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Who becomes an entrepreneur? Insights from research studies

187 points by bhavansri 4y ago

loopdoend 4y ago
The nice thing about this article is it blows some ageist assumptions out of the water. I wasn’t expecting the average founders age to be over 40 in SV.
- sgu999 4y ago
  I learned that a couple months ago and was shocked as well. It could also be a symptom of ageism in the industry: as it becomes harder for those not attracted by the corporate ladder to be hired, they start a business.
  - lnsru 4y ago
    I am almost here. Similar age and in a company planing 2nd round of layoffs. I really have no delusions that somebody will want to hire me again. Universities are pumping out thousands of cheaper and better looking graduates. I never saw big corp hiring (in Germany) a graybeard like me for developer role. All the graybeards were so called consultants hired over specific agency. 40 is the magic number I guess. On the other hand 40 is about the right time, because body and mind is still functional. The network is available and the people skills should be developed even in worst outcasts (there are exceptions). People often have some business ideas and the worthy ones are developed a bit as a hobby. Being fired is the so much needed kick to get started for real.
    - JanSt 4y ago
      My employer is hiring many older people. Where do you live in Germany?
      - lnsru 4y ago
        I am near Munich. There 2 classes in “our” floor: people working for decades in the company and the young guys who come and go. Max age for hiring lies somewhere at 35.
- moremetadata 4y ago
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bruce511 4y ago
Which just goes to show that all the studies in the world don't mean a whole lot :) I guess it depends on your definition of "entrepreneur" - does it count if you only found 1 company? But from where I stand I pretty much fail all the "high probability" criteria, no troubled past, no mental health issues, no previous employment history, no bad-childhood, and do on. Arguably I'm "well rounded" (for some definition of that. Yay!) So to aspiring entrepreneurs let me say, indicators don't really matter to _you_ as an individual. These are not _requirements_, they are indicators. Starting a business is not for the faint hearted though. You'll work more hours, probably for less money, possibly for no money, and you'll likely fail. You need more than just desire, you need a product people want, that they can afford, and you need a way to reach that market. And some luck. Did I mention you'll likely fail? Success isn't bei g a billionaire, success is keeping the doors open, drawing a salary, employing others in a non-exploitive way, not grinding away every second. Success is taking time off to spend with family, or playing sport, or whatever, just because you can. To those just starting out I say, welcome to the biggest adventure of all.
- Swizec 4y ago
  > Success isn't bei g a billionaire, success is keeping the doors open, drawing a salary, employing others in a non-exploitive way, not grinding away every second. Success is taking time off to spend with family, or playing sport, or whatever, just because you can. Success is whatever you want it to be. And that, to me, is the point of entrepreneurship: Defining your own success and getting there on your own terms.
  - eastbound 4y ago
    Success is having no regrets. But of all the people, those who show jealousy acts are often the ones who say success is having less money and more time with family. Then you show them “Hey, you have 3 kids, a loving wife, just enough money to get by which is both what you’ve always said was sufficient and what you voted for (while you voted for the richer single men getting slashed), meanwhile I’m autistic, have no wife or kid, I’m rich like Cresus as a nice kickback from spending my Sundays at work… and you still have to be jealous???” If it were on my own terms, I would have chosen to be able to join improv groups and invite them all home without having a tantrum thrown because I don’t contribute more than the rest of the group. Money doesn’t equate universal power.
paxys 4y ago
If you study 10 entrepreneurs you will find 11 different paths they took in their journey. While this is a good read, the advice to everyone looking for the "secret sauce" to starting a successful venture remains the same – there is none. You can try to emulate Steve Jobs or Mark Zuckerberg or whoever else all you want. The moment you idea meets the real world you will be in completely unfamiliar territory with no operating manual and have to just...figure it out.
- 1970-01-01 4y ago
  The secret sauce is "Make something people want" (YC's motto)
  - paxys 4y ago
    A lot of times people don't know they want something until it is in front of them.
    - jackblemming 4y ago
      And even more times people thought they were being Henry Ford or Steve Jobs when they were actually making something nobody wanted.
    - TeMPOraL 4y ago
      The trick: they didn't actually need or want it until you put it in front of them, engineered to induce the want.
      - nottorp 4y ago
        Here's an anecdote. I used Linux as my main desktop OS for like 15 years. One day someone paid me to write some Mac software for them. I did the project on a $150 ancient mac from a second hand store, and partially on Linux. When the project ended I bought a new macbook when i got paid because i thought "ok, there's money in doing mac stuff, i better have current hardware". Linux was still my main desktop OS. 2 years later I switched my desktop to Mac OS too because after using it, it was simply far less annoying than either alternative. So when you see people talking about the reality distortion field and why pay extra for Macs... take it with a grain of salt. It's likely they just looked at prices and guessed it's not worth it, maybe thought about induced want. So was I before I got paid to use one :)
bushbaba 4y ago
It’s easy to choose a career in entrepreneurship when you either have enough inheritance wealth to not need to work OR living in poverty where there’s not much lower you could drop. For those in the middle, entrepreneurship comes with likely too great a risk to be worthwhile.
- olalonde 4y ago
  I'm not sure that's true given that immigrants are 80% more likely to start a business than people born in the U.S.[0]. That's the case in almost every country[1]. [0] https://www.wbur.org/news/2022/05/09/immigrants-are-80-more-likely-to-start-businesses-in-the-u-s-than-native-born-citizens-study-finds https://www.wbur.org/news/2022/05/09/immigrants-are-80-more-... [1] https://hbr.org/2021/08/research-why-immigrants-are-more-likely-to-become-entrepreneurs https://hbr.org/2021/08/research-why-immigrants-are-more-lik...
  - athinggoingon 4y ago
    Wouldn't that fit the second criteria since many first generation immigrants don't have the requisite language skills to compete with the native population for middle class jobs.
  - A4ET8a8uTh0 4y ago
    A fair amount of immigrants are less likely to have resources like capital or relationships to accommodate a different path so parent is likely right that they are somewhat forced onto path of entrepreneur.
- snapplebobapple 4y ago
  Scared money don't make no money sir....
- rxhernandez 4y ago
