10 misconceptions about great Silicon Valley entrepreneurs

Technology journalist Sarah Lacy debunks 10 misconceptions about great entrepreneurs

Having interviewed some of the biggest names in Silicon Valley, technology journalist Sarah Lacy has learned the most common misconceptions about great entrepreneurs the hard way

I have a pretty awesome job. From my home in Silicon Valley, I’ve spent the last 10 years meeting, schmoozing, interrogating and arguing with some of the best entrepreneurs on the planet. Of course, that makes it a trying job at times, as truly great entrepreneurs are frequently temperamental, acerbic, competitive and demanding.

The highlight of my career, so far, was spending a year chronicling the rise of some of the hottest Web 2.0 companies, just as the wave was exploding, for my book, The Facebook Story. I spent hundreds of hours interviewing the founders of companies like Twitter, Slide, LinkedIn, Ning, Digg and, of course, Facebook, and developed a deep love-hate relationship with each subject. In the process, I learned a lot about what truly makes great entrepreneurs tick.

The following is a list of 10 big misconceptions about great entrepreneurs:

1. They are all geniuses

Alright, some entrepreneurs are geniuses. But even then, that’s not really enough. Building a company can take years – even decades – of hard, 24-hours-a-day, seven-days-a-week work. It’s frequently gruelling and tedious drudgery. Being street smart and the ability to scrap matter more than IQ or being well read. This is why, almost universally, great entrepreneurs come from pretty modest backgrounds, not trust funds and prep school.

2. Innovation beats execution

People want to think the key to Silicon Valley is that over-used buzzword ‘innovation’. It’s not, it’s execution. Almost all of the great companies weren’t necessarily doing something new, they were just doing something better. Think about Oracle, Microsoft and Google – even Facebook. Larry Ellison ripped off the idea of the structured database from a paper, Bill Gates ripped off the best parts of Windows from Apple, which ripped them off from Xerox PARC, and Google was hardly the first company to build a search engine.

Facebook was so late to the social networking game it was laughed out of some venture capital offices. Want to see some innovators? How about TiVo, Napster and BetaMax. It’s not the idea in Silicon Valley, it’s what you do with it.

3. They’re motivated by money

People always get this wrong. Just because great entrepreneurs can make more money faster than nearly anyone else in the economy, doesn’t mean that’s their goal. Money is just a way of keeping score. With the exception of Larry Ellison, go to most great entrepreneurs’ homes and you’ll be shocked at how modest they are. Open their closets and you’ll be more shocked.

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Compare that to the lifestyles of Hollywood or Wall Street, where the dollar amount of top success is typically an order of magnitude lower. The entrepreneurs who are motivated by money almost never succeed, because the nature of entrepreneurship is being willing to risk everything to win. Entrepreneurs are often geeks who happened to hit it big. Most of the things ordinary people assume they’d do with wealth – date models, buy a huge house, quit their job – are things that don’t typically appeal to entrepreneurs.

4. They play fair and by the rules

Silicon Valley doesn’t get off on Machiavellian games, but that doesn’t mean our entrepreneurs play fair. Remember, most of these guys grew up hacking, and fun for them isn’t just winning, it’s outsmarting the game.

5. They are nice people

When they hear about negative personality traits from great entrepreneurs, people are often shocked. Steve Jobs is mean? Larry Ellison is a womaniser? In my experience most great entrepreneurs are so intense, driven and competitive that they’re not ‘nice’ in the classic sense. You just learn not to take it personally, because it almost never is personal.

6. They spin out of universities

For some reason, people look at the Valley and assume all these entrepreneurs are the products of our excellent universities, such as Stanford and Berkeley. Maybe that was the case a few decades ago when Silicon Valley was just starting to develop, but not now. If this myth were true, Boston would be a more competitive hub for innovation than it is.

This will get my tyres slashed in the Valley, but Stanford could burn down and you’d still get great companies. Silicon Valley has become a destination, and most of its best entrepreneurs never could have afforded an Ivy League education to begin with. The Stanford kids who do start great companies tend to be drop-outs.

7. Serial entrepreneurs are inherently the best

This is perhaps the biggest myth inside Silicon Valley. The biggest and most successful tech companies are the ones where the founder stays in a key c-level role throughout the company’s life. Think Apple, Oracle, Amazon and Hewlett-Packard when it was at its zenith. And if Mr Serial Entrepreneur is so great, why is he available to start another company? Don’t get me wrong – one of the best things about the Valley is not penalising entrepreneurs for taking risks and failing. But some just failed because they simply sucked at it.

8. They’re risk takers

I know few entrepreneurs who spend their time wrestling lions or jumping off buildings. But most didn’t start their companies because they were thrill seekers by nature. It’s just that when they see an opportunity so clearly that no one else gets, they can’t not pursue it. To them, it’s not risky. Great entrepreneurs see the world a different way.

9. They dream of going public

When I first moved to Silicon Valley, everyone had the same barometer of what success meant: an initial public offering. Not anymore. The allure of going public has been replaced with a disdain of living your life on a quarter-to-quarter basis, spending more time with investors and analysts than engineers or customers – and, of course, the dreaded costs of being Sarbanes Oxley compliant.

By and large, entrepreneurs are still mid-hangover of the drunken euphoria of the late 1990s Nasdaq run. That’s a big reason why everyone sells these days, so what ‘success’ means to entrepreneurs is a lot more nuanced. Sometimes it’s making enough money to give you enough financial security to play by your own rules. Sometimes it’s building something that has a huge impact. And sometimes it’s just pure ego. Frequently, it’s a mixture of all of the above.

10. Silicon Valley ones are unique

My second book is about entrepreneurs in emerging markets, so I’m spending roughly half my time in other countries these days. People always ask me how entrepreneurs in the Valley are different from their counterparts in London, China or Rwanda. The truth is, they’re not. There are just more of them. It doesn’t matter what place or what industry, a great entrepreneur is one that fundamentally looks at the world through a slightly different lens and can’t help but act on what he sees.

Sarah Lacy has been a business reporter for 10 years, most recently covering technology for Business Week. She is also Silicon Valley host of Yahoo Finance’s Tech Ticker and blogs for TechCrunch. The Facebook Story is published by Crimson. www.crimsonpublishing.co.uk


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