In his recent article for The New Yorker, "Epic Fails of the Startup World," James Surowiecki tackles the traits that define a great entrepreneur, as well as takes a good look at the burgeoning startup culture.
The emergence of crowdfunding and angel investing has contributed to the rising number of startups that are growing at exponential rates.
Most of these startups never achieve the rags to riches fantasies; but despite the devastatingly high fail rate, startups continue to emerge and entrepreneurs continue to gamble on them.
"Entrepreneur" is a term coined by the 18th century Irish-French economist Richard Cantillon, and Cantillon intended for it to mean the "bearer of risk."
Taking risks requires a great deal of confidence, and a healthy ego doesn't hurt either. Yet, the very confidence that drives entrepreneurs can lead to failure in large scales.
The fact that so many entrepreneurs are convinced that they will succeed makes success less likely, by swelling the ranks of competitors.
This dynamic was made famous by the economist H. Scott Gordon: In a 1954 essay, he noted that, because fishermen were “incurably optimistic” about their abilities to bring in a big catch, there were always too many fishermen working in the ocean, which, in turn, made it harder for them to earn a living.
So what makes some investors more successful than others? Having a larger fortune to play with can't hurt because the more investments one makes, the more one can increase the odds of seeing returns on those investments.
Yet it would appear that in business, as in life, sometimes it's the luck of the draw. A bit of wishful thinking, enough confidence and a whole lot of guts can go a long way.
Ultimately, those who take the biggest risks stand to lose the most, but they also position themselves to gain more than is reasonably imaginable.
via New Yorker, Photo Credit: Getty Images