  As an entrepreneur twice over, it had everything to do with being able to spend the most productive hours of my day on being an entrepreneur and being armed with basic full stack web development skills. I had zero success in entrepreneurship in my 20s and I was delusional to think I could accomplish anything in entrepreneurship without both of those properties (and I tried multiple times a year for the decade of my 20s). It would take someone truly amazing* to pull off starting a successful business while working a full-time job. * And I say that in contrast to myself, who has been called talented more than a few times by my managers and still couldn't pull it off until I earned enough money to take time off
Joel_Mckay 4y ago
A better question is "Who becomes [a successful] entrepreneur?" There are many folks with side businesses that compliment their incomes, but primarily it is a tax strategy driven investment decision process. I think most successful "entrepreneurs" clue into the pejorative connotation of the word sooner. =)
shon 4y ago
It’s an interesting article. In my view, Non-conformists start companies. Possibly aggressive non-conformists most of all. In my personal case, I made many questionable choices, including turning down a job at Microsoft in the nineties (would have been better financially) and leaving multiple great jobs (one of which afforded me corporate apartments in Honolulu and London) to risk everything multiple times to start multiple companies. So there’s risk-seeking behavior there as well as a refusal to accept “good enough” even when it was almost definitely a better choice from a financial and physical health perspective. I can still see my dad shaking his head about turning down Microsoft… It sort of worked out. I had a good exit but nothing like kicking it at M$ for 30 years would have been. I’m not sure we why we glamorize this. But in the end I wouldn’t change it. I did it my way. I’m now trying to do it again. This is why I can’t play any games which require grinding (looking at you Eve) because I know it’s more fun IRL. ¯\_(ツ)_/¯
- Darmody 4y ago
  That's why I can't play almost any game, because I'll grind everything, even useless achievements. At least I have idle games and I'm also working on one which will probably end up in nothing.
- barrysteve 4y ago
  "including turning down a job at Microsoft in the nineties I can still see my dad shaking his head about turning down Microsoft…" That was quite a while ago... Probably should forgive and forget that one. Forgiving the disappointment makes mental space for new opportunities. I agree non-conformists start the really visible flashy companies. A new aircraft maintenance company can make bank, but it doesn't really grab headlines.
- jaggederest 4y ago
  Not especially non-conformists - non-conformity is merely a symptom. As you say, risk seeking behavior, resulting from the actual cause: "poor risk assessment" - ties right in to difficult childhood, mental health issues, and the market misjudging you (all causes or signs of trauma and being outside the norm). I say this as someone with an appetite for trying new things, being non-conformist, and adventure sports - clearly the accuracy or the precision of my risk assessment model is significantly outside the norm! People with excellent and accurate risk estimation and assessment work as actuaries, or accountants, certain kinds of insurance brokers, something nice and safe where you can do good work for 35 years and retire. The quintessential "brown volvo" driver. Now, I personally think those people are rather safe and uninteresting - but then we've already established I'm probably not the person to base your decisions on! If people are interested, there are good psychological tests for risk assessment skills - https://en.wikipedia.org/wiki/Impulsivity#Assessment_of_impulsivity https://en.wikipedia.org/wiki/Impulsivity#Assessment_of_impu...
atleastoptimal 4y ago
Another correlation, very unusual and interesting, is that past infection with Toxoplasmosis (a parasite that grows in cat poop) increases the chances of becoming an entrepreneur by a factor of 1.27 to 2 https://hbr.org/2022/07/a-common-parasite-can-make-people-more-entrepreneurial https://hbr.org/2022/07/a-common-parasite-can-make-people-mo... > they discovered that those infected with the parasite Toxoplasma gondii were, on average, 29% more likely than others to have founded a start-up, 27% more likely to have founded multiple ventures, and more than twice as likely to have founded their businesses alone Along with an increased risk of death via car accidents, having contracted Toxoplasmosis seems to precipitate risk seeking behaviors, similar to its intended evolutionary prerogative: the infection makes rats sexually aroused by the smell of cat urine, so they seek the smell, where cats are more likely to be around, are eaten by cats, and the cycle continues.
- thesz 4y ago
  https://pubmed.ncbi.nlm.nih.gov/21957440/ https://pubmed.ncbi.nlm.nih.gov/21957440/ Toxoplasma affects dopamine metabolism - body starts to produce more of it. Dopamine is also released with alcohol intake, notice that alcohol also makes everyone more confident, attractive and, well, prone to car accidents. I guess the "rough childhood" also has something to do with alcohol or other drugs somehow, that means dopamine metabolism is also affected. Dopamine is a powerful thing.
- jl2718 4y ago
  I'm just guessing, but I think you'll find an even stronger correlations from Toxoplasmosis to the lack of traditional family obligations, and also the latter to entrepreneurship.
  - goldenkey 4y ago
    My mother cares more about her cats than I. So this rings somewhat true.
Nevermark 4y ago
Working on my second startup. I have clinical depression, ADHD and OCD. The depression is an endless battle through a muddy swamp. I have to endlessly game it with exercise, sleep, supplements. I would give anything to not be held back by that. I somewhat envy the manic benefits of Bipolar! That sounds so much better than just regular depression! /h But my ADHD is high functioning. My mind constantly jumps from topic to topic, every aspect of a problem, or any problem in my life, or anticipated future life. And my brain tracks all these puzzle pieces well. It is my counter-point to focusing! And OCD works for me too. I think it is what makes my ADHD work for me. Always fixing, improving, smoothing, organizing. I can get distracted rearranging books on a shelf, but even then its like meditation, my zen, in that even small positive changes to my environment motivate me out of depression. Also, the constant ADHD/OCD iterations over the smallest things, leads me to fluency with my projects that invariably lead to the bigger novel insights that make all the difference. You can't run around the base of a huge mountain like a madman, testing every possible crevice, accumulating every possible strategy, practicing every kind of traversal, and acquiring every piece of equipment, without finding a way up! Even if I can't describe to anyone whether I am making any progress at all until I do! The downside of ADHD is very real for me: "less skilled at necessary tasks like accounting and bookkeeping" is an understatement. I can keep my regular life on rails, or get work done. Unfortunately, not both.
- herbst 4y ago
  I feel you. Depression and ADHD is what I credit for my 'independent work personality' a burnout was what made me quit the job I always wanted about 8 years ago. And 3 'companies' later my main pain in life is bookkeeping. I am not risk seeking, but definitely a non conformist. I think the main thing that drove me to be entrepreneural is the lack of a choice, for not 99% properly working people, in the traditional working market.
