For the entrepreneurs who might be reading this, let me first extend my apologies … to your spouses and families. The data I’m about to share suggests that the key to entrepreneurial success may not be how good your business idea is or how much money you have to launch it, but rather how many times you try.
This data is not new and it’s not mine, but it has colonized a place in my mind (somewhere very close to my major life decision-making faculties) ever since I first heard it.
“Many entrepreneurs describe their turn to entrepreneurship as an irreversible life-event, something falling in between having an epiphany and contracting a disease. Many are willing to chase their entrepreneurial angels or demons indefinitely, successful or not. This data may supply the method to their madness.”
I was sitting in on a lecture to business school students with Murray Low, Associate Professor and Director of the Entrepreneurship Program at Columbia Business School (CBS). Low presented the surprising findings from a survey conducted among 2,655 CBS alumni. Though hardly a random sample, the respondents do represent a decent-sized swath of the world business community: 61 percent of them had been involved in start-ups resulting in 3,096 new ventures, 123,500 jobs and total annual revenues of $23 billion.
The survey solicited both quantitative and qualitative responses from the current and former entrepreneurs in the sample, including details on the performance of their ventures (measured by number of employees, revenues, and financial returns) and their personal motivations for becoming entrepreneurs.
In Low’s analysis, a key data point and predictor of success turned out to be the number of ventures each respondent had worked on: about half had worked on one start-up, a quarter had worked on two, and another quarter had worked on more than two, putting themselves in the category of “serial entrepreneurs.”
In analyzing these data, Low writes:
“On every measure, second businesses are more successful than first businesses, third businesses are more successful than second businesses and so on. It appears without question that there is a powerful learning process at work.”
Entrepreneurs in both the for-profit and non-profit sectors are some of the most driven and passionate people I know. Many describe their turn to entrepreneurship as an irreversible life-event, something falling in between having an epiphany and contracting a disease. Many are willing to chase their entrepreneurial angels or demons indefinitely, successful or not. This data may supply the method to their madness. And Low, in his spirited pitch to win the best and brightest Columbia MBA students to his department, eggs them on:
“Interruptions in an entrepreneurial career were shown to have a negative impact on performance. Taking time off to raise a family or to work for others is associated with less success.”
There’s more food for thought for prospective entrepreneurs and MBAs in the full survey results. For one: the “desire to build something” is a better predictor of success than having a great business idea, frustration with your corporate job, or monetary ambitions. For another: the “sweet spot” for starting a successvul new business is 3-5 years out of business school. It might be worth taking a look at the complete study in PDF.
One could argue that the results of this survey are not surprising at all, that we know as much about what makes a successful entrepreneur from our common sense and banal aphorisms like “If at first you don’t succeed…” Still, I’ve found the data helpful — especially when talking to my wife about the topic.