Upon my return to the U.S. I had tons of reading to catch up with. There were two copies of The Economist, BusinessWeek and a new subscription to Foreign Policy. But, at my Dad’s recommendation, the first article I read was The Sure Thing, by one of my favorite author’s Malcolm Gladwell. You can read the whole article here (if you have a New Yorker subscription – more on this later).
For those of you without New Yorker subscriptions, the article goes through a list of wildly successful entrepreneurs – from Ted Turner to Sam Walton to John Paulson – and argues that none of them are risk takers. Instead Gladwell points out that like most successful entrepreneurs this list of billionaires got wealthy precisely because they are risk averse. Gladwell’s profiles the successful entrepreneur as constantly “hedging his bets and minimizing the risk of failure.” These “predators,” as Gladwell calls them, use proprietary information and their unique position in the market as leverage to close transactions that turn into billions in profits.
Gladwell’s analysis, as usual, is compelling, insightful and a bit lacking. He completely ignores the “rags to riches” entrepreneur of American folklore, pointing out that all of the men he profiles either started with large family inheritances (Turner), married into money (Walton) or had enough money left over from their previous career success (Paulson). The article implies that it is impossible for those without capital to succeed as entrepreneurs.
For an entrepreneur without capital (like me) this is incredibly disheartening:
“New-business success is clearly correlated with the size of initial capitalization. But failed entrepreneurs tend to be wildly undercapitalized…Writing a business plan is a must; failed entrepreneurs rarely take that step. Taking over an existing business is always the best bet; failed entrepreneurs prefer to start from scratch.”
Reading this my stomach churned. We started TaskUs with $20,000 that Jaspar and I had saved from throwing all age nightclubs in college. Having written an extensive business plan for a previous business that never got off the ground, we decided there was simply no point in putting pen to paper to write down ideas that were sure to change as we iterated through the various phases of the business’s existence. We started the business from scratch – an idea that came to me while working at the investment bank, a name that came to me while lying on my floor and a dream that drove us to work tirelessly toward success.
Returning from the Philippines I felt closer to success than ever. But reading Gladwell has never left me feeling so depressed.