October 22, 2014

The Mall Bathroom Test to Identify Entrepreneurs

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I’m often asked to list the characteristics that can be used to identify entrepreneurs from the rest of the population. Many people have a belief that entrepreneurs are very different from the rest of us. They are thought to be more passionate, creative, innovative, risk taking, driven, optimistic, and so on, than other people.

The conventional wisdom is that the key attributes that predict whether or not a person becomes an entrepreneur lie in his or her psychology and mindset.

There’s only one problem, a person’s psychology and mindset are not very good predictors of who becomes an entrepreneur and who doesn’t. When researchers have examined the differences between entrepreneurs and non-entrepreneurs on a number of psychological characteristics in carefully conducted studies, they have found that psychological traits are far down the list in terms of what characteristics have the most predictive power.

Much more predictive than psychological traits are demographics like age, race and gender. This leads me to the title of this post.

If you want to predict who is an entrepreneur and who is not, the best test I know of is to go to the nearest mall and stand in front of the rest rooms. If you say that everyone going into the men’s room is an entrepreneur and everyone who goes into the ladies room is not, you will have a more accurate prediction than any psychological test available.

I’m not saying that no women become entrepreneurs and that all men do. But the fact that men are twice as likely as women to start businesses means that gender is a better predictor of who becomes an entrepreneur than any psychological attribute.

Maybe this just means that we’re not very good at predicting who will become an entrepreneur. Or maybe it means that we have a societal problem of too few women starting businesses. Probably both. But it also means that we need to think about things other than psychological traits we try to explain whether or not people start businesses.

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About the Author: Scott Shane is A. Malachi Mixon III, Professor of Entrepreneurial Studies at Case Western Reserve University. He is the author of eight books, including Illusions of Entrepreneurship: The Costly Myths that Entrepreneurs, Investors, and Policy Makers Live By; Finding Fertile Ground: Identifying Extraordinary Opportunities for New Ventures; Technology Strategy for Managers and Entrepreneurs; and From Ice Cream to the Internet: Using Franchising to Drive the Growth and Profits of Your Company.

28 Comments ▼

Scott Shane


Scott Shane Scott Shane is A. Malachi Mixon III, Professor of Entrepreneurial Studies at Case Western Reserve University. He is the author of nine books, including Fool's Gold: The Truth Behind Angel Investing in America ; Illusions of Entrepreneurship: and The Costly Myths that Entrepreneurs, Investors, and Policy Makers Live By.

28 Reactions

  1. Scott,

    LOL that’s interesting!

  2. Glib and full of assertion.

    You say “When researchers have examined the differences between entrepreneurs and non-entrepreneurs on a number of psychological characteristics in carefully conducted studies, they have found that psychological traits are far down the list in terms of what characteristics have the most predictive power.” – Please quote your sources.

    We can debate why there are fewer female entrepreneurs (and politicians, and bankers, and brick layers, and head teachers, and mass murderers, and authors of blogs) than males. But that does not mean that there are not, in addition, character traits that typify the entrepreneur (as opposed to the “owner manager” or employed “managers” – who are also more often “male” than “female”).

    Burns (Entrepreneurship and Small Business) quotes various studies to identify various traits. However, my favorite definition is from John Bird, founder of The Big Issue, who described the entrepreneur is a driven and flawed character – “An entrepreneur is somebody who *sometimes* gets it right. They are like a dog with an itchy rear. They are always coming up with ideas. They are always running here and running there. They are not very happy people. Otherwise they would settle down and get a real job.”

  3. Are there any statistic that reflect circumstances such as startups following a job loss, single or married, children or no children. Necessity is the mother of invention.

  4. I would have thought that as entrepreneurs are human beings it is a combination of factors which may change over time due to economic and social conditions etc.

    Are there any statistics that show the factors for successful entrepreneurs versus those who just become entrepreneurs but may fail again and again.

  5. Susan,

    There are a bunch of factors associated with being a successful entrepreneur. I will post some next week.

    Gary,

    Being unemployed increases the odds of starting a business, as does being married (the latter isn’t just necessity, though, it is also related to spousal health insurance).

    Adrian,

    I’m not putting footnotes in a blog post. You can find them in my books and articles.

  6. Wow! Now THAT was a title! I defy anyone not to read on after seeing that in their reader…

  7. Andertoons, I agree! Even on vacation, I had to stop and read — the title is not something you can avoid.

    Scott, much as I’d like to disagree with you purely on principle (i.e., the gender part), unfortunately I have to agree. As Susan alludes, maybe it has something to do with raising the kids and other life factors. Anecdotally, I have noticed a lot more women getting more serious about entrepreneurship later in life.

