Everyone can name some celebrity entrepreneurs, but the latest evidence shows that most successful founders look very different from Zuckerberg, Gates, or Bezos. This is part of the message that Wharton associate management professor Ethan Mollick has been trying to communicate — through his teaching, his research, and now a new book published by Wharton School Press: The Unicorn’s Shadow: Combating the Dangerous Myths that Hold Back Startups, Founders, and Investors.
Mollick has been on a mission to, as he says, “democratize” entrepreneurship amid an empirical revolution in the study of the field. New data and better research methods have been overturning the conventional wisdom behind what successful founders look like, how they succeed, and how the startup ecosystem works. Mollick recently sat down with Wharton School Press’s senior editor, Brett LoGiurato, to discuss his new book and various initiatives he’s spearheading at the School.
Brett LoGiurato: What originally drew you to your area of research? And how did you come to Wharton?
Ethan Mollick: I came here via a bit of a roundabout path. I started off as a consultant and then, with a college roommate, launched a startup company in the early days of the internet. We invented the paywall. So, I’m sorry.
I literally made every mistake possible in the company. It was ultimately successful, but I basically did everything wrong. So I thought, I’m going to go get an MBA and figure out how to be an entrepreneur. I went to MIT to get an MBA, and I realized nobody really knew the answers. I decided I would help figure it out. So I got a PhD, and that’s been my mission ever since: figuring out how to make entrepreneurship and innovation more science-driven, more accessible.
BL: You’ve talked a lot about wanting to “democratize” entrepreneurship.
Mollick: Entrepreneurship is the engine for the growth of the economy. New ventures are the key to economic growth. They’re often the key to individuals raising their socioeconomic status. And talent is everywhere. We have a big world full of talented people. But opportunity isn’t well distributed. The flip side of Wharton being one of the best places in the world to start being an entrepreneur is that it’s really easy to start a company from Wharton. It’s less easy if you don’t have access to the resources, education, and connections here.
One of our big missions at Wharton, and one of the big missions with the book, is to try and take what we’ve learned, what we know about entrepreneurship, and make that accessible to more people: democratize opportunity, and not just democratize the ability to start a company.
BL: You wrote this book to dispel some of the myths of entrepreneurship. Why do you think it’s so important for people to be aware of these myths?
Mollick: Entrepreneurship has historically been full of myths because we haven’t had data. People have been making decisions based on gut feel and intuition and trying to pattern-match. And some of the patterns they’ve been matching have been those of very successful past founders. But the problem is, those successful past founders tend to look very similar to each other. They’re often young male college dropouts with a technical background. The research shows that’s not the best or only model to be a founder. And as a result, people who might otherwise enter entrepreneurship are discouraged, because they look at founders that are famous and that they see in the movies and they don’t resemble those people. They think they can’t be founders. But the evidence shows that’s not right at all.
BL: Explain the meaning behind the title The Unicorn’s Shadow and how it reflects the themes of the book.
Mollick: “Unicorn” is the nickname for a private company with over a billion-dollar valuation. So that’s Uber, Airbnb — all these pre-IPO companies are unicorns. Because these unicorns are the public face of what you get to be if you’re a rock star in the entrepreneurial world, they have an outsize influence over the entire industry. They cast a shadow in their own shape over everything else. People want to be like these companies. So they find themselves emulating these organizations. But the research shows that not only does this usually not lead to success; it also discourages a lot of people who might otherwise enter entrepreneurship … because they don’t see themselves as being in the mold of these unicorn founders.
BL: What data has surprised you the most in your research?
Mollick: There are a couple of interesting, surprising things — one piece of good news and one piece of bad news. The good news: I study crowds, and it turns out that when large groups of people get together to make decisions, those are actually pretty rational decisions. And they also tend to reward risk-taking in ways that if you just asked the experts, they’re actually more conservative and less likely to fund interesting, innovative projects than the crowd will.
On the downside, I, and a lot of other researchers, have been looking at gender gaps in entrepreneurship, and especially the persistence of funding gender gaps — why women receive much less venture capital investment than men. And those have proven to be amazingly stubborn and persistent across many different measures, different cultures, and different approaches. We’re still trying to untangle the problem and offer better solutions.
BL: You co-founded Wharton Interactive with Sarah Toms, another Wharton School Press author. Talk to us about the origins of that and what you ultimately hope to accomplish.
Mollick: The way we teach in schools today is very similar to the way Socrates taught about 2,500 years ago. The Socratic method is to lecture — the “sage on a stage,” where you stand up and you say things. And that can be very compelling, right? But we’ve had a massive technological change in the past few decades that has enabled new forms of teaching. That’s combined with a games industry that I’ve been studying for a very long time. Games offer really compelling templates for teaching and for educating.
We’ve combined this interactivity of games and simulations with new modes of teaching. And we’ve used that to create very new experiences. Simulations that teach you. Interactive tools that bring the classroom into the real world, and vice versa. And we’re really trying to transform education in a fundamental way.
BL: How has Wharton Interactive changed the way that you approach teaching and think about teaching? And how has it expanded your capacity to reach new learners?
Mollick: When you teach entrepreneurship, most classes in most universities end with a pitch. The end of your entrepreneurial experience is a pitch — and pitching is really cool. That usually happens a few months into your startup. But the really interesting stuff often happens in your startup eight months, 10 months, 12 months in, where we know a lot about how to grow a company, how to scale it, how to hire. And those are things that don’t come up in pitches.
One of the exciting things we’re doing at Wharton is a real-time simulation where students help run a fake business. We’ve built a fake Gmail, fake Slack, fake Dropbox. You run a business over the course of three weeks in real time and get that experience of what it’s like to actually deal with customers and suppliers and financial issues and lawyers. So that lets us go deeper and further into the startup process. We call it the Looking Glass Simulation — it’s like a flight simulator for running a startup, or Dungeons & Dragons for managers.
I find that people who go through the simulation rate it as much more effective than other kinds of teaching techniques. And what’s cool is, I’ve had students reach out to me two years after playing the simulation, as they run their own startups and they’re raising venture capital, and they talk about events that happened in the simulation as if they happened to them in real life. So trying to give people that experience — that sort of Inception moment of having lived through this before — is a big benefit.
Published as “Beware the Unicorn” in the Spring/Summer 2020 issue of Wharton Magazine.