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on September 3, 2008
This book is the perfect example of the folks whose communication style goes like this: they tell you what they are going to tell you, they tell you, and then they tell you what they told you! And just for good measure (or to fill up more pages) this guy adds a numerical list of what he told you! Since the hardcover version I have runs just 165 pages before endnotes, you have to wonder if this is really a business magazine article, stretched waaaayyyyy out.

From reading business and economic development literature, I have often seen a distinction made between lifestyle entrepreneurs and other entrepreneurs. Shane makes no such distinction and I think the statistics he uses to bust myths are highly questionable. Do we really think policy-making in this important area should conflate every attorney who hangs a shingle to do real estate closings or draft wills, with businesses that aspire to develop new products, technologies?

On the other hand, if you are reading this because you want to leave your law firm and open a solo practice, or sell baked goods prepared in your home (lifestyle entrepreneurs) this book could be quite useful.
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on December 8, 2009
What disappointed me about this book is that it is not really about "entrepreneurs" as I and many other people understand the term, that of people who create businesses that are generally meant to employ others, but rather about the self-employed. Many of the self-employed, such as freelance writers, podiatrists, those working as consultants for tax-reasons, are not entrepreneurs in the same sense as Bill Gates, Michael Dell, or the founder of a restaurant near your home are. To my mind it's a bit of apples and oranges to lump these two widely disparate groups together, and then draw conclusions about them, and even worse, to push for policies that do not differentiate between these two groups.

Using this definition, which includes many people not working full-time, and many who cannot find full-time jobs, Shane arrives at conclusions such as that entrepreneurs earn less than than the industry average, that striving to work as an entrepreneur is generally unwise, and more. In my opinion Shane's conclusions do not "shatter myths," but merely reiterate what has long been known, thereby confusing his readers.

A more accurate, and less myth-making, title for this book would have been "Aggregate Data about the Self-Employed." Somewhat worryingly, this book lists "East Germany" as a "country" existing in 1999! Might there be other crass inaccuracies in it? I cannot recommend this book.
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on March 25, 2008
Basic Argument: The public, investors, and policy makers mistakenly believe a number of myths about the value of entrepreneurship for the society. Research disproves many of these myths but nevertheless shows an underlying dynamic that can improve the selection of entrepreneurial ventures that will create value for the society.

Shane identifies and discusses 67 myths and key realities (truths) grounded in fully cited research. He addresses the topic from the perspective of industries, entrepreneurial traits, startup models, financing, entrepreneurial tasks, entrepreneurial success, women as entrepreneurs, black entrepreneurs, and the value of the average startup. His definition of entrepreneur includes self-employed as well as employers who startup any type of business, thus not limiting the population to those starting firms to create new products or use new methods by Schumpeter's definition. Shane's concluding chapter provides his insight into how to select valuable entrepreneurial ventures.

Strengths: The grounding of his arguments in identifying myths and drawing conclusions as to truths is well done. He even tackled the sensitive areas of black and women entrepreneurs without inappropriate political correctness. His conclusions validate the activities of business schools, angel investors, and venture capitalists.

Weaknesses: One has to `slog' through the long discussion of myths without knowing that there is `light at the end of the tunnel' in the conclusions. He understated the distinction between entrepreneurship by necessity and by opportunity as brought out by the GEM report. (Acs 2004) This confuses the myth/truth aspect of much of his discussion.

Applicability: The conclusions validate a new direction for academic research and the appendix of cited research when keyed to the 67 myths/truths would provide valuable reference data for future work.

Useful learning: The broad definition of entrepreneur in use by the public, politicians, and occasionally academics greatly reduces the value of any popular discussion of its merits or consequences.
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on January 16, 2011
Every once in awhile you encounter a book that is flawed from its fundamental premise - this is one of those books - it's wrong from page one.

Scott Shane confuses two different types of entrepreneurship; small business and scalable startups. A small business entrepreneur is someone who is self-employed trying to build and grow a profitable business that can feed his or her family. The U.S. has 5.7 million small businesses (under 500 employees) and over 50% of Americans work in them. The return on investing in these small businesses are low, so capital, if needed is raised from friends/family or traditional bank loans. Small businesses are the heart of Main Street USA.

In contrast, an entrepreneur building a scalable startup is not interested in feeding their family. From day one, their goal is to change the world. They're looking to grow their business to 100's of millions of dollars in revenue and dominate a market or industry. In doing so they need external capital and the size of their opportunity and potential return can attract venture capital. Scalable startups are not found on Main Street. They are concentrated in a few centers of innovation. Silicon Valley, New York, San Diego, Boston, etc.

