Fifty-five percent of businesses such as, restaurants, gas stations and shops fail within the first five years and by the tenth year, seventy-six percent of all those businesses are gone. For forty-six percent of them, the failure is due to incompetence and, for thirty percent it is due to lack of managerial experience.
Entrepreneurs are often blind to the risk of starting a new firm, especially when the business they pursue is new to the world, such as a breakthrough innovation and the statistics are even worse for innovative new business startups. Venture capital firms (VC) expect a ninety-five percent failure rate. If VC's find a venture too risky, then its odds are effectively miniscule. Why then do we hail entrepreneurs as the lifeblood of society and why does our government pour taxpayer money into these 'most likely to fail' new enterprises? With these statistics, is there any reason at all for a sane person or organization to start a new firm? Not even banks will invest in projects like these!
Entrepreneurial endeavors are not much different from the theory of evolution, where most new species end up as someone else's dinner. The outcome is good for the collective but is a miserable deal for the individual entrepreneur. He or she may not be literally eaten, however they will most likely lose their savings, retirement, home and maybe even their marriage and their children's' future educational funding in the process.
What keeps us blind to the lousy odds is biased sampling since only the most successful entrepreneurs make it to the front page of public attention and then they are worshiped like gods. Apple's Steve Jobs, Google's Larry Page and Sergey Brin and Facebook's Mark Zuckerberg, have become icons of business success, overshadowing the thousands who were left wasted by the roadside. The returns are visible, but not the cost of those returns.
This entrepreneurial lemming-effect feeds off our values, beliefs and attitudes making our behavior work in favor of society's evolution. In the Western world, we are raised to value risk-taking, hard work, perseverance and money. We believe that everyone has a chance to make the leap from rags to riches and our ingrained attitude is that of "go for broke and don't let the naysayers discourage you."
With these miserable prospects, what is the upside of entrepreneurship that outweighs one's reason and accountability? Some of us just come programed with the need to dream, explore boundaries and to be continuously challenged. This is what brought the Vikings to Greenland and Newfoundland, while losing fifty percent of their crew and ships in the dark, ice-cold Labrador Sea. It was resilience that made these entrepreneurs build more ships and continue their explorations in the face of these obstacles.
Perhaps these are not the actions of rational, accountable individuals, however, they are still remembered more than a thousand years later. While few of these savage entrepreneurs are known personally, they live on forever as an idea that inspires dreams and changes lives. Most importantly, their lives had meaning, love, courage and accomplishments and through living just outside the edge of what is possible, they felt alive.