    Anita

  8. Anita,

    The data agree with you. There is definitely a statistical relationship between the hours spent by women on childcare and household responsibilities (greater than men) and odds of starting a business (lower than men). Also the lower number of hours women spend on their businesses is related to their childcare and household responsibilities and accounts for a good portion of the difference between men and women in performance of new ventures (on average). There is also some evidence of shifting upward in the rate of starting businesses when women reach ages when having small children tends to decline, but this is tempered by a high rate of self-employment through home-based businesses. The data show that it is easier to work at home by having one’s own business than by working for someone else.

  9. A true entrepreneur (male or female) would come up with a business outside the bathroom. How about giving out anti-bacterial moisturized paper napkins?! ;) On the package it would be printed an URL for the entrepreneur test.

    http://yalepress.yale.edu/yupbooks/entrepreneurshipquiz.asp

  10. This is a fantastic discussion. Like all discussions about entrepreneurs – I think we need to get a good definition of entrepreneur. To me, for example, an entrepreneur is someone who has a UNIQUE idea about a product, service, offering, or business model and launches a business around it. In my mind, a buying a franchise doesn’t count because it’s an existing model (that’s just me, though). The same holds true with home based businesses. For example, I’m a strategy consultant that works from home. Not a new business, not a new model, nothing other than being incorporated would designate me as a “business” – so I don’t consider myself an “entrepreneur.” I’m’ curious about how the rest of you define entrepreneurship.

  11. Very interesting. I would have to agree that women often have just too much on our plates. With children and household duties, we rarely have time for ourselves let alone start a business.

  12. As a guy juggling both a business and being a stay-at-home-dad, I dunno what to make of this. Pretty interesting though…

  13. As some have already alluded, the fact that most women have much more on their plates to handle than men (with kids, family, etc), makes it understandable that there would be more male entrepreneurs rather than women. Though this reasoning should be notes in an article pointing it out – it’s not that women do not have the abilities, it’s just that traditional/cultural circumstances makes it the way it is… unfortunately.

  14. Hai,

    I am really aghast at this inference that women are less likely to become start a busines. Give me a few days and i will show you statistics of the opposite. Infact, in India, women cherish work -life balance and the man more often does the boring thing of going to a regualr job. Many well accomplished women have started and are thriving in a business of their own . I have found the trend to be the same world over. I am not will to make blanket statement without sources like our professor. But being a women I am quite amused that such notions are being entertained by educated men in very advanced countries.

  15. This is quite interesting. I always say that the corporate world is a man’s world – and unfortunately, it seems that may still be true. Because of children, husband’s and rearing a family, it seems this could be the case. However, it may also be an indicator that’s it’s still more difficult for a woman to succeed in this world than it is for a man. Not real sure how I feel about this quite yet – but interesting, indeed. . .

  16. Our technology driven society has turned too many things into statistics. Horse racing favorites win one in three and the best team or player does not always win.

    During a local seminar that highly successful entrepreneurs participated in, the speaker asked those who had straight A’s or made honor roll in high school to raise their hands. Few did. He then asked for those who expected their children to make straight A’s or honor roll to raise their hands and most did. The speaker then asked, “What is wrong with this picture”?

    Whenever asked for career advice my recommendation is, decide what it is you love and are passionate about, figure out how to make money at it, and do it with people you enjoy being with.

    We trained our children to be independent by giving them jobs instead of an allowance, matching money they put in the bank, and allowing them to fall down and pick themselves back up. We instilled confidence that they could do whatever they want and tried to temper that with enough common sense that not everything is worth doing.

    Our two daughters dance professionally and supplement their incomes with a free, entrepreneurial and feminine spirit. They began dancing for the Charleston Ballet Theatre at 17 & 18. One currently serves as a missionary in Brazil, spent two months in the Amazon last year, continues to dance and teach, and raises all of the money on her own. They both make jewelry with plans to turn that into an enterprise when their dance careers are over. During the summer, which is the off season, they run a kitchen for a backstage catering company at music festivals. They are not following traditional career paths, are doing what they love with people they enjoy working with, and they have a vision.

    IMHO, statistics and demographics serve a wonderful purpose; they are a beginning, not an end. The entrepreneurial spirit emanates from the human spirit, which is unquantifiable and should be nurtured, not measured.

  17. BTW, my wife owns and operates a successful dance school with a unique vision. That’s three out of three women in our family. We beat the odds!

  18. Defining the characteristics of an entrepreneur is increasingly becoming more difficult. Stay-at-home moms are starting their own in-home businesses. Groups and organizations such as Women Entrepreneurs of Canada, Women in a Home Office, Diserving Divas, and Company of Women all show the growth in women business owners. Statistics show that more and more women and minorities are starting their own businesses, especially with the help from firms like BizLaunch (www.bizlaunch.ca) and Cyberbahn. Stats Canada says:

    -There are 821,000 women entrepreneurs.

    -Since 1976, the average annual growth rate of self-employment for women has been 5.3%, compared with 2.2% for men.

    -Between 1981 and 2001, the number of women entrepreneurs in Canada increased 208%, compared with a 38% increase for men.

    It’s a safe assumption to say that the characteristics of the entrepreneur are changing and becoming harder to define.

