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Theanatomyofanentrepreneur 100105180411-phpapp01 Document Transcript

  • 1. The Anatomy of an Entrepreneur Authors: DEEPAK R GORAD SEWANG PUNKAR July 2009
  • 2. The Anatomy of an Entrepreneur Family Background and Motivation
  • 3. T h e A n a t o my o f a n E n t r e p r e n e u r : F a m i l y B a c k g r o u n d a n d M o t i v a t i o n 1
  • 4. Table of Contents Introduction and Findings ... .....................................................................................................................................4 Company founders tend to be middle-aged and well-educated, and did better in high school than in college ... ................................................................................................ ...5 These entrepreneurs tend to come from middle-class or upper-lower-class backgrounds, were better educated and more entrepreneurial than their parents... ................................................................5 Most entrepreneurs are married and have children ... .................................................................................... ...5 Early interest and propensity to start companies.............................................................................................. ..5 Motivations for becoming entrepreneurs: Building wealth, owning a company, startup culture, and capitalizing on a business idea ... ..................................................................................... ..6 Not important or less-important factors: Inability to obtain employment or encouragement from others ... ....................................................................................................................... .6 Most had significant industry experience when starting their companies ... ................................................. ...6 Early entrepreneurs and those with an early interest in entrepreneurship are different ... ..............................6 Methodology/Industries Surveyed ... ......................................................................................................................8 Figure 1—Type of Business Currently Running or Founded ......................................................................... ...8 Figure 2—Country of Birth ... .............................................................................................................................. .8 Definition of founder ... ...................................................................................................................................... ...8 Detailed Findings ... ....................................................................................................................................................9 The average and median age of company founders in our sample when they started their current companies was 40. The standard deviation for this distribution was 7.7. ........................................................9 Company founders tend to be well-educated ... ............................................................................................9 Figure 3—Highest Level of Degree ... ....................................................................................................... ...9 They tend to do very well in high school... .....................................................................................................9 Figure 4—How Would You Rank Your High School Academic Performance Relative to Your Peers? ....................................................................................................... ..9 They also do well, but not as well, in college ... .............................................................................................9 Figure 5—How Would You Rank Your College/University Academic Performance Relative to Your Peers? ... ................................................................................. ...9 Majority come from middle-class or upper-lower-class families ... ......................................................... .10 Figure 6—How Would You Describe Your Family’s Circumstances as You Grew Up? ... .................. .10 The average birth order of respondents in their family was 2.2 and the average number of siblings was 3.1. Figure 7—Number of Siblings ................................................................................................................. ...10 Figure 8—Birth Order ... ........................................................................................................................... ...10 Entrepreneurs usually better educated than their parents ... ....................................................................11 Figure 9—What is the Highest Level of Degree Earned by Your Father? .......................................... ...11 Figure 10—What is the Highest Level of Degree Earned by Your Mother?........................................ ...11 Entrepreneurship didn’t always run in the family .......................................................................................11 More than half (51.9 percent) of respondents were the first in their family to launch a business. For 38.8 percent of respondents, their father was the first one to start a business in their family and 15.2 percent indicated siblings had previously started businesses. .. ............ .112 T h e A n a t o my o f a n E n t r e p r e n e u r : F a m i l y B a c k g r o u n d a n d M o t i v a t i o n
