Monday, November 18, 2002
By Matthew Herper, Forbes.com Special to ABCNEWS.com
N E W Y O R K, Nov. 13 — Eighty years ago, 14-year-old John R. Simplot ran away from home because he was sick of milking cows. Eventually he built a fortune growing potatoes; he still supplies McDonald's with french fries. Sixty years later, Bill Gates dropped out of Harvard to run a small startup called Microsoft. Now, of course, he's the richest man in the world.
Gates and Simplot are two of the world's most successful entrepreneurs. To psychologists, their stories raise fascinating questions. In what ways are the two men, born generations apart and raised in completely different surroundings, alike? More importantly, what makes them different from the great majority of people who never started a business, watched it succeed and become incredibly rich?
After decades of what at first amounted to little more than guesswork, scientists are collecting data they think can answer those questions. Enticing clues indicate that telltale bits of psychology may spur people to start businesses and even help determine who succeeds and who fails. The venture capitalists of the future may use psychological profiles to pick entrepreneurs who are more likely to create winning companies.
Is There a Type?
The first steps psychologists took toward understanding entrepreneurs were based on anecdote, not experiment. Alexander Zelaznick, a professor emeritus of psychology at Harvard Business School, says years of interviewing entrepreneurs led him to the dramatic conclusion that they simply did not feel risk, or weigh consequences, in the same way as other people. "To understand the entrepreneur," Zelaznick told The New York Times in 1986, "you first have to understand the psychology of the juvenile delinquent."
"That's a great quote," responds Kelly Shaver, a professor of psychology at the College of William and Mary who is working in the field today. "But I think it's really not true."
Anecdotal evidence created a caricature of the typical entrepreneur: A young man with an appetite for risk and a persuasive personality, a gifted salesman with an independent streak. "I'd say the evidence that entrepreneurs have a particular personality 'type' is mostly unconvincing," says Shaver. However, he says, data collected over the last decade has allowed psychologists to confirm — or disprove — parts of this picture.
Take for instance, the notions that entrepreneurs are risk takers. Robert Baron, a psychologist at Rensselaer Polytechnic Institute, has shown that entrepreneurs are more successful when they are persuasive and have strong social skills — in other words, that being a charismatic salesman is a big help. That would be no surprise to Apple Computer CEO Steve Jobs, famed for being so convincing he seems to temporarily distort reality.
Here, though, another problem rears its head. Most studies of entrepreneurs look only at people who have been successful. That is, they pick out people who have already founded businesses. Instead of first finding entrepreneurs and then asking what makes them successful, researchers are left looking at a group of winners, at least relatively speaking.
To make matters worse, researchers often have asked these entrepreneurs to describe themselves at their career's beginning. This, it turns out, is almost impossible for anyone to do. We all craft stories about our lives that exaggerate some factors while leaving others out. Could Larry Ellison really give an accurate assessment of what was going through his mind when he founded Oracle, even if he wanted to?
They Just Don't Care
Shaver and some of his colleagues are trying to get around this through a survey called the Panel Study of Entrepreneurial Dynamics, which began in 1995; 64,622 American households were called at random, and, from this large group, the researchers found 800 entrepreneurs who had not been in business more than three months. They also assembled a representative sample of 400 people to use as a control group.
Each participant in the study answered a 15-page questionnaire. From this data, Shaver and others have already been able to draw some basic conclusions. For instance, entrepreneurs and normal people seem to worry equally about financial autonomy and/or a feeling of being motivated in their jobs. Neither a need for financial nor personal independence seems to have caused any of these people to start their own business.
Nor, says Shaver, do the entrepreneurs seem to be devil-may-care risk takers. Only a subtle difference in the way they appreciate risk emerged. The entrepreneurs are worse at coming up with reasons they might fail. "Being able to generate more unpleasant possibilities might be making non-entrepreneurs more afraid," Shaver says, but we don't know that.
So far there is one other big difference between those who go into business for themselves and those who don't, Shaver says. Entrepreneurs don't care what other people think about them. "They really don't care as much," Shaver says. "They're just happy to go ahead and do what they're doing." Statistically speaking, then, Simplot and Gates would seem to have two things in common: They have trouble imagining failure, and they don't care what you think.
For more, go to Forbes.com..