As I show in my book, from empirical studies, much less than 1% of all new startups ever see a venture capitalist.Much less than 1% of all new companies every year have venture backing of any kind.
But you think the incubator isn’t having the desired effect that a lot of people are hoping for. Schramm: Again, empirically, very few companies come out of these incubators. I’m in the middle of writing an essay about incubators, and the premise is that as we turn towards 3% and 4% GDP, and much lower rates of unemployment and much higher demand for well-trained people, no one is going to want to spend time in an incubator. And that’s a really important part of the drama of becoming an entrepreneur.
In the book, I make the case that the most effective place to learn how to be entrepreneurial is to go into a big company. More innovation happens in big companies than, for example, university laboratories. Knowledge[email protected]: You give real-world examples in the book, including the story about vacuum cleaning company Dyson. James Dyson was an industrial designer by background, and he came to the view that vacuum cleaners had been a technology that hadn’t moved very far. If your idea clicks and you can make it work, and you haven’t taken your company public — that is, you still control it — you’re going to work there for the rest of your life. It’s an important point, particularly for people who are in higher education.
Empirically, it appears as if you don’t need a business plan.
Second, the business planning process is largely generated as a preview for venture capital.
I said, “Holy smokes, if I want to really make this work and actually change the world, I can’t do it by writing an academic paper.
I have to start a business.” [email protected]: How should we teach our kids about entrepreneurship? Because if you look empirically at where entrepreneurs come from, if they have formal training, it’s not in entrepreneurship.A finely crafted, tightly defined, highly detailed business plan seems like a perfectly rational tool for getting your entrepreneurial ideas off the ground. Schramm, an economist, Syracuse University professor and former president of the Ewing Marion Kauffman Foundation — a non-profit that encourages entrepreneurship — says that crafting a business plan is one of the biggest misconceptions about how to start a company on the right footing.His new book, , says the true blueprint for success requires innovative ideas, real-world experience and keen judgment.Schramm: I don’t think [the current curriculum] can be tweaked. It’s in engineering or the STEM subjects, the technical subjects. At MIT, there’s one professor in the business program there who teaches entrepreneurship.Many, many more entrepreneurs come out of MIT because it’s an engineering and a technical school. But it doesn’t matter because if they didn’t teach it at all, these schools would be producing many, many new businesses all the time.Schramm: One reason people can become entrepreneurs at midlife is they turn to their own savings, their own assets, to friends and families for loans.By the time you’re 40, which is the average age at which people start businesses, you’ve settled your student debt. You’re likely to have a spouse who has a job, which is a huge protection if you start a new company because she or he has health insurance and other benefits. [email protected]: In the book, you also talk about the [email protected]: Would you say that passion and determination are two of the great qualities that a lot of entrepreneurs have? Students in college are told to follow your passion and start a company.But a lot of times, the passion doesn’t make any sense.And the whole schema, including the notion of a business plan as the formal way to teach how to start a business in a college classroom, is geared to 20-year-olds.Much of our mythology is that unicorn companies are started by people, like Mark Zuckerberg, who are in their 20s.