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…
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.