Guest Post: Entrepreneurs don’t have a special gene for risk—they come from families with money

Many of us think millionaires have a kind of self-motivation and hard work not given to others, but this article here identifies the game changer. So, if you want to be a millionaire, part of your hard work should be to save money, lots of money to venture. Money is the thing that separates millionaires from attempters. So does this article by Aimee Groth accessible on reveals. http://qz.com/latest/

Guest Post: Entrepreneurs don’t have a special gene for risk—they come from families with money

 BY

Aimee Groth

We’re in an era of the cult of the entrepreneur. We analyse the Tory Burches and Evan Spiegels of the world looking for a magic formula or set of personality traits that lead to success. Entrepreneurship is on the rise, and more students coming out of business schools are choosing start-up life over Wall Street.

But what often gets lost in these conversations is that the most common shared trait among entrepreneurs is access to financial capital—family money, an inheritance, or a pedigree and connections that allow for access to financial stability. While it seems that entrepreneurs tend to have an admirable penchant for risk, it’s usually that access to money which allows them to take risks.

And this is a key advantage: When basic needs are met, it’s easier to be creative; when you know you have a safety net, you are more willing to take risks. “Many other researchers have replicated the finding that entrepreneurship is more about cash than dash,” University of Warwick professor Andrew Oswald tells Quartz. “Genes probably matter, as in most things in life, but not much.”

University of California, Berkeley economists Ross Levine and Rona Rubenstein analysed the shared traits of entrepreneurs in a 2013 paper, and found that most were white, male, and highly educated. “If one does not have money in the form of a family with money, the chances of becoming an entrepreneur drop quite a bit,” Levine tells Quartz.

New research out this week from the National Bureau of Economic Research (paywall) looked at risk-taking in the stock market and found that environmental factors (not genetic) most influenced behaviour, pointing to the fact that risk tolerance is conditioned over time (dispelling the myth of an elusive “entrepreneurship gene“).

Resilience is undoubtedly a necessary trait for success; many notable entrepreneurs experienced success only after leading failed ventures. But the barrier to entry is very high.

For creative professions, starting a new venture is the ultimate privilege. Many start-up founders do not take a salary for some time. The average cost to launch a start-up is around $30,000, according to the Kauffman Foundation. Data from the Global Entrepreneurship Monitor show that more than 80% of funding for new businesses comes from personal savings and friends and family.

“Following your dreams is dangerous,” a 31-year-old woman who runs in social entrepreneurship circles in New York, and asked not to be named, told Quartz. “This whole bulk of the population is being seduced into thinking that they can just go out and pursue their dream anytime, but it’s not true.”

So while yes, there’s certainly a lot of hard work that goes into building something, there’s also a lot of privilege involved—a factor that is often underestimated.