- thecoppinger 4y ago
  Oh boy, I can deeply relate :’)
paulpauper 4y ago
Being a tech entrepreneur seemed so cool in the early 2000s. Tech salaries have exploded so much since then that you're better off with an office job in terms of risk vs. reward, or maybe youtube or substack for those who want to be more entrepreneurial but without owning a business. The whole LLC/business plan route is not as important as it used to be unless you actually think you can create the next Square, Stripe, or Coinbase and can get the VC to write a big check. It does not help either that costs have really surged, such as coding, advertising, fees and regulations (such as Apple App store rules and fees, which are so high and restrictive), and complexity (like coding) compared to the early 2000s, and markets seem more saturated too.
- antoniuschan99 4y ago
  Definitely true during the height if the pandemic. So many paper millionaires when their stocks surged.
deleted 4y ago
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jossclimb 4y ago
I tell you what its not, being a great engineer. That can help in someways in understanding the technical aspects, but the amount of startups I know who have written incredible clean code with beautiful architecture who have run out of funding compared to the folks who wrote a janky frankensteins monster which they sold to customers, is very high.
- mjfl 4y ago
  correct. writing "clean code" is for pedants at big orgs.
  - tccole 4y ago
    Though if you have clean code… it makes it easier to iterate
- ZephyrBlu 4y ago
  I think this is highly dependent on your product. If you're selling an API, you probably cannot afford to have a shitty API design because no one will want to use your API. If you're selling a B2B product, you can probably have a shitty architecture because it's all internal and B2B app are generally lower scale. Though in saying that I would expect that B2B products like Snowflake and other 'deep tech' products require good engineering, otherwise the product just wouldn't work.
- gumballindie 4y ago
  > who wrote a janky frankensteins monster which they sold to customers That's likely because they are focused on building products not fancy toys. No wonder they succeed. Once cash flow is established you can hire workers to tidy things up and argue over what indentation style to use or which shiny new framework to adopt.
  - jt2190 4y ago
    Furthermore, we’re now in a far more cash-constrained business environment, and it’s much harder to justify having staff that have a vague impact on the bottom line (“argue over indentation style”, “argue over which shiny new framework to adopt”).
RMWildly 4y ago
I've also read a line of thinking that negatively correlates home ownership with entrepreneurship - or sometimes this is operationalised as a high proportion of net worth being accounted for by home ownership rather than other assets. This paper explores the idea in the UK over time, but I've seen studies out there that examine the idea comparing the UK to other European countries where home ownership is less of an embedded norm: https://conference.iza.org/conference_files/ESSLE_2012/bracke_p6867.pdf https://conference.iza.org/conference_files/ESSLE_2012/brack... Anyhow, very interesting to think that there are human traits at play as in the original article as well as structural/socio-economic factors.
gumballindie 4y ago
"In pursuit of that subject, we’ve studied companies from around the world, across industries, and at different stages of maturation, hopping from Starbucks to Stripe, Y Combinator to Flexport, Rappi to Kaspi, and DST to TSMC." A curious sample. Unfortunately these types of "studies" omit the bulk of entrepreneurs that keep an economy running. Small businesses, 5-50 employees, that tick on without the glory and fame that outliers capture are more interesting and more likely to be achieved. Would be curious to see more studies about the types of entrepreneurs that build them.
- Kye 4y ago
  It might be the actual research is more diverse, but they plucked out examples that were more likely to get people interested. Bob's Extruding in Elbow, Alabama might be a key plastic component supplier for the global economy, but nobody's heard of it.
  - gumballindie 4y ago
    > but nobody's heard of it. Well naturally since all these papers are focused on lottery wining tickets. Running a small to medium sized business is far more relevant to most of us.
  - burkaman 4y ago
    No, you can look at all their briefings here: https://www.generalist.com/briefings https://www.generalist.com/briefings. They don't really branch out beyond software startups and big businesses, and don't seem to be interested in smaller-scale entrepreneurship.
gadders 4y ago
I'd like to have seen more on the socio-economic background of entrepreneurs - does YC collate this diversity data? The stuff about the Chinese famine is interesting but I don't think can be generalised beyond China. My sense is that there are two socio-economic backgrounds that become entrepreneurs - those who are (not to put too fine a point on it) "poor" and so have no assets to risk in starting a company, and those that are "rich" that are also not risking much because their family or others could support them if the company failed.
brnewd 4y ago
My primary motivation to start a business was freedom. Having no boss and a ton of spare time. I got lucky and have something almost running on auto pilot. I'm not eager to start another business, I rather enjoy chilling at the pool and browsing HN. I guess this is the opposite of most VC funded YC startups eager to take over the world.
- moneywoes 4y ago
  How did you make it on auto pilot, a self serve model?
  - brnewd 4y ago
    It's a niche platform where subscribers/members post listings where other members respond to. The listings are public and indexed by Google, new customer acquisition is driven by organic trafic and word of mouth.
dagorenouf 4y ago
I left a 6 figure engineering job to build my own startup with my wife. For the past 5 years, we spent 2/3rds of our savings on it and almost didn’t take vacation. This year we finally reached ramen profitability. When I look at where we would be if I had kept the job, we would be homeowners, be able to buy new clothes regularly, go to restaurants and take awesome vacations a few times a year. But the missing thing would be autonomy. The reason why I’m willing to sacrifice so much is because i fundamentally don’t like having to follow orders from a boss or manager. I’m arrogant enough to think i know better, and want to prove it by actually building my own thing. Regardless of how silly it sounds on a financial level, the calculation makes sense once we look at the sense of ownership and autonomy over our own work. It’s worth more to me than any money I could make. Ps: if you’re curious, the startup is logology.co
- JohnFen 4y ago
  > The reason why I’m willing to sacrifice so much is because i fundamentally don’t like having to follow orders from a boss or manager. This is why I do it as well, at least in part. The other part is that I get to control what projects I get to work on.
- s1k3 4y ago
  I literally just wasted so much money on a logo. Coulda used this post last week.
  - dagorenouf 4y ago
    I hope you still got something you like!
- Delento 4y ago
  Tbh it looks more like the dream of being independent was more important to you than actually solving a real problem. I find it very interesting that you value 'any startup' more than owning your own flat for example
