Malcolm Gladwell: Entrepreneurs are anything but risk-takers

http://www.newyorker.com/reporting/2010/01/18/100118fa_fact_gladwell

by cwan • 17 years ago

9 5 17 years ago

newyorker.com

ashley• 17 years ago

Interesting idea, but am not convinced by his argument that being a "predator" is so far removed from risk-taking.

tptacek• 17 years ago

Apparent correction: Some entrepeneurs are anything but risk takers.

jsm386• 17 years ago

Maybe it is the recent spate of articles taking down a number Gladwell arguments, but I look at anything he writes at this point from the perspective of, is he being contrarian for the sake of being contrarian - and based on the abstract (no full article available to me), it seems like that is the case, once more.

The examples - John Paulson, a hedge fund trader. First - is a hedge funder making trades an entrepenuer to begin with? Second - trading, in exotic securities, short, no less, is the definition of risk. He can call it predatory, but to say it isn't risky is ridiculous.

Also - Ted Turner. Again, maybe the full article has more, but his one example pales against his other risks, such as launching CNN, a 24 hour cable news network when no one had even heard of such a thing or thought it would ever work.

credo• 17 years ago

The abstract doesn't talk about this, but one school of thought suggests that entrepreneurs aren't necessarily risk-takers, they are just overly optimistic.

I think that is true. If you're overly optimistic or over-confident, you're more likely to do things that others consider as risky (because they don't seem risky to you)

jazzdev• 17 years ago

The basic premise is that a predator does low-risk deals with a large upside. And they can do that because they are well-informed. Turner knew he can use his billboard business to advertise a TV station. Paulson buying CDS's because his research showed the real estate bubble was about to burst.

It's an interesting thesis, though it does suffer from survivorship bias.

I thought the most interesting part was data from the book, "The Illusions of Entrepreneurship", by Scott Shane.

New-business success is clearly correlated with the size of initial capitalization. The data show that organizing as a corporation is best. But failed entrepreneurs tend to organize as sole proprietorships. Writing a business plan is a must; failed entrepreneurs rarely take that step. Taking over an existing business is always the best bet; failed entrepreneurs prefer to start from scratch. Ninety per cent of the fastest-growing companies in the country sell to other businesses; failed entrepreneurs usually try to sell to consumers, and, rather than serving customers that other businesses have missed, they chase the same people as their competitors do. The list goes on: they underemphasize marketing; they don't understand the importance of financial controls; they try to compete on price.

Malcolm Gladwell: Entrepreneurs are anything but risk-takers

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