Dustin Allison's Reviews > The Illusions of Entrepreneurship: The Costly Myths That Entrepreneurs, Investors, and Policy Makers Live By

The Illusions of Entrepreneurship by Scott A. Shane
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Apr 23, 08

Read in April, 2008

This book was very informative, but way too negative. The author clearly had strong views about the myths associated with entrepreneurship that he shattered with loads of data. The problem I had was was with the myths he labled as commonly held beliefs. As someone who has read a lot about entrepreneurship in the last few months, I was confused by many of the "illusions" the author was debunking. Every book I have read so far talks about how difficult it is to run a successful start-up, and how the great majority of them fail.

It also seemed like the author tailored and tweaked the "illusions" to fit the data he had a available. For instance, the author quotes some business website in Dallas as saying entrepreneurs should be willing to take risks, be self-starters, good salesman and so on. But then goes on to debunk this illusion with data showing that the typical entrepreneur is none of those things. This irked me because I don't think the website was making the claim, or perpetuating the illusion, that the typical entrepreneur has those traits. Rather, I'm fairly certain that the website, and others like it, were listing traits that would help you succeed as an entrepreneur. Now the author does go into what a successful entrepreneur looks like, but largely discounts psychological reasons because, I suspect, he wasn't able to find a way to quantify those kind of traits.

All in all though, this book is full of valuable statistics for the would be entrepreneur. Just don't think statistics tell the whole story like the author does.
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message 1: by Brayden (new)

Brayden Yeah, I agree with you about Shane's overall take. It seemed that sometimes he created myths to make his numbers look more meaningful. But still I found the mounds of quantitative evidence to be really useful. If you're an aspiring entrepreneur, it would help to know the kinds of conditions that would most likely lead to success. You can be more strategic if you go in with your eyes open and aware of the probabilities of success in different scenarios (this is, after all, what other risk managers, like the guys who manage hedge funds, do). The problem is that the average entrepreneur doesn't pay enough attention to the market conditions and instead jumps in thinking that success is entirely driven by what they do. I summarized some of this in a blog post: http://orgtheory.wordpress.com/2008/0...

Incidentally, in this book I'm reading now about the restaurant industry, the writer describes new restaurateurs in a very similar way. Most new restaurant owners enter the market knowing a great deal about cooking, hosting, providing good service, etc., but they don't know nearly enough about their market and they tend to enter crowded markets. Bottom line: if you enter a crowded market, your chances of success are already significantly lower than you'd probably like. The best restaurateurs are those people who have tons of experience in working in the restaurant industry (as GMs or as chefs) and have figured out how to differentiate themselves in the very beginning.



Dustin Allison It's possible my review sounded a little more negative than it should of because I too found his data very informative. In fact, his data validated my own strategy: get more education (law school/?MBA), work for a good company, and then see what the market possibilities are at that point.

I think I was mostly bothered by his tone, but his lack of regard for the majority of small businesses coupled with his conclusions about what to do about entrepreneurship, also drove me crazy. Basically he thought that policies designed to help all small businesses were counterproductive since so few of them create any real benefits. In his mind, current policies are likened to "throwing mud at a wall to see what sticks." His remedy called for the government to play a more active role in finding worthy entreprenuerial activities.

This was a scary idea for me. Maybe it is the case that governments can do more to create more productive companies--"The People's Coporation of China" is doing pretty well right now. However, what "sticks to the wall" in our country is pretty impressive, and I'm pretty confident more government intervention would only create a decidely "unsticky wall".


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