  - dagorenouf 4y ago
DeathArrow 4y ago
Since many big tech companies were start-ups once I will add psychopaths to the list.
quadcore 4y ago
I havent read it all but it doesnt seem to be about entrepreneurs but about innovators. Big difference. If I had to guess, innovators must be misfits whereas entrepreneurs must rather be fiting. So they dont make bombs in kindergarten, they win the class elections.
wufufufu 4y ago
Lost me on "9 year olds"
- cutemonster 4y ago
  It's not 9 it's: 41.9 I also misread that as 9 for a little while (and 41 as section nr 41)
peterjancelis 4y ago
My experience: Psychological orphans with a basic income. "Psychological orphans" i.e. kids who had shitty parents and learned to adapt to survive. Then this behavior became a habit and a game. "Basic income" i.e. kids from middle and upper middle class backgrounds so there was no food poverty in the family and long term thinking was possible by the kid, even in the context of the dysfunctional setting. The above is true for me and all of the high growth tech founders I know on a very personal level (could be selection bias in who I connect deeply with though).
- vague_vagaries 4y ago
  ^This My recipe for tech startup founder includes: 1. You were one of the smartest kids at your private school—so you’re opinionated and confident 2. You’re some kind of social misfit with a chip on your shoulder 3. Father is an Engineer, Lawyer, Banker, Doctor 4. Got some private tutoring or coaching at a young age 5. Went to a fancy big-name college It doesn’t apply to everyone, but during a recent job search I did a little detective work on founders at jobs I was applying for, and this was the large majority of them
- hnuser847 4y ago
  Wow, that's a really interesting observation and describes me perfectly. I wouldn't consider myself a "real" entrepreneur, but I've always had a side hustle and I own some rental properties. I took me until the age of 34 and having kids of my own to realize that my childhood wasn't that great, and that a parent's role should extend beyond just feeding their kids. My upbringing made my hyper-independent, so the desire to make myself completely financially independent basically consumed by 20s. It took me a long time to realize this drive, while useful in my career, came from a very unhealthy place.
- nickpinkston 4y ago
  Yea, I definitely have seen this same pattern, nice description. Though there is the "upper class" founder background that still had shitty parents and something to prove, and often they can get really far because of the $ and connections, though often have the issue that their alternative life is a bit "too easy" so they don't execute hard enough / close enough, or they just give up.
svcphr 4y ago
In the US, inventors (not the same as entrepreneur, but often related) are also disproportionately likely to be immigrants > We find immigrants represent 16 percent of all US inventors, but produced 23 percent of total innovation output, as measured by number of patents, patent citations, and the economic value of these patents. Immigrant inventors are more likely to rely on foreign technologies, to collaborate with foreign inventors, and to be cited in foreign markets, thus contributing to the importation and diffusion of ideas across borders. https://www.nber.org/papers/w30797 https://www.nber.org/papers/w30797
- giraffe_lady 4y ago
  Aren't immigrants about 15% of the US population though? It's not that disproportionate.
analyst74 4y ago
It seems the first reason is root of all the other reasons. If one cannot find a job that pays what they believe they deserve, they are much more likely to start their own business. The employee market does penalize generalists, those who lack political savvy (ADHD, OCD), and/or those who do not come from well off families and connections.
jl2718 4y ago
I ran a large, somewhat infamous hacker house, and watched the beginning of a few unicorn founders. My observation is that everybody talks about being an entrepreneur, but the only people that actually do are the people with no other options. They'll never admit those painful and repeated failures at normal employment, or other areas of normal life. For instance, I have rarely seen men in relationships succeed. Their partner loses respect for them very quickly, and they will spend all their time job hunting until they either take a job or get dumped in horrible embarrassing ways. Partnered women usually end up quitting in disgust or dumping their partners to gain the benefits of being single when soliciting potential investors. Everybody that made it had some kind of family support or side hustle that supported them through it. This is not about money to survive, but some kind of consistent positive affirmation. One category that I didn't see a lot of is the fully-employed side-hustler, so that may also exist with a completely different set of characteristics. Incidentally, according to the article, I should be a prototypical entrepreneur, and I've certainly always known this, but, wow, the level of misery I experienced from everybody close to me has been overwhelming every time I've started anything. I've been 'lucky' in the sense of finding some kind of a way into a job when it got to be too much. I've been homeless, I've been to war, I've done ultramarathons, but this is nothing compared to the more normal types of people problems that nobody ever talks about. My plan had always been to make only enough money to survive for a few years of freedom. It turns out that this was easy, but didn't solve the right problem. As a non-success, I still consider myself one of the lucky ones. I've seen people, who seemed to have it much better than I, get into much worse situations, and several didn't survive it. Steve jobs said you can't connect the dots to success looking forward, and this is obviously also true of disaster. It's easy to forget about these people, or only remember the bad dots. I think about what to tell my son about all of this. I want him to never feel forced into anything. If he feels good about a job or a relationship, he should feel happy to continue it. But he should know that those things may change to hurt him, and he should never get into a situation where he feels stuck. One important thing about this is that I believe that the law and the culture is strongly against him, and seems to be getting worse. He should not expect success in this environment, and I'd advise that it may be wise to go somewhere less hostile, even at the expense of financial opportunity. Most young people don't realize that the majority of middle-aged men in this country are legally barred from leaving their state of residence without permission. So the conditions for success seem simple, and the people that win big often don't seem very impressive, but the failure conditions are often larger and more hidden than most people understand early in life. You're not competing just with your mind, but your entire life situation to support your ideas.
andrepd 4y ago
>Research studies The author looks at a survey of knitters who sell their patterns online to conclude that "hard workers are more likely to become entrepreneurs". Even more comically, they grab a study about Chinese companies founded by the generation born around the time of the Great Famine, to conclude... that childhood adversity makes for better entrepreneurs! Need I say more? Unsurprisingly, they miss the prime correlation: parental income and access to wealth.

