9 Myths about Entrepreneurs and

Entrepreneurship
Professor Laura L. Hollis, JD
Clinical Professor of Business Administration
November 4, 2008
#1. Entrepreneurship is a “young person’s game;” most
first-time entrepreneurs are either in college or right out
of it

FALSE
In fact, the average age of a first-time entrepreneur starting
a technology business is 39! And since this is an average,
that means that just as many start-up founders are older as
are younger.

Source: Wadhwa, Freeman and Rissing, Education and Tech Entrepreneurship, Report of
the Kauffman Foundation, May 2008
#2. Successful entrepreneurs are those who come up
with the most creative, original ideas for their
businesses
FALSE
•It depends on what you mean by “creative” and
“original.”
•According to some studies, anywhere from 70% - 90% of
the ideas for a new business come from an entrepreneur’s
previous employment or existing business contacts.
•In other words, the more experience you get working
for someone else, the more likely you are to come up
with an idea for a new business.
Source: Prof. Ikhlaq Sidhu, Center for Entrepreneurship and Technology, University of
California, Berkeley
#3. Most entrepreneurs are motivated by money
or “greed”
FALSE
•And not just “false,” but way, way off.
•Most entrepreneurs are motivated by a desire to work for
themselves, and a passion for solving problems –
particularly difficult, entrenched human problems.
•Even the most successful entrepreneurs will tell you that if
you’re “in it for the money,” get out now; it’s much easier
to make money working for someone else!
Sources:
Scott Shane, The Illusions of Entrepreneurship, Yale University Press
Guest lectures, Lectures in Entrepreneurship course, University of Illinois, 2001-2008
#4. Most successful entrepreneurs – especially in
high- tech companies – have Ph.Ds in science
FALSE
•6% of U.S. born tech company founders have a high school
diploma or less
•2% have an associates’ degree, some college, or a
certification
•44% have a bachelors degree
•30% have a masters
•4% have an MD
•4% have a JD
•Only 10% of high-tech company founders have
a Ph.D!
Source: Wadhwa, Freeman and Rissing, Education and Tech Entrepreneurship, Report of
the Kauffman Foundation, May 2008
#5. Entrepreneurs are “born
different”
FALSE
•In fact, a good number of people who become
entrepreneurs never planned to be.
•Although there are correlations between certain types
of behavior or psychological traits and
entrepreneurship, it
seems that as many successful entrepreneurs learn these
skills and acquire these attributes as are “born” with
them.
•And we know that some of the most significant
personality traits associated with entrepreneurship – such
as “self-
Source: efficacy”
Bill Lucas, MIT and -Sarah
CAN be Cambridge
Cooper, taught University
#6. To be successful, an entrepreneur needs a degree
in business
FALSE
•Although many self-employed people have business degrees,
there is a stronger correlation between a degree in the
sciences or engineering
•According to a recent study, 34% of U.S. founders of high-
tech companies held degrees in business, finance or
accounting
•47% held degrees in STEM-related fields (Science,
Technology, Engineering, or Mathematics
Source: Wadhwa, Freeman and Rissing, Education and Tech Entrepreneurship, Report of the
Kauffman Foundation, May 2008
#7. Most entrepreneurs are millionaires

FALSE
•Most new businesses fail
•The average self-employed person earns less than they
would working for someone else
•Entrepreneurs work more hours, on average, than
those working for someone else

Source: Scott Shane, The Illusions of Entrepreneurship, Yale University Press

#8. You can’t be an entrepreneur without venture capital

FALSE
• only .03% of new companies are financed by venture capital
•the average amount of money used to start a business is
between $15,000 - $20,000
• the most common source of this money is the
entrepreneur’s
savings; not banks, or even loans from friends and
family
•65% of entrepreneurs finance their companies use some form
of personal debt
•fewer than 1 in 12 start-ups gets investment money (equity
financing) from family and friends
Source: Scott Shane, The Illusions of Entrepreneurship, Yale University Press
 #9: Entrepreneurs are happier than those who work for
other people
TRUE
• But! It depends upon what measure you are looking at
•Remember, entrepreneurs work more hours than those working
for someone else
• And, they tend to make less money
• And, most new businesses fail
•That said, self-employed people report HIGHER job
satisfaction
• dramatically higher – 62.5% versus 45.9%
•Why? Autonomy, flexibility, greater impact and
greater control.
Source: Scott Shane, The Illusions of Entrepreneurship, Yale University Press