On Sense & Business

By: Benjamin Hallen

Full of energy, going through rapid changes, still learning to understand the world around them, and overconfident. For anyone who knows or once was a teenager, these characteristics ring all too true. Yet, these traits are also consistently exhibited by entrepreneurs and their nascent startups. Like teenagers, entrepreneurs see the world full of possibilities and eager to make their mark on the world around them — this is a good thing, especially for those who benefit from the new products and services they bring to market.

On the other hand, the combination of overconfidence and the new situations in which they often find themselves can also create a lot of risks. In my experiences as a business school professor and former entrepreneur, some of the risks that entrepreneurs often encounter but fail to appreciate include: poor legal arrangements between founders, outsourcing the development of their technology to subpar contractors… or engaging partners who might be more interested in competing with an entrepreneur’s start-up….

Our research highlights the value of accountability and guidance. By having someone external to their start-up who is keeping a close eye on decisions and is more experienced with either entrepreneurship or a given industry, entrepreneurs may become more disciplined in recognising and thinking through the risks associated with their choices.

From “Why Entrepreneurs are like Teenagers and Need a Protective Mother”