Travails of entrepreneurship

The business media tends to romanticise entrepreneurship by focusing on the success stories, says Schumpeter in the Economist. I would add that it also tends to portray entrepreneurs as people who know how to balance work, leisure and family, have great EQ and, of course, they glorify the millions that entrepreneurs make.

The reality is that entrepreneurship is enormously challenging mentally and physically. Schumpeter writes:

Business professors celebrate the geniuses who break the rules and change the world. Politicians praise them as wealth creators. Glossy magazines drool over Richard Branson’s villa on Lake Como. But the reality can be as romantic as chewing glass: first-time founders have the job security of zero-hour contract workers, the money worries of chronic gamblers and the social life of hermits.

Failure rates are frighteningly high:

Over half of American startups are gone within five years. Most of the survivors barely stumble along. Shikhar Ghosh of Harvard Business School (HBS) found that three-quarters of startups backed by venture capital—the crème de la crème—failed to return the capital invested in them, let alone generate a positive return. In 2000 Barton Hamilton of Washington University in St Louis compared the income distributions of American employees and entrepreneurs, and concluded that the latter earned 35% less over a ten-year period than those in paid jobs.

As for their being balanced personalities, forget it:

John Gartner, who teaches psychiatry at Johns Hopkins University medical school, suggests that a disproportionate number of entrepreneurs may suffer from hypomania, a psychological state characterised by energy and self-confidence but also restlessness and risk-taking. Numerous studies confirm, at the least, that they are prone to over-optimism.

Schumpeter quotes one ex-entrepreneur as urging would be entrepreneurs to have more healthy lifestyles. Somebody else urges them to get support networks and mentors.

I doubt that these can help. Entrepreneurship is a passion. Like great works or art, music or even writing, they are born of enormous sacrifice. Sometimes there are rewards at the end of the tunnel, very often there are none. Entrepreneurship is a form of madness. Entrepreneurs will pursue their dreams regardless. To ask them to do so in a balanced way or with help or guidance is rob them of the special quality that makes for success in some cases.

You cannot ask an entrepreneur to be balanced any more than you can ask a genius or a prodigy to be normal.