Beyond a refusal to stay employed, top entrepreneurs have even less in common with regular employees than commonly thought.
Among top entrepreneurs, the “rags to riches” millionaire has practically become a stereotype. Almost all of them seem to have a story of coming from a rough background, to the point that some of you may expect it’s all made up. But there’s a good reason for it.
The (Very Real) Link Between Between Unemployability and Entrepreneurship
British multi-millionaire and Dragon’s Den investor, Duncan Bannatyne, famously pointed out that many entrepreneurs are who they are because they were unemployable (and recently, he even said being made redundant may be what you need to become an entrepreneur).
There seems to be a ring of truth to this. Consider the long list of billionaires, who couldn’t – or wouldn’t – find regular employment: Kenny Trout, the billionaire founder of Excel Communications, started by selling life insurance. Larry Ellison, founder of Oracle, only worked odd jobs for eight years. Virgin’s Richard Branson was self-employed from the start of his career, beginning with running a magazine.
So what’s the deal here? Why do so many top entrepreneurs seem to come from the ranks of the unemployable (by choice or circumstance), rather than, say, the ranks of salaried accountants, middle-managers, and supervisors?
It’s All About Risk
There are plenty of reasons at play here, but chief among them is the concept of risk.
Consider if you have a good degree, and a prospect of earning S$3,500 a month right out of school, with a good likelihood of making S$7,000 to S$10,000 a month at the peak of your career. This comes with a predictable year end bonus, company healthcare, and the surety of having a job till retirement.
If that’s your situation, how willing are you to throw all that way, and risk starting your own business?
Bear in mind that doing so will probably require a frighteningly high bank loan (one that your parents may have to take on your behalf), and a high risk of failure (statistically, 90 per cent of start-ups will fail).
On top of that, you also need to sacrifice aspects of your personal life – you won’t have weekends off to party and watch movies, there are days when you’ll have to skip lunch, and even relationships will suffer due to your uncertain future.
Now, consider what happens if – by choice or circumstance – you couldn’t be employed anyway. Maybe it’s a lack of qualifications, redundant skills, or a simple inability to slave away in an office cubicle for 40+ years.
Due to your situation, you don’t make much money anyway – you’re probably scraping by on odd jobs, or past savings. Your future is already uncertain. All the pains of an entrepreneur – from not affording lunch to having no money for weekends – are already part and parcel of your everyday life.
At that point, what do you have to lose by trying to start your own business? You don’t have a career to risk anyway, and things can’t get much harder than they already are.
Now, this doesn’t mean you’ll succeed as an entrepreneur just because you’re unemployable. But it does mean that, among 10 per cent of start-ups that succeed, there’s a better chance the person behind it was one of the unemployable; that entrepreneur took the risk that someone with more stable job prospects wouldn’t.
Mindset – the Other Major Factor
There are some entrepreneurs who made themselves unemployable with their mindset. They may have had the right skills to join any firm; but they just didn’t have the mentality to make it work.
For example, Brian Liu, co-founder of LegalZoom, graduated from law school. By his own admittance, it was his mindset that would have made him a terrible employee. It’s also often observed that people such as Richard Branson, Elon Musk, and the late Steve Jobs would all be terribly disruptive as regular employees.
Entrepreneurs combine two qualities that are great for running businesses, but are a nightmare for bosses.
The first is a sense of opportunism, that most bosses hate. If an entrepreneur works in your restaurant kitchen, and he sees his cooking brings in the crowds, his first instinct is often to wonder why he still needs you. Perhaps he should just set up his own restaurant.
To most employers, this is perceived as a lack of loyalty, or a mercenary attitude (never mind that their company was probably built by someone with the same mindset).
The second quality is an “output-driven” approach. Entrepreneurs often have an idea that they try to push on the market first, even if there’s no existing demand for it. This is how they end up being innovators or pioneers – Steve Jobs famously maintained that market research was a waste of his time, because we didn’t know what we want until he told us.
This is the complete opposite of conventional business protocols, which are input-driven. I.e., conducting surveys, doing research and then building what customers (say they) want.
Practically speaking, a successful approach is a blend of the two; not every entrepreneur is as extreme as Steve Jobs. But most entrepreneurs are more concerned with pushing “their” idea on the market, than they are in just following trends (e.g. let’s make smartwatches because that’s what people say they like right now).
If you’ve spent any amount of time in the workforce, you can imagine how hard it is to work with someone who is output-driven. They ignore research findings, are obsessed with their own projects, often struggle to convey an idea that no one else “gets”, and will come across as self-centered or arrogant.
(Until their idea actually works; then they’re geniuses)
What About the Rest of Us?
As disconcerting as it is to learn that good entrepreneurs don’t seem to make good employees, it doesn’t mean regular employees will never make it as entrepreneurs. Remember, there are always exceptions to the rule.
But the next time you hear another story about a man who couldn’t be employed by Kentucky Fried Chicken, but ended up owning a major internet company (Jack Ma), you’ll have a better idea of how they ended up that way.
Read This Next:
By Ryan Ong
Ryan has been writing about finance for the last 10 years. He also has his fingers in a lot of other pies, having written for publications such as Men’s Health, Her World, Esquire, and Yahoo! Finance.