Book Review - "The Soul of an Entrepreneur"

December 19, 2021

“The Soul of an Entrepreneur” is a non-fiction book written by Canadian journalist David Sax. Sax’s take on entrepreneurship differs from the narrowly defined, tech-centric ideal. He also focuses on the why instead of the how of entrepreneurship.

Sax’s definition of entrepreneurship is anyone who has the freedom to choose their work, including freelancers, farmers, and family businesses. Those who start lifestyle businesses, which are large enough to sustain the owner’s lifestyle and too small to attract investors, are also covered. This book excludes gig economy workers such as drivers since existing companies largely determine their work.

This book explores a range of entrepreneurs:

  1. Half of the businesses and half of the companies listed on the stock exchange are family businesses in the US.
  2. Entrepreneurs can lose money: milk farmers lose money selling milk since the market price had declined from 2009 to 2018 when the market price was below cost.
  3. Americans are increasingly self-employed with age; many become entrepreneurs as a last resort. In 2017:

7% of 16-49 year-olds were entrepreneurs,

16% of 60-64 year-olds were entrepreneurs,

30% of 75-79 year-olds were entrepreneurs.

  1. Many immigrants start restaurants because they cannot get equivalent jobs before immigration.
  2. Fewer people are working for themselves in 2018 than 20 or 30 years ago. When Reagan was in office, 2/10 people worked for themselves; as of 2018, there is only 1/20
  3. The US economy has gotten less entrepreneurial for decades. From 1977 to 2013, startups as a share of all firms fell from 16.5% to 8%. The decline is pervasive across states and across and sectors, including high tech. This is partially due to increased market concentration, meaning larger companies control a larger portion of the market. Source
  4. Developing countries tend to be more entrepreneurial. For example, small businesses which create up to 50 jobs account for 60% of GDP in South Africa and a whopping 90% in India. Firms creating up to 500 jobs only account for 43.5% of GDP in the US. Source
  5. There are gender differences. According to the Kauffman Institute 2016 study, women are half as likely to start a business as men.
  6. Lifestyle entrepreneurs have a different take on work; some pursue their passion and turn it into money-paying work. An E.F. Schumacher quote summarizes this nicely: “Joy and leisure cannot be separated without destroying the joy of work and the bliss of leisure.”
  7. Social entrepreneurship emerged in the 1980s: it focused on benevolent consumption and satisfying all stakeholders, not only shareholders—they included companies such as Patagonia, Whole Foods, and Ben and Jerry (the ice cream company).
  8. The tech billionaire entrepreneur is a narrow definition of entrepreneurship. Elizabeth Holmes of Theranos delivered on that entrepreneurship ideal even as her company failed to deliver on its promises.
  9. The formal field of entrepreneurship study is new in America: it only began in 1947. Since then, even the most ‘entrepreneurial’ schools, such as Stanford, have < 5% of students actively starting a business.
  10. US venture capital accounts for < 0.5% of the GDP, a small number despite the fanfare.

I highly recommend this book for those interested in entrepreneurship. It provides an excellent historical context and clears up the misconception in the field.