Nurturing the Entrepreneur DNA

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I've been thinking a lot lately about how we improve some of the structural issues with NYC as an entrepreneurial center/startup hub. It got me thinking of the debate around Nature vs Nurture regarding entrepreneurship. Here's some thoughts…


Slide1
Some people are born entrepreneurs.
They don't like rules. They don't like constraints. And they are able to combine that disdain for the status quo with a productive creativity. But it's not a binary either/or kind of thing. It's a trait that a lot of people have on some level, and the strength of its expression exists on a spectrum. I'll call this the Entrepreneurial trait "E"

Being an entrepreneur is not the same as starting a company. Business entrepreneurs are only one kind of entrepreneur, and sometimes starting a business (under certain conditions) doesn't require you to be very entrepreneurial. The more the environment discourages starting companies, the more entrepreneurial you have to be to start a company. Conversely, the more the environment encourages starting companies, the less entrepreneurial you have to be to start a company. I'll call this the Business Propensity co-efficient "b"

Propensity to Start a Company = E*b

My Dad's Story
My father has entrepreneur DNA in spades. And if not inborn, then the mould was caste at an early age. He was born in a one-room adobe house in the New Mexico desert in 1929. His father had died a few months before, and his mother, age 19, a kind and caring woman, possessed a high school diploma and not much else. From day one, as is custom in latin households for the eldest male, he assumed the mantle of "man of the house." 

When he was 6, my father was displaced as man of the house by a coal miner named Cunningham, who married my grandma. Cunningham would get drunk and beat her. In the winter of 1935, my father, my grandma and his newborn sister Dorothy escaped. My pa' was once again man of the house. 

When he was 12, he started working in a logging camp. When he was 14, despite being an awkward, skinny twerp, he started laying railroad tracks. The railroad foreman laughed at him when he showed up, told him he wouldn't last a day. His hands bled. He lasted.   

When he was 16, he announced to my grandma that he was moving to Los Angeles, that their little town in the desert was too small for him, that he needed to escape "the chains" that had been placed on his brain, that he had ambition that could not be met in Tularosa, New Mexico. And so they packed up and left. Their new home: a federal housing project in East LA. 

One thing you gotta understand about my dad (I'll get back to how this fits into the big picture in a sec) is that back in the day, he was angry. He was fatherless and brown and poor in a world where all the rich people were white––and something inside of him was deeply pissed off. This anger drove him, it compelled him to break the chains, to overcome the pain, to bleed, to do whatever the fuck it took to get what he wanted. 

This was a time when you could still call someone a "dirty Mexican" in polite company––back before the days of affirmative action and "diversity initiatives." What he got, he got because he was an entrepreneur. There were no businessmen in my family. My great grandpa had been a cowboy, literally. My grandma was a waitress. A few years after he passed the 20 year mark and––much to his surprise––was still alive, he decided to go to college. First East LA Community College. Then UCLA. Then UCLA grad school. And ultimately, a PhD and a professorship, which he used to start one of the first Chicano Studies departments in the country at East LA College and launch a bunch of other innovative initiatives. To finance this all, he used the GI Bill and worked as a construction worker, laying pipe in the streets. 

I tell this story of my father again because I think it's instructive. He clearly had the entrepreneurial DNA that Mark Suster described: Tenacity, Street Smarts, Ability to Pivot, Resiliency, Inspiration, Perspiration, Willingness to Accept Risk, Attention to Detail, Competitiveness, Decisiveness and Integrity. And yet he never started a company

Me thinks: Starting a company involves more than having entrepreneurial DNA. Education and culture have a HUGE role in the process. 

Social Networks & Education
Our educational system does not teach people how to start businesses or even the bare basics of how a business works. If you're starting out like my father did, the process of how you figure out the basics of business is opaque and horribly confusing, especially in a pre-Google world. 

The internet is leveling the playing field to some extent, especially in the startup world with the proliferation of high quality blogs that quite literally teach you the ropes (think Mark Suster, Brad Feld, Chris Dixon, Fred Wilson's MBA Mondays, Venture Hacks, etc). But the discovery problem hasn't been entirely solved yet. And nothing beats having a mentor or network of mentors who can answer questions and offer guidance, both intellectual (hello Quora!) and emotional. 