  • 5. Figure 11—Which Members of Your Family Started a Business Before You Did? ... .......................... ..11 Married with children... ........................................................................................................................................ ...12 Figure 12—What Was Your Marital Status When You Started the Business? ... ....................................12 Figure 13—How Many Children Did You Have Living In Your Household When You Started Your Business? ... ............................................................................................................. .12 Early interest and propensity to start companies... ...................................................................................... ...12 Figure 14—How Many Businesses Have You Started? ... ............................................................................12 Always thinking about entrepreneurship?... .................................................................................................. ...13 Figure 15—How Interested Were You in Becoming an Entrepreneur While You Were Completing Your Higher Education?.................................................................................. .13 Motivations for becoming an entrepreneur ... ................................................................................................. ..13 Figure 16—Wanted to Build Wealth ... ........................................................................................................... ..13 Figure 17—Wanted to Capitalize on a Business Idea I Had ... .....................................................................13 Figure 18—Startup Company Culture Appealed to Me... ............................................................................ ..14 Figure 19—Have Always Wanted My Own Company ... ...............................................................................14 Figure 20—Working for Someone Else Did Not Appeal to Me ... ............................................................... ..14 Less important or not-important factors... ....................................................................................................... ..15 Figure 21—Inability to Find Traditional Employment... ................................................................................. ..15 Figure 22—Co-Founder Encouraged Me to Become a Partner and Start Our Company.......................15 Figure 23—Developed a Technology in a Laboratory Environment and Wanted to See It Make an Impact ... ....................................................................................................... ..15 Figure 24—An Entrepreneurial Friend or Family Member Was a Role Model... ......................................15 Most had significant industry experience when starting their companies... ......................................... .16 Figure 25—Approximately How Many Years Did You Work for Another Employer Prior to Starting Your First Business? ...................................................................... ..16 Early entrepreneurs and those with an early interest in entrepreneurship are different ... ................. .16 Figure 26—Time Taken to Start a Company for Those with Extreme Interest in Entrepreneurship in College vs. Overall Population ... ............................................................................. ..16 Figure 27—Level of Interest in Entrepreneurship in College vs. Number of Years Worked before Starting First Business ... ......................................................................... .17 Figure 28—Number of Years Worked Before Launching First Business by Marital Status ... ............. ..17 Serial entrepreneurs: extremely interested in starting business in college and motivated by wanting to own a company ... .............................................................................................. .17 Figure 29—Number of Companies Started by Entrepreneurs Who were Extremely Interested in Entrepreneurship in College vs. Overall Population ... .................................. ...17 Figure 30—Level of Motivation as Wanting to Own Their Company in Serial Entrepreneurs vs. Overall Population... .............................................................................................17 Respondents from a “lower-upper-class” background: more likely to be driven by wealth or wanting own company and interested in entrepreneurship during college ... .............. ..18 Figure 31—Level of Motivation to Build Wealth in Respondents from “Lower-Upper-Class” Background vs. Overall Population: ... ...................................................................... ..18 Figure 32—Level of Interest in Entrepreneurship During College by Those with “Lower-Upper-Class” Background vs. Overall Population ... ................................................................ .18Analysis and Conclusions ........................................................................................................................................... .20 T h e A n a t o my o f a n E n t r e p r e n e u r : F a m i l y B a c k g r o u n d a n d M o t i v a t i o n 3
  • 6. Introduction and Findings Introduction and helping to begin filling some of those information gaps by providing high-level insights into the Findings backgrounds (socio-economic, educational, and familial) and motivations of entrepreneurs. Entrepreneurs are among the most celebrated people in our culture. Celebrity entrepreneurs such as This is a follow-up to several research projects by the Steve Jobs, Bill Gates, Sergei Brin, and Larry Page often Global Engineering and Entrepreneurship project at grace the covers of prominent publications. These Duke University, which has been researching the effect of company founders and innovators fuel economic globalization on the engineering profession and on U.S. growth and give the nation its competitive edge. competitiveness. Our previous research had According to the U.S. Small Business Administration, in focused on the contributions of skilled immigrants, the 2004 small firms (<500 employees) employed 50.9 education and backgrounds of technology company percent of the private-sector work force and generated founders, and the differences between immigrants and 50.7 percent of the non-farm private gross domestic U.S.