Vivek Wadhwa

When it comes to tech entrepreneurs and their successes, legends abound

By Vivek Wadhwa
August 2, 2011

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The legends of Bill Gates, Steve Jobs, and Mark Zuckerberg have fed a stereotypical vision of innovation: Mix a brainy college dropout, a garage-incubated idea, and a powerful venture capitalist, stir well, and you get the latest Silicon Valley powerhouse. But these individuals are not typical entrepreneurs. Let’s dispense with some major misconceptions:

America’s typical tech entrepreneurs are in their 20s.

Duke University’s 2009 survey of 549 company founders found that the average and median ages of these founders was 40. Twice as many were older than 50 as were younger than 25, and 43.5 percent had two or more children.

The mythology of the kid in the garage is grounded more in Hollywood than in Silicon Valley.

Entrepreneurs are like top athletes, born not made.

The research revealed that 52 percent were the first in their immediate families to start a business. Their parents were academics, lawyers, factory workers, and bureaucrats. Only about 39 percent had an entrepreneurial father, and 7 percent had an entrepreneurial mother; some had both. Only a quarter caught the entrepreneurial bug in college.

College dropouts make better entrepreneurs.

The Thiel Fellowship offers students $100,000 to drop out of college. The logic? That higher education is overpriced and unnecessary, and that budding entrepreneurs are better off building companies than studying irrelevant subjects.

But the research finds US-born founders of engineering and technology firms tend to be well educated. On average, companies founded by college graduates have twice the sales and workforce of companies founded by people who did not go to college. Surprisingly, attending an elite university doesn’t provide a significant advantage in entrepreneurship. What matters is the degree.

Women can’t cut it in the tech world.

Women start 3 percent of technology companies. They are almost absent in high-level technology positions. They contribute to fewer than 5 percent of all IT patents. So, is there something about women that leaves them out of the high-tech industry? Not at all. Our research found almost no difference in the factors driving success for male and female company founders.

The problem is a broader one. Few girls get encouragement from their parents to study engineering; they encounter negative stereotypes in the workforce; they are asked demeaning questions such as, “How are you going to manage your company when you have children?’’

Venture capital is a prerequisite for innovation. Less than 5 percent of venture capital goes to early-stage companies - those taking the risk of developing innovative products. The reality is that venture capital follows innovation.

Vivek Wadhwa, a Washington Post columnist, is research director at the Center for Entrepreneurship at Duke University.