A lot of it is simply having role models––as Jordan Cooper put it recently in a comment

You need founders who look and smell like college students to come in and say, "look, I am not smarter than you. I was not better prepared than you. If I can do this…and…I AM DOING THIS…than you probably can too…

I don't think that student's are missing the "value prop" of starting a company, I think they just perceive themselves as somehow unprepared or unequal to the Mark Zuckerberg's of the world. in NY, students need to see hipsters in jeans and t-shirts building companies they know and respect, and then they need to calibrate themselves intellectually with those hipsters and realize there is not a whole lot of difference between the two groups.

Networks matter because the more people you see who look and think just like you starting companies, the less opaque and daunting the process becomes. Social networks serve as a source of informal education. (Social networks as in literally the people you know, not Facebook the platform.) And for folks who don't know a lot of founders, formal entrepreneurial business education can create real value and change people's lives. 

This was definitely true for me: I didn't know shit about business until I went to Stanford for a summer and attended a mini-MBA type training program they offer at the Business School. Not only did it teach me basic business principals, but also it helped me build a network. There I met Joe Kennedy, the CEO of Pandora. He has been helping me out and advising me ever since. 

Social Class & Economic Risk
I was drinking beer last night with some Columbia students. One of them was from Miles City, Montana. His mother worked as a waitress at diner, his father a manager at an auto-parts store. He had joined the Marines when he was 18, served two tours in Iraq as a Combat Engineer, and two weeks after being discharged, started Columbia. He had just finished his freshman year.

"What do you want to do when you're done?" I asked. 

"I dunno, maybe work for the CIA or something," he said. "Maybe law school. I dunno."

"Ever thought of starting a company?" I inquired.

He shook his head: "No."

When you come from the lower middle class and below, your idea of what constitutes attainable social status and overall life possibilities is very different than what your average Choate grad sees in his/her future. No one they knew growing up was a corporate exec. None of their friends' dads were entrepreneurs of the Silicon Valley (or often even the non-drug dealing) variety. Because there's such an information deficeit around entrepreneurship, lower middle class strivers don't even see it as an option, and instead they gravitate toward the known, well-established means of upward mobility: Grad school! Big, brand name companies! Not little fucking startups involving shit pay and a life of teetering on the economic precipice. 

Furthermore, people who come from poor or less-than-wealthy families tend to have a lot of student debt. It raises their minimum livable monthly income, and that makes doing a startup much, much harder. Plus, these peeps tend not to have the mom & dad cushion to fall back on––and more likely, they're sending cash home to their families. So not only do they perceive it, but they actually are subject to greater economic risk. 

No discussion of creating an entrepreneurial culture is complete without taking this socio-economic reality into account––which is doubly important given that so many entrepreneurs and investors know so little of it. 

Our current system is really good at getting––to paraphase John Doerr––white, upper middle class geeks to start companies. But that is an inefficient use of our societal talent and aggregate entrepreneurial DNA. Does anyone really think there's something inherent in the white, upper middle class geek population that makes them pre-disposed to starting companies? Or is it that they have the right combo of social networks, education, economic situation and informal education to take the leap? 

Venture Capital returns are down. We need a fatter pipe. We need more entrepreneurs starting companies. And it's not a matter of "making entrepreneurs" out of scratch. Rather, we need to actualize the latent entrepreneurial DNA and talent that exists in our society but goes unrealized because that silly Business Propensity co-efficient. 

There are thousands upon thousands of people out there like my father: Entrepreneurs at heart, but uneducated in and disconnected from the fabric and inner workings of capitalism. Because we don't know who they are, we need to provide business training "nurture" in a more formal, evenly distributed and systematized way to all of society. It's the only way that we'll get more of this latent entrepreneurial DNA to actually go out and start companies.

  • http://profile.typepad.com/how2startup How2startup

    Very interesting post, Matt. I see a couple of tiny, tiny parallels between you and your dad ;) Sounds like quite a guy.
    So… habla’s espan~ol?

  • http://profile.typepad.com/kapriforce Kal L.

    Great points – barriers to starting a company are cultural, educational, and also an issue about resources.
    How many great ideas could have become companies if they weren’t drowned by the zip code that entrepreneur dna is in?
    Nature vs. Nuture.