-born company founders. product.1 According to that same report, in 2004 For this project, we surveyed 549 company founders firms with fewer than 500 employees had $1.9 trillion in a variety of industries, including aerospace and in annual payroll, not including benefits. An extensive defense, computer and electronics, health care, and report released in November 2008 by the U.S. Small services. (This was a broader range of industries than Business Administration found that small firms had a we previously researched). We also asked founders higher percentage of patents per employee than larger more detailed questions about their backgrounds, firms, and that younger firms were more likely to have motivations, and experiences in launching companies. a higher percentage of patents per employee than older firms.2 While our research cannot be generalized to the entire population of entrepreneurs in the United However, very little is known today about the States, it is meant to be illustrative of the backgrounds backgrounds, life histories, motivations, and beliefs of of entrepreneurs in industries that we expected to be the founders of businesses in high-growth industries. higher growth.3 Unfortunately, like most research in Understanding how entrepreneurs develop, the this area, we are affected by a survivor bias, in that we circumstances that can foster or induce are able only to reach entrepreneurs whose companies entrepreneurship, and the mindset and beliefs of are still alive. entrepreneurs could prove helpful both in supporting the existing class of entrepreneurs and in augmenting Here are some of our key findings. Detailed statistics the ranks of entrepreneurs. This paper is aimed at and charts are available in latter sections of this paper. Entrepreneurs are among the most celebrated people in our culture. Celebrity entrepreneurs often grace the covers of prominent publications. These company founders and innovators fuel economic growth and give the nation its competitive edge. 1. U.S. Census Bureau data and the U.S. Small Business Administration, Office of Advocacy contract, The Small Business Share of GDP, 1998-2004, submitted by Kathryn Kobe, Economic Consulting Services, LLC, April 2007. 2. An Analysis of Small Business Patents by Industry and Firm Size: SBA Research Paper by Anthony Breitzman, PhD, and Diana Hicks, PhD, November 2008. 3. The Survey of Business Owners from the Census Bureau is a good source of overview statistics on business owners in the United States, but is only completed every five years and has very limited space for questions (http://www.census.gov/econ/sbo/index.html). Other private surveys, such as the Kauffman Firm Survey, also have information on owner backgrounds, but are focused on a different population of businesses (http://www.kauffman.org/research-and-policy/kauffman-firm- survey.aspx).4 T h e A n a t o my o f a n E n t r e p r e n e u r : F a m i l y B a c k g r o u n d a n d M o t i v a t i o n
  • 7. Introduction and Findings 75 percent ranked their academic performance among the top 30 percent of the high school class, with a majority (52.4 percent) ranking their performance among the top 10 percent.Company founders tend to be middle-aged • More than half (51.9 percent) of respondents wereand well-educated, and did better in high the first in their families to launch a business. Onlyschool than in college 38.8 percent, 6.9 percent, and 15.2 percent, respectively, had a father, mother, or siblings who• The average and median age of company founders had previously started businesses. in our sample when they started their current companies was 40. (This is consistent with our Most entrepreneurs are married and have previous research, which found the average and median age of technology company founders to children be 39). • 69.9 percent of respondents indicated they were married when they launched their first business. An• 95.1 percent of respondents themselves had earned additional 5.2 percent were divorced, separated, or bachelor’s degrees, and 47 percent had more widowed. advanced degrees. • 59.7 percent of respondents indicated they had at• 75 percent ranked their academic performance least one child when they launched their first among the top 30 percent of the high school class, business, and 43.5 percent had two or more with a majority (52.4 percent) ranking their children. performance among the top 10 percent.• 67 percent ranked their academic performance Early interest and propensity to start among the top 30 percent of their undergraduate companies class, but a smaller percentage (37.5 percent) ranked their performance among the top 10 • 52 percent of respondents had some interest in percent. becoming an entrepreneur when they were in college, but 34.7 percent didnt even think about it, and 13.3 percent had little or no interest. ThoseThese entrepreneurs tend to come from from lower-upper-class backgrounds were moremiddle-class or upper-lower-class likely to have been extremely interested in starting abackgrounds, and were better educated and business than the average (25 percent vs. 18.5more entrepreneurial than their parents percent).• 71.5 percent of respondents came from middle-class • Of the 24.5 percent who indicated that they were backgrounds (34.6 percent upper-middle class and “extremely interested” in becoming entrepreneurs 36.9 percent lower-middle class). Additionally, 21.8 during college, 47.1 percent went on to start more percent said they came from upper-lower-class than two companies (as compared to 32.9 percent families (blue-collar workers in some form of of the overall sample). manual labor). • The majority of the entrepreneurs in our sample• Less than 1 percent came from extremely rich or were serial entrepreneurs. The average number of extremely poor backgrounds businesses launched by respondents was• The average birth order of respondents in their approximately 2.3; 41.4 percent were starting their family was 2.2 and the average number of siblings first businesses. was 3.1.• The fathers of 50.1 percent of the company founders held bachelor’s or advanced degrees, as did 33.9 percent of the mothers. T h e A n a t o my o f a n E n t r e p r e n e u r : F a m i l y B a c k g r o u n d a n d M o t i v a t i o n 5