187 points by bhavansri 4y ago

The nice thing about this article is it blows some ageist assumptions out of the water. I wasn’t expecting the average founders age to be over 40 in SV.

sgu999 4y ago
I learned that a couple months ago and was shocked as well. It could also be a symptom of ageism in the industry: as it becomes harder for those not attracted by the corporate ladder to be hired, they start a business.
- lnsru 4y ago
  I am almost here. Similar age and in a company planing 2nd round of layoffs. I really have no delusions that somebody will want to hire me again. Universities are pumping out thousands of cheaper and better looking graduates. I never saw big corp hiring (in Germany) a graybeard like me for developer role. All the graybeards were so called consultants hired over specific agency. 40 is the magic number I guess. On the other hand 40 is about the right time, because body and mind is still functional. The network is available and the people skills should be developed even in worst outcasts (there are exceptions). People often have some business ideas and the worthy ones are developed a bit as a hobby. Being fired is the so much needed kick to get started for real.
  - JanSt 4y ago
    My employer is hiring many older people. Where do you live in Germany?
    - lnsru 4y ago
      I am near Munich. There 2 classes in “our” floor: people working for decades in the company and the young guys who come and go. Max age for hiring lies somewhere at 35.
moremetadata 4y ago
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bruce511 4y ago

Which just goes to show that all the studies in the world don't mean a whole lot :) I guess it depends on your definition of "entrepreneur" - does it count if you only found 1 company? But from where I stand I pretty much fail all the "high probability" criteria, no troubled past, no mental health issues, no previous employment history, no bad-childhood, and do on. Arguably I'm "well rounded" (for some definition of that. Yay!) So to aspiring entrepreneurs let me say, indicators don't really matter to _you_ as an individual. These are not _requirements_, they are indicators. Starting a business is not for the faint hearted though. You'll work more hours, probably for less money, possibly for no money, and you'll likely fail. You need more than just desire, you need a product people want, that they can afford, and you need a way to reach that market. And some luck. Did I mention you'll likely fail? Success isn't bei g a billionaire, success is keeping the doors open, drawing a salary, employing others in a non-exploitive way, not grinding away every second. Success is taking time off to spend with family, or playing sport, or whatever, just because you can. To those just starting out I say, welcome to the biggest adventure of all.

Swizec 4y ago
> Success isn't bei g a billionaire, success is keeping the doors open, drawing a salary, employing others in a non-exploitive way, not grinding away every second. Success is taking time off to spend with family, or playing sport, or whatever, just because you can. Success is whatever you want it to be. And that, to me, is the point of entrepreneurship: Defining your own success and getting there on your own terms.
- eastbound 4y ago
  Success is having no regrets. But of all the people, those who show jealousy acts are often the ones who say success is having less money and more time with family. Then you show them “Hey, you have 3 kids, a loving wife, just enough money to get by which is both what you’ve always said was sufficient and what you voted for (while you voted for the richer single men getting slashed), meanwhile I’m autistic, have no wife or kid, I’m rich like Cresus as a nice kickback from spending my Sundays at work… and you still have to be jealous???” If it were on my own terms, I would have chosen to be able to join improv groups and invite them all home without having a tantrum thrown because I don’t contribute more than the rest of the group. Money doesn’t equate universal power.

paxys 4y ago

If you study 10 entrepreneurs you will find 11 different paths they took in their journey. While this is a good read, the advice to everyone looking for the "secret sauce" to starting a successful venture remains the same – there is none. You can try to emulate Steve Jobs or Mark Zuckerberg or whoever else all you want. The moment you idea meets the real world you will be in completely unfamiliar territory with no operating manual and have to just...figure it out.

1970-01-01 4y ago
The secret sauce is "Make something people want" (YC's motto)
- paxys 4y ago
  A lot of times people don't know they want something until it is in front of them.
  - jackblemming 4y ago
    And even more times people thought they were being Henry Ford or Steve Jobs when they were actually making something nobody wanted.
  - TeMPOraL 4y ago
    The trick: they didn't actually need or want it until you put it in front of them, engineered to induce the want.
    - nottorp 4y ago
      Here's an anecdote. I used Linux as my main desktop OS for like 15 years. One day someone paid me to write some Mac software for them. I did the project on a $150 ancient mac from a second hand store, and partially on Linux. When the project ended I bought a new macbook when i got paid because i thought "ok, there's money in doing mac stuff, i better have current hardware". Linux was still my main desktop OS. 2 years later I switched my desktop to Mac OS too because after using it, it was simply far less annoying than either alternative. So when you see people talking about the reality distortion field and why pay extra for Macs... take it with a grain of salt. It's likely they just looked at prices and guessed it's not worth it, maybe thought about induced want. So was I before I got paid to use one :)

bushbaba 4y ago

It’s easy to choose a career in entrepreneurship when you either have enough inheritance wealth to not need to work OR living in poverty where there’s not much lower you could drop. For those in the middle, entrepreneurship comes with likely too great a risk to be worthwhile.

olalonde 4y ago
I'm not sure that's true given that immigrants are 80% more likely to start a business than people born in the U.S.[0]. That's the case in almost every country[1]. [0] https://www.wbur.org/news/2022/05/09/immigrants-are-80-more-likely-to-start-businesses-in-the-u-s-than-native-born-citizens-study-finds https://www.wbur.org/news/2022/05/09/immigrants-are-80-more-... [1] https://hbr.org/2021/08/research-why-immigrants-are-more-likely-to-become-entrepreneurs https://hbr.org/2021/08/research-why-immigrants-are-more-lik...
- athinggoingon 4y ago
  Wouldn't that fit the second criteria since many first generation immigrants don't have the requisite language skills to compete with the native population for middle class jobs.
- A4ET8a8uTh0 4y ago
  A fair amount of immigrants are less likely to have resources like capital or relationships to accommodate a different path so parent is likely right that they are somewhat forced onto path of entrepreneur.
snapplebobapple 4y ago
Scared money don't make no money sir....
rxhernandez 4y ago
As an entrepreneur twice over, it had everything to do with being able to spend the most productive hours of my day on being an entrepreneur and being armed with basic full stack web development skills. I had zero success in entrepreneurship in my 20s and I was delusional to think I could accomplish anything in entrepreneurship without both of those properties (and I tried multiple times a year for the decade of my 20s). It would take someone truly amazing* to pull off starting a successful business while working a full-time job. * And I say that in contrast to myself, who has been called talented more than a few times by my managers and still couldn't pull it off until I earned enough money to take time off

