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Entrepreneurs: Made or Born?

Is Man’s behavior the result of Nature or Nurture? It’s a debate that’s been raging since the days of Socrates.  The derivative question: Are entrepreneurs made or born also has been a subject of much speculation.  That numerous studies have been conducted and books written about this very topic is testament to our ongoing fascination with entrepreneurs and what makes them tick.

In an attempt to gauge the Georgia start-up community’s thoughts on this topic, Venture Atlanta collected the opinions of some of its most influential entrepreneurs, investors, entrepreneur-turned-investors and industry professionals and put them up against the findings from four recent studies. The results were enlightening and a little surprising.

Natural Born Talent

According to a survey of more than 200 U.S. entrepreneurs conducted by Northeastern University’s School of Technological Entrepreneurship, almost two-thirds of respondents said they were inspired to start their own companies by their innate desire and determination.

Alan Taetle, General Partner, Noro-Moseley Partners

Alan Taetle, general partner at Noro-Moseley Partners describes this innate desire in more detail:

“Entrepreneurs are born. They have a different level of optimism and risk-tolerance than most people. They usually have something to prove; a chip on your shoulder is not necessarily a bad thing. Entrepreneurs have an unshakeable vision of what they want to accomplish. They are often passionate and charismatic.”

 

 

 

Silicon Valley Bank’s Dale Kirkland echoes this observation and cites specific iconic Georgia entrepreneurs:

“In my role at SVB, I’ve had the privilege to work with hundreds of entrepreneurs. My observation is that entrepreneurs are born out of non-conformism, and a vision for what should be, rather than what is. They have an innate need to catalyze positive change.  In fact, I’m amazed at how often the fire in the belly that makes them successful often keeps them from enjoying retirement at an early age.  Some Atlanta examples include Tom Noonan, Ashish Bahl and Jay Chaudhry.”

And it would appear that the absence of early retirements is not the only common trait among entrepreneurs. It seems that entrepreneurial tendencies manifest at an early age. This same study asked respondents for the age in which they launched their first venture and this is the breakdown:

  • 42 percent launched their first venture at childhood
  • 33 percent between age 18 and 30
  • 13 percent between age 30 and 40
  • Only 12 percent started their first venture after 40 years of age

All about Genetics? Not So Fast

But as with all topics of great debate, the body of research can produce mixed results.

A study directed by Vivek Wadhwa, an entrepreneur turned academic who is currently a Visiting Scholar at UC-Berkeley, Senior Research Associate at Harvard Law School and Director of Research at the Center for Entrepreneurship and Research Commercialization at Duke University, contradicts many of the finding of the Northeastern University survey.

According to this study, entrepreneurship is not hereditary.

Wadhwa’s study was underwritten by the Kauffman Foundation and published in 2009. It surveyed 549 successful entrepreneurs and found that 52 percent of the respondents were the first in their immediate families to start a business.  Approximately 39 percent had an entrepreneurial father, and 7 percent had an entrepreneurial mother.

Latent Tendencies & Survival Instincts

Glenn McGonnigle, General Partner, TechOperators

While none of the individuals Venture Atlanta spoke with for this article believed that entrepreneurship could be learned from the ground up, Glenn McGonnigle of TechOperators offers an interesting point of view regarding latent entrepreneurial tendencies:

“It is human to seek security for ourselves and our families. We are brought up to do well in school and pursue a profession that will incrementally reward us for our efforts. But for those among us who are dormant entrepreneurs, there will come a time when something deep inside is triggered that will spur us to take a path less traveled in pursuit of a dream.  Those who choose to take the leap most likely possess the genetic mutation that enables them to rationalize trading comfort and stability for chaos.

This trait, while partially inherited from our ancestors, is further developed throughout our formative years. As an entrepreneur matures, the rational mind weighs the burning desire to deviate from the plan against reality and the commensurate practicalities such as  – saving for retirement, paying bills, having a fallback job option, and seeking input from friends and family.  But passion is the spark that ignites this flame and keeps it burning.  The greatest company founders I know made the leap out of sheer passion and conviction for their idea.  For them, the reward that comes from successfully launching and growing a business transcends mere dollars and cents.”

According to Wadhwa’s study, only 25 percent of the respondents had entrepreneurial aspirations while in college. Half didn’t even think about entrepreneurship, and had little interest in it while still in school. This finding would seem to fly in the face of conventional wisdom and the stereotypical kid with the lemonade stand.

Or, could it be that Wadhwa’s entrepreneurs were late bloomers whose latent entrepreneurial instincts had to be ‘liberated’ as described by McGonnigle?

What Taetle characterizes as passion and charisma, Kirkland calls non-conformism and McGonnigle describes as a genetic mutation, Blake Patton, one of Advanced Technology Development Center’s (ATDC) newly minted entrepreneurs-in-residence calls innate survival instincts dulled only by the entrepreneur’s life experiences:

“To succeed in guiding a business through the start-up phase and beyond is a test of our survival skills as much as our intelligence and business acumen. The good news is we’re all born equipped with those survival instincts and my view is they are more often than not suppressed through life experiences and outside influences that lead us to take the ‘safe route’.”

