Archive for the ‘entrepreneurship’ Category
Tucker Max is most well known as a “fratire” writer, but he’s also an law school graduate, investor, and successful business owner. He recently wrote a column for the Observer about his experience as angel investor and his analysis is highly sociological. The basic point is that the VC field is structured by networks. Yes, the next Google or Facebook is out there, but you can only get a chance to invest if you work with one of a very small number firms who get “first dibs” on the start-ups that have a chance at making it big:
The other problem is that there are, at BEST, only a few of these massive home run companies formed each year. You think you can predict, out of the thousands of start-ups launched each year, which ones will be the winners? A lot of people think they can. Almost all are wrong. But here’s the most messed up part: even if you can reliably pick the winners with some degree of certainty, you’re still probably going to lose. Why? Because you probably can’t get into the winners. This is because the best companies (at least in Silicon Valley) tend to get identified early, and as a result, they have a lot of people trying to put money into them. And to even be able to put money in, you have to have a way in, which means one thing: It almost always takes the right social connections to get into very early stage companies. Let me be super clear about this: all the great deals I got into were because of my social network. That’s it. No other reason.
Another great sociological lesson: good ideas don’t make money, good people make money. The problem is that there are very few people who are “good” entrepreneurs that can successfully turn a small start up in a larger firm. Simply put, there are a lot of immature men and women running start ups and many of them are horrible at taking advice. Thus, the angel investor isn’t just working with products, they are working with people who may be unable to take direction:
Most of the founders are young, and young people are inexperienced, which might be great for a lot of reasons (energy, enthusiasm, flexibility, no assumptions), but it almost automatically makes them stupid at entrepreneurship. I was exceptionally stupid when I was young, so I speak from experience here, but without an experiential framework to fall back on, you have no way to understand and solve many of the hundreds of problems that come up when you start a company. The younger you are, the less experience you have, the harder this whole thing is. This doesn’t mean young people can’t excel at entrepreneurship. Yes of course some young people can and do build companies and become amazing CEO’s. Please, do not point to Mark Zuckerberg and Evan Speigel as your rebuttal; they are by definition the exceptions that prove the rule. For every one of them, there are 50 founders who torpedo their previously hot company by making all the standard mistakes of youth. Ask any VC you know to tell you those war stories. They have way more of the bad than the good.
“there’s no rankings problem that money can’t solve” – the tale of how northeastern gamed the college rankings
There’s a September 2014 Boston.com article on Northeastern University and how it broke the top-100 in the US News & World Report of colleges and universities. The summary goes something like this: Northeastern’s former president, Richard Freeland, inherited a school that was a poorly endowed commuter school. In the modern environment, that leads you to a death spiral. A low profile leads to low enrollments, which leads to low income, which leads to an even lower profile.
The solution? Crack the code to the US News college rankings. He hired statisticians to learn the correlations between inputs and rankings. He visited the US News office to see how they built their system and bug them about what he thought was unfair. Then, he “legally” (i.e., he didn’t cheat or lie) did things to boost the rank. For example, he moved Northeastern from commuter to residential school by building more dorms. He also admitted a different profile of student that wouldn’t the depress the mean SAT score and shifted student to programs that were not counted in the US News ranking (e.g., some students are admitted in Spring admissions and do not count in the US News score).
Comments: 1. In a way, this is admirable. If the audience for higher education buys into the rankings and you do what the rankings demand, aren’t you giving people what they want? 2. The quote in the title of the post is from Michael Bastedo, a higher ed guru at Michigan, who is pointing out that rankings essentially reflect money. If you buy fancier professors and better facilities, you get better students. The rank improves. 3. Still, this shows how hard it is to move. A nearly billion dollar drive moves you from a so-so rank of about 150 to a so-so rank of about 100-ish. Enough to be “above” the fold, but not enough to challenge the traditional leaders of higher ed.
Orgtheorist and loyal orgtheory commenter Howard E. Aldrich is featured in a video about his intellectual trajectory and the history of organizational studies. Learn about Howard’s start in urban sociology and organizational studies, why he finds cross-sectional studies “abhorrent,” his years at Cornell where he overlapped with Bill Starbuck, and how he got started publishing in organizational ecology. He also explains how the variation, selection, and retention VSR) approach was a “revelation” for him, and how various institutions (University of Michigan, Stanford, and others) have promoted his intellectual development via contact with various colleagues, collaborators, and graduate students. Towards the end of the interview, Aldrich describes his latest research on the Maker movement, including hacking and the rise of affordable 3-D printing and other hardware and software that may propel technological innovation.*
The videoed interview is courtesy of Victor Nee’s Center for Economy & Society at Cornell University. More videos, including a presentation on his work on entrepreneurship, are viewable here. Also, those looking for an organizational studies text should see his seminal Organizations Evolving with Martin Reuf here.
* The Maker movement has strong affinities with Burning Man. In fact, that’s partly how I started attending Maker Faire – check out my photos of past Maker Faires, which included performance artists from the now-defunct Deitch Art Parade.
An old question for management scholars, with a few words from Bill Reichert, a well known tech guy:
Anyone who has spent any time in the entrepreneur ecosystem knows that there is an inverse correlation between high prestige MBAs and entrepreneurship. It’s clear what is going on here. The GMAT, like the SAT, is focused on finding the high achievement individuals in society — not the compassionate, ethical, collaborative, or socially conscious individuals. The whole institutional educational game is focused on individual achievement and test scores on standardized bodies of knowledge, not on teamwork, risk-taking, and innovative thinking.
