Startups and entrepreneurship are a myth – unicorns are extremely rare, and they don’t contribute to innovation

But also beyond the culturally promoted myths about entrepreneurship as the road to salvation for individuals, communities, and society as a whole, entrepreneurship is misunderstood. As Aldrich and Ruef (2018) have shown, major selection biases in the attention paid to innovation and entrepreneurship in popular culture, policymaking and public administration, and also academic research, have contributed to what they call a “Silicon Valley mania”. Although only a tiny fraction of all entrepreneurship and innovation in the world happens in Silicon Valley, it is the “unicorns”, “gazelles” and other rare events from that sunny region in California that get the media attention and set the standards for the policies adopted across the globe, for promoting entrepreneurial success (Hwang and Powell 2005; Boyle and Kelly 2010). Innovation and entrepreneurship research plays along, neglecting the mundane reality and the empirically accurate in favor of the exciting but unrealistic, thus reproducing heroical myths about startups overcoming major obstacles, battling monopolies, perhaps even “moving fast and breaking things” in the process (see Chap. 5), and almost single-handedly turn grim prospects for a region into bright futures with growth, jobs, and sustainability (Brattström and Wennberg 2022).

It matters little that entrepreneurship in the real world is something rather mundane and dull, as entrepreneurship researcher Scott Shane (2008) has demonstrated. People are more likely to become entrepreneurs, that is, to start their own businesses, in countries that are poor and agricultural, than in countries that are richer and reliant on manufacturing. Most new businesses are started in “run-of-the-mill industries” such as retail, accommodation and food services, and construction. Most entrepreneurs are not in search of opportunities to exploit but form businesses based on what they are good at, and what they want to do. Most entrepreneurs get no funding from venture capitalists and business angels, but invest their own savings (Shane 2008: 28, 31, 38, 68–69, 89–91). Not much of this seems to matter for the popular image of entrepreneurs. It likewise matters little that most evidence suggests that policies that encourage startups are unnecessary, since there is no evidence that too few new businesses are started when such policies are absent, and a lot of evidence that such policies mostly lead to businesses that fail, that have very limited economic impact, and generate few new jobs (Shane 2008: 157). These and other irrefutable facts aside, current society still views the typical entrepreneur as “a hero with special powers that lead him to build a great company, which innovates, creates jobs, makes markets more competitive, and enhances economic growth” (Shane 2008: 160).

Most entrepreneurs are not like that. There is no specific personality trait shared by all successful entrepreneurs, quite the opposite—they seem all to be dissimilar (Rauch and Frese 2007; Kerr et al. 2019; Levine and Rubinstein 2017). Most entrepreneurs earn less than they would do from comparable employment (Åstebro 2012), and have weaker social security coverage (Hessels et al. 2006). There are also studies that show that entrepreneurs tend to experience more negative stress and anxiety, not less (Dahl et al. 2010; Hessels et al. 2017), and that many end up disappointed or even depressed (Jennings et al. 2016). All this gives good reason to argue, as Hartmann (2021) does, that “entrepreneurship is a terrible idea for most people, most of the time”, because all available evidence suggests that success in entrepreneurship is like winning the lottery—“wildly unlikely, and more or less random”—which in turn means that entrepreneurship should not be promoted among the many, but rather be viewed as something comparable to “a career in professional sports or the high arts”.