Study of Twins

Venture Atlanta reviewed a third study which presented a different answer to the debate. Conducted in England and co-directed by Scott Shane, a professor of entrepreneurial studies at Case Western Reserve University, this study compared the entrepreneurial activities of more than 1,600 pairs of twins.  Specifically Shane studied 870 pairs of identical twins (each pair shared 100 percent of their genes with the other) and 857 pairs of same-sex fraternal twins (each pair shared 50 percent of their genes with the other) to see how much of entrepreneurial behavior is genetic and how much is environmental.

The verdict? Sixty percent of entrepreneurs are made and 40 percent are born.

Nina Sawczuk, Director, Startup Services & General Manager, ATDC

While this may appear to be a hedge by some, a number of those polled by Venture Atlanta agreed with the finding. Nina Sawczuk, general manager at ATDC offered an inclusive point of view in the nature versus nurture debate:

“What this question overlooks is the heterogeneity of entrepreneurship. While entrepreneurs often have similar characteristics, there are many differences among them that are under appreciated. In our rush to identify and support entrepreneurship as a legitimate career category, we over generalize.

An analogy is the “brilliant scientist.” Not all high contributing scientists make discoveries the same way. Some have flashes of inspiration while others painstakingly collect information and gather insight ploddingly. The former look more like they were “born” to scientific inquiry, the latter look as if they were “taught”. It has been determined that for science to advance most effectively, we need both these approaches.”

Cherie M. Fuzzell, president and CEO of FirstView, LLC adds a nuance asserting that entrepreneurs who are made have to work harder to achieve success:

“Individuals who naturally take risks, who have a positive attitude, who are committed despite setbacks, and who seek new experiences are more likely to succeed. While people lacking these traits can certainly develop them, they will have to work harder than individuals born with them.”

Education & Entrepreneurial Success

Finally, if we’re willing to consider that some entrepreneurs are born and some made, what about the role of education? Does formal education augment inherent entrepreneurial traits? Does it increase the likelihood of entrepreneurial success?

Figure 2

According to another Wadhwa study, this time of 652 CEOs and CTOs of 502 technology companies, there was a direct relationship between founders with higher education and the success of their start-ups when compared to those with a high school diploma.

However, contrary to the Ivy-league dominated list of the top 10 most entrepreneurial business schools compiled by Linkedin and displayed in Figure 2, the Wadhwa study found little difference in success rates between firms founded by Ivy-league graduates and those by graduates of other universities.

 

 

 

 

Sig Mosley, President, Imlay Investments

 

A proponent of the ‘entrepreneurs are born’ argument, Sig Mosley, President of Imlay Investments offered an often overlooked truth:

“Entrepreneurs must have a certain passion and that cannot be ‘made.’ But just because an individual is a born entrepreneur, that does not mean they will be a great entrepreneur.”

 

Mentorship and Peer Education

While the jury is still out as to whether entrepreneurial studies can improve an entrepreneur’s likelihood of success, there are those who support the efficacy of mentorship and peer education. For Jeffrey McConnell, CEO of Whisper Communications and the head of Venture Atlanta’s coaching program, mentorship is a familiar topic:

“Entrepreneurs are born but the most successful ones realize that they need to be trained/educated to be successful. They are very comfortable surrounding themselves with advisors/co-founders that fill in the blanks. I see it every year as we coach companies for Venture Atlanta – the best ones listen and then adjust their presentations accordingly.”

And on the topic of education and entrepreneurial success, the last word goes to ATDC’s Sawczuk:

“To support entrepreneurship and entrepreneurs, our job is not to identify the “born”entrepreneurs nor structure educational programs to “teach” entrepreneurship, but rather support those who are actively involved in solving a problem which is currently not being addressed…”

Now that you’ve heard from our panel and reviewed some of the research, what’s your take on this topic? Do you agree or disagree with the comments from our panel? Are there studies you want to share? We would love to hear from you in the comments section or via email at editor@ventureatlanta.org if you wish to keep your comments private.

 

September 2011 Newsletter

 


 

3 Responses to Entrepreneurs: Made or Born?

  1. Charles Acquah-Ankomah says:

    thank u for helping me solve an entrepreneurial question, i shall again be happy to enjoy more from your tutorials

  2. K2 says:

    K, did you even read the article? Your response is completely unrelated and incomprehensible. Jungle skills? Local community?

  3. K says:

    “Entrepreneurs are born in Georgia and made in Silicon Valley”

    Good article. It reveals the psychic powers and values of local community. The entire topic born/grown is basically a pity call to a bunch of guys, childish adults playing gods instead of growing up and building systems.

    Imagine a two-level house. There is no staircase. To live in the house at the second level requires jungle skills, swinging rope, power muscles, rock-wall climbing skills. Children from the neighborhood gather and bemuse themselves if building two-level houses and more so living there is an inborn feature – cowboys’ mentality. Similar children gather in some neighborhood 15 hundred miles to the West. They don’t chuckle. They build a staircase so, that a grandma’ can live in the house.

    So is Georgia. Building systems for easy-to-use labor division, simplification of communication and collaboration interfaces is a pipe dream. Entrepreneurship infrastructure will not work here unless the minds and the community’s business model changes.