  • 8. Introduction and Findings Motivations for becoming entrepreneurs: Most had significant industry experience building wealth, owning a company, startup when starting their companies culture, and capitalizing on a business idea • The majority of respondents (75.4 percent) had • 74.8 percent of respondents indicated desire to worked as employees at other companies for more build wealth as an important motivation in than six years before launching their own becoming an entrepreneur. This factor was rated as companies. Nearly half (47.9 percent) launched their important by 82.1 percent of respondents who first companies with more than ten years of work grew up in “lower-upper-class” families. experience. • 68.1 percent of respondents indicated that • Significant percentages of respondents started their capitalizing on a business idea was an important first companies after working eleven to fifteen years motivation in becoming an entrepreneur. (23.3 percent), sixteen to twenty years (14.3 • 64.2 percent of respondents said they have always percent), or greater than twenty years (10.3 percent) wanted to own their own companies. This was a for someone else. stronger factor for those from lower-upper-class backgrounds—78.6 percent ranked this as Early entrepreneurs and those with an early important. interest in entrepreneurship are different • 66.2 percent said the appeal of a startup culture • Entrepreneurs who started their companies soon was an important motivation. after graduating (with zero to five years of work • 60.3 percent said that working for others did not experience) and those who had an extremely strong appeal to them. Responses to this question were interest in entrepreneurship in college were far less relatively evenly distributed in a rough bell curve, likely to be married (36.6 percent vs. the total with 16 percent of respondents citing this as an sample average of 69.9 percent) or to have kids extremely important factor and 16.8 percent of when they launched their first businesses respondents citing it as not at all a factor. (26.9 percent vs. the total sample average of 59.6 percent). Not important or less-important factors: • Those who were “extremely interested” in starting a inability to obtain employment or company while in college were far more likely to be encouragement from others early entrepreneurs. Of these entrepreneurs, • 80.3 percent of respondents stated that inability to 69 percent started their companies within ten years find traditional employment was not at all a factor of working for someone else (as compared to in starting their own businesses. Only 4.5 percent 46.8 percent from the rest of the population). said this was an important factor. • Level of interest in entrepreneurship during college • 37.8 percent of respondents said the role played by was correlated to the number of years worked an entrepreneurial friend or family member was an before starting a business—only 18 percent from important factor. A co-founder’s encouragement the “extremely interested” group worked for at was important for 27.9 percent of the respondents. least fifteen years before starting their own • 18.1 percent had developed a technology they businesses, as compared to 46.4 percent from the wanted to commercialize. “not very interested” group. 60.3 percent said that working for others did not appeal to them. Responses to this question were relatively evenly distributed in a rough bell curve, with 16 percent of respondents citing this as an extremely important factor and 16.8 percent of respondents citing it as not at all a factor.6 T h e A n a t o my o f a n E n t r e p r e n e u r : F a m i l y B a c k g r o u n d a n d M o t i v a t i o n
  • 9. Methodology/Industries Surveyed and Detailed FindingsT h e A n a t o my o f a n E n t r e p r e n e u r : F a m i l y B a c k g r o u n d a n d M o t i v a t i o n 7
  • 10. Methodolgy/Industries Surveyed Methodology/Industries The respondents were highly concentrated in technology sectors, with 77 percent indicating that Surveyed their current company made computer hardware/software or other forms of technology The primary data source for this work is a subset of an existing dataset of corporate records included in the products and services. Other sectors included biotech, OneSource Information Services Companies database. To medical, military, and other (non-technology). construct our dataset, we extracted records of We asked the founders to categorize their companies based in the following industries: companies by industry. These responses were not always consistent with the OneSource classification of Automotive & Aerospace these companies. This report focuses on surviving • Aerospace & Defense businesses, thus may not be representative of the Computers & Electronics overall population of businesses. • Audio & Video Equipment • Computer Hardware Figure 1: Type of Business Currently Running • Computer Networks or Founded • Computer Peripherals Computer Hardware/ Software 30.4% • Computer Services Engineering Consultants 18.0% • Computer Storage Devices Medical 4.0% • Electronic Instruments & Controls Defense 4.2% • Scientific & Technical Instruments Energy 4.2% • Semiconductors Biotechnology 5.8% • Software & Programming Telecommunication 10.4% Other 23.0% Health Care 0 5 10 15 20 25 30 35 • Biotechnology & Drugs Percentage • Health Care Facilities • Medical Equipment & Supplies Figure 2: Services Country of Birth • Computer Services USA 82.5% India 