WSJ.com

The Surprising Truth Behind the Myth of the Lone Entrepreneur

Other entrepreneurs are one of the best resources for startup know-how and funding.

By James Allen

First published on Μαΐου 06, 2016
min read


This article originally appeared on WSJ.com. The image of the bold, do-it-yourself entrepreneur is romantic and deeply entrenched. It’s also completely misleading. Far from being disconnected outliers, entrepreneurs thrive best when they operate in tight-knit networks, nurture fellow risk takers, and trade know-how and capital. The Endeavor organization together with my colleagues at Bain & Co. mapped this social network of entrepreneurs across multiple generations and multiple continents—even in some of the harshest terrain for innovation, such as Buenos Aires, Istanbul and Mexico City. For example, they surveyed more than 200 Argentine entrepreneurs, asking such questions as: Who inspired you? Who invested in your company? Who mentored you? They then followed up with in-depth interviews to identify specific ways that entrepreneurs benefited from or offered assistance to others. They found that Buenos Aires is in the midst of an entrepreneurship epidemic despite continued political and economic unrest. Nearly 80% of today’s tech companies there trace their roots to three companies founded between 1997 and 1999: Patagon, OfficeNet and MercadoLibre. The leaders behind these pioneering companies mentored new entrepreneurs, invested capital in their companies, supplied experienced talent and started new ventures themselves. These first-generation entrepreneurs are the super carriers of the entrepreneurship virus. Endeavor and Bain visualized this phenomenon in a series of social network maps, using bubbles to represent companies and multicolored arrows to represent different connection types. The size of each bubble corresponds to the number of connections each company has and, in turn, the number of connections each company’s connections have. The bigger the bubble, the more influence that company and its founders have had on others in the network. The companies were placed on a series of concentric circles, similar to rings on a tree, based on their founding year. In all three of these cities, the number of companies increased rapidly over time—as you go from the innermost ring to the outermost one—and a handful of companies, those highlighted in orange, have played a disproportionate role in creating the entrepreneurship ecosystems found in these cities today. Entrepreneur networks don’t start with gleaming facilities or government guarantees, nor do they spring spontaneously from successful companies. Instead, a few pioneering founders actively spread the entrepreneurship fever by mentoring and investing in subsequent generations of entrepreneurs. Rather than a cutthroat, competitive mentality, these founders see inter-company pollination as being good for their businesses. While a few people might be struck out of the blue by the desire to start a new company, far more find encouragement by meeting another entrepreneur, getting advice from someone who’s been there, or meeting an angel investor at a party or social gathering. Budding entrepreneurs should go out of their way to tap into an existing ecosystem. They should look first for high-impact entrepreneurs who could serve as mentors. First-generation founders speak frequently at colleges and universities, serve as judges at start-up competitions, appear at community events, and act as angel investors to get other founders’ dreams off the ground. These people often are willing, even eager, to help new entrepreneurs build their businesses on a solid foundation, giving them blunt advice that will improve their concept or approach. Entrepreneurs can also learn from regional leaders in established companies. While not founders, these executives have valuable in-market experience to share with rising entrepreneurs, and they can support small firms by serving as mentors or early customers or advising entrepreneurs on customer acquisition strategies. Besides these regional leaders, an often-overlooked element in the ecosystem is great talent at no or low cost. Smart, energetic people can be found either through local business schools or through externship programs offered by global corporations. If you’re still acting as if you’re in a dog-eat-dog world, you’re cutting yourself off from a new breed of dogs that’s playing a smarter game. Many of the entrepreneurs we surveyed listed altruistic goals among their top priorities such as, “I want to be a role model and inspire others” and “I want to change my society.” The contagion lives within all entrepreneurs. They just need permission to let it out. James Allen is co-leader of the global strategy practice at Bain & Co.

This article originally appeared on WSJ.com.

The image of the bold, do-it-yourself entrepreneur is romantic and deeply entrenched. It’s also completely misleading.

Far from being disconnected outliers, entrepreneurs thrive best when they operate in tight-knit networks, nurture fellow risk takers, and trade know-how and capital.

The Endeavor organization together with my colleagues at Bain & Co. mapped this social network of entrepreneurs across multiple generations and multiple continents—even in some of the harshest terrain for innovation, such as Buenos Aires, Istanbul and Mexico City. For example, they surveyed more than 200 Argentine entrepreneurs, asking such questions as:

Who inspired you?
Who invested in your company?
Who mentored you?

They then followed up with in-depth interviews to identify specific ways that entrepreneurs benefited from or offered assistance to others.

They found that Buenos Aires is in the midst of an entrepreneurship epidemic despite continued political and economic unrest. Nearly 80% of today’s tech companies there trace their roots to three companies founded between 1997 and 1999: Patagon, OfficeNet and MercadoLibre. The leaders behind these pioneering companies mentored new entrepreneurs, invested capital in their companies, supplied experienced talent and started new ventures themselves. These first-generation entrepreneurs are the super carriers of the entrepreneurship virus.

Endeavor and Bain visualized this phenomenon in a series of social network maps, using bubbles to represent companies and multicolored arrows to represent different connection types. The size of each bubble corresponds to the number of connections each company has and, in turn, the number of connections each company’s connections have. The bigger the bubble, the more influence that company and its founders have had on others in the network. The companies were placed on a series of concentric circles, similar to rings on a tree, based on their founding year. In all three of these cities, the number of companies increased rapidly over time—as you go from the innermost ring to the outermost one—and a handful of companies, those highlighted in orange, have played a disproportionate role in creating the entrepreneurship ecosystems found in these cities today.

Entrepreneur networks don’t start with gleaming facilities or government guarantees, nor do they spring spontaneously from successful companies. Instead, a few pioneering founders actively spread the entrepreneurship fever by mentoring and investing in subsequent generations of entrepreneurs. Rather than a cutthroat, competitive mentality, these founders see inter-company pollination as being good for their businesses.

While a few people might be struck out of the blue by the desire to start a new company, far more find encouragement by meeting another entrepreneur, getting advice from someone who’s been there, or meeting an angel investor at a party or social gathering.

Budding entrepreneurs should go out of their way to tap into an existing ecosystem. They should look first for high-impact entrepreneurs who could serve as mentors. First-generation founders speak frequently at colleges and universities, serve as judges at start-up competitions, appear at community events, and act as angel investors to get other founders’ dreams off the ground. These people often are willing, even eager, to help new entrepreneurs build their businesses on a solid foundation, giving them blunt advice that will improve their concept or approach.

Entrepreneurs can also learn from regional leaders in established companies. While not founders, these executives have valuable in-market experience to share with rising entrepreneurs, and they can support small firms by serving as mentors or early customers or advising entrepreneurs on customer acquisition strategies.

Besides these regional leaders, an often-overlooked element in the ecosystem is great talent at no or low cost. Smart, energetic people can be found either through local business schools or through externship programs offered by global corporations.

If you’re still acting as if you’re in a dog-eat-dog world, you’re cutting yourself off from a new breed of dogs that’s playing a smarter game. Many of the entrepreneurs we surveyed listed altruistic goals among their top priorities such as, “I want to be a role model and inspire others” and “I want to change my society.”

The contagion lives within all entrepreneurs. They just need permission to let it out.

James Allen is co-leader of the global strategy practice at Bain & Co.