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It is worth it? Who are they? What do the successful ones do?
2
Successful Entrepreneurship
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
0%10%20%30%40%50%60%70%80%90%
100%100%
75%
64%56%
50%45%
40% 37% 34% 31% 29%
Business Survival Over Time
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Most Startups Fail
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
-$20,000
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
$160,000
Employee IncomeEntrepreneur Income
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Incomes Are Lower Than Work
Wealth of Top 10%
$350,000
$1,300,000
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Most Lose, But Winners Win Big
Employees Entrepreneurs
Employees Entrepreneurs
39%25%
35%
36%
13%31%
Completely Satisfied
Very Satisfied
Fairly Satisfied
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And They’re Happier
Job Satisfaction
Traits•Bad Risk Assessors•Overconfident•Fewer Regrets
Motivation
•Work For Himself•Task Oriented
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Who Are Entrepreneurs?
Individual Differences
Sample Case: Threatened with $1.1MM lawsuit Offer to settle for $0.3MM (6% of company
profits) At 99% likely to prevail, you’d go to court At 1% likely to prevail, you’d settle
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Risk Propensity
Choose the lowest chance to win that would prompt you to go to court
Sample Case: Chickens don’t fight in red light Chickens can be fitted with red-tinted
contact lenses, resulting in fewer attacks Lenses cost $0.02 each, but save $0.50 per
bird Initial results with a local farmer are
positive
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Risk Assessment Assessment
Is this a good idea? Should you pursue it?
Overconfidence◦ More likely to believe they knew certain facts
Illusion of Control◦ More likely to believe that they can achieve
success where others can’t Law of Small Numbers
◦ Willing to believe results from small data sets
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Risk Assessment Problems
Outcome
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Why Do Some Succeed?
Traits•Disagreeable•Conscientious•Desire to Succeed
Background/Skills
•More Education•More Experience•Older•More Time in Industry•Ventured Before
Motivation
•Growth Orientation•Organizational Orientation
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Why Do Some Succeed?
Individual Differences
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Importance of Success Factors
Industry Experience
College Education
Motivation to Succeed
Mission Statement
Growth Goals
0.0x
0.5x
1.0x
1.5x
2.0x
2.5x
3.0x
3.5x
Likelihood of Rapid Growth
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The Leadership Transition
When the entrepreneur’s role is less about what s/he can do, and more about what s/he can get the organization can do.
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Task Orientation: Hitting The Wall
Task Orientation
•Achieve by own efforts•Attribute success to self•Avoid risk and chance•Get feedback•Introduce innovations•Think about the future
Hierarchic Orientation
•Compete•Exercise power over others•Assert oneself•Distinctive status•Be a manager
04/13/2023
Institutionalizing key tasks Developing mid-level management Distributing decision-making Maximizing others’ performance
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Transitional Difficulties
Commit◦ Work full time◦ Start marketing sooner◦ Build a team◦ Do a proper evaluation of the biz
Focus◦ Get more capital◦ Establish financial controls◦ Focus on one thing◦ Set goals
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What Do The Successful Do?
Complete Plan Form Entity Ask for funds Obtain inputs0%
10%20%30%40%50%60%70%80%90%
100%
43%
58% 54%
66%
Relative Likelihood of Disbanding (30 Months)
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Commit to the Business
Improves venture growth Improves employee commitment Reduces cost of inputs by aligning
suppliers
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Entrepreneurial Vision
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Vision Definition The reason that your company does what
it does. Its purpose.
3M: To solve unsolved problems. Merck: To preserve and improve human
life. Nike: To experience the emotion of
competition. Wal-Mart: To give ordinary folk the chance
to buy the same things and rich people. Disney: To make people happy.
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Vision Examples
A mission statement explains what the company intends to achieve.
It is realistic, setting you up for success. It is measurable, so you can know how
close you are to achieving it. It is meaningful, so people want to get
behind it. It is time-bound
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Set A Goal: Mission Statements
References growth Written down Frequently communicated
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Qualities of Successful Missions
Stakeholders understand their role They can see how they fit into the
company’s overall goals They can recognize and take pride in their
individual contributions Employees are not mushrooms
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Organizational Alignment
04/13/2023
Larger startup teams outperform smaller teams (up to 4 people)
Distributed leadership outperforms unitary control
Team cohesion improves sales and profits
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Teams Improve the Odds
04/13/2023
Convenience Model:Access/Similarity
Instrumentality Model:Based on role need
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Team Formation
04/13/2023
Recognize your limitations Learn and grow Set goals Commit yourself Build a team
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Improve Your Odds
