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How can you create successful entrepreneurs? | by Christian Soschner | June 2022

Do you want to invest in startups? Read it.

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Have you ever wanted to become a successful entrepreneur like Jeff Bezos, Steve Jobs or Elon Musk?

Have you dreamed of creating a hero story in your life, like conquering outer space? Similar to what Elon Musk is doing?

Or do you aspire to help founders create great success stories as investors?

I bet many readers here on Medium have pondered such questions once in their life.

If only I could help create a successful, world-changing startup…

Sorry to tell you that; most people who start venturing into the world of entrepreneurship are doomed to fail. Again and again.

Nine will not return from the corporate battlefield, and only one will succeed.

But he and his investors have a 1% chance of becoming successful entrepreneurs. And maybe one of those 1% is the next Elon Musk.

Most successful founders won’t bring home great stories; 99% will “just” create average boring businesses and not big hero stories that excite hundreds of millions like Jeff Bezos did with Amazon.

This is why there is only one Jeff Bezos and not Millions. Do you remember the beginnings of Amazon?

They were the first to sell books online, but since it was just code, it was easy to copy. Many online bookstores popped up, but only one survived long term with a market capitalization of over $2 trillion.

The big question in the room is:

Are such extraordinary founders born, or can investors help create them?

Investor Mar Hershenson addressed this topic at the all-in summit in a keynote.

Mar Hershenson started the VC Pear startup stage, and before that he started 3 companies as a founder and taught engineering at Stanford University for over ten years.

The question is big and important:

Can investors do anything to help founders become extraordinary entrepreneurs?

Can founders grow?

Here is Mar’s response:

Mar presented data showing that

42% of successful founders started their business when they were kids

A metric that every investor should check before investing.

This doesn’t necessarily mean that a founder who starts a business later in life automatically fails, but the likelihood of success increases when at least one founder starts early in life.

37% of successful founders are repeat founders and 59% of top unicorn founders are also repeat founders

The data suggests that certain things can increase investors’ chances of success.

Mar presents the success data of his investments:

  • 2 in 10 startups fail no matter what investors do
  • 2 will succeed no matter what investors do
  • in 6 companies, investors can influence success

This is a high percentage in which investors can help create successful entrepreneurs.

So what can they do? How can investors build entrepreneurial machines?

10% of all Unicorn founders are Stanford graduates.

Why is Stanford so successful?

On the one hand, Stanford has a long-standing reputation for entrepreneurship that brings together peers and skills in one place. The story helped build a brand, the right network and attract capital and opportunity.

Mar explains that peers and networks matter the most to the success of startups. Being close to Stanford increases the chances of being surrounded by people who are always thinking about starting new businesses.

When I entered the first spin-out of a large company in 2006, we had just created a department.

No one was talking about StartUps or offering places in incubation or acceleration programs to help the founding team get off to a good start.

Leading a team that moves from a department of a global company to a legal entity with no connection to the company is a huge cultural shift.

It doesn’t matter whether people are starting something from scratch or trying to take off after a spin-out phase – both situations present unique challenges.

In the United States, Y-Combinator launched the first seed-stage startup program. The initiatives in Europe were mainly public grants and loans. I have always wondered, besides the injection of capital, is there an added value of public and private incubation programs?

Mar says yes. Here, studies show that the simple fact that founders can sit down together and discuss their successes and failures helps increase the success rate.

In a program for women founders, Mar reported that of 78 women who participated, 45 started a business and 35 raised more than $1 million in capital.

This is an above average number.

As a student and member of a fraternity, I had a similar experience. We were about twenty economics students who met regularly at events. Once or twice a week, we discussed what we had learned in university and we exchanged our notes – it was the beginnings of the Internet.

And guess what? All the students passed all the exams and were successful in their careers.

The key word here is peer learning, and it works.

Investors should strive to bring their founding teams together frequently and have them have open and honest conversations about their successes and failures.