Authored by Rainer Zitelmann via RealClearMarkets,
What personality traits distinguish successful entrepreneurs? This question has occupied academic research on entrepreneurship for decades, with scholars examining the relationship between personality traits and entrepreneurial success.
When we want to understand or recognize something, we often do so by making comparisons. About 200 years after the birth of Christ, the Greco-Roman historian and philosopher Plutarch wrote a collection of parallel biographies of famous figures from Greek and Roman history. By comparing their characters, decisions, and lives, he sought to reveal similarities and differences and thereby arrive at a deeper understanding of each individual.
The American economist and entrepreneur Greg Autry has followed this model. In his book "Barons and Bros", he presents four pairs, each consisting of a living entrepreneur and an entrepreneur from the 19th century.
Many readers will be familiar with five of the names: SpaceX founder Elon Musk, Amazon founder Jeff Bezos, Virgin founder Richard Branson, steel magnate Andrew Carnegie, and railroad and shipping entrepreneur Cornelius Vanderbilt. In addition, Autry has chosen Monty Ward, the pioneer of mail-order retailing; Hiram Maxim, the inventor of the machine gun; and Palmer Luckey, the founder of the virtual-reality company Oculus.
Formal education played hardly any role. Only two of these eight successful entrepreneurs completed a university degree, and only one of them - Musk - studied economics, among other subjects. The inventor Hiram Maxim, who received 122 U.S. patents and 149 British patents and developed, among other things, the first automatic fire sprinkler, attended a one-room schoolhouse for only five years. Richard Branson is dyslexic and left school at the age of 16.
In my dissertation The Wealth Elite, for which I conducted in-depth interviews with 45 wealthy self-made entrepreneurs, I reached a similar conclusion: there was no correlation between performance at school or university and the level of wealth these individuals later attained. Those who had excelled at school or university were generally not among the very wealthiest later in life.
For these entrepreneurs, implicit learning - "learning by doing" - and the implicit knowledge acquired through this process played a much more important role. Six of Autry's eight heroes were already engaged in entrepreneurial activities as teenagers, learning skills that would later contribute to their success. This, too, corresponds to the findings of my dissertation: What was striking was the way the future wealthy entrepreneurs earned money while still at school or university.
Typical student jobs in which they simply worked for an hourly wage were the exception. There is little doubt that these experiences shaped the young people who later became entrepreneurs. They learned how to organize, sell, and think entrepreneurially. Without even being aware of it, they acquired the implicit knowledge that is so important for successful entrepreneurs and investors. Their early entrepreneurial experiences were the best possible preparation for becoming self-employed later in life.
Most of the entrepreneurs featured in Autry's comparisons would probably never have made careers in large corporations because they were often difficult personalities, unwilling or unable to conform and subordinate themselves to others. All of them were undoubtedly outstanding salesmen and networkers. Again and again, Autry describes his heroes making "cold calls" - contacting strangers they did not know but who were important to their plans.
How often have you tried to write to or call an important person you did not know?
All the heroes in this book suffered major setbacks. Musk's companies Tesla and SpaceX repeatedly came close to bankruptcy, and many of Branson's companies failed.
Palmer Luckey was forced out of Facebook after the company acquired his business because he was considered politically "too right-wing." Vanderbilt suffered a major defeat in the so-called Erie War and, in his unsuccessful attempt to gain control of the Erie Railroad, at one point lost around $7 million - the equivalent of perhaps $170 million today.
Andrew Carnegie experienced one of the greatest crises of his life during the bloody Homestead conflict of 1892; the confrontation permanently damaged his reputation as an employer sympathetic to workers.
Perseverance alone does not explain their success. What matters is the combination of perseverance, a willingness to experiment, and the ability to learn from mistakes. The crucial skill shared by Autry's heroes was their ability to recognize opportunities where other people saw none. This corresponds to the insights of the great economist Israel Kirzner, whose theory of entrepreneurship places the entrepreneur's "alertness" to new opportunities at its center.
In his definition, the "pure entrepreneur" is a decision-maker whose entire role consists of discovering previously unnoticed opportunities.
When it comes to the personalities of Autry's heroes, one thing stands out: they were all nonconformists - in the sense described by the economist Joseph Schumpeter. According to Schumpeter, the entrepreneurial type does not regard the fact that something has never been done before as an argument against doing it. Inhibitions that constitute firm boundaries for the behavior of others do not constrain him in the same way.
He draws different conclusions from the circumstances around him than the mass of static economic actors. He does not care much how others judge his enterprise - and often even takes pleasure in swimming against the current. All of this applies without qualification to the people portrayed in this book.
And there is something else that stands out: Autry's entrepreneurs think very, very long term. Not in months, and not even in years, but in decades. This sets them apart from the overwhelming majority of people.
There is almost no theory in Autry's book, and that is a good thing. His accounts are vivid, entertaining, and full of anecdotes. "The thing I have noticed is when the anecdotes and the data disagree, the anecdotes are usually right." This statement would drive most academics to despair, but it comes from Jeff Bezos, one of the richest people in the world. The entrepreneur's knowledge is different from the academic's knowledge - something intellectuals will never understand.
This book could only have been written by an author who is both a scholar and an entrepreneur himself, and who therefore possesses a kind of knowledge superior to that of the pure academic.
Autry has met all of the entrepreneurs featured in the book who are still alive - some only briefly, others more closely. I have read many biographies of Musk, Bezos, and Branson, and of course I was already familiar with Vanderbilt and Carnegie. Nevertheless, I learned a great deal from this book and read it in one sitting. As a reader, I am already looking forward to Autry's next parallel biographies, since he announces that he intends to write more.
Anyone interested in entrepreneurship will learn more from this book than from many years spent studying business administration.
In June, Skyhorse Publishing will release Rainer Zitelmann's book "New Space Capitalism."