I wrote a post last week about some of challenges facing Chilean would-be entrepreneurs because of the culture. Overall, Chilean culture punishes failure, which stifles innovation.
It got me thinking and I realized that it seems to me that a fixed percentage of people in the world are entrepreneurial. I’m not sure what the exact number is but if I had to guess, it’s probably around 10% and I’d be willing to bet that percentage is fairly static across the world. I believe that these 10% have the skills, desire and entrepreneurial spirit to start a business and succeed. 10% of Americans, Saudis, Chileans, Spaniards and South Africans all have the desire to start businesses, so why do some places have lots of entrepreneurship and others don’t?
Why does the US have a higher percentage of entrepreneurs than Chile, Saudi Arabia or other places around the world. And in the US why do Silicon Valley, NYC, Austin, Boulder and Boston have a higher percentage of entrepreneurs compared to Des Moines, Tallahassee and Phoenix?
I believe that certain cultural values free up the entrepreneurial 10% to actually start businesses and succeed. For example, in the United States, we reward risk taking, business ownership and making money. On average, we also love innovation, learning and trying new things. We love rags to riches stories, even if they are only partly true. If someone’s business fails, it’s seen as experience, not a black mark. In the US, these values are stronger in San Francisco and Austin than in Cleveland and Memphis.
In other parts of the world, there are many different cultural pressures that stifle innovation: punishing failure, punishing innovation, closed culture. Some places even look down on successful people.
In Silicon Valley, I bet 20% of the people are entrepreneurs in some way shape or form. In Austin, maybe 8%. In Chile it’s .01%. I believe that all cultures start out with the same 10% who can start businesses, but some cultures push people who may not have started businesses to do it, while others push people who would have otherwise started a business to shy away. The most important thing entrepreneurs, government and academics can do is to try to free the people who would start a business, but don’t because of cultural pressures.
I’ve seen it first hand in Madison. When I was 19 and just starting with ExchangeHut, there were not many young entrepreneurs. I only knew 4-5 students and recent grads who were starting businesses. After JellyFish sold to Microsoft, Networked Insights started to have some success and young entrepreneurs like those in the Burrill Business Plan Competition started to get press in national publications and have some success, other people started to see that they too could start a business. Capital Entrepreneurs has accelerated the process, along with all sorts of cool initiatives from the startup community like barcamp, forward tech festival, high tech happy hour and more. I think Madison went from a 1% to a 3% city in the last five years. We still have a long way to go, but by unlocking the pent up entrepreneurial talent, we’ve seen an explosion in entrepreneurship. Just wait until we see what Madison looks like at 5%!
In Chile, I’d estimate that we’re at .1%: for every 1000 people who are entrepreneurs at heart, only 1 starts a business. That’s 1/1000! In Silicon Valley, it’s probably 200/1000, Austin 80/1000 and so on.
Part of Start-Up Chile‘s mission is to introduce entrepreneurs from all over the world into Chile’s culture to try to break the cultural pressures that punish failure and stifle innovation. I believe that we should be focusing on the other 9.9% of Chileans who might start a business if they were not afraid of being punished for their failure. If we can double the amount of entrepreneurs who start businesses, it will be a huge win for Chile. I see similar parallels to Madison and the entrepreneurial community is starting to take shape. People just need the entrepreneurial push!
What do you think? Are entrepreneurs distributed equally across the world or are more entrepreneurs born in one country compared to another? What can you do to help free up the rest of the entrepreneurs who are scared to make the leap?