THE ILLUSIONS OF ENTREPRENEURSHIP

The Illusions of Entrepreneurship. The Costly Myths That Entrepreneurs, Inventors, and Policy Makers Live By is the latest book by Scott A. Shane.
After you have read Scott A. Shane’s book, The Illusions of Entrepreneurship, you are rewarded with the answers to 67 myths about entrepreneurship.
Before you start, take the entrepreneurship quiz and see how much you know. I got a score of 40% before I had read the book.
The book is divided in 10 chapters. The author starts off with debunking the myth that today’s America is the land of opportunity when it comes to entrepreneurship. According to research, he says, the self-employment rate was much higher in the beginning of 20th century compared with today’s situation. The United States of America is bottom on the list of self-employment rate compared with the other OECD countries. Turkey is number one with 30 percent of new established businesses per capita. America has a rate of about 7.
If you look on a local level, Silicon Valley is not the startup place in America. The green mountain state of Vermont is number one. [As a side note, If you are interested in “how people across America are transforming their lives by finding the where of the happiness,” I recommend you to check out Rich Karlgaard’s site Life 2.0. ]
In the next chapter, you get a wake-up call if you already have decided your industry to work in. Your chances for success are much higher if you choose the right industry. Some industries have dismal success ratios and you may want to avoid them.
In chapter three, you get a not-so-rosy picture on who becomes an entrepreneur. Scott Shane states that physiological factors account for much less than demographics like age, race and gender. Some may view this as a controversial viewpoint. As an example, Scott Shane’s post here at Small Business Trends, Why is the Rate of Entrepreneurship Among African Americans so Low? generated plenty of comments and the discussion got pretty heated. To cool things down a bit, I have to use a funny quote from the book:
“Therefore, if you want to become an entrepreneur, go to school — just don’t go on to get a PhD. With that much education you are likely to become a nerdy professor like me, who studies entrepreneurship instead of doing it.” [Chapter 3, Who Becomes an Entrepreneur, page 47.]
With that statement I want to conclude that this book is inspirational reading material. You get mental exercise by reading the book and you start to think in new directions. Plenty of the old myths are taken care of in an elegant way. It is reassuring to read the following paragraph:
“Starting a new business isn’t as quick, painless, linear, collective, or all-encompassing a process as our popular conception suggests. A remarkably small percentage of entrepreneurs – one third – manage to get business established within seven years of starting the process, and even then it often takes several years to do so.” (Chapter 4, What Does The Typical Start-Up Look like?, pages 77 – 78.]
Scott Shane ends the last chapter with criticizing the government’s intervention in the business field, pushing their own agenda to show the voters that they have “created” economic growth by actively promoting the establishment of new enterprises. I think we should start a debate on why policy makers encourage people to start new companies.
I want to end this book review with a great quote from the conclusion:
“We shouldn’t get rid of the start-ups. Despite the dismal story about the typical start-up portrayed in this book, getting rid of start-ups isn’t the answer. Entrepreneurship is central to the success of a capitalist economy.” [Conclusion, page 162.]
While at first glance the book may not sound like a “feel good” book that gets you fired up to go start a business, it is inspirational. It will get you thinking. You may learn some things that help you be smarter about deciding which business to start, and how to get it off the ground, so that you have the best possible chance for success. Give yourself the best shot at success by reading this book.