The Reason Entrepreneurial Learning Matters

I'm going to argue that tackling entrepreneurial learning will have a positive impact on the unemployment and underemployment problem. While I've spent way too much time researching for my thesis regarding entrepreneurial learning, I began asking myself why I should tackle entrepreneurial learning as a thesis. I've tried sketching an argument to explain to myself the importance of entrepreneurial learning, and why it's relevant to our current society:

To put this thesis into the context of the current economic climate, my generation, those people graduating post-crash, is having difficulty finding their way into established companies. According to the Bureau of Labor Statistics, the fourth quarter of 2011 had unemployment rates amongst those aged 16 to 19 at 23.6%, those aged 20 to 24 at 14.2%, and those aged 25 to 34 at 9.4% (source). According to Gallop Poll tracking January 2nd to September 30th, 2011, for those aged 18 to 29, 30% are underemployed and 14% are unemployed (source). This means that it has become much more difficult to find employment in existing organizations.

Also, in recent years, there’s been a growing and revived interest in entrepreneurship, and I believe the connection between the crash and the current rise of entrepreneurship in American society is more than correlated. As one of my interviewee's put it, it’s one of the current causes of “startup companies popping up like Rock bands in the 80’s." While interviewing a community leader in the Philadelphia startup ecosystem, he said, “every startup that comes in creates ancillary jobs that generate taxes that gives back to the city, that gives back to build better things to make things better." This isn’t simply anecdotal, but is supported by a job growth study performed by the Kauffman Foundation. The report concludes that “new firms add an average of 3 million jobs in their first year, while older companies lose 1 million jobs annually” (source). This means that people realize the potential behind getting involved in a new firm or starting one. The report studied startups and existing firms from 1977 to 2005 and defines startups as firms younger than one year old. The report goes on to say that policymakers do not correctly focus their attention on supporting startup growth. This opinion is reflected in the same startup community leader, “the older institutions that were fostered in the 60s, like Ben Franklin tech partners, like the science center, like the chamber of commerce, these bureaucrats and older generation, are trying to sustain their positions and their jobs and companies and they’re not fostering innovation." This community leader has been an advocate for startups in Philadelphia for the past decade. Putting his opinion side-by-side with the findings from the Kauffman report means that people have already realized the potential behind getting involved in a new firm or starting one.

However, ninety percent of startups fail. Seventy percent of them, discovered by the Startup Genome, scale prematurely along any one of five dimensions, which they think may partly explain the ninety percent failure rate amongst technology startups. The Startup Genome has published two reports, one with a data set of 650+ internet technology startups and another on 3200+ internet technology startups. The Startup Genome set out to test three hypotheses, and one which is of interest to this project is, “learning is a fundamental unit of progress for startups. More learning should increase chances of success.” They went on to discover,

“Founder's that learn are more successful. Start-ups that have helpful mentors, track performance metrics effectively, and learn from start-up thought leaders raise 7x more money and have 3.5x better user growth.”

They point to three factors being relevant for funding and user growth: helpful mentors, tracking metrics, and learning from thought leaders. All three provide the foundation to learn. Being able to raise funds and maintain user growth is key to a healthy startup, which means that learning is vital for a healthy startup.

Now that I've convinced myself that understanding entrepreneurial learning and providing a design solution is a meaningful problem to solve, I'll be collecting more of my thoughts on my blog to prepare me in writing my thesis book. If you're reading this and believe there's a flaw to the argument or have ideas or want to leave an opinion, feel free to comment or get in contact with me through the about & contact page.

The current draft of my thesis can be found here.

Update: The next blog post untangling the many interpretations of entrepreneurship is here.

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