The mystery of "ambition" and how it correlates with success
Hi, Vincent here. When we started our masters in entrepreneurship, so many years ago it seems, we were kindly informed that our chances of failure were pretty high—above 75% after 5 years, I believe. So that’s about on par with a career in Catalonian linguistics then… Nice!
For my thesis, while it was not the primary focus to discover those failure-rates (after all, how can you interview start-ups about failure, while they’re still running?), we did get some implicit data about it amongst ca. 300 Dutch technology start-ups, younger than 5 years. Specifically, we looked at several factors: at technology-level, which we assigned three levels (low, mid, and high); funding-levels; and ambition-levels, which we assigned four levels (none, low, medium, and high).
An ambition of “None” signified a planned closure or a similar pessimistic outlook on the future of the firm. “Low” meant that a business was not planning to do much in terms of growth in the future. “Medium” meant some growth in terms of people or regional expansion. And “High” signified people who had plans to grow significantly, such as expanding into other countries or otherwise. A low technology-level signified a low tech component in the business, e.g. a warehouse, which could in some cases still be classified as a “technostarter” in the Netherlands. A mid-technology-level signified an undifferentiated tech-component, to which many a web-based firm belonged. And high-tech signified a high tech-component, differentiated within the industry, e.g. a biotech-firm, but also sometimes software.
Now, we found interesting correlations between all of those, the most obvious one being related to technology-level and funding (higher = higher, duh). I won’t go into those now, but I can at a later date, if there’s interest. Ambition was, to me, the most interesting, as young start-ups have little in tangible resources at that stage, except for ambition, people, an idea, hopefully, a business-plan, and, equally hopefully, some money/collateral, with which to convince third parties of their chances of success.
Concerning ambition-level, when correlated with technology-level, we got this:
Medium-level ambitions (or as I like to call them, “realistic”) clearly dominated the chart on all three levels. Interesting is that that the low-ambition-level was highest amongst medium-tech firms. My interpretation was that undifferentiated technology is worse than the opposite or no tech-component at all. You are simply overwhelmed with competition. The “Lows,” signifying imminent failure were quite equal for all three levels, at the 10% mark.
And concerning ambition-level, correlated with funding, we got the following:
Again, the results are not really shocking, though you have to wonder what came first, the ambition or the funding. What we see is that funding is abysmal for those start-ups with lower ambitions, who didn’t even attain first-round funding, and great for the “high ambitions” specifically.
Now, there’s no clear answers here for you. How do you get ambition, is it correlated with success or is success correlated with ambition? To me, those that showed the highest ambition, also understood their business best and had formed clear plans about how to meet their goals. A high ambition-level, just like a high technology-component, is correlated with a higher resource-need—you’ll need more money to expand internationally and build that factory—so it is not surprising that funding is positively correlated with it.
What is clear, to overcome failure, you have show a certain level of ambition. Whether that is a rational thing or one based on emotions & dreams, I leave up to you, but in my opinion it is a combination of vision & reducing assumptions (risks) about that vision through study and hard work.
Hope it stimulates some entrepreneurship (and that my post was not too academic).
Note: this is only 2 pages from a 180-page thesis on the funding of high-tech start-ups. If the feedback’s good, I’ll post a lot more, if not, a lot less.
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Not surprising indeed: high tech means more capital intensive, hence a need for more upfront investments and a necessary business plan ambition to raise such funds.
A quick question about startup industrial expertise in the Netherlands: what are the 5 topics you think the Netherlands are Top-of-the-World in?
I would say: business-services (consulting & IT), logistics (port & hub-related), Food (Wageningen University has a significant cluster), industrial design (Delft university & Phillips), architecture (bridges, dams, often water-related). There’s probably more, but these are the ones I’m thinking of now.
Sorry, re-read your question, slightly different answer.
You said start-up industrial experience… This is very probably quite different from “top-of-the-world” industries, simply because those are much harder to enter as an independent company. I’ll go further into the “why” in a future post.
Still, consulting and IT (software & webware) is where we found most start-ups in our study, and most of which we also assigned a “medium-tech” rating, simply because much of it was not innovative enough. It was so much, that we had to give a higher weight to start-ups from other sectors, or else the study would be IT-dominated.
A reasonably big “high-tech” sector included biotech & healthcare, and some strong growth in communications (again IT-related).
If the 180 pages you mention are all as interesting as this post, then, man, you shouldn’t wait to publish a book on entrepreneurship in the Netherlands.
Have you thought about it?
I think, whether or not I’ll consider such a thing, will depend entirely on the grade/feedback I’ll get.
Hi Vincent, to stop me from refreshing every 20minutes, when will you be having your evaluation?
Georgia, subscribing to the comments on this blog will save your life!!! Eh, I mean, your time: http://techiteasy.org/comments/feed/
The evaluation is not scheduled yet. I’m in the ‘first feedback phase,’ then I’ll get a second feedback, then I’ll have to defend my thesis. Hopefully it will all be completely out of my life by the end of this month.
hehe! thanx for the delivery link and good luck.
highly interesting.
I’m a frenchy aiming at starting in entrepreneurship, and for some weeks now, I’m reading through the whole of this blog.
I m quite sure that you don’t want to share your thesis, maybe because for the risk of seeing others publishing it somewhere else, so if there’s any way to cnvince you to tell a little more about it, please tell us
Thanks, Rodel. I’m currently on hiatus, but I’ll do my best to publish something soon.
[...] not all the start-ups I interviewed were high-tech, which showed some interesting differences in ambition, funding-need, and funding-strategy, but also not all the incubators, I looked at, were focussed on [...]