While they both use the words innovation, startup and entrepreneur - these two groups have very little in common. Their purpose, market size, business model, capital requirements, team, growth rate, etc are radically different.

By combining small business and scalable startups into one category and then trying to analyze them, graph them, plot them, bust myths about them, etc. the author falls victim to the classic "comparing apples and oranges." (Given his work with the Kaufmann Foundation I'm surprised and disappointed.)

I now use this book in my university classes as a perfect example of what happens when you can't tell the difference between small business and scalable startups.

I'll charitably write it off as a book written by academic who's never gotten out of the building.
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on December 20, 2008
Give this book to your partner as well so she/he will know what she is getting herself into before you start the business. To start, where was Shane 25 years ago when I needed him most while I was starting my first business. There was little help back then for the entrepreneur. I also completed an EMBA at an Ivey league school 3 years ago and this type of consolidated knowledge/wisdom was not available. What sets this book apart is that it is backed up by seemingly sound research and fact based evidence. So many other books on the market are anecdotal in nature that leads potential entrepreneurs (or anyone, see other reviews) astray.

I won't give all the good lessons away but here are a few:

1. People start business for one of 3 reasons: they can't find a job, don't like working for others, want to make lots of money. Which do you think is most successful?
2. Who is more successful in business on average: the software engineering startup or joe the plumber. The answer, which business would you roll $100k into if you had to make a choice between only the two. Come on, be honest with youself.
3. Why women start businesses and why they don't achieve the success that men do. They could very easily, they just have different goals.
4. Factors that will increase you success rate - gender, education, choice of industry to start a business in.
5. Entrepreneurship is like golf, looks easy but it is not. Its largely a winner take all endeavor where only a few win big. In fact he makes the argument that most people (upwards of 80%) will be better off financially as a employee given the risk/reward.
6. The correlation between country wealth and level of entrepreneurship. Hint: while the US may be the wealthiest its not the most entrepreneurial. Neither is Silicon Valley the most entrepreneurial area in the US!

One area the author misses is the toll it takes on your personal life although he does mention financial risks.
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on May 1, 2008
This is an OUTSTANDING book that should be very useful to entrepreneurs, researchers and policy makers.

The author is one of the most respected scholars in entrepreneurship. He uses a lot of research papers and industry reports to present the facts and bust the "myths" about entrepreneurship and entrepreneurs.

The book has ten chapters with a total of 67 busted myths. Chapters 2 and 7 should be very useful to entrepreneurs. Chapter 2 tells us that industry selection matters in starting a business. Unfortunately, entrepreneurs select industries that they know better and in which it is easy to start businesses. Further, most entrepreneurs don't select the most profitable industries but instead pick industries with the highest firm failure rates. Chapter 7 tells us that success depends on more important factors than entrepreneur personality or psychological traits.

The book raises some serious questions about conventional wisdoms. Here are two examples:

Concerning the typical entrepreneur, "The characteristics that make people more likely to start businesses aren't all desirable; people are more likely to go into business for themselves if they are unemployed, work part-time, have changed jobs often, and make less money. The typical entrepreneur earns less money than he would have earned had he worked for someone else and has worse job benefits."

Concerning government policy to promote entrepreneurship, "We have no evidence that in the absence of government intervention, people were creating too few businesses or that without government action the wrong firms would get started or financed. Moreover, we have no evidence that creating additional new companies is a good thing. ... there is ample evidence that when governments intervene to encourage the creation of new businesses, they stimulate people to start new companies disproportionately in competitive industries with lower barriers to entry and high rates of failure."

I find the book interesting and entertaining. It is well-written and easy-to-follow, without unnecessary academic jargons. I would highly recommend the book to anyone who is serious about entrepreneurship.
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on February 28, 2008
When I heard about this book I thought the last thing we need is one more book about entrepreneurship. There are hundreds of books on this topic, most of which glorify the practice and provide some list of 5 or 10 things to do to be successful. The problem is that most of these "success lists" are not grounded in any type of serious research and literally represent the personal experiences of the writer. This advice, though well meaning, may be as likely to lead the potential entrepreneur astray as not. I remember one successful entrepreneur arguing that the secret to success is hard work and staying the course. My response was that I knew a lot of focused hard workers who endure years of difficulty explicitly because their original entrepreneurial idea was, well, not so good. One entrepreneurs secret to success may be another's secret to years of failure.

Dr. Shane's book is different. He uses very detailed and high quality research to describe the geography of entrepreneurship. He tells it like it is. There is nothing worse than trying to get to a destination using a fictitious set of directions. Dr. Shane explores common misconceptions about entrepreneurship and then sets the record straight. This is a must read for anyone serious about the topic.
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on May 4, 2008
I was drawn to this book when Dr. Shane gave us a quiz about the FACTS of entrepreneurship. Believe it or not, although many of us might have thought we were savvy in entrepreneurship, we got almost none of the questions correct. After that, I placed a pre-order for this book and waited for months before this book was first in print and available. It was quite a worthwhile.

