UC Berkeley professor and Fauffman Foundation researcher Vivek Wadwha recently published the results of a research project aimed at answering the question: are entrepreneurs born, or are they made? Vivek’s findings are very interesting – for instance, did you know most entrepreneurs are married and have children? – and illuminate some of the major factors that led to the success of a number well-known entrepreneurs (e.g., Sergey Brin, Larry Page, and Steve Jobs to name a few).
For the project, Vivek and his team surveyed 549 company founders in a variety of industries including aerospace and defence, computer and electronics, health care, and services. Information gathered on these founders focused on family backgrounds, motivations, and experience in launching companies.
I’ve cherry-picked Vivek’s key findings and included them below. Also, if you’re interested in reading the complete report, you’ll find it at the end of this post.
As always, we would enjoy hearing your thoughts. The question of nature versus nurture has always been much debated. As an entrepreneur, do Vivek’s findings resonate with you? Do you agree with his assertion that entrepreneurs are made, not born?
Company founders tend to be middle-aged and well-educated, and did better in high school than in college
- The average and median age of company founders in our sample when they started their current companies was 40. (This is consistent with our previous research, which found the average and median age of technology company founders to be 39).
- 95.1 percent of respondents themselves had earned bachelor’s degrees, and 47 percent had more advanced degrees.
- 75 percent ranked their academic performance among the top 30 percent of the high school class, with a majority (52.4 percent) ranking their performance among the top 10 percent.
- 67 percent ranked their academic performance among the top 30 percent of their undergraduate class, but a smaller percentage (37.5 percent) ranked their performance among the top 10 percent.
These entrepreneurs tend to come from middle-class or upper-lower-class backgrounds, and were better educated and more entrepreneurial than their parents
- 71.5 percent of respondents came from middle-class backgrounds (34.6 percent upper-middle class and 36.9 percent lower-middle class). Additionally, 21.8 percent said they came from upper-lower-class families (blue-collar workers in some form of manual labor).
- Less than 1 percent came from extremely rich or extremely poor backgrounds
- The average birth order of respondents in their family was 2.2 and the average number of siblings was 3.1.
The fathers of 50.1 percent of the company founders held bachelor’s or advanced degrees, as did 33.9 percent of the mothers. - More than half (51.9 percent) of respondents were the first in their families to launch a business. Only 38.8 percent, 6.9 percent, and 15.2 percent, respectively, had a father, mother, or siblings who had previously started businesses.
Most entrepreneurs are married and have children
- 69.9 percent of respondents indicated they were married when they launched their first business. An additional 5.2 percent were divorced, separated, or widowed.
- 59.7 percent of respondents indicated they had at least one child when they launched their first business, and 43.5 percent had two or more children.
Early interest and propensity to start companies
- 52 percent of respondents had some interest in becoming an entrepreneur when they were in college, but 34.7 percent didn’t even think about it, and 13.3 percent had little or no interest. Those from lower-upper-class backgrounds were more likely to have been extremely interested in starting a business than the average (25 percent vs. 18.5 percent).
- Of the 24.5 percent who indicated that they were “extremely interested” in becoming entrepreneurs during college, 47.1 percent went on to start more than two companies (as compared to 32.9 percent of the overall sample).
- The majority of the entrepreneurs in our sample were serial entrepreneurs. The average number of businesses launched by respondents was approximately 2.3; 41.4 percent were starting their first businesses.
Motivations for becoming entrepreneurs: building wealth, owning a company, startup culture, and capitalizing on a business idea
- 74.8 percent of respondents indicated desire to build wealth as an important motivation in becoming an entrepreneur. This factor was rated as important by 82.1 percent of respondents who grew up in “lower-upper-class” families.
- 68.1 percent of respondents indicated that capitalizing on a business idea was an important motivation in becoming an entrepreneur.
- 64.2 percent of respondents said they have always wanted to own their own companies. This was a stronger factor for those from lower-upper-class backgrounds—78.6 percent ranked this as important.
- 66.2 percent said the appeal of a startup culture was an important motivation.
- 60.3 percent said that working for others did not appeal to them. Responses to this question were relatively evenly distributed in a rough bell curve, with 16 percent of respondents citing this as an extremely important factor and 16.8 percent of respondents citing it as not at all a factor.
Most had significant industry experience when starting their companies
- The majority of respondents (75.4 percent) had worked as employees at other companies for more than six years before launching their own companies. Nearly half (47.9 percent) launched their first companies with more than ten years of work experience.
- Significant percentages of respondents started their first companies after working eleven to fifteen years (23.3 percent), sixteen to twenty years (14.3 percent), or greater than twenty years (10.3 percent) for someone else.
Early entrepreneurs and those with an early interest in entrepreneurship are different
- Entrepreneurs who started their companies soon after graduating (with zero to five years of work experience) and those who had an extremely strong interest in entrepreneurship in college were far less likely to be married (36.6 percent vs. the total sample average of 69.9 percent) or to have kids when they launched their first businesses (26.9 percent vs. the total sample average of 59.6 percent).
- Those who were “extremely interested” in starting a company while in college were far more likely to be early entrepreneurs. Of these entrepreneurs,
- 69 percent started their companies within ten years of working for someone else (as compared to 46.8 percent from the rest of the population).
- Level of interest in entrepreneurship during college was correlated to the number of years worked before starting a business—only 18 percent from the “extremely interested” group worked for at least fifteen years before starting their own businesses, as compared to 46.4 percent from the “not very interested” group.
The Anatomy of an Entrepreneur – Family Background and Motivation
