When we asked respondents in our annual State of Small Business survey which television show best captures the essence of starting a company, the majority predictably chose Shark Tank. But a sizable minority were peeved that we had even asked the question.
“Entrepreneurs don’t have time to watch TV,” wrote one. “I don’t have time to watch that crap. I am running a business,” wrote another. “No TV show can capture what’s its like,” said a third. And so on, and so on.
Certainly television--with its emphasis on neatly timed dramatic twists and emotionally satisfying conclusions--offers a gross over-simplification of business-building. But a greater distortion involves the popularity of entrepreneurship overall. Television and other media convey the impression that every third American is an entrepreneur: If you don’t own your own restaurant, tattoo parlor, or pawn shop then you’re not really trying. Silicon Valley’s royalty, meanwhile, have joined movie stars in the ranks of camera-ready Californians gracing ubiquitous magazine covers.
Yet out here in the real world, business starts have been declining for years. Recently, the number of companies dying surpassed, for the first time, the number launching. Duck Dynasty and Welcome to Sweetie Pie’s notwithstanding, in 2013 the percentage of families owning businesses was the lowest on record. How to explain this disconnect?
Patricia Thornton, a professor at Duke’s Fuqua School of Business, says that when the media hypes entrepreneurship “featuring only success stories and not the ups and downs and failures,” it creates a split between “motivation” and “justification.” Motivated people are real entrepreneurs, willing to endure almost anything to make their dream of business creation a reality. The justifiers, by contrast, like to think of themselves as entrepreneurs because the media has told them it’s a cool identity. Justifiers are “the tire kickers,” says Thornton. “When any phenomenon becomes buzz it attracts people who do not have the right stuff to take the risks and do the hard work.”
To the extent that popular culture deludes people about entrepreneurial health, that’s a problem. It’s tough to focus the public’s attention on issues of obvious scarcity, tougher when that scarcity is hidden by the misperception of amplitude. “People in Boston and New York and San Francisco look around and say, ‘how can this be? There are startups everywhere,’” says Ian Hathaway, founder and managing director of the economics consultancy Ennsyte, who studies trends in business formation. “Or they say, ‘who cares? We don’t need more mom and pops.’ But high growth firms come in all shapes and sizes. You don’t know who is going be a massive high-growth company that creates a lot of jobs and value.”
Hathaway calls the decline in entrepreneurship a damper on economic dynamism and, potentially, on productivity. High-growth companies, he says, have been particularly affected. “You’re seeing that those firms make up a smaller portion” of the young-business population, says Hathaway. “It’s not just that we’ve got fewer shots at the goal. It seems like the shots on goal are getting in less.”
The good news, says Thornton, is that for real, motivated founders, the cultural embrace of entrepreneurship creates “an environment that is more supportive of them.” But don’t let all those people kicking tires fool you into thinking we’ve got enough cars on the road.