3.8% • Engineering Consultants UK 1.7% • Software & Programming Canada 1.3% Germany 1.0% We extracted randomized records by region. We Iran 0.8% visited the Web sites of these companies to make sure Italy 0.6% China 0.6% the company was still in operation and to obtain Norway 0.6% names of founders and contact information. We Taiwan 0.6% contacted company founders via e-mail and requested Other 6.7% they complete a brief online survey consisting of a 0 20 40 60 80 100 series of questions about their own personal and Percentage family backgrounds, as well as their views on and motivations toward starting a business. Our team of researchers sent up to four unsolicited e-mails to these founders. In some cases, we followed up with phone Definition of founder calls. We allowed company executives to tell us if they Five hundred and forty-nine respondents took the were a founder. The guidelines we provided for survey, which was conducted between August 2008 defining a “founder” was “an early employee, who and March 2009. We estimate that, of the founders typically joined the company in its first year, before the we could reach, approximately 40 percent completed company developed its products and perfected its the survey. business model.”8 T h e A n a t o my o f a n E n t r e p r e n e u r : F a m i l y B a c k g r o u n d a n d M o t i v a t i o n
  • 11. Detailed FindingsDetailed FindingsAge The average and median age of company founders in our sample when they started their current company wasforty. The standard deviation for this distribution was 7.7. Figure 3: Highest Level of DegreeCompany founders tend to be well-educated JD 2.4% Company founders in the industries we PhD 10.5%researched tend to be well-educated. More than Postdoctoral Research 0.8%95.1 percent hold bachelor’s degrees or higher. A MD 0.6%higher percentage of respondents had just MBA 13.8%bachelor’s degrees (48 percent) than advanced Master’s 19.0% 48.0%degrees (47 percent), however. Bachelor’s Associate’s 1.8% Other 3.2% 0 10 20 30 40 50 Percentage Figure 4: How Would You Rank Your High School Academic Performance Relative to Your Peers?They tend to do very well in high school Top 10% 52.4% A significant majority of respondents (75 percent)ranked their academic performance among the top Top 30% 22.6%30 percent of the high school class, with a majority Average 19.7%(52.4 percent) ranking their performance among thetop 10 percent. But about 24.6 percent ranked their Bottom 30% 3.6%performance average or below average. Bottom 10% 1.3% N/A 0.4% 0 10 20 30 40 50 60 Percentage Figure 5: How Would You Rank Your College/ University Academic Performance Relative to Your Peers?They also do well, but not as well, in college Top 10% 37.5% A solid majority of respondents (67 percent)ranked their academic performance among the top Top 30% 29.5%30 percent of their undergraduate class, but a Average 26.0%smaller percentage (37.5 percent) ranked theirperformance among the top 10 percent. The Bottom 30% 2.7%percentage of founders that rated themselves in the Bottom 10% 1.6%bottom 30 percent of class performance was nearlythe same in high school (4.9 percent) and college N/A 2.6%(4.4 percent). 0 5 10 15 20 25 30 35 40 Percentage T h e A n a t o my o f a n E n t r e p r e n e u r : Family Background and Motivation 9
  • 12. Detailed Findings Majority come from middle-class or upper- Figure 6: How Would You Describe Your Family’s lower-class families Circumstances as You Grew Up? We used the following definitions for socio- economic status by Lower-Lower Class 8.7% Dennis Gilbert.4 Upper-Lower Class 21.8% UPPER-UPPER CLASS: “Old money;” people who have been born into and raised with Lower-Middle Class 36.9% wealth; mostly consists of old “noble” or Upper-Middle Class 34.6% prestigious families. LOWER-UPPER CLASS: “New money;” Lower-Upper Class 5.4% individuals who have become rich within their Upper-Upper Class 0.6% own lifetimes. 0 5 10 15 20 25 30 35 40 UPPER-MIDDLE CLASS: Professionals with a Percentage college education and, more often, with postgraduate degrees like MBAs, PhDs, MDs, JDs, MSs, etc. LOWER-MIDDLE CLASS: Lower-paid white collar workers, but not manual laborers. Often hold associate’s Respondents’ average birth order in or bachelor’s degrees. their families was 2.2. The average UPPER-LOWER CLASS: Blue-collar workers number of siblings was 3.1. and manual laborers. Also known as the “working class.” Figure 7: LOWER-LOWER CLASS: The homeless and Number of Siblings permanently unemployed, as well as the “working poor.” 0 3.0% 1 19.2% What we found was that respondents tended 2 23.8% not to come from either extreme of the socio- 3 21.6% economic spectrum, with 34.6 percent 4 14.7% describing their socio-economic level as upper- 5 7.3% middle class. Among respondents, 36.9 percent 6 4.8% described themselves as lower-middle class, and 7 2.6% 21.8 percent described themselves as upper- More than 7 3.0% lower class. Only three respondents (0.7 percent) 0 5 10 15 20 25 indicated their origins were lower-lower class Percentage and only three respondents (0.6 percent) indicated their origins were upper-upper class. Figure 8: These results seem to show that entrepreneurs, on Birth Order the whole, are more likely to emerge from First 42.5% stable, comfortable family existences but not Second 28.1% from circumstances of great Third 14.9% family wealth. Fourth 6.8% Further, the results indicate that extreme Fifth 4.5% poverty is a significant barrier to Sixth 1.5% entrepreneurship. With regard to extremely Seventh 0.4% wealthy families, the pool is so small in the Eighth 0.6% United States that the low response rate might Ninth or More 0.8% more be a reflection of a smaller population than 0 10 20 30 40 50 anything else. Percentage 4. Gilbert, D. (2002). The American Class Structure: In An Age of Growing Inequality. Belmont, Calif.: Wadsworth; Thompson, W., and Hickey, J.10 T h e A n a t o my o f a n E n t r e p r e n e u r : F a m i l y B a c k g r o u n d a n d M o t i v a t i o n
