I believe it. I'm

clifford wong — Mon, 11 Feb 2008 14:37:19 -0500

I believe it. I'm practically living proof. I personally worked for a prominent dot-com company and ventured out to do my own thing 8 months ago in the automotive industry. Although the business I've built in the automotive industry is entirely different, my business is very much Internet related.

I have long believed and

iamned g — Sat, 09 Feb 2008 18:52:46 -0500

I have long believed and still do that entrepreneurship is vastly overrated.

The American entrepreneurial myth

Mark Henricks — Fri, 08 Feb 2008 13:53:09 -0500

Ask any U.S. businessperson what makes America special and the list will likely include "entrepreneurial spirit." But what does that really mean? It means "almost as entrepreneurial as Latvia."

When the Global Entrepreneurship Monitor ranked 35 countries by percent of population that owned a young business, the U.S. came in 25th with 4.7 percent, right behind the enterprising Latvians, and well behind Canada, Jamaica, Venezuela, and Greece. At the top of the heap: Thailand, where more than 14 percent of people own and run a business less than three-and-a-half years old.

The belief that the U.S. is a relative haven for small businesses is one of many bubbles burst by Scott Shane in his book "The Illusions of Entrepreneurship: The Costly Myths That Entrepreneurs, Investors, and Policy Makers Live By," just published by the Yale University Press.

There are many people that believe in the myth. Consider the recent comment by Phil Anderson, Americas Director of the Ernst & Young Entrepreneur Of The Year program, who recently said his company was "privileged to honor distinguished entrepreneurs throughout the world, but especially in America, where entrepreneurship is a unique part of the cultural fabric."

Anderson didn't trot out another common conception -- that entrepreneurs and the technology industry go together like Britney and paparazzi. If he had, he'd have been wrong again. Most new businesses, Shane shows, start in low-tech fields like construction and retail trade.

While he's busting myths, Shane also unveils weaknesses in common entrepreneur practices. For example, he says if you start a business in a field where you previously worked, as most entrepreneurs do, you set yourself up for failure. The fact that entrepreneurs typically enter industries where they have experience means they, by definition, dive into the most heavily populated and, therefore, competitive arenas, he argues. That helps explains why fields with the highest number of new entrants also have the highest failure rates.

Not only do they seek competition, but entrepreneurs also seem to fail to follow the money. When he looked at the industrial classifications with the highest profit margins or income levels per firm, Shane didn't see similarly high levels of new firms forming:

"Instead there is a weak negative correlation between revenues per firm and rate of entry into the industry. That is, there is no evidence that entrepreneurs select industries in which profits, profit margins or revenues are higher." [page 36]

None of this is to say that the U.S. is a lousy place to start a business, that entrepreneurs are idiots or that technology is a crummy playground for startups. But if you're going to make a personal statement by taking the plunge into entrepreneurship, you need to know whether to pronounce it in English or, say, Latvian.

Related news, commentary, and predictions:

Prediction: The USF VC Confidence Index will rise to 3.70 or greater in Q1 2008
Analysis: Venture Capitalists' Confidence Wanes
Analysis: Record amount of private equity raised — gives entrepreneurs an upper hand
Analysis: Turning bad policy into fraud
Analysis: A cooling economy chills innovation

The Industry Standard - The American entrepreneurial myth - Comments

I believe it. I'm

I have long believed and

The American entrepreneurial myth