A biting quote for legend Guy Kawasaki:
Entrepreneurs ask us all the time how we figure out the valuation of a startup company. Most VCs suggest that this is a very mysterious art. But actually it’s quite simple: To determine the fair value of a startup company, multiply the number of engineers by $250,000, add $250,000 for each engineer from IIT, and then subtract $500,000 for each MBA. <
Reichert ends on a positive note:
So what should we do to develop these talents in our young people? Is it the proper domain of our university system to teach team skills and social consciousness? Or do we simply accept that the current approach to finding and selecting elites is the best the university system can do, and leave it to the real world to apprentice young graduates in these skills and attitudes? It’s hard to imagine developing an effective curriculum for our educational system that will develop the non-academic team skills and creative thinking skills that we need. But we can probably do more, in early education, in the universities, and in the workplace, to foster the development of these skills and to make sure that young people with these skills are not undervalued by the educational system, or by our society.
Definitely worth the read.
I’ve recently finished Joel Mokyr’s The Englightened Economy, an economic history of Britain during the industrial revolution. The book is an exhaustive argument about the role of Enlightenment ideas on economic development. I won’t go into detail here, but I’ll summarize it by merely saying that the book is a thorough review of the literature on Britain through the eyes of economists and historians.
Today, I want to make a comment on an observation of Mokyr. In his review of research in higher education during British industrialization, he notes the following:
- Higher education was very rare
- Innovators and industrial leaders were mostly uneducated
- Individuals with elite education (e.g., Oxbridge) were fairly rare among the ranks of the industrial leadership
Mokyr raises this point in service of the argument that Britain’s economic expansion can’t be attributed to rising quality of education since most people were not well educated until well after the industrial revolution. My point: This is somewhat analogous to economic expansion today. Leading Silicon Valley firms aren’t always, or even usually built, from people who have advanced degrees. I can think of only one such major firm (Google). Microsoft, Facebook, and Apple were founded by college drop outs, albeit elite drop outs. Groupon was founded by a policy school grad school drop out (not computer science). Twitter’s founder was a computer geek in high school but went to un-glamorous Missouri Tech, then later went to NYU, not known as a computer science hub.
The conclusion: You need an educated work force to carry out ideas, but the leadership doesn’t need a lot of education. Rapid economic expansion seems to hinge on having a mix of smart people who get their “training” from a wide variety of sources, not just college. Colleges are more about educating the masses who compose the rest of the organization.
Howard Aldrich, a man who needs no introduction, has written a new book about entrepreneurship and evolutionary theory. He’s also written a blog post at the publisher’s website discussing some of the book’s key insights and detailing his own intellectual journey as a sociologist who has embraced entrepreneurship as a topic of study. It’s really interesting. Everyone should go read his blog post.
In addition to providing a really fascinating look into the mind of Howard Aldrich, in his post he offers some sage advice to young organizational scholars. It’s such good advice I thought I’d cross-post it here:
- Think in terms of long-term projects, especially if you are studying dynamic processes that take some time to unfold. Cross-sectional studies provide snapshots of the way things are at a moment in time, but most contemporary theorizing concerns mechanisms and emergent processes that must be studied over time. Many of my projects involved data collection that extended over 4 to 6 years, with analysis and writing requiring several more years. Luckily, I had a portfolio of projects, some of which came to fruition earlier than others and thus I never lacked things to do!
- Think in terms of cumulative work that builds one paper on top of another, as a project matures over its planned life. In this age of “salami-publishing” – chopping bigger projects into smaller chunks and then publishing the smaller bits as independent papers – scholars often forget that such behavior cannot go undetected. Independent observers of someone’s career take notice of suboptimal publishing patterns and are likely to discount a project’s worth, if its contributions are diluted by being parceled out in dribs and drabs. Instead, focus on establishing theoretical and empirical continuity across your work.
- Pay attention to what others are doing and find ways to link your work to theirs. With tools such as Google Scholar, citation alerts, table of content alerts, and other technologically-enhanced ways of keeping track of work in your field, you can enhance the impact of your own contributions by showing how it relates to the emerging state of the art.
- Most research projects in organization and management studies are multi-disciplinary, especially in entrepreneurship. Keep up with key work in other disciplines working on the same or similar issues, attend conferences, read their journals, and seek other people with diverse competencies to work with you on your long-term projects.
I really like his second point about the cumulative contribution of your work. One of the travesties of contemporary scholarly contribution metrics is that we have substituted quantity of publications for cumulative contribution. We assume that somebody with 5-6 publications in “A” journals has made a contribution, irrespective of the content of that work or how it aggregates into larger themes. Personally, I’d like to see more younger scholars who are actively laying out a theoretical and empirical agenda that builds on itself over time and who think less about how they can get their next AMJ paper published. Of course, making that a winning strategy is best done in a context where tenure committees actually read the work and make thoughtful assessments of quality rather than just counting lines on a CV.
From the Home Office in St. Gallen, Switzerland, Tim Lehmann sent me the following call for applications:
Well, here is your opportunity: The Schwab Foundation for Social Entrepreneurship, the Huffington Post and Student Reporter have teamed up to invite ten students to form a virtual team starting 1st of February 2013 for six months to contribute to Huffington Post’s Social Entrepreneurship section. Ideally, an inter-disciplinary team of students with strong disciplinary foci in sociology, psychology, anthropology, economics, entrepreneurship studies, and political theory would form this team. We also welcome applications from social entrepreneurs. Candidates must be enrolled in an educational program such as BA, MA, MBA, or PhD.