Everything you know about startups is wrong, says Wharton professor

In his new book ‘The Unicorn’s Shadow: Combating the Dangerous Myths that Hold Back Startups, Founders, and Investors,’ Ethan Mollick debunks myths about entrepreneurship.

picture of booksleeve on left and author on right
Ethan Mollick is an associate professor at The Wharton School, where he studies and teaches innovation and entrepreneurship. (Image: Wharton School)

When you think of successful entrepreneurs, Bill Gates and Mark Zuckerberg may first come to mind for most people. However, in his new book, Wharton School professor Ethan Mollick says “most successful founders look very different from Zuckerberg or Gates.” In fact, he says most startup origin stories are unlike famous “unicorns” that have achieved valuations of more than $1 billion, from Facebook to Google to Uber.

In “The Unicorn’s Shadow: Combating the Dangerous Myths That Hold Back Startups, Founders, and Investors,” Mollick argues that entrepreneurship is too important, both for society and for the individuals who start companies, to be eclipsed by the shadows of unicorns. He shows that entrepreneurship can be democratized—but only by following an “evidence-based approach” that puts to rest the false narratives that surround it.

“The path to entrepreneurship is never easy even in the best of times,” he says. “But I hope this book shows you that with the right approaches, you can accomplish your goals.”

This is an excerpt adapted from “The Unicorn’s Shadow,” which was published in June by Wharton School Press. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.

Think about the famous startups—like Facebook, Google, Microsoft, Twitter, and Apple—and some infamous ones, like Theranos.

These are the legendary unicorns, with valuations of over $1 billion that inform so much of the popular imagination about startups. And because these unicorns are the public-facing rock stars of the entrepreneurial world, they have an outsized influence over the imagination of founders and the public at large. They cast a shadow in their own shape over everything else. People want to be like these companies. They find themselves emulating these organizations.

But they don’t have to—and they probably shouldn’t. I wrote “The Unicorn’s Shadow” to tell you why and to reveal how the stories we carry around about startups hold back founders, investors, and entrepreneurship in general.

I can do this because the study of entrepreneurship has been in the midst of an empirical revolution. New data, better research methods, and a host of smart scholars have been overturning the conventional wisdom behind what successful founders look like, how they succeed, and how the startup ecosystem works. In this book, we will look at the latest evidence on how to build successful startups and the way in which startups can use a scientific approach to gather their own data to increase their chances of success. At the Wharton School, the business school of the University of Pennsylvania, we call this method Evidence-Based Entrepreneurship.

It’s tempting to say that Evidence-Based Entrepreneurship has been the sole key to the tremendous success of Penn grads in the world of startups. In 2018, for example, University of Pennsylvania graduates raised more venture capital money than was raised in all of France and Germany put together. But this fact alone should give you pause. My students are terrific, but are they really worthy of more investment than everyone in two of the world’s largest and most innovative economies? This disproportionate investment illustrates that the myths of entrepreneurship have greatly distorted the way that opportunities and talents are supported to the benefit of my students, but to the detriment of many others.

We are still in the early days of understanding startups, and we continue to learn and build out the real, messy, complicated, and sometimes counterintuitive story behind the myths.