Americans, perhaps more than the citizens of any country, identify and sympathize with the entrepreneur. Objectively, they truly are the backbone of the U.S. economy, considering that small businesses make up 99.9 percent of all businesses in the United States.
And yet, most Americans would probably agree that entrepreneurs are different from “the rest of us.” Myths abound about entrepreneurs. For example, the dot-com boom led many to perceive that all entrepreneurs are young. They are not. The median age of small business owners, which again includes beginner entrepreneurs, is 41. Meaning fully half are olderthan 41. Other clichés declare that all entrepreneurs are brilliant and fearless and eccentric, and above all, they are greedy. All they want to do is turn their brilliance into cash.
For many of today’s innovative entrepreneurs, the myths, for the most part, do not sync with reality. As Eric Curry, who is managing director of strategic client development at banking and wealth management firm Boston Private, an SVB company, puts it:
“I have to confess that before I started working with entrepreneurs, I assumed they were in business to make money and turn a profit. But as part of the innovation economy, they are motivated by a number of factors, such as achievement, influence and power. That is, the power to make a change, to make something better or something completely different.”
Curry’s observation is borne out by the results of the second installment of a comprehensive survey titled, The WHY of Wealth 2021, fielded this past spring by Boston Private. The study focused on high net worth (HNW) individuals across four age groups and wealth levels ranging from $1 million to $15+ million.
Declaring that progressive entrepreneurs, institutions and technology are the “lynchpin” of growth in the innovation economy ecosystem, the study offers data that maps out the relationship those entrepreneurs have with their wealth. That is, what they find to be important, what they are focused on and what motivates them.
The Boston Private study showed that entrepreneurs, rather than being driven by greed, are more likely to be idealists who are motivated by a need for self-actualization. Just looking at the way they define wealth shows what is important to them and what they are focused on.
For example, according to The WHY of Wealth 2021, success, power and pride are three wealth definitions which resonate among wealthy entrepreneurs. In fact, compared to non-entrepreneurs, 55 percent say their primary definition of wealth is success, versus 50 percent of all Boston Private survey respondents.
Wealth is important to their well-being with nearly half of the study’s entrepreneurs associating it with peace of mind (48 percent) and health (46 percent). Power and influence are also important to them with 31 percent saying it is one definition of their wealth, and when it comes to pride, fully a quarter use as it as a wealth definer versus 19 percent of all survey respondents. And what is at the bottom of their list? Life capital, with just 17 percent of entrepreneurs saying it defines their wealth versus 24 percent of all survey respondents.
With life capital at the bottom of the list of wealth definers, clearly the Boston Private survey belies the cliché of money being the main focus and key motivator among entrepreneurs. That is especially true among those entrepreneurs the Boston Private survey describes as “progressive” and part of the “innovation economy ecosystem.” As can be seen, data throughout the survey shows differences between these entrepreneurs and other high net worth Americans in the study.
“In my experience,” says Curry, “what’s different about this group of innovation clients is their motivations and their desire.”
To illustrate, he describes, David Nahabedian, an entrepreneur who started his enterprise technology business, Integration Partners, to improve working environments so that employees could be truly fulfilled in both their professional and personal lives.
“He told me that in starting the business it was equally important to foster a positive work environment as it was to integrate the technology solutions he created,” says Curry. “It’s important to have a social impact, and as I think is true for at least some entrepreneurs, basically the money just followed.”
In other words, much of the focus of Nahabedian’s business was inspiring people, first.
So, if we ask why innovation entrepreneurs focus on creating more social value by putting purpose first, the short answer is: It’s good for business.
How good?
A study of purpose in business by Deloitte declares, “Purpose-driven companies witness higher market share gains and grow three times faster on average than their competitors, all while achieving higher workforce and customer satisfaction.” And a study by the McKinsey Quarterly poses this question, “What is your company’s core reason for being, and where can you have a unique, positive impact on society?” and then asserts, “Now more than ever, you need good answers to these questions” if you do, in fact, want the money to “just follow,” as Curry put it.
Regarding money, Curry points to two key factors that influence the number and types of entrepreneurs we have today. The first is about capital. “I am not saying this is easy by any stretch,” he says, “but today’s entrepreneurs have better access to capital. The barrier to entry is not as challenging as it was 50 years ago.”
The second factor is what Curry calls a tremendous increase in “intellectual horsepower” among younger entrepreneurs. That can be accounted for, at least in part, to better access to something else—higher education. Consider this: Just after World War II, 5.5 percent of adult men and women in the U.S. had a college degree. Now, nearly 40 percent do.
Also, Curry says, “Compared to 50 years ago, now all of us know so much more about our economy, about our environment, about the impacts of innovation, both good and bad in our society. And I think that motivates people to want to make a change.”
It also motivates innovative entrepreneurs more than other wealthy Americans. How much? Nearly a quarter, 24 percent versus 22 percent, cite among the top 10 factors that drive the actual use of their wealth: “Making a difference.” And as part of the innovative economy ecosystem, they are making, and will continue to make, a difference in ways unlike any generation before them.
This article was developed and paid for by Boston Private, an SVB company.
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