  • 13. Detailed Findings Figure 9: What is the Highest Level of Degree Earned by Your Father?Entrepreneurs usually better educated than PhD 6.1%their parents MBA, JD, MD 5.9% In terms of parents’ educational level, only 23 Master’s 11.0%percent of entrepreneurs’ fathers earned advanced Bachelor’s 27.1%degrees and only 27.1 percent earned bachelor’s Associate’s 5.4%degrees. Among mothers of entrepreneurs, only 9.5 High School 24.0%percent earned advanced degrees, and only 24.4 Diploma/GEDpercent earned bachelor’s degrees; 55.6 percent Other 0.9%earned high school degrees or no degree at all. No Degree 19.5% 0 5 10 15 20 25 30 Percentage Figure 10: What is the Highest Level of Degree Earned by Your Mother? Ph 0.9% D 0.4% MBA, JD, MD 8.2% Master’s 24.4% Bachelor’s 10.1% Associate’s High School 37.1% Diploma/GED 0.4% Other 18.5% No Degree 0 5 10 15 20 25 30 35 40 Percentage Figure 11: Which Members of Your Family Started a Business Before You Did?Entrepreneurship didn’t always run in the I was the first infamily my immediate family to start a 51.9% More than half (51.9 percent) of respondents businesswere the first in their families to launch a Father 38.8%business. For 38.8 percent of respondents, theirfather was the first to start a business in their Mother 6.9%family; 15.2 percent indicated siblings hadpreviously started businesses. Siblings 15.2% 0 10 20 30 40 50 60 Percentage T h e A n a t o my o f a n E n t r e p r e n e u r : F a m i l y B a c k g r o u n d a n d M o t i v a t i o n 11
  • 14. Detailed Findings Figure 12: What Was Your Marital Status When You Started the Business? Married with Children Single One common stereotype of an entrepreneur is a 24.9% childless, unmarried workaholic with no time for a wife or husband and children. This stereotype Married 69.9% appears to be false, as 59.7 percent of respondents indicated they had at least one child when they Divorced/ Separated 4.5% launched their first businesses, and 43.5 percent had two or more children. Additionally, 69.9 percent of Widowed 0.7% respondents indicated they were married when they launched their first businesses. 0 10 20 30 40 50 60 70 80 Percentage Figure 13: How Many Children Did You Have Living In Your Household When You Started Your Business? 0 40.3% 1 16.4% 2 28.0% 3 11.0% 4 3.4% 5 0.9% 0 10 20 30 40 50 Percentage Figure 14: How Many Business Have You Started? Early interest and propensity to start 1 41.4% companies 2 26.0% The majority of the entrepreneurs in our sample 3 16.6% were serial entrepreneurs; the average number of 4 7.7% businesses launched by respondents was 5 1.8% approximately 2.3.5 But 41.4 percent were running 6 2.2% the first business they had started. 7 1.6% 8 1.2% 9 0.4% More than 10 1.0% 0 10 20 30 40 50 Percentage 5. In this calculation, we assigned the weighted value ten to respondents who had indicated they had launched ten or more businesses. The potential for underestimating the average number of businesses launched per respondent is likely minimal, due to the small number of respondents claiming to have launched ten or more businesses.12 T h e A n a t o my o f a n E n t r e p r e n e u r : F a m i l y B a c k g r o u n d a n d M o t i v a t i o n
  • 15. Detailed Findings Figure 15: How Interested Were You in Becoming an Entrepreneur While You Were Completing Your Higher Education?Always thinking about entrepreneurship? Not at all Only 24.5 percent indicated they were extremely interested 7.2%interested in becoming entrepreneurs when they Not very interested 6.1%were completing their higher education. Anadditional 27.5 percent had some interest. But Didn’t think about it 34.7%34.7 percent didn’t give this any thought, and13.3 percent indicated that they were not at all Somewhat interested 27.5%interested or not very interested. Extremely interested 24.5% 0 5 10 15 20 25 30 35 Percentage Figure 16:Motivations for becoming an entrepreneur Wanted to Build Wealth The strongest motivations for respondents instarting their own businesses were building wealth, Extremely important factor 18.4%owning their own companies, capitalizing on Very importantbusiness ideas they had, and the appeal of startup factor 24.4%culture. Regarding desire to build wealth, 74.8 Important factor 32.0%percent of respondents indicated they viewed this as Not veryan important, very important, or extremely important factor 16.7%important motivation in becoming an entrepreneur. Not at all a factor 7.3%In terms of capitalizing on business ideas they had, N/A 1.1%68.1 percent of respondents indicated they viewedthis as an important, very important, or extremely 0 5 10 15 20 25 30 35 Percentageimportant motivation in becoming an entrepreneur.With regard to always wanting to own their own Figure 17:businesses, 64.2 percent of respondents viewed this Wanted to Capitalize onas an important, very important, or extremely a Business Idea I Hadimportant motivation in becoming an entrepreneur. Extremely important 23.6%In terms of the appeal of a startup culture, 66.2percent of respondents viewed this as an important, Very important factor 19.7%very important, or extremely important motivation in Important factor 24.8%becoming an entrepreneur. And 60.3 percent saidthat an important, very important, or extremely Not very important factor 14.2%important factor was that working for others did Not at allnot appeal to them. a factor 14.0% N/ 3.8% A 0 5 10 15 20 25 Percentage T h e A n a t o my o f a n E n t r e p r e n e u r : F a m i l y B a c k g r o u n d a n d M o t i v a t i o n 13
