How To Become an Successful Entrepreneur

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Everyone in America loves entrepreneurs. Wall Street celebrates them; Washington strives to encourage them; Silicon Valley nurtures them. But where exactly do they come from and which ones are most likely succeed? A new study released by the Kauffman Foundation, a leading research organization on entrepreneurship, provides some insight.

According to the Kauffman study, “user entrepreneurs” – people who created products or services for their own use and then later commercialized them – account for more than 46 percent of startups that have lasted for five years or more, even though they make up only about 11 percent of U.S. startups overall. Well-known companies started by “user entrepreneurs” include Medtronic, Yahoo! and sports equipment maker Black Diamond.

So why do “user entrepreneurs” seem to succeed at a higher rate than other startups? “User entrepreneurs are different from other entrepreneurs,” said study co-author E.J. Reedy. “It is clear that these entrepreneurs are coming into their businesses with more tangible ideas, innovations or customers to build a successful firm.”

According to study co-author Sonali Shah, “in many cases, users, not producers, have the best information, and their incentive is to build something better for their own use. As a result, they are able to create truly novel innovations.”

The image of David Hewlett and Bill Packard and Steve Jobs and Steve Wozniak launching business empires from Silicon Valley garages has become the iconic image of American entrepreneurial success – and rightly so. Yet the Kauffman study suggests that business success can be traced not only to the spark of genius, but frequently to a product user who simply sees a better way and is persistent enough to develop it.