What we got wrong? If you read the book you will understand why many of us got them wrong. His data (much of them from public sources) basically strikes you like this:
* Can you believe the most entrepreneurial state in the US is not California, nor Massachusetts, but Vermont?
* Can you believe U.S. is not the most entrepreneurial country in the word, but instead three times less entrepreneurial than the top country? (The book uses various measures of entrepreneurial activities)
This long list of debuted myths are summarized in the end of each chapter.

Most important, each chapter explains WHY the myths turn out to be wrong. Without these explanations, the book would become simply a stack of striking facts that you found hard to believe. What makes this book highly insightful and convincing is that the author not only points out what is the truth based on reliable data, but also tells us why the surprising truth makes sense.

Certainly, to buy in his points, you need to first buy in how the author defines entrepreneurship--starting a new (for-profit) organization, including self-employment, etc. This is a fair definition in the research on entrepreneurship.

If you teach entrepreneurship or related courses, the book will be a perfect tool for you to draw students' interest. Students become more involved and learn more when their stereotype mental model is challenged with a sound reason.

One more thing to note: The author has a notable merit across his writings: clear, and easy to follow. This book is of no exception. You can easily grab what he wants to say in this book even when you read it when traveling on a plane or before going to bed.
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on October 30, 2009
The central goal of this book is to debunk overly optimistic myths about entrepreneurship in the US (and partly abroad). In doing so, however, the author effectively replaces such myths by an equally harmful proposition, namely that starting a business is statistically a bad idea (most startups go under in a few years, most business owners would be better off working for others, etc).

Although I believe academics might find his extensive bibliography research useful (hence the two stars, and not one), I question whether investors or prospective entrepreneurs would learn anything useful from this book (contrary to what is suggested by its marketing). Most of the data and discussion on survivability and profitability refer to all startups taken together-with the exception of a literally sketchy and brief Chapter 7 (see below)-and virtually no effort is made to quantify the likelihood of success for different types of business, product, service, or entrepreneur. As such, it's like looking at the face-value statistics of a marathon (most runners either don't finish or finish far later than the winner) without conditioning on crucial factors such as the level of preparation of the competitor, their diet, or how many previous marathons they have run for example. In other words, such data is of little use for the wanna-be runner who is seeking to obtain a competitive advantage in preparation for the big day.

The only part of the book where such issues are addressed is in the aforementioned Chapter 7, where the author identifies industries (e.g. high-tech) that yield a higher rate of success for startups. But then again, in the author's own words, "[...] the smart money already knows this. Just look at where venture capitalists put their money". The remainder of the chapter is rather cursory and oversimplified, at one point summarizing the findings of what seems to be hundreds of references in about one page (p. 117).

Now, even in the realm of face-value type of analysis, I have trouble following one of the central conclusions of the author, namely that business owners are worse off than workers except for the lucky ones that make it to the top decile (Chapter 6). Although the family income data distribution in Fig. 6.3 seemingly corroborates his point, Fig. 6.4 manifestly contradicts it (family wealth distribution). Indeed, if you look at the actual numbers in the reference provided by the author, the data shows that families whose head is a business owner typically accumulate ~4 times the wealth of worker families across *all* deciles.

There are other minor points that I have found distracting. First is the frequent use of "he/him/his" when referring to an entrepreneur. That is not just politically incorrect; it's also offensive for the female reader who is trying to overcome the gender bias that the author talks about in Chapter 8. Also, sometimes it's hard to know what the author is trying to convey: in page 105 he says that "People who have their own business are more likely than people who work for others to report that their work makes them unhappy or depressed", and three pages later he says that "Entrepreneurship provides a very important non-financial benefit: it makes people happier". (?!)

Perhaps this book is useful for policy makers or academics who need to quote accurate (but not necessarily constructive) statistics. But for the rest of us, the wisdom of seasoned investors and/or entrepreneurs is far more useful (see e.g. the articles by Paul Graham, from Y Combinator, or those of Greg Gianforte, author of Bootstrapping your business).
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on February 2, 2008
An excellent book separating the facts from the fairy tales (much of it promulgated by politicians, policy makers, and those of us in the business media) about what it takes to successfully launch a business in America. This is a must-read for aspiring entrepreneurs, as well as those who want to understand what it really takes to spur successful small business ownership. The chapter on what's holding back black entrepreneurs alone is worth the price of the book. Talk about a reality check!
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