Joel_Mckay 4y ago

A better question is "Who becomes [a successful] entrepreneur?" There are many folks with side businesses that compliment their incomes, but primarily it is a tax strategy driven investment decision process. I think most successful "entrepreneurs" clue into the pejorative connotation of the word sooner. =)

shon 4y ago

It’s an interesting article. In my view, Non-conformists start companies. Possibly aggressive non-conformists most of all. In my personal case, I made many questionable choices, including turning down a job at Microsoft in the nineties (would have been better financially) and leaving multiple great jobs (one of which afforded me corporate apartments in Honolulu and London) to risk everything multiple times to start multiple companies. So there’s risk-seeking behavior there as well as a refusal to accept “good enough” even when it was almost definitely a better choice from a financial and physical health perspective. I can still see my dad shaking his head about turning down Microsoft… It sort of worked out. I had a good exit but nothing like kicking it at M$ for 30 years would have been. I’m not sure we why we glamorize this. But in the end I wouldn’t change it. I did it my way. I’m now trying to do it again. This is why I can’t play any games which require grinding (looking at you Eve) because I know it’s more fun IRL. ¯\_(ツ)_/¯

Darmody 4y ago
That's why I can't play almost any game, because I'll grind everything, even useless achievements. At least I have idle games and I'm also working on one which will probably end up in nothing.
barrysteve 4y ago
"including turning down a job at Microsoft in the nineties I can still see my dad shaking his head about turning down Microsoft…" That was quite a while ago... Probably should forgive and forget that one. Forgiving the disappointment makes mental space for new opportunities. I agree non-conformists start the really visible flashy companies. A new aircraft maintenance company can make bank, but it doesn't really grab headlines.
jaggederest 4y ago
Not especially non-conformists - non-conformity is merely a symptom. As you say, risk seeking behavior, resulting from the actual cause: "poor risk assessment" - ties right in to difficult childhood, mental health issues, and the market misjudging you (all causes or signs of trauma and being outside the norm). I say this as someone with an appetite for trying new things, being non-conformist, and adventure sports - clearly the accuracy or the precision of my risk assessment model is significantly outside the norm! People with excellent and accurate risk estimation and assessment work as actuaries, or accountants, certain kinds of insurance brokers, something nice and safe where you can do good work for 35 years and retire. The quintessential "brown volvo" driver. Now, I personally think those people are rather safe and uninteresting - but then we've already established I'm probably not the person to base your decisions on! If people are interested, there are good psychological tests for risk assessment skills - https://en.wikipedia.org/wiki/Impulsivity#Assessment_of_impulsivity https://en.wikipedia.org/wiki/Impulsivity#Assessment_of_impu...

atleastoptimal 4y ago

Another correlation, very unusual and interesting, is that past infection with Toxoplasmosis (a parasite that grows in cat poop) increases the chances of becoming an entrepreneur by a factor of 1.27 to 2 https://hbr.org/2022/07/a-common-parasite-can-make-people-more-entrepreneurial https://hbr.org/2022/07/a-common-parasite-can-make-people-mo... > they discovered that those infected with the parasite Toxoplasma gondii were, on average, 29% more likely than others to have founded a start-up, 27% more likely to have founded multiple ventures, and more than twice as likely to have founded their businesses alone Along with an increased risk of death via car accidents, having contracted Toxoplasmosis seems to precipitate risk seeking behaviors, similar to its intended evolutionary prerogative: the infection makes rats sexually aroused by the smell of cat urine, so they seek the smell, where cats are more likely to be around, are eaten by cats, and the cycle continues.

thesz 4y ago
https://pubmed.ncbi.nlm.nih.gov/21957440/ https://pubmed.ncbi.nlm.nih.gov/21957440/ Toxoplasma affects dopamine metabolism - body starts to produce more of it. Dopamine is also released with alcohol intake, notice that alcohol also makes everyone more confident, attractive and, well, prone to car accidents. I guess the "rough childhood" also has something to do with alcohol or other drugs somehow, that means dopamine metabolism is also affected. Dopamine is a powerful thing.
jl2718 4y ago
I'm just guessing, but I think you'll find an even stronger correlations from Toxoplasmosis to the lack of traditional family obligations, and also the latter to entrepreneurship.
- goldenkey 4y ago
  My mother cares more about her cats than I. So this rings somewhat true.

Nevermark 4y ago

Working on my second startup. I have clinical depression, ADHD and OCD. The depression is an endless battle through a muddy swamp. I have to endlessly game it with exercise, sleep, supplements. I would give anything to not be held back by that. I somewhat envy the manic benefits of Bipolar! That sounds so much better than just regular depression! /h But my ADHD is high functioning. My mind constantly jumps from topic to topic, every aspect of a problem, or any problem in my life, or anticipated future life. And my brain tracks all these puzzle pieces well. It is my counter-point to focusing! And OCD works for me too. I think it is what makes my ADHD work for me. Always fixing, improving, smoothing, organizing. I can get distracted rearranging books on a shelf, but even then its like meditation, my zen, in that even small positive changes to my environment motivate me out of depression. Also, the constant ADHD/OCD iterations over the smallest things, leads me to fluency with my projects that invariably lead to the bigger novel insights that make all the difference. You can't run around the base of a huge mountain like a madman, testing every possible crevice, accumulating every possible strategy, practicing every kind of traversal, and acquiring every piece of equipment, without finding a way up! Even if I can't describe to anyone whether I am making any progress at all until I do! The downside of ADHD is very real for me: "less skilled at necessary tasks like accounting and bookkeeping" is an understatement. I can keep my regular life on rails, or get work done. Unfortunately, not both.