  • 16. Detailed Findings Figure 18: Startup Company Culture Appealed to Me Extremely important factor 20.8% Very important 22.1% factor Important factor 23.3% Not very important factor 12.5% Not at all a factor 18.0% N/A 3.4% 0 5 10 15 20 25 Percentage Figure 19: Have Always Wanted My Own Company Extremely important factor 27.5% Very important factor 15.9% Important factor 20.8% Not very important factor 17.8% Not at all a factor 16.1% N/A 1.9% 0 5 10 15 20 25 30 Percentage Figure 20: Working for Someone Else Did Not Appeal To Me Extremely important factor 16.0% Very important factor 20.3% Important factor 23.9% Not very 22.4% important factor Not at all a 16.8% factor 0.6% N/A 5 10 15 20 25 0 Percentage14 T h e A n a t o my o f a n E n t r e p r e n e u r : F a m i l y B a c k g r o u n d a n d M o t i v a t i o n
  • 17. Detailed Findings Less important or not-important factors Only 4.5 percent of respondents stated that inability to find traditional employment was an important motivator in starting their own businesses. In fact, 80.3 said that this was not at all a factor. Only 27.9 percent of respondents felt that encouragement by a co-founder, entrepreneurial friends, or family members to launch a company played an important, very important, or extremely important role in their motivations to launch a business. And only 18 percent of respondents said that taking a technology they already had developed in the lab and trying to see if it could make an impact was an important, very important, or extremely important motivator toward their business launch. Figure 21: Figure 22: Inability to Find Traditional Employment Co-Founder Encouraged Me to Become a Partner and Start Our Company Extremely important factor 1.3% Extremely Very important important factor 6.8% 0.9% factor Very important 7.9% Important factor factor 2.3% Important Not very factor 13.2% important factor 11.3% Not very 13.0% Not at all a important factor factor 80.3% Not at all a factor 44.0% N/A 3.8% N/A 15.1% 0 20 40 60 80 100 Percentage 0 10 20 30 40 50 Percentage Figure 23: With regard to the impact of role models Developed a Technology in a Laboratory such as family members or entrepreneur Environment and Wanted to See it Make friends, 37.8 percent of respondents an Impact indicated they played an important, very Extremely 8.0% important, or extremely important role in theimportant factor decision to start a company. Very important 4.2% factor Important factor 5.9% Figure 24: Not very 10.0% An Entrepreneurial Friend or Family Memberimportant factor Was a Role Model Not at all a factor 50.9% Extremely N/A important factor 9.2% 21.0% Very important 0 10 20 30 40 50 60 factor 12.3% Percentage Important factor 16.2% Not very important factor 18.5% Not at all a factor 35.1% N/A 8.7% 0 5 10 15 20 25 30 35 40 Percentage T h e A n a t o my o f a n E n t r e p r e n e u r : F a m i l y B a c k g r o u n d a n d M o t i v a t i o n 15
  • 18. Detailed Findings Most had significant industry experience when Figure 25: starting their companies Approximately How Many Years Did You The majority of respondents (75.4 percent) had Work for Another Employer Prior to Starting worked as employees at other companies for more Your First Business? than six years before launching their own 0-5 years companies. The highest percentage of entrepreneurs 24.6% (52.2 percent) launched their companies after 6-10 years 27.6% working as employees for other companies for between one and ten years. However, significant 11-15 years 23.3% percentages of respondents started their first companies after working eleven to fifteen years 16-20 years 14.3% (23.3 percent), sixteen to twenty years (14.3 percent), or greater than twenty years (10.3 percent) 20+ years 10.3% for someone else. In other words, while 0 5 10 15 20 25 30 entrepreneurs do tend to launch companies early in Percentage their careers on average, significant portions (47.9 percent) wait until much later in their careers, after passing ten-plus years in the workforce before launching a company. Early entrepreneurs and those with an early Figure 26: interest in entrepreneurship are different Time Taken to Start a Company for Those We analyzed the number of years an entrepreneur with Extreme Interest in Entrepreneurship in had worked for someone else before launching his College vs. Overall Population or her own business. Key differences emerged. 6.0% 20+ years Entrepreneurs who started their companies soon 11.7% after graduating (with zero to five years of work 16-20 years 12.0% experience) and those who had an extremely strong 14.5% interest in entrepreneurship in college were far less 11-15 years 12.8% 27.0% likely to be married (36.6 percent vs. the total 27.8% sample average of 69.9 percent) or to have children 8-10 years 27.5% when they launched their first businesses (26.9 41.4% percent vs. the total sample average of 59.6 0-5 years 19.3% percent). The respondents who said that they were 0 10 20 30 40 50 “extremely interested” in starting a company while Percentage in college were far more likely to be early “Extremely Interested” in Starting a Company While in College entrepreneurs. Sixty-nine percent started their own Overall Population: Excluding the “Extremely Interested” Group companies within ten years of working for someone else (as compared to 46.8 percent from the rest of the population). Generally, we saw a correlation between the level of interest in entrepreneurship during college and the number of years worked before starting a business. For instance, only 18 percent from the “extremely interested” group worked for at least fifteen years before starting their own businesses, as compared to 46.4 percent from the “not very interested” group.16 T h e A n a t o my o f a n E n t r e p r e n e u r : F a m i l y B a c k g r o u n d a n d M o t i v a t i o n
