by the employment growth expected by an entrepreneur over the first few years of the business’s life. Those outsize dreams have a lot to do with what makes the United States what it is.)
Other scientific studies have perhaps got closer to the mark. A very intriguing study conducted by Cambridge University studied the brains of 17 ordinary corporate managers and sixteen entrepreneurs, each of whom had started at least two high-tech companies and who therefore passed any reasonable test of entrepreneurship. Asked to make a series of routine decisions, the managers and entrepreneurs scored about the same. These were sensible people, analysing problems in a sensible way. As soon as they were asked to make decisions involving considerable risk, however, the entrepreneurs were consistently bolder. Knox D’Arcy would, no doubt, have been off the scale.
Bold, please note, is not the same as intelligent. Indeed, it’s a commonplace in the venture capital industry that founder-CEOs should be gently eased out of the hot-seat as soon as possible. Noam Wasserman of Harvard Business School quotes one venture capital type as saying:
Upfront, I ask founders to level with me. If they are interested in working with me on the basis of [their] being a big shareholder, then I am interested. If they are interested in working with me because they have to run the company, then it’s probably not going to make sense for us to work together.
This attitude, a common one in the industry, would make no sense if that entrepreneurial boldness was the same thing as profit-maximizing genius. It isn’t. It’s gambling, linked (as Wasserman also points out on the basis of careful study) to the tendency among entrepreneurs to be markedly more optimistic about outcomes than their peers.
The trouble is that any attempt to measure optimism in laboratory conditions founders on a basic difference between entrepreneurs and the rest of us. It may, indeed, look to us as though entrepreneurs are ‘too’ optimistic, yet that’s to make the mistake of looking at their world through our eyes. To us, failure matters. To them, failure doesn’t really matter an iota. The failure of a particular venture is not the desired outcome, obviously, but it’s not a bad one. The only bad outcome would have been if they hadn’t had the nerve to go for it in the first place. Our ‘do nothing’ default option is their worst case scenario. That’s the one they truly can’t envisage. Equally, our worst case scenario (‘invest up to your neck, then see the whole thing go pear-shaped’) is no big deal for them. It’s an ‘Aw shucks!’ outcome, one that just makes them want to go back and try again with something else.
Even the way we respond to success is different. For us, success probably means a new home, a nice car and perhaps (depending on the level of our success) a yacht, a private jet, a football club, or a private island. For them, success means all those things for sure, but it means something else even better: that their ‘baby’ has flourished, that their act of creation has been rewarded by something that has matured into a confident, independent adulthood. These feelings mean that the risks and rewards we face are quite different from the ones that entrepreneurs face, even if we were both to compute the odds in the exact same way. Little wonder that we end up behaving in sharply different ways.
| How we feel | How entrepreneurs feel | |
| Do nothing | Fine. This is our default choice. | Bored. Frustrated. No way. |
| Try and fail | Oh my God! What do I live on? | At least I gave it a go. |
| Try and succeed | Jackpot – got the house, got the yacht. | Immense satisfaction – I created something. |
Knox D’Arcy is the perfect exemplar of all these things: the optimism, the gambling – and the irresponsibility which (to our pastoral, anti-nomadic minds) is the inevitable result. D’Arcy’s judgement about the Mount Morgan mine proved reasonable, but he refused to sell down his investment in it, even after the stock hit absurdly unsustainable heights. His judgement about Persian oil was simply awful. True enough, even that bet came good in the end, but any competent business manager would have made a much better fist of assessing risks and benefits before making any financial commitment – and would, at the very least, have come up with a much more sober estimate of the probable costs and the scale of financing needed.
Yet there’s nothing unique about his mindset. I’ve spoken to upwards of two dozen self-made multimillionaires. (And my threshold level for ‘multimillionaire’ was high. The median net worth of those I spoke to was well into the tens of millions of pounds.) Almost all of these entrepreneurs used the same kind of language to describe themselves. They’re ‘restless’, have a ‘very low boredom threshold’, need ‘decisions to happen quickly’, need ‘high energy’ and ‘passion’ from those they work with, couldn’t stand the ‘slowness’ of large corporations.
Some of them did have high educational achievement, but plenty didn’t. Typical was one entrepreneur who crammed his three-year law course into an eighteen-month workathon. After getting his degree, he started in corporate finance. He became bored working for others, so set up on his own instead. When he wearied of funding other people’s companies, he bought his own. Work was never the challenge, dullness was. With people like that, I almost got the feeling that if they were forced to sit in a classroom or given a pedestrian middle-management job in a dull but worthy company somewhere, they’d end up chewing carpet tiles or jabbing forks into electrical sockets. These were folk who needed stuff to happen and happen fast.
Although entrepreneurs are often described as rule-breakers, it would perhaps be more accurate to say that they’re typically not rule-minded. It’s not particularly that they seek to break rules, more that they don’t really see the rules that are so clear to the rest of us. That’s why those 7R-DRD4 variant nomads find it so easy to travel beyond the far horizon. They haven’t felt the tug of any prohibition against doing so. It’s perhaps also why immigrants are so over-represented in entrepreneurship – around a quarter of all US start-ups are founded by immigrants, for example. Those who are born and brought up in a place feel its rules and mores in their bones. Those who have already left kin and country behind are much less tuned in to those rules in the first place.
These issues may even lie at the heart of one of the oddest results to come out of the torrent of research into entrepreneurship: namely that while only 1 per cent of corporate managers are dyslexic an astonishing 20–35 per cent of entrepreneurs are (the two figures are for UK and US entrepreneurs respectively; the researcher was Julie Logan of the Cass Business School in London). There’s no settled interpretation of this research finding, but here’s mine. Dyslexics have gone through their school life noticing that the rules which work for others don’t seem to hold for them. A is for Apple, B is for Bird, C is for Cat, D is for Dog. That worked for me. If you’re non-dyslexic, then it presumably worked for you. For dyslexics, however, even those most basic of all rules seem to make no sense. So what do you – as a bemused child, anxiously seeking the approval of your teachers and parents – do in such a situation? You surely get creative. You develop your own techniques and trust those in preference to the seemingly unreliable ones offered by your teacher. You’ve learned to invent your own way around problems. You’ve learned that the rules of Planet Normal just aren’t going to work for you – indeed, they don’t even make sense. And as soon as you start to think like this, though you may not know it yet, you’re an entrepreneur.
If wealth creation is alchemy, then its orginating spark is here. The restlessness of people who can’t bear to be still; the risk-taking of those who can’t bear to be safe; the decisiveness of those who know that if they want a thing done, they’ll need to do it themselves. And from
