Paradox of entrepreneurship (Noam Wasserman) applied to morality
A recent article in The Wall Street Journal points to an interesting paradox:
Call it the paradox of entrepreneurship: The very thing it takes to start a business often ends up destroying it.
How is that possible? Quite simple, what all business start-ups have in common is the drive or passion that the founders have. And it is this passion, the relentless and uncompromising belief in the idea (with a pinch of egoism) that causes the failure.
As Noam Wasserman makes clear, what all start-ups have in common is passion for the idea (or product). Their enthusiasm figuratively spills over the people they talk to, whether they are just friends and family, who get convinced of the greatness of the idea/product; or investors, who see the need for passion to succeed. However, it is the same passion that is also the downfall. As it happens, the enthusiasm these newly founded businesses show also stands in the way of sound advice. Their passion, again figuratively, blinds them to the actuality of the market, makes them overconfident on the decisions that are made – ultimately, leading to the worst decisions being taken at the worst possible time.
Noam Wasserman does have some advice:
- Don’t rush into things and create a company directly. There are three things to take into account: look whether the market is favourable, think about your skills, and don’t forget your personal circumstances! What this basically comes down to, is whether your idea really is that great to sacrifice your time and money; are you the person who can pull this off by yourself; and most naturally, whether it is great at all – is there a market for your product or is it simply a great idea?
- Though it is crucial to stay optimistic, it is equally, if not more, important to remain realistic. The business plan should remain what it is – a business plan! Not a grocery list which you can easily tick off and get done in one go.
- When working together, maintain an easily adjustable contract. As time passes, there will be different views on who should do what and how much of it. Do not commit to something that may later haunt you and disrupt the workflow due to unhappiness with commitments of the past.
- Remember that although you found the company (or simply had a great idea), it does not mean that you are also the best man to run the show! This may sound difficult to believe, but you are not the best person for the job simply because you have done your research, started up everything, had the initial contracts, etc. etc. Sometimes it is best to leave the forefront and move a step back. Difficult to accept? Think about all the major companies (Microsoft, Dell, eBay, etc. – the founders have long stopped functioning as CEO’s and the revenues are increasing further and further.
Deliberately avoiding Marx for a moment, what does this tell us about those who never thought of having their own business? It would seem that despite the specificity of the issue to economics, there is a great moral point in the paradox of entrepreneurship. Certainly, all four points apply to personal development – say, in academic work, or personal relationships.
But these points also apply to our understanding of society as whole. Again, this is quite self-explanatory. There is however a note to be made on the type of morality we would consider here. Society that promotes these morals would have to be one that is not based on individualism but on cooperation between its members (some form of communitarianism). For now it is best to leave the debate between individual and community for another occasion.