herbst 4y ago
I feel you. Depression and ADHD is what I credit for my 'independent work personality' a burnout was what made me quit the job I always wanted about 8 years ago. And 3 'companies' later my main pain in life is bookkeeping. I am not risk seeking, but definitely a non conformist. I think the main thing that drove me to be entrepreneural is the lack of a choice, for not 99% properly working people, in the traditional working market.
thecoppinger 4y ago
Oh boy, I can deeply relate :’)

paulpauper 4y ago

Being a tech entrepreneur seemed so cool in the early 2000s. Tech salaries have exploded so much since then that you're better off with an office job in terms of risk vs. reward, or maybe youtube or substack for those who want to be more entrepreneurial but without owning a business. The whole LLC/business plan route is not as important as it used to be unless you actually think you can create the next Square, Stripe, or Coinbase and can get the VC to write a big check. It does not help either that costs have really surged, such as coding, advertising, fees and regulations (such as Apple App store rules and fees, which are so high and restrictive), and complexity (like coding) compared to the early 2000s, and markets seem more saturated too.

antoniuschan99 4y ago
Definitely true during the height if the pandemic. So many paper millionaires when their stocks surged.

deleted 4y ago

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jossclimb 4y ago

I tell you what its not, being a great engineer. That can help in someways in understanding the technical aspects, but the amount of startups I know who have written incredible clean code with beautiful architecture who have run out of funding compared to the folks who wrote a janky frankensteins monster which they sold to customers, is very high.

mjfl 4y ago
correct. writing "clean code" is for pedants at big orgs.
- tccole 4y ago
  Though if you have clean code… it makes it easier to iterate
ZephyrBlu 4y ago
I think this is highly dependent on your product. If you're selling an API, you probably cannot afford to have a shitty API design because no one will want to use your API. If you're selling a B2B product, you can probably have a shitty architecture because it's all internal and B2B app are generally lower scale. Though in saying that I would expect that B2B products like Snowflake and other 'deep tech' products require good engineering, otherwise the product just wouldn't work.
gumballindie 4y ago
> who wrote a janky frankensteins monster which they sold to customers That's likely because they are focused on building products not fancy toys. No wonder they succeed. Once cash flow is established you can hire workers to tidy things up and argue over what indentation style to use or which shiny new framework to adopt.
- jt2190 4y ago
  Furthermore, we’re now in a far more cash-constrained business environment, and it’s much harder to justify having staff that have a vague impact on the bottom line (“argue over indentation style”, “argue over which shiny new framework to adopt”).

RMWildly 4y ago

I've also read a line of thinking that negatively correlates home ownership with entrepreneurship - or sometimes this is operationalised as a high proportion of net worth being accounted for by home ownership rather than other assets. This paper explores the idea in the UK over time, but I've seen studies out there that examine the idea comparing the UK to other European countries where home ownership is less of an embedded norm: https://conference.iza.org/conference_files/ESSLE_2012/bracke_p6867.pdf https://conference.iza.org/conference_files/ESSLE_2012/brack... Anyhow, very interesting to think that there are human traits at play as in the original article as well as structural/socio-economic factors.

gumballindie 4y ago

"In pursuit of that subject, we’ve studied companies from around the world, across industries, and at different stages of maturation, hopping from Starbucks to Stripe, Y Combinator to Flexport, Rappi to Kaspi, and DST to TSMC." A curious sample. Unfortunately these types of "studies" omit the bulk of entrepreneurs that keep an economy running. Small businesses, 5-50 employees, that tick on without the glory and fame that outliers capture are more interesting and more likely to be achieved. Would be curious to see more studies about the types of entrepreneurs that build them.

Kye 4y ago
It might be the actual research is more diverse, but they plucked out examples that were more likely to get people interested. Bob's Extruding in Elbow, Alabama might be a key plastic component supplier for the global economy, but nobody's heard of it.
- gumballindie 4y ago
  > but nobody's heard of it. Well naturally since all these papers are focused on lottery wining tickets. Running a small to medium sized business is far more relevant to most of us.
- burkaman 4y ago
  No, you can look at all their briefings here: https://www.generalist.com/briefings https://www.generalist.com/briefings. They don't really branch out beyond software startups and big businesses, and don't seem to be interested in smaller-scale entrepreneurship.

gadders 4y ago

I'd like to have seen more on the socio-economic background of entrepreneurs - does YC collate this diversity data? The stuff about the Chinese famine is interesting but I don't think can be generalised beyond China. My sense is that there are two socio-economic backgrounds that become entrepreneurs - those who are (not to put too fine a point on it) "poor" and so have no assets to risk in starting a company, and those that are "rich" that are also not risking much because their family or others could support them if the company failed.

brnewd 4y ago

My primary motivation to start a business was freedom. Having no boss and a ton of spare time. I got lucky and have something almost running on auto pilot. I'm not eager to start another business, I rather enjoy chilling at the pool and browsing HN. I guess this is the opposite of most VC funded YC startups eager to take over the world.

moneywoes 4y ago
How did you make it on auto pilot, a self serve model?
- brnewd 4y ago
  It's a niche platform where subscribers/members post listings where other members respond to. The listings are public and indexed by Google, new customer acquisition is driven by organic trafic and word of mouth.

dagorenouf 4y ago

I left a 6 figure engineering job to build my own startup with my wife. For the past 5 years, we spent 2/3rds of our savings on it and almost didn’t take vacation. This year we finally reached ramen profitability. When I look at where we would be if I had kept the job, we would be homeowners, be able to buy new clothes regularly, go to restaurants and take awesome vacations a few times a year. But the missing thing would be autonomy. The reason why I’m willing to sacrifice so much is because i fundamentally don’t like having to follow orders from a boss or manager. I’m arrogant enough to think i know better, and want to prove it by actually building my own thing. Regardless of how silly it sounds on a financial level, the calculation makes sense once we look at the sense of ownership and autonomy over our own work. It’s worth more to me than any money I could make. Ps: if you’re curious, the startup is logology.co

