A (sorta) wise entrepreneur once said

A response to Scott Adams of Dilbert and some successful guys I interacted with on Twitter on the topic of entrepreneurship. My take: Entrepreneurship is a wonderful thing, but let's not prescribe or fetishize it.

March 13, 2013
Jonathan Libov

This post was mainly inspired by a recent blog post from Scott Adams - Management/Success/Leadership: Mostly Bullshit - of Dilbert fame. In that spirit I'll start with a cartoon of my own:

Career Services

In his post, Adams elucidates some ideas that I've long held. Specifically, the kind of business/management advice you read online and elsewhere is:

  • Mostly a lot of hot air
  • Lacking nuance or context
  • Misguided
  • Painted in overly broad strokes

I want to focus on one particular point from Adams' piece:

"How about the idea that every hourly wage slave should 'act like an entrepreneur'? How do you think that would play out with Apple's 50,000 employees? The unsexy reality is that everyone in the company can't be creative risk-takers. Someone has to actually work."

As someone who's embedded in the "startup" world, especially in Tel Aviv where everyone and their אמא is starting a company, I love this quote. And when I say "embedded", I mean living in the echo chamber we've all created for ourselves on Twitter, blogs and other services that deliver our news and opinion. In this echo chamber, entrepreneurship is the foremost badge of success, even if your company stinks, or fails. It's not uncommon to see these kinds of opinions bandied about (the identities of this tweeter has been redacted to protect the innocent from my devastating brand of logic):

Not everyone will be an entrepreneur but everyone should think like one

Pardon my French, but here's what I think of this kind of opinion: "Barf".

You lost me at "Everyone should"

Below are Startup Guy B's (a different guy in the startup Twitterverse) replies to my reply, in which I expressed some skepticism on the notion that "everyone should think like [an entrepreneur]". Startup Guy B enumerates what it actually means to think like an entrepreneur.

not limited to risk or chaos. Entrepreneurship also about opportunity, positive attitude, commitment, perseverance etc

I fail to see how these qualities are inherent to entrepreneurs, or exclusive of non-entrepreneurs. If I had a nickel for every non-entrepreneur I knew who is opportunistic, has a positive attitude, and embodies commitment and perseverance, I'd have a lot more nickels.

also important: doing more with less

As I replied, why is it preferable to "do more with less"? Many people (bankers, lawyers) do very well by doing more with more!

With that said, my greater objection is with the phrasing "everyone should", as in "everyone should think like an entrepreneur". To Startup Guy A's credit, he suggests that not everyone will be an entrepreneur, only that they should think like one. I ask: Are the merits of entrepreneurship so unimpeachable that we should prescribe it to all as a way of life? Let's reserve the word should for the more universal truths in life (e.g., "You should help old ladies cross the street" or "You should not date Taylor Swift").

Sample bias

Imagine you're an executive at a snack food company looking to get some consumer feedback on a new cookie you're developing. You recruit a focus group of 20 people who love cookies, and love your products and those of your competitors. This is called selection bias, and it's a deeply problematic way to go about your research.

To those in the tech/startup world, ask yourself: Who have you recruited to your Twitter and RSS feeds to provide commentary and analysis on career and lifestyle choices? Chances are your feed is filled with successful entrepreneurs, not with scores of washed-up or failed entrepreneurs that eventually took jobs in order to pay the bills.

On the one hand, it is of course sensible to seek out advice from those who are successful rather than those who weren't. But on the other hand, as Adams puts it:

My view is that success happens when you have a coincidence of talent, resources, and timing. One can explain the existence of successful serial entrepreneurs by the fact that once successful they gain resources, credibility, extra talent, contacts, and the opportunity to live someplace such as Silicon Valley where opportunities fall out of trees. You would expect that group of people to get lucky more often than someone just starting out.

I believe this to be true (my argument in this post is invalidated if it's not). But let's be clear, people who succeed in their first venture are not merely lucky. Adams even lists qualities that are critical to success - resourcefulness, opportunism - which echo those mentioned by Startup Guy B. A short way to put it is that part of opportunism is being smart enough to put yourself in situations where you can get lucky.

Yet luck is still an indispensable part of the equation. Consider that even the smartest people in the venture capital world lose more than they win. That's their model. Some of the very smartest lose a lot more than they win for extended periods. What this means is that even if you manage to land an investment from one of the premiere firms (let alone the lesser ones), then by all rational measures your investors would admit that the odds are stacked against your venture being a success.

Part of the reason VC's invest in one entrepreneur over another is that they (the entrepreneur) have the know-how, resourcefulness, and ability to capitalize a large demand if the market bears the opportunity. Yet 70% of the companies they invest in fail, and I don't believe it's always the case that the VC was simply wrong about the quality of the entrepreneur; I suspect, as Adams did in so many words, that things just didn't break their way. Put otherwise, the opportunity the entrepreneurs had positioned themselves for never presented itself, often through no fault of their own!

If you're in the tech world and harbor an ambition to be an entrepreneur, consider this: The Personal Advisory Board you've assembled on Twitter and RSS is funneling you into a system where failure is the norm. If investors and successful-entrepreneurs-cum-angel-investors weren't so enthusiastic and convincing about entrepreneurship, they'd inspire fewer people to become entrepreneurs and would therefore have fewer entrepreneurs to invest in. Oddly enough, it's a case where selection bias catalyzes natural selection.

Word to the wise

To be clear, I'm not arguing that there's anything fundamentally wrong about this ecosystem. Not only do I think it's inspired a lot of entrepreneurs to go out there on their own and innovate, but I harbor many of these ambitions myself!

I'm also not arguing for anyone to start following failed entrepreneurs on Twitter, because that would be boring. To those who have made it to the end of this piece, I hope it's come across that I'm simply not arguing for any particular way of going about your business, as that would amount to the kind of should-mentality that don't support.

Looking to wrap up this post, I'm dying for a pithy proverb to support my rationale. Since I've been unable to find one, I'm just going to invent a deliciously-stilted one and attribute a fake ancient Chinese name to it. This way, that those who merely skimmed the piece will have a soundbite to take away. Here goes:

Powerful is the man who makes his own luck. Wise is the man who knows how luck is made. - Tzu Hai