Dear Laissez Faire Today Reader,
For young people facing terrible job prospects and a generally bad economic environment going forward, starting a business sounds very appealing. It has advantages over embedding yourself in a big institution, taking your wages in forms of benefits, and hoping (against hope) to climb the ladder.
It’s never been easier to strike out on your own, except for one thing: Commerce is always harder than it appears. Success means overcoming challenges that seem insurmountable and that you never expected.
People write me all the time with business ideas, asking my opinion and some guidance going forward. Such guidance is almost impossible to provide. Also, giving advice is always dangerous. If the person takes it and flops, you are to blame. If they don’t take your advice, you will probably still be blamed.
And there’s another substantial reason that it is dangerous to offer entrepreneurial advice. Decision-making in commerce depends on too many variables of time and place, and it is impossible for an outsider to know them all well enough to provide consulting.
Still, I’m going to venture some broad advice that doesn’t depend on any particulars. It is this: Originality is overrated. Instead of trying something completely new, you are far better off copying someone else’s successful idea and customizing and improving it to suit the needs of a niche that you know best. Emulation is a better path to success. In fact, it is the only proven path.
This advice grows out of a lesson from the history of invention: The idea of the sole creator, the great innovator who