JohnFen 4y ago
> The reason why I’m willing to sacrifice so much is because i fundamentally don’t like having to follow orders from a boss or manager. This is why I do it as well, at least in part. The other part is that I get to control what projects I get to work on.
s1k3 4y ago
I literally just wasted so much money on a logo. Coulda used this post last week.
- dagorenouf 4y ago
  I hope you still got something you like!
Delento 4y ago
Tbh it looks more like the dream of being independent was more important to you than actually solving a real problem. I find it very interesting that you value 'any startup' more than owning your own flat for example
- dagorenouf 4y ago

DeathArrow 4y ago

Since many big tech companies were start-ups once I will add psychopaths to the list.

quadcore 4y ago

I havent read it all but it doesnt seem to be about entrepreneurs but about innovators. Big difference. If I had to guess, innovators must be misfits whereas entrepreneurs must rather be fiting. So they dont make bombs in kindergarten, they win the class elections.

wufufufu 4y ago

Lost me on "9 year olds"

cutemonster 4y ago
It's not 9 it's: 41.9 I also misread that as 9 for a little while (and 41 as section nr 41)

peterjancelis 4y ago

My experience: Psychological orphans with a basic income. "Psychological orphans" i.e. kids who had shitty parents and learned to adapt to survive. Then this behavior became a habit and a game. "Basic income" i.e. kids from middle and upper middle class backgrounds so there was no food poverty in the family and long term thinking was possible by the kid, even in the context of the dysfunctional setting. The above is true for me and all of the high growth tech founders I know on a very personal level (could be selection bias in who I connect deeply with though).

vague_vagaries 4y ago
^This My recipe for tech startup founder includes: 1. You were one of the smartest kids at your private school—so you’re opinionated and confident 2. You’re some kind of social misfit with a chip on your shoulder 3. Father is an Engineer, Lawyer, Banker, Doctor 4. Got some private tutoring or coaching at a young age 5. Went to a fancy big-name college It doesn’t apply to everyone, but during a recent job search I did a little detective work on founders at jobs I was applying for, and this was the large majority of them
hnuser847 4y ago
Wow, that's a really interesting observation and describes me perfectly. I wouldn't consider myself a "real" entrepreneur, but I've always had a side hustle and I own some rental properties. I took me until the age of 34 and having kids of my own to realize that my childhood wasn't that great, and that a parent's role should extend beyond just feeding their kids. My upbringing made my hyper-independent, so the desire to make myself completely financially independent basically consumed by 20s. It took me a long time to realize this drive, while useful in my career, came from a very unhealthy place.
nickpinkston 4y ago
Yea, I definitely have seen this same pattern, nice description. Though there is the "upper class" founder background that still had shitty parents and something to prove, and often they can get really far because of the $ and connections, though often have the issue that their alternative life is a bit "too easy" so they don't execute hard enough / close enough, or they just give up.

svcphr 4y ago

In the US, inventors (not the same as entrepreneur, but often related) are also disproportionately likely to be immigrants > We find immigrants represent 16 percent of all US inventors, but produced 23 percent of total innovation output, as measured by number of patents, patent citations, and the economic value of these patents. Immigrant inventors are more likely to rely on foreign technologies, to collaborate with foreign inventors, and to be cited in foreign markets, thus contributing to the importation and diffusion of ideas across borders. https://www.nber.org/papers/w30797 https://www.nber.org/papers/w30797

giraffe_lady 4y ago
Aren't immigrants about 15% of the US population though? It's not that disproportionate.

analyst74 4y ago

It seems the first reason is root of all the other reasons. If one cannot find a job that pays what they believe they deserve, they are much more likely to start their own business. The employee market does penalize generalists, those who lack political savvy (ADHD, OCD), and/or those who do not come from well off families and connections.

jl2718 4y ago

I ran a large, somewhat infamous hacker house, and watched the beginning of a few unicorn founders. My observation is that everybody talks about being an entrepreneur, but the only people that actually do are the people with no other options. They'll never admit those painful and repeated failures at normal employment, or other areas of normal life. For instance, I have rarely seen men in relationships succeed. Their partner loses respect for them very quickly, and they will spend all their time job hunting until they either take a job or get dumped in horrible embarrassing ways. Partnered women usually end up quitting in disgust or dumping their partners to gain the benefits of being single when soliciting potential investors. Everybody that made it had some kind of family support or side hustle that supported them through it. This is not about money to survive, but some kind of consistent positive affirmation. One category that I didn't see a lot of is the fully-employed side-hustler, so that may also exist with a completely different set of characteristics. Incidentally, according to the article, I should be a prototypical entrepreneur, and I've certainly always known this, but, wow, the level of misery I experienced from everybody close to me has been overwhelming every time I've started anything. I've been 'lucky' in the sense of finding some kind of a way into a job when it got to be too much. I've been homeless, I've been to war, I've done ultramarathons, but this is nothing compared to the more normal types of people problems that nobody ever talks about. My plan had always been to make only enough money to survive for a few years of freedom. It turns out that this was easy, but didn't solve the right problem. As a non-success, I still consider myself one of the lucky ones. I've seen people, who seemed to have it much better than I, get into much worse situations, and several didn't survive it. Steve jobs said you can't connect the dots to success looking forward, and this is obviously also true of disaster. It's easy to forget about these people, or only remember the bad dots. I think about what to tell my son about all of this. I want him to never feel forced into anything. If he feels good about a job or a relationship, he should feel happy to continue it. But he should know that those things may change to hurt him, and he should never get into a situation where he feels stuck. One important thing about this is that I believe that the law and the culture is strongly against him, and seems to be getting worse. He should not expect success in this environment, and I'd advise that it may be wise to go somewhere less hostile, even at the expense of financial opportunity. Most young people don't realize that the majority of middle-aged men in this country are legally barred from leaving their state of residence without permission. So the conditions for success seem simple, and the people that win big often don't seem very impressive, but the failure conditions are often larger and more hidden than most people understand early in life. You're not competing just with your mind, but your entire life situation to support your ideas.

andrepd 4y ago

>Research studies The author looks at a survey of knitters who sell their patterns online to conclude that "hard workers are more likely to become entrepreneurs". Even more comically, they grab a study about Chinese companies founded by the generation born around the time of the Great Famine, to conclude... that childhood adversity makes for better entrepreneurs! Need I say more? Unsurprisingly, they miss the prime correlation: parental income and access to wealth.