Startup DNA

Posted: September 18, 2011 by John Clarkin in Innovation, People, Startup

What makes entrepreneurs different from other people?  Is it some character trait (or flaw)?  Is it something related to behavior, or is it how they think?  These are questions that have been asked countless times in surveys conducted throughout the world.  Imagine for a moment that we could get a sample of 100 million people, locate those that founded companies over the past 10 years, and explore elements of their backgrounds such as their age, where they live, where they worked, and where they were educated.  That’s exactly what Monica Rogati did.

 Rogati is a Senior Data Analyst at LinkedIn, and she presented the findings of her “Sequencing the Startup DNA” study at Startup Fest 2011 in Montreal in July.  The study revealed some interesting patterns in the education, experience, and threads that link the careers of more than 13,000 entrepreneurs.  Although some of the findings were not surprising, such as the disproportionate amount of startup activity in California and Massachusetts, some results reveal interesting differences from earlier studies of entrepreneurs.

The LinkedIn study found differences in the age distribution of entrepreneurs from that published by Ernst & Young.  Anticipating a bias toward younger founders in the LinkedIn sample, I was surprised to see that the age group 30-39 was overrepresented in the LinkedIn sample, while the age group 20-29 was most prominent in the Ernst & Young study.  Rogati’s study also revealed that some companies such as Adobe, Apple, eBay, Google and Microsoft created breeding grounds for entrepreneurs, and were more likely to appear in the backgrounds of founders than retail giants Home Depot, Macy’s, and Walgreens.

 The value of formal education for entrepreneurs is a widely debated topic, and the educational backgrounds of founders were part of the LinkedIn study.  As expected, the most overrepresented majors were entrepreneurship, computer engineering, computer science, physics and electrical engineering, while the fewest majors in the backgrounds of founders included pharmacy, social work, human resources, and nursing.   Unexpectedly, the schools that appeared most often in the backgrounds of entrepreneurs differed substantially from those ranked as the “best” by some well-known publications.

In John Byrne’s recent article “10 Best Business Schools for Aspiring Entrepreneurs” he compared the results of the LinkedIn study to what he called “… the two most-cited but deeply flawed rankings of leading entrepreneurial programs by Princeton Review and U.S. News and World Report.”  He noted that Columbia Business School, which did not make the Princeton Review list and ranked 19th by U.S. News, had the seventh largest number of founders in the LinkedIn database.  Byrne also noted that seven of LinkedIn’s Top 10 schools did not warrant a mention in Princeton Review.  Four of Princeton Review’s top five schools (Chicago, Michigan, Brigham Young, University of Arizona) do not appear in LinkedIn’s top 10 schools.

The LinkedIn ranking is not based on raw numbers, but levels the playing field for smaller schools by looking at how “over-represented” the schools are by entrepreneurs.  Although the LinkedIn study has limitations (it excluded LLC’s from its sample) it does have merit for two key reasons.  First, it is based on real data from a large sample; and providing student experiences that produce successful entrepreneurs is what university entrepreneurship programs should be about.  Byrne suggested that LinkedIn’s study “…calls out schools that have made entrepreneurship a marketing or promotional vehicle vs. those that have produced actual startup entrepreneurs.”

Monica Rogati’s presentation: http://www.slideshare.net/mrogati/sequencing-the-startup-dna-mrogatis-talk

John Byrne’s article:  http://poetsandquants.com/2011/09/01/the-best-b-schools-for-startups/

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