What would the hip "entrepreneur" narrative be without the dazzling stories of ingenious founders, populating business journals like the beautiful, rich and noble populate women's journals? We
all know them - the stories of the wondrous entrepreneurial being who shatters all business obstacles with the disruptive power of a young daredevil go-getter, with charisma and a good dose of
highly gifted nerdiness? Who, after the apocalyptic failure of his umpteenth company, immediately gets up again and launches the umpteenth+1th business idea, which this time around turns out to
be incredibly successful?
And who wouldn't have dreamed of founding their own company and amassing a fortune in just a few years, living happily ever after and even being able to make generous donations to all kinds of good causes?
In the corresponding dreams, you can already see yourself jetting back and forth between various residences on colorful dream beaches and the in-cities of this world, in your first-class hammock,
and now and then at philanthropic events, graciously reducing the hardships of humanity by a few million by a wave of your hand ...
With nice regularity these reveries are followed by the sigh: "Oh no, such luck is unfortunately not given to me. I am simply not one of those chosen ones. No brilliant idea in sight, no founder's genes and no start-up capital inherited from parents, and anyway: I am simply much too normal for such flights of fancy". We've heard it all before, the list of supposedly typical characteristics that a successful founder supposedly needs to have in order to get a chance at the big breakthrough.
But what's really true about the common myths on these wondrous entrepreneurial beast? Are founders really so unique and different from the rest of the world? What characteristics do successful founders and business models actually have? Let's take a look and see what the facts say.
Myth No. 1: Founders must be Young
Courageous, young, unbound and adventurous - that's how people like to imagine the typical founder. Of course, when you're young you have all the energy to conquer the world, and in youthful enthusiasm the trees still grow to the sky. But who would take the risk of founding a company at an advanced age, when a sense of reality and habits take hold, and when your family responsibilities require some security and stability?
However, the fact check shows that the age distribution of founders in Germany is actually extremely broad and includes all age groups. Everything is represented, from 18-year-old greenhorns to 60-year-old seniors. On average, as a German Reserach Institute found out, the average age of founders (in Germany) is an impressive 38.6 years! Job-specific know-how and experience, but also the accumulation of start-up capital, are obviously not negligible factors that significantly influence the willingness to found a company and turn out to be more favorable with age.
Myth No. 2: Founders are Risk Takers
We all know them, the examples of famous risk-taking founders. Elon Musk, it is said, put his entire fortune into companies, so that he ended up having to borrow money to pay his rent. A famous quote from Mark Zuckerberg is: "The biggest risk is to take no risk at all." Of course, starting a business, making large investments into it, and foregoing a reliable income as an employee is always a risk.
But is it true that entrepreneurs are therefore more risk-averse than their peers? A study from the American Universities Stanford and Princeton examined the risk-taking behavior of budding entrepreneurs in comparison to the general population. In a business game, participants could choose between an investment decision with an 80 percent chance of winning $1.25 million and one with a 20 percent chance of winning $5 million. The result: founders-to-be were actually less risk-averse than their peers. The majority of founders preferred the higher probability for the smaller gain. In the control group, it was the other way around. With the smaller risk, the entrepreneurs thus acted according to the principle: Better a bird in the hand than a pigeon on the roof. Who would have thought that?
Myth No. 3: Founders are Charismatics
What would the presentations of the latest Apple products by the late Steve Jobs some decades ago or the entrepreneurial visions of Elon Musk now be without the charisma of these two personalities? Who would get excited about the same ideas or products if they were announced by the janitor next door in the pub over a beer? Who would you be more likely to buy a new capsule coffee machine from - a greasy salesman at the front door, or a fascinating charming beau?
But beware: The dark side of many charismatics is that they operate on an extremely fine line on the precipice to manipulation and psychopathy. The bestselling author and career consultant Martin Wehrle impressively showed in his book: "The smarter one gives in" ("Der Klügere denkt nach") why discreet and introverted characters can also be extremely successful. From this point of view, it may well be much better advice to trust the solid professional next door rather than the front man of a questionable new hype that's all over the media.
Myth No. 4: Failures make you wise
The bookstores are packed with books that sing the praises of failure. "The Art of Failure," "The Beauty of Failure," "Fail Properly," "Fail Playfully." One would almost like to think that know-how is not important at all when starting a business. You just have to have failed enough times in order to become successful at the next try. As if the success of founding a company were a lottery game in which you only have to have participated often enough to inevitably win at some point.
Wrong. The fact is: Founders that failed once are not always more successful; on the contrary, they often fail again. A study (Junge Unternehmen, May 2014) found that entrepreneurs who had to give up a previous company due to insolvency or other reasons are more likely to file for insolvency again with a new company. Without a solid foundation, a business can't work - no matter how many mistakes you make and learn from them. If the next business avoids the old mistakes but does not have a solid foundation, then even the hundredth start-up will not be crowned with success.
Myth No. 5: Start-up ideas must be disruptive
Truly successful business ideas should revolutionize the market - create a whole new class of products and thus make the existing ones obsolete. In the best case, this may be a very successful strategy. Indeed, digital cameras, for example, have completely shaken up the entire photo market, wiping such established players as Kodak off the map. But does that necessarily mean that every good business idea has to be so innovative that it has this kind of disruptive effect?
In reality, the percentage of firms that actually change a market is vanishingly small. In his survey of the 500 fastest-growing American companies, U.S. economist Amar Bhide, author of the
relevant classic „The Origin and Evolution of New Businesses“, found that only 1 in 8 entrepreneurs is successful because of an exceptionally innovative idea. 88% make their money with an
everyday idea - but which they execute exceptionally well.
As Oliver Samwer (one of the two founders of the extremely successful Rocket Internet) puts it, "We might not win the top award for greatest innovation, but what does it matter? You just have to be super pragmatic."
And even if you actually have an extremely disruptive idea, that doesn't mean it's enough to turn it into a successful business. Let's imagine, for example, the person who invented the wheel. Perhaps he was a bit slenderly built and therefore put a lot of energy into inventing a tool that would enable him to transport heavy objects. What could he do about it when someone twice his size stole the idea from him and used it to gain success with his tribal chief? In the modern business context, there are plenty of examples of inventions or ingenious ideas simply being bought up by a big player or - even more bluntly - downright stolen in legal processes that bleed the actual inventor dry financially? No, even a disruptive idea is neither necessary nor sufficient to generate a successful business.
What do we conclude from these findings?
I think, this is good news for all those who are considering starting their own company.
You don't have to be the young, daring, charismatic guy who already busted 3 startups, but now has the most brilliant idea of the century that will turn the world as we know it upside down.
Even, and perhaps especially, the middle-aged average person with a level-headed mind and a fair amount of professional and life experience can found a successful company. It does not always take an ingenious innovation to succeed. A solid business concept that has already proven itself elsewhere might as well do very nicely. Or an idea that is simply implemented in a better, more elegant and cooler way.
OK, maybe you won't go public with your business within the first 5 years and raise investments of billions of euros. But you may be spared from a subsequent crash. With well-calculated risk, you can build up a healthy business even without charismatic character traits. In the long term, you might even be more successful than the well-known "rich and beautiful" from the yellow press.