What’s It Like to Be an Entrepreneur? Myths and Realities Innovative Views on Youth Entrepreneurship Athens, May 21 st, 2007 Dr. Anthony C Warren Farrell Professor of Entrepreneurship Penn State University Fulbright-Hall Distinguished Chair in Entrepreneurship - Central Europe, 2007

u There is no single accepted definition of entrepreneurship – it applies to all sizes of enterprises: Small business Corporate entrepreneurship or intrapreneurship High-growth firms Family businesses Franchises Government departments What IS an Entrepreneur?

u Timmons (1994): Entrepreneurship is creating something of value from practically nothing. u Drucker (1985): Entrepreneurship is an act of innovation… u Low & MacMillan (1988): Entrepreneurship is the creation of new enterprise. u “CREATION” seems to be a common theme in many definitions. u Entrepreneurship is a MINDSET – a Way of Thinking and IT CAN BE LEARNED. Some Selected Definitions

Publicly Traded vs. Private US Firms 6.3 million US Employers (136 million employees) 30-mil employees106-mil employees How Important are Entrepreneurs to the Economy?

Employment & Distribution of US Firms 9000 Public US Firms (employ 30 million) 5M employees 10M employees 20M employees

Some Facts About Entrepreneurship u 1998 adult working population was 130 million, 17.3% or 21+ million were self-employed. u Since WWII small entrepreneurial firms have been responsible for ½ of all innovation and 95% of all radical innovation.

More Facts u ~800,000 new startups each year: 150 on average go public but this number is highly volatile Small businesses employ 53% of the private workforce u 16% of all U.S. firms have been in existence for less than one year.

u Since 1980, “Fortune 500” companies have lost more than 5M jobs, but 34M new jobs have been created. u At any point in time, 8.5% of the U.S. adult population is starting a new business. u In 1950s, 50,000 businesses were incorporated per year. 770,000 businesses were incorporated in And Yet More Facts Small businesses are the backbone of the American Economy. They create 2 of every 3 new jobs and produce 39% of the GNP.

u The vast majority or nearly 3 million millionaires accumulated their wealth through entrepreneurial acts. u Roughly 80% of Forbes list of “Wealthiest Americans” are first-generation entrepreneurs that “started with little of nothing and built major enterprises creating enormous wealth”. u Many of these give back much to society – e.g. Bill and Melinda Gates, Warren Buffett etc. Entrepreneurs can become RICH!

Entrepreneurs have created multibillion industries For Example: Semiconductors Mini-and micro computers Telecommunications Cellular telephones Biotechnology e-commerce Web 2.0 Etc.

MYTH 1 Entrepreneurs are LONE INVENTORS !

Where Do Entrepreneurs Actually Get Their Ideas? u Discovered through systematic research for opportunities u Swept into the PC revolution u Discovered serendipitously: Built temporary or casual job into a business (7%) Wanted as an individual consumer (6%) Happened to read about the industry (4%) Developed family member’s idea (2%) Thought up during honeymoon in Italy (1%) Replicated or modified an idea encountered through previous employment Source: INC Magazine, 1999

MYTH 2 Entrepreneurs lack SOCIAL SKILLS! They are LONERS, difficult to work with, inflexible, trouble-makers!

 Creativity  Analytical Ability  Imagination  Personal Networking  Risk Taking  Achievement Driven  Self-Motivation and Self-Confidence  High Autonomy  Leadership  Persuasiveness  Initiative Taking – Action oriented Successful Entrepreneurs’ Skills Include:

In Addition Entrepreneurs often show….  Commitment, perseverance, optimism  Tolerance for ambiguity and complexity  Intuition  Willingness to listen and take advice  Flexible and willing to change direction  Passionate in enjoyment of life  High energy people  Loyalty and openness to partners  Willingness to share the upside.

MYTH 3 Entrepreneurs are so focused that they often drive in the wrong direction.

 Ambiguity--Planning  Creativity--Discipline  Urgency--Patience  Flexibility--Organization  Responsiveness--Systems  Risk Taking--Risk Management  Short Term--Long Term Entrepreneurs are expert at managing paradoxes:

So Why Not YOU?