Maybe it is the recent spate of articles taking down a number Gladwell arguments, but I look at anything he writes at this point from the perspective of, is he being contrarian for the sake of being contrarian - and based on the abstract (no full article available to me), it seems like that is the case, once more.
The examples - John Paulson, a hedge fund trader. First - is a hedge funder making trades an entrepenuer to begin with? Second - trading, in exotic securities, short, no less, is the definition of risk. He can call it predatory, but to say it isn't risky is ridiculous.
Also - Ted Turner. Again, maybe the full article has more, but his one example pales against his other risks, such as launching CNN, a 24 hour cable news network when no one had even heard of such a thing or thought it would ever work.
The basic premise is that a predator does low-risk deals
with a large upside. And they can do that because they are well-informed. Turner knew he can use his billboard business to advertise a TV station. Paulson buying CDS's
because his research showed the real estate bubble was about to burst.
It's an interesting thesis, though it does suffer from survivorship bias.
I thought the most interesting part was data from the
book, "The Illusions of Entrepreneurship",
by Scott Shane.
New-business success is clearly correlated with the size
of initial capitalization. The data show that organizing as a
corporation is best. But failed entrepreneurs tend to organize
as sole proprietorships. Writing a business plan is a must;
failed entrepreneurs rarely take that step. Taking over an
existing business is always the best bet; failed entrepreneurs
prefer to start from scratch. Ninety per cent of the fastest-growing
companies in the country sell to other businesses; failed entrepreneurs
usually try to sell to consumers, and, rather than serving customers
that other businesses have missed, they chase the same people
as their competitors do. The list goes on: they underemphasize
marketing; they don't understand the importance of financial controls;
they try to compete on price.
The abstract doesn't talk about this, but one school of thought suggests that entrepreneurs aren't necessarily risk-takers, they are just overly optimistic.
I think that is true. If you're overly optimistic or over-confident, you're more likely to do things that others consider as risky (because they don't seem risky to you)
The examples - John Paulson, a hedge fund trader. First - is a hedge funder making trades an entrepenuer to begin with? Second - trading, in exotic securities, short, no less, is the definition of risk. He can call it predatory, but to say it isn't risky is ridiculous.
Also - Ted Turner. Again, maybe the full article has more, but his one example pales against his other risks, such as launching CNN, a 24 hour cable news network when no one had even heard of such a thing or thought it would ever work.