I really enjoyed Scott Shane’s new book, The Illusions of Entrepreneurship– especially the title. Being a big fan of Magic (my son “supported himself in his teen years by doing magic shows for birthday parties), I also focus on the illusions and myths (and the costs as Scott says) of entrepreneurship in my first book, You Need To Be Alittle Crazy: The Truth About Starting and Growing Your Own Business. Scott is the author of 11 (can that be right) books and 60 scholarly articles- so he knows what he is talking about.
At the publisher’s web site, Yale Press, you can take Scott’s quiz.
My favorite questions:
Which number best approximates the typical capitalization of a new business?
a. $5,000
b. $25,000
c. $125,000
d. $500,000
What percentage of software firms founded annually achieve more than $50 million in sales by the time that they are five years old?
a. 0.4 percent
b. 4.0 percent
c. 9.1 percent
d. 14.4 percent
In the late 90’s, entrepreneurship took on a more mythic quality where people started to believe that anybody could start a business. People started to think that it was an easy get quick rich scheme. Scott and I agree that this is far from the truth. While the journey can be wonderful and fulfilling, it is not for the faint of heart or the misguided.
In his book, Scott looks at what the typical start up is like, (tiny) what industry are they in (not high tech), where is the best entrepreneurial opportunities (not the US), who finances it (not VCs or angels), how much entrepreneurs need (less than you think), how wealthy do entrepreneurs end up (not that well).
Unlike a lot of books I read by academics, Scott’s is easy to read and very understandable for the pragmatic business person. My favorite part of the book is the secret sauce chapter where Scott talks about what make some businesses more successful than others.
He gives some very sensible advice which isn’t the typical 10 steps to riches:
1. Pick the right industry and one that you know
2. It gets easier over time. Staying in business will increase your chances of financial success.
3. Start your business for the right reasons
4. Work for others before you start your own thing.
Read Scott’s book before you start or while you are in the middle of things. It will reset your expectations and help you toward success.
