The 5 Myths of Entrepreneurship
By Anna Johnson on March 23rd, 2009A recent article in The Economist shines some welcome light on the popular, somewhat romanticized view of the entrepreneur. In doing so, it blasts through five myths of entrepreneurship, which should be inspirational and encouraging for people who ARE entrepreneurs.
The Economist defines entrepreneur, not as anyone who starts a business, but as someone who starts a business in order to bring an innovative solution to the world.
This concept of entrepreneur is borrowed from the late management guru, Peter Drucker, who said that, by definition, entrepreneurs ‘innovate’.
So rather than simply copy other businesses – for example, the lawyer who starts a firm offering the same services in the same way to the same kind of customers as most other law firms – entrepreneurs deviate in some profound way from the accepted way of doing things.
All well and good, but what are the 5 myths of entrepreneurship? Here goes…
Myth #1: Entrepreneurs are lone wolves who succeed without and in spite of others and established social networks.
In reality, ultra-successful entrepreneurs NEVER do it alone. Many start out with partners and build networks with others in order to succeed.
Myth #2: Most entrepreneurs start their businesses when they’re young e.g. in their teens or early twenties.
In fact, some of the most celebrated entrepreneurs start their businesses in their elder years. Harland Sanders started franchising Kentucky Fried Chicken when he was 65, Herb Kelleher was 40 when he founded Southwest Airlines, and Ray Kroc was 52 when he started McDonalds.
Also, the Kauffman Foundation’s study of 652 American-born bosses of technology companies set up in 1995-2005 found that not only was the average boss 39 when he or she started, but the number of founders over 50 was twice as large as that under 25.
Myth #3: Entrepreneurship is mainly driven by venture capital.
In reality, most venture capital goes into only a few areas of business, such as computer technology, semiconductors, telecommunications and biotechnology. The vast majority of startups do NOT receive venture funding and, instead, are bootstrapped or raise money from friends, families or ‘angel’ investors.
Myth #4: To succeed, entrepreneurs must produce a world-changing new product.
The Economist article indicates that most successful entrepreneurs introduce innovative processes rather than innovative products. In other words, they tend to focus their innovation on radically improving an existing way of doing things.
Myth #5: Entrepreneurship cannot exist in large companies.
The Economist article points out that large companies can and do facilitate and encourage entrepreneurship.
For example, Johnson & Johnson operates like a holding company that provides capital and marketing help to its internal startups, while Microsoft and Nokia encourage large networks of small companies to work with and for them.
So… how many of these myths ring true to you?
Source: Adrian Wooldridge, “A special report on entrepreneurship,” The Economist, March 12 2009
