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in Title
9 Myths about Entrepreneurs andEntrepreneurship
Professor Laura L. Hollis, JD
Clinical Professor of Business AdministrationNovember 4, 2008
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#1. Entrepreneurship is a “young person’s game;” most
first-time entrepreneurs are either in college or right out
of it
FALSE
In fact, the average age of a first-time entrepreneur starting
a technology business is 39! And since this is an average,that means that just as many start-up founders are older as
are younger.
Source: Wadhwa, Freeman and Rissing, Education and Tech Entrepreneurship, Report of
the Kauffman Foundation, May 2008
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#2. Successful entrepreneurs are those who come upwith the most creative, original ideas for their businesses
FALSE
•It depends on what you mean by “creative” and “original.”
• According to some studies, anywhere from 70% - 90% of
the ideas for a new business come from an entrepreneur’s
previous employment or existing business contacts.•In other words, the more experience you get working for
someone else, the more likely you are to come up with an
idea for a new business.
Source: Prof. Ikhlaq Sidhu, Center for Entrepreneurship and Technology, University of
California, Berkeley
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#3. Most entrepreneurs are motivated by money or“greed”
FALSE
•And not just “false,” but way, way off.
•Most entrepreneurs are motivated by a desire to work for
themselves, and a passion for solving problems –
particularly difficult, entrenched human problems.• Even the most successful entrepreneurs will tell you that if
you’re “in it for the money,” get out now; it’s much easier
to make money working for someone else!
Sources:
Scott Shane, The Illusions of Entrepreneurship, Yale University Press
Guest lectures, Lectures in Entrepreneurship course, University of Illinois, 2001-2008
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#4. Most successful entrepreneurs – especially in high-tech companies – have Ph.Ds in science
FALSE
•6% of U.S. born tech company founders have a high
school diploma or less
•2% have an associates’ degree, some college, or a
certification•44% have a bachelors degree
•30% have a masters
•4% have an MD
•4% have a JD•Only 10% of high-tech company founders have a Ph.D!
Source: Wadhwa, Freeman and Rissing, Education and Tech Entrepreneurship, Report of
the Kauffman Foundation, May 2008
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#5. Entrepreneurs are “born different”
FALSE•In fact, a good number of people who become
entrepreneurs never planned to be.
•Although there are correlations between certain types of
behavior or psychological traits and entrepreneurship, it
seems that as many successful entrepreneurs learn theseskills and acquire these attributes as are “born” with them.
•And we know that some of the most significant personality
traits associated with entrepreneurship – such as “self -
efficacy” - CAN be taught
Source: Bill Lucas, MIT and Sarah Cooper, Cambridge University
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#6. To be successful, an entrepreneur needs a degreein business
FALSE
• Although many self-employed people have business degrees,
there is a stronger correlation between a degree in the sciences
or engineering
• According to a recent study, 34% of U.S. founders of high-tech companies held degrees in business, finance or
accounting
• 47% held degrees in STEM-related fields (Science,
Technology, Engineering, or Mathematics
Source: Wadhwa, Freeman and Rissing, Education and Tech Entrepreneurship, Report of the
Kauffman Foundation, May 2008
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#7. Most entrepreneurs are millionaires
FALSE
•Most new businesses fail
•The average self-employed person earns less than they would
working for someone else
•Entrepreneurs work more hours, on average, than thoseworking for someone else
Source: Scott Shane, The Illusions of Entrepreneurship, Yale University Press
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#8. You can’t be an entrepreneur without venture capital
FALSE
• only .03% of new companies are financed by venture capital
• the average amount of money used to start a business is
between $15,000 - $20,000
• the most common source of this money is the entrepreneur’s savings; not banks, or even loans from friends and family
• 65% of entrepreneurs finance their companies use some form
of personal debt
• fewer than 1 in 12 start-ups gets investment money (equityfinancing) from family and friends
Source: Scott Shane, The Illusions of Entrepreneurship, Yale University Press
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#9: Entrepreneurs are happier than those who work forother people
TRUE• But! It depends upon what measure you are looking at
• Remember, entrepreneurs work more hours than those
working for someone else
• And, they tend to make less money
• And, most new businesses fail
• That said, self-employed people report HIGHER job
satisfaction
• dramatically higher – 62.5% versus 45.9%
• Why? Autonomy, flexibility, greater impact and greater control.
Source: Scott Shane, The Illusions of Entrepreneurship, Yale University Press