have enough experience before building a company.
An MIT study found the average age of a successful startup founder is 45. The study authors found that work experience explains much of the age advantage. They write in the Harvard Business Review, “Relative to founders with no relevant experience, those with at least three years of prior work experience in the same narrow industry as their startup were 85% more likely to launch a highly successful startup.”
Indeed, Chamorro-Premuzic said that technical expertise in the area where you’re founding a company is one of the most “underrated” attributes of a successful entrepreneur.
‘It’s your baby, your everything’
I asked a few entrepreneurs to tell me about their experiences, about how entrepreneurship porn had (or hadn’t) influenced their decision to launch a company.
Sophie Kahn took a relatively cautious approach: As she told Business Insider’s Libby Kane, she kept her job at Marc Jacobs while developing the plans for AUrate New York, the jewellery company she cofounded with Bouchra Ezzahraoui and that’s raised $US2.6 million. Entrepreneurship, she learned, was both harder and easier than she’d anticipated.
“Harder, because it’s truly all-consuming and you never ever have a day off. It’s your baby, your everything, and always with you,” she wrote in an email.
And “easier, because it doesn’t feel like work in the sense that it’s your passion and you want to work on it, and of course since you’re free to make your own choices and set your own schedule.”
Jen Rubio left her job at Warby Parker a few years before cofounding direct-to-consumer luggage company Away, which has raised a total of $US81 million. But Rubio says she and her cofounder, Steph Korey, another Warby Parker alum, learned a lot from their experience there: “Being on the ground floor of an early-stage startup with that mentality allowed us both to build something entirely new every day,” Rubio wrote in an email.
Rubio’s best advice for anyone considering starting a business is “to be really specific about why you’re doing it and what problems you’ll be able to solve in a meaningful way for your customers; don’t start a business just because you think you have have a great idea.”
‘Passion can become your peril’
Another persistent myth about entrepreneurship is that, once you’ve got the product and financing in place, the people stuff will come naturally. Many entrepreneurs, Wasserman said, are completely oblivious to the importance of the people side – i.e. who you hire and how you manage your company.
For example, some entrepreneurs figure that they’re already best friends with their cofounder, so everything should be fine. “Unfortunately, those happen to be the least stable of founding teams,” Wasserman said.
But perhaps the most destructive misconception around entrepreneurship is the importance of passion.
At the start of every semester, Wasserman asks his students: How important is passion for the “entrepreneurial magic?”
“We get a resounding, ‘Passion is critical. Passion is going to be the main ingredient that is going to enable me to go and succeed as a founder,'” Wasserman said. Then he presents them with a case study “that drives home to them that passion can become your peril.”
Specifically, Wasserman said, passion can mislead you into thinking you’re readier to start a company than you are, or make you believe that your idea is more valuable than it is. “You have to really go and grab the founders by the lapels and have them think deeper about these people issues,” Wasserman said, “where the person that they’re dealing with is themselves.”
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