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Howard Steven Friedman

Howard Steven Friedman

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Gladwell's Views on Entrepreneurs

Posted: 03/31/11 03:39 PM ET

Last night, I was privileged to listen to Malcolm Gladwell discuss innovation at an ICAP Ocean Tomo dinner for entrepreneurs. In his speech, he proposed that innovators are operationally conservative but socially nonconforming. This contrasts with the vast majority who tend to be socially conforming -- constantly looking for acceptance from their families, peer groups, co-workers and even strangers. The operationally conservative part of innovators specifically refers to the idea that innovators are better at identifying the true risk of a situation and are more willing to fail than others.

One example he gave was Ted Turner. Turner had inherited Turner Advertising Company, a highly profitable billboard business from his father. In 1969, Turner purchased a defunct television station and put it back on the air with inexpensive programming while promoting it using his billboard business. The synergies between his businesses helped this television station eventually became the super-station, a cash machine which funded many of his future ventures. Operationally, Turner's move into a defunct television station was conservative in that he understood the synergies between the billboard and TV advertising business, but socially he was highly criticized in the Atlanta business community. Additionally, Turner's outspoken personal style has continued to earn him public enemies but his business moves have generally been built on carefully analyzed insights.

Mark Zuckerberg fits this model of operationally conservative but socially nonconforming as well. Zuckerberg founded Facebook in 2004. Soon after, he dropped out of Harvard and moved to California to pursue his business goals. Dropping out of school is generally socially nonconforming as so many of us are pushed to graduate from top colleges and graduate schools. For Mark, dropping out may have been particularly nonconforming given the significant educational accomplishments of his family -- his father is a dentist, mother a psychiatrist and he had recently graduated from the prestigious Phillips Exeter Academy. But operationally, dropping out was reasonably conservative. Zuckerberg had interest from entrepreneurs like Sean Parker and investors such as Peter Theil (who invested $500,000 by late 2004), there was good reason to feel confident in the customer base growing (based on initial successes like Facemash and the limited version of Facebook that was operational) and he could re-enter a top university sometime in the future if Facebook failed.

There is selection bias in Mr. Gladwell's discussion, much like in his book Outliers. After all, his lecture focused on examples of successful innovators, with no discussion of those who misestimated risk and failed perpetually. Nonetheless, there is a broader point about social conformity. How often do we avoid taking an action not out of the fear of failure itself, but rather out of the fear of other people's opinions of our failure?

On a personal note, my greatest regrets have never been in my abject failures, but rather in the times where I simply didn't try.

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