  • 19. Detailed Findings Figure 27: Level of Interest in Entrepreneurship in Figure 28: College vs. Number of Years Worked Before Number of Years Worked Before Launching Starting First Business First Business by Marital Status Extremely 20+ years 10.9% interested 85.5% Somewhat 16-20 years 5.3% interested 90.7% 0-5 years Didn’t think 6-10 years 8.9% about it 11-15 years 85.5% 11- 15 years 16-20 years 25.9% Not very 20+ years 8-10 years interested 68.7% 57.3% Single Not at all 0-5 years Married interested 36.6% 0 10 20 30 40 50 0 20 40 60 80 100 Percentage Percentage Serial entrepreneurs: extremely interested in starting business in college and motivated by wanting to own a company Respondents who were “extremely interested” in entrepreneurship during college were more likely to start more than two companies (47.1 percent vs. an average of 28 percent from the rest of the population). Serial entrepreneurs also indicated that they always wanted their own companies (73 percent vs. an average of 59.6 percent from the rest of the population). Figure 29: Number of Companies Started by Figure 30: Entrepreneurs Who Were Extremely Level of Motivation as Wanting to Own Interested in Entrepreneurship in Their Company in Serial Entrepreneurs vs. College vs. Overall Population Overall Population5 or more 12.4% Extremely 35.2% 7.0% important factor 24.3% Very important 19.5% 4 12.4% factor 13.7% 6.2% Important 18.2% 22.3% factor 21.6% 3 14.8% Not very 13.2% important factor 20.4% 21.5% 2 Not at all a 11.9% 27.4% factor 18.2% 1 31.4% 1.9% 44.6% N/A 1.8% 0 10 20 30 40 50 0 5 10 15 20 25 30 35 40 Percentage Percentage “Extremely Interested” in Entrepreneurship During Higher Education Serial Entrepreneurs Overall Population: Excluding “Extremely Interested” Group Overall Population-Excluding Serial Entrepreneurs T h e A n a t o my o f a n E n t r e p r e n e u r : F a m i l y B a c k g r o u n d a n d M o t i v a t i o n 17
  • 20. Detailed Findings Respondents from a “lower-upper-class” Figure 31: background: more likely to be driven by Level of Motivation to Build Wealth in wealth or wanting own company and Respondents from “Lower-Upper-Class” interested in entrepreneurship during college Background vs. Overall Population Fifty percent of respondents who came from a “lower-upper-class” background said that wealth Extremely 25.0% important factor 18.1% was an extremely important or very important Very important 25.0% motivator for starting their own businesses, as factor 24.5% compared to 42.6 percent of the overall Important 32.1% population. People from this background were factor 32.1% more likely to be driven by always wanting their Not very 10.7% important factor 17.1% own companies (78.6 percent vs. the overall sample average of 63.5 percent). Also, 41.4 Not at all a 7.1% factor 8.2% percent of them indicated that they were 0 5 10 15 20 25 30 35 “extremely interested” in entrepreneurship during Percentage college as compared to the overall sample average Lower-Upper Class of 24.5 percent. Overall Population-Excluding Respondents from “Lower-Upper-Class” Backgrounds Figure 32: Level of Interest in Entrepreneurship During College by Those with “Lower-Upper-Class” Backgrounds vs. Overall Population Extremely 41.4% interested 23.9% Somewhat 27.6% interested 27.5% Didn’t think 27.6% about it 35.3% Not very 0.0% interested 5.7% Not at all 3.4% interested 7.6% 0 10 20 30 40 50 Percentage Lower-Upper Class Overall Population-Excluding Respondents from “Lower-Upper-Class” Backgrounds18 T h e A n a t o my o f a n E n t r e p r e n e u r : F a m i l y B a c k g r o u n d a n d M o t i v a t i o n
  • 21. Analysis and ConclusionsT h e A n a t o my o f a n E n t r e p r e n e u r : F a m i l y B a c k g r o u n d a n d M o t i v a t i o n 19
  • 22. Analysis and Conclusions The core findings of this research are straightforward and contradict some prevailing stereotypes. In the industries we researched, entrepreneurs are more likely to come from a middle-class or upper- lower-class background, and very few come from backgrounds of extreme wealth or extreme poverty. These entrepreneurs are usually well- educated, with only 5 percent reporting having less than a bachelor’s degree. They also are likely to be better educated than their parents were, with half their fathers and a third of their mothers having at least bachelors’ degrees. They performed well in high school and in college, with the vast majority ranking average or above in their respective institutions. Entrepreneurs dont always come from families of entrepreneurs; slightly more than half of our sample were the first in their families to launch businesses. On average, entrepreneurs tend to be the middle child in a three-child household. They are significantly more likely to be married and have children when they launch their first businesses. Entrepreneurs are far more likely to have worked for an employer for more than six years than to have quickly launched their own businesses. Their primary motivations for launching a business are to build wealth, to own their own company, and to capitalize on a business idea they had. The findings perhaps provide some clues about what conditions might be helpful in supporting entrepreneurs and helping them become successful. Entrepreneurs typically are well-educated and experienced. In other words, they largely come from the existing workforce and not from college. They have ideas they want to commercialize, are motivated to build wealth, and like the idea of being their own bosses in a startup. These observations are based on initial analysis of the data; we are planning further detailed analysis of the dataset. But these observations could perhaps be useful guideposts for the next round of inquiry that attempts to understand not only the background and broad motivations of entrepreneurs but also the deeper formative factors that influence this select and incredibly important class of individuals.20 T h e A n a t o my o f a n E n t r e p r e n e u r : F a m i l y B a c k g r o u n d a n d M o t i v a t i o n
  • 23. T h e A n a t o my o f a n E n t r e p r e n e u r : F a m i l y B a c k g r o u n d a n d M o t i v a t i o n 21
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