  19. Scott, Anita et al,

    Even though investing in a franchise is not pure entrepreneurship, it is still a risk taking action. Most of my face to face appointments are with men. {Well actually 90% of them}

    Having said that, whenever I do get the chance to help a victim of corporate downsizing that happens to be a woman, I really look forward to our meeting. In my experience, once a woman latches onto a franchise concept that I have in my repertoire, that is a nice match for her, she goes all out, and her tenacity to get all the facts during the due diligence process is quite remarkable. I wish I had more potenetial franchise candidates that were women. They do a nice job…

    Joel Libava
    Franchise Selection Specialists inc.
    Cleveland, Oh

  20. There are a lot of options out available for home based businesses, but I find that I am not quite sure as to what I want in a home based business. I appreciate sites like this for ideas, feedback, and to meet different people with different ideas to see what works best! Thanks!

  21. Non-Employment is not that much of a problem if I am rich enough to implement and then finance my own ideas. I agree that women prove to be better businessmen if they get the chance. Entrepreneurship is a combination of Luck+Money+Time+Education.
    Personality works parallel. This is what I think!

  22. In my field, at least, women are far less likely than are men to speak at conferences, establish blogs, and generally get out in public and say their piece. Being busy with family is only one cause of our invisibility. There are societal expectations and pressures as well.

  23. From my opinion almost everyone may become an entrepreneur due to some certain circumstances. I am speaking about such cases when, for instance, a human loses his job, has many kids and needs to search some additional source of profit. Yes, the women are found as entrepreneurs much less, but do you know how much she should take care for: household duties, children, husband, etc But if the woman starts her own business she succeeds for sure. We, women, are used to do any thing with great care and devotion.. However I cannot ague that the very males dominate in business. What to say?? We’re living in the man’s world

  24. Say 90% of entrepreneurs (for some definition) are male. But only 10% of the population generally is an entrepreneur. With these close-enough numbers, sex only correctly predicts entrepreneurship 9% of the time and correctly predicts non-entrepreneurship 49% of the time. Whether there’s no better predictor is a matter of evidence, and I’ve never seen the evidence of other methods of prediction to know. But the implicit idea that sex is a good predictor of entrepreneurship doesn’t hold up.

  25. No, no, no! Bad maths!

    The percentage of people that are entrepreneurs is small. Let’s be generous and say that it’s about 3% of the workforce. That means that for every 100 able-bodied workers that enter the bathroom, and assuming an equal male-to-female ratio, you will have 48 men that are incorrectly labelled as entrepreneurs, and one woman that was missed, which in turn means that the estimate was correct 51 times out of a hundred.

    I can do better than that simply by saying that NO-ONE that goes to a mall bathroom is an entrepreneur. I’d have a 97% success rate! Does this mean that we can validly draw the conclusion that there is a problem in the bathroom-attending population that we should correct if we want to improve the rate of entrepreneurship?

  26. Demallien and Joshua,

    Thanks for allowing me to clarify. What I said was “If you say that everyone going into the men’s room is an entrepreneur and everyone who goes into the ladies room is not, you will have a more accurate prediction than any psychological test available”. Gender is a better predictor than any psychological test. Since you have no information about the psychological test distribution, you can’t make a statement about whether it is better or worse predictor than gender. It’s better.

    You rightly pointed out that I badly phrased the preceeding sentence. “If you want to predict who is an entrepreneur and who is not, the best test I know of is to go to the nearest mall and stand in front of the rest rooms.” I gave the impression that this is a good test in an absolute sense. You are right. It is not.

    As Joshua pointed out, the correct prediction rate for entrepreneurship (his estimate is pretty close on the percentage of people who are entrepeneurs) isn’t very high in an absolute sense.

    I wrongly gave the impression that gender is an accurate predictor. It’s not, it’s only good in a relative sense (better than any psychological attributes). Thanks for the correction.

  27. Hi Bhuvana, I certainly did NOT mean to suggest that women shouldn’t become entrepreneurs. I know many who do — and wish many more women would because I happen to think entrepreneurship is a more fulfilling working experience in many dimensions, than being employed.

    It’s just that I’ve noticed that not as many women in young adulthood choose entrepreneurship as men, especially during times when family responsibilities are at their height.

    Later on I think that becomes a different story, and I see a lot more older women trying their hands at entrepreneurship.

    In the U.S. between working and commuting and all the accoutrements of raising kids it can be pretty exhausting to start a business on top of it all. There’s a lot to be said for the American lifestyle, but unfortunately a balance between life and work is not among them.

    Consequently, it takes a special person to be able to raise young kids and start and run a business at the same time — it’s a tough juggling act.

    Does it ever happen? Sure — it happens. But it’s not for the faint of heart, either.

    Anita

  28. The title was too good to ignore. Like Martin L, I would’ve thought it involved people using the mall bathroom as a venue for selling something (shades of The Apprentice).

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