  • http://profile.typepad.com/dshen1 Dshen

    Great post. However I think you need to be specific about what kind of entrepreneurism you mean when you talk about the above.
    Entrepreneurism isn’t just limited to going for the Google style exit. Businesses get started everyday both large and small and the bulk of businesses are small businesses. That also constitutes entrepreneurism.
    Therefore, I think your social class comment is a bit off because certainly there are a lot of small business owners who come from many different social classes.
    If you mean that someone who may not be exposed to going for the Google type startup is of lower social class, perhaps that is an unfortunate circumstance of the education they got and the social circles they are in, especially if friends aren’t doing that. But we should not forget that there are plenty of people of higher social class who do not have startup friends as well.
    But entrepreneurism of the small business sort is alive and well among ALL social classes.

  • http://dino.sr Shane

    This is an amazing post. Very inspiring story re: your dad. Loved reading this.

  • http://profile.typepad.com/1233532474s12769 Matt Mireles

    Ahh yes. The “What is the definition of an entrepreneur?”question. Mark Suster, Steve Blank & Vivek Wadwha spent 15min on the definition. Small business owners vs Silicon Valley startup founders.
    Hmm. I’m gonna think about this for a bit then write back.

  • http://www.victusspiritus.com Mark Essel

    What you describe is a form of hacking society, or acting as an agent of social change. To optimize financial growth and productivity we need to better tap into the founder business spirit of would be entrepreneurs.
    Honestly, not even two years ago I never thought being a founder possible, even though I’m in the role model demographic. I just kept getting fed up with my day job even though it was good for a lot of reasons. Frustration finally forced my hand and I took a leave to do some soul searching. Blogging, and spreading out my attention allowed me to hone in on the potential of a startup. Now I’m paying the bills with a part time day job while ambitiously seeking a viral pattern with every ounce of energy I can muster.
    Thanks for sharing this story about your family. It was inspirational and a healthy reminder of the value of grim determination, and positive outcomes.

  • http://www.virtualbusinesslifestyle.com stephanie

    very inspiring post.. yes it is true that it takes more than entrepreneurial dna to start your own company. but then starting one is not even the definition of being an entrepreneur..i think starting and growing your company is the essence of being an entrepreneur. my dad started a lot of businesses, too. small ones, and some that are not too bad though..but unfortunately most of them didn’t last that long. he probably had the entrepreneurial dna, the contacts and all..but not much on the commitment. i believe without character all is lost.

  • Kevin Mireles

    Matt,
    Dad was a social entrepreneur and was more interested in societal change than monetary gain. For him, bringing education and opportunity to fellow Chicanos was more important than starting a company. For him, it made more sense to work within the educational and non-profit world than the corporate world. For dad, success was about launching new and innovative programs and the payoff was seeing students succeed – not cash out in an IPO. Under that scenario, it wouldn’t make sense to go into the startup business world – as the key drivers, cash generated, are different than in the educational world, people’s lives improved. While ideally we’d love our businesses to do both – getting those two concepts to align are very difficult and cashflow needs/desires generally trump ideals.
    Also, I’d challenge the notion that as a whole poor/working class people are any less likely to be entrepreneurial. Go into any immigrant neighborhood, and you see tons of sidewalk entrepreneurship going on – from home-based mechanics, gardening businesses, etc..
    The larger issue I see is that the educational system has become a barrier as opposed to an enabler. The educational system is not generating enough “minority” IT business talent. When I switched from being a reporter in Santa Ana to working in technology, it was as like, “What happened to all the Hispanics?” Did they all get deported?” Where is the 40% of the population and the 60% of California’s youth? I went from speaking Spanish every day, to going 10 years before having an African-American or Hispanic product manager in my department.
    You mentioned there aren’t enough developers for startups. Frankly, we are not creating enough engineers period! The educational ladder is missing multiple wrungs and as a result is becoming a barrier into the middle class – and a barrier for our country’s economic success.
    Which leads to your comments about school has become so darn expensive that most people can’t afford to pursue anything that doesn’t pay well because of their incredible debt loads – so I whole heartedly agree with that portion of your assessment.
    The educational system is broken and doesn’t meet our country’s needs – resulting in a debt-laden, under-educated majority unable to participate in tech period. And that my brother is the bigger issue. And that’s why Dad chose to become an educational entrepreneur rather than a business entrepreneur.
    And as his sons’ I guess the question is, what are we going to do to build upon his legacy?

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