Where to Find Authentic Entrepreneurs
March 27, 2014 Editor 0
I still remember when Steve Jobs was featured in business school case studies as an example of bad leadership style. At the time, Apple was a less-than-successful computer company, and Steve – ever the loner – had moved on to create Next, another less-than-successful one. When things go poorly for a nonconformist, how easy it is to call them the fool. But on those rare occasions when the loner gets it right – see Jobs a few years later when he returned to Apple – he does so in a big way. Nothing pays off so well as a nonconformist strategy that wins.
Many people come to the Silicon Valley in search of nonconformist entrepreneurs, looking for the next big thing. But here’s the problem: here, entrepreneurship is the norm. The way to conform in the Silicon Valley is to act like an entrepreneur. I’ve often been told by spectacularly intelligent Stanford students, sheepishly, that they have accepted a well-paying job at a big established company. That such great news is delivered with embarrassment says something about the culture of the Silicon Valley. In places where entrepreneurship is all the rage, you can’t tell the loners from the poseurs. It makes it really hard to figure out who really means it.
To find a nonconformist entrepreneur, we should look to places where entrepreneurship is unpopular. Consider Tokyo. A company’s status matters a lot in most countries, but this is especially true in Japan. So it was shocking when the “Purinto Kurabu” (in English, “Print Club”) appeared all over Tokyo back in the 1990s.
Japanese teens lined up for blocks to get into one of these booths for a picture with their friends, which would then come out on a sticker. Ultimately, this little device proliferated worldwide, and made a lot of money along the way. But unlike most Japanese innovations, it did not come from a big established firm. Instead, it came from a start-up company, “Atlus,” formed when Naoya Harano struck out on his own. His little company was creating some of the earliest fantasy-based video games, such as “Megami Tensei” (in English, “Transformation of the Goddess”) and had a cult following in Japan.
But these games did not pay the bills. Harano, desperate and intelligent (a great combination), made money any way he could – distributing billiard tables to gaming rooms, setting up karaoke machines in empty container vehicles around Tokyo, and the like. The consummate loner, Harano would likely have stayed off our radar screen, except that one day his unpredictable behavior led to a fantastically successful product. In fact, the idea for the product itself came from a female secretary at Altus. This never would have happened at one of the huge, established Japanese conglomerates, where a new idea from a low-status female worker would have had no chance. But in the hands of a nonconformist entrepreneur, the idea saw the light of day.
Other examples abound once you look for them. In the UAE, you might be surprised to find twofour54, an entrepreneurial media hub in Abu Dhabi run by Ms. Noura Al Kaabi. Coming out of Peru, you’ll find Kola Real, formed during a coup d’état in 1988, not exactly an ideal environment for business incubation. Or, in Kamchatka, you’ll find ecotourism ventures by Wild Salmon River Expeditions, initiated by an alliance between a former American military officer and his Russian associates. Name your own unusual circumstance. Where entrepreneurship is least expected, only the authentic entrepreneurs show up.
You’d think that professionals might be better at turning up these high-risk, high-reward authentic entrepreneurs, but they’re not. Professor Elizabeth Pontikes of the University of Chicago and I examined thousands of software firms over more than a decade. Companies and venture capitalists chase hot markets. Entries into markets triggered more entries, and markets that saw companies fleeing went cold. Venture capital magnified this boom and bust cycle: firms were especially likely to enter markets that had recently attracted VC funding, and VCs moved into markets that had recently attracted VC funding (especially those that had attracted attention from large, high-status VCs). Organizations that entered when VC fundings were booming were increasingly likely to fail, and those financed in a VC funding boom were unlikely to make it to an IPO. By contrast, those (fewer) firms that entered markets during bad times were then increasingly likely to prevail.
Nonconformist thinking has the best potential for genius. Those who follow the herd may or may not be right, but for sure they are predictable. The loners, those willing to go against the consensus, are anything but predictable. They may well be wrong, in which case they look the fool. But when the loners are right, we think of them – later, with hindsight – as geniuses. No wonder we resonate to Robert Frost: “I took the one less traveled by, and that has made all the difference.”
An earlier version of this post appear at BarnettTalks.
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