Musings on Entrepreneurship and Innovation
Monday, December 27, 2004Serial Entrepreneurs and Logical Fallacies
Imagine that an entrepreneur recently moved to your town. He has an Ivy League pedigree and three successful startups to his credit. Obviously, he is a great entrepreneur who must know what it takes to be successful. Right?
Well, maybe.
There exists the logical fallacy of enumeration of favorable circumstances (i.e., counting the hits and forgetting the misses). Consider the following footnote by Carl Sagan in The Demon-Haunted World:
My favorite example is this story, told about the Italian physicist Enrico Fermi, newly arrived on American shores, enlisted in the Manhattan nuclear weapons Project, and brought face-to-face in the midst of World War II with U.S. flag officers:
So-and-so is a great general, he was told.
What is the definition of a great general? Fermi characteristically asked.
I guess it's a general who's won many consecutive battles.
How many?
After some back and forth, they settle on five.
What fraction of American generals are great?
After some more back and forth, they settled on a few percent.
But imagine, Fermi rejoined, that there is no such thing as a great general, that all armies are equally matched, and that winning a battle is purely a matter of chance. Then the chance of winning one battle is one out of two, or 1/2; two battles 1/4; three 1/8; four 1/16; and five consecutive battles 1/32 -- which is about 3 percent. You would expect a few percent of American generals to win five consective battles -- purely by chance. Now, has any of them won ten consecutive battles...?
Over the last 20 years, I've come to appreciate just how hard it is to be associated with one successful company, much less three. Though I believe chance plays a significant role in the success or failure of a company, so does skill, hardwork, and ready access to complementary strategic resources. Nevertheless, an entrepreneur's success with one, two, or even three ventures doesn't connote unassailable authority. In fact, my skepticism has come to increase in proportion to the claim of such authority.
Last week, I was introduced to Robert Uhlmann, who recently moved to Bozeman from Kansas City. Robert is a graduate of Dartmouth and Harvard Business School. He told me that he's founded three successful companies, including Broadcast Data Systems (now Nielsen Broadcast Data Systems), which uses technology originally developed to track the audio signature of Soviet submarines to track radio airplay of popular music across the U.S. and Canada. Over the course of lunch, our conversation turned to whether or not Robert's experiences might be useful to share with the entrepreneurship students at Montana State University.
I encouraged Robert to pursue the opportunity -- not because he had founded three successful ventures but because Robert had made a point of revealing that he had started over 40 ventures. Taking his claim at face value, I inferred a degree of passion, perseverence, and fact-based decision-making that is worthy of attention. Whether or not Robert is an entrepreneurial authority, he would seem to be a source of valuable experience and expertise.
