Do Entrepreneurs have Personalities?Posted: November 14, 2011
At the recent HBS strategy conference, a number of papers and one panel were focused upon entrepreneurship. Over the past several years, innovation and entrepreneurship have been (and continue to be) very active areas of research. For example, in 2007 the SMS launched the Strategic Entrepreneurship Journal and, for those engaged in it, there appears to be almost unlimited funding for entrepreneurship research (the Kauffman Foundation being a leading source).
During one of the paper sessions, Axel Bichara of Atlas Venture, an early-stage investor in life sciences startups, made an offhand comment to the effect that they place a fair amount of weight on the managerial and personality characteristics of their candidate recipients for funding. My guess is that most people in the business would agree that some people have what it takes to be an entrepreneur and that screening for those qualities is an important part of creating the potential for a successful venture.
In the late 80s, I found myself serving as CFO of an entrepreneurial venture. We had made it past the prototype stage and were gearing up for regional rollouts of our retail product. Our VP Marketing had been hired from a well-known F500 consumer products company (and didn’t come cheap). Unfortunately, it quickly became clear that this individual simply didn’t “get it” when it came to being an entrepreneur. Rather than hustling out in the field and being quick to respond to unexpected events, this person spent most of the time behind a desk issues edicts to advertising firms and setting complex coupon strategies up on a spreadsheet.
Being quick to respond to unexpected events ourselves, we let that person go and immediately began a search for a suitable replacement. Eventually, one young woman with marketing experience from another well known F500 consumer products firm made a very positive impression on myself and the rest of the senior management team. Yet, we had just been down this road with her predecessor: someone with the right pedigree, who came across as very mature, successful and highly polished, failed epically. How could we be sure we wouldn’t be making the same mistake again? And, note well, we weren’t going to get a second chance.
We decided to devise a test. As it happened, next up on the rollout was the Atlanta market. Being lean on resources, we didn’t have much in the way of specific information about the distribution channels there. So, we figured we would send our candidate there for a week to reconnoiter the situation. Based upon her performance, we would have a lot more information about how she would fare in an entrepreneurial setting. We told her we liked her for the job, but had a disastrous experience with her predecessor. Therefore, we said, we wanted to hire her as a consultant to handle a one week, special assignment. We told her that, if she was game, she was to show up at our offices the following Monday, at which time we would explain the assignment, hand her a round-trip plane ticket somewhere, and have her back the following weekend.
Her reaction to this proposal was, “Sure. Do I need to bring food?” That reaction was perfect on so many levels.
She returned late the following Saturday with a jaw-dropping treasure-trove of information and competitive intelligence (purchasing managers spilled their guts to her on competitor pricing, consumer research, specific store information by location … we were stunned). Following our Saturday debriefing, we told her we needed her report in time for a critical funding meeting with our NYC VC that Monday. We put her up in a dump of a NJ hotel (where the receptionist dealt with people from behind bullet-proof glass). She was unfazed and worked, essentially without sleep, to deliver her report to us on-time Monday morning. At that point – surprise again – we explained that, since none of us had time to read the report, we wanted her to present her findings to the VC. She did an outstanding job there as well. The VC granted our next take-down and agreed we should hire her on the spot. Which we did.
Not surprisingly, she turned out to be one of the greatest entrepreneurs I have ever known.
I’m not sure how all the qualities on display in that anecdote would be described in an appropriately general and precise academic fashion. One would think that doing so would be an important scholarly endeavor. Yet, according to a quick google scholar search, the bulk of serious research on the personal characteristics of successful entrepreneurs was done in the 80s and 90s. There seems to be little interest in this question today. Is this because it has been answered, because we don’t think it can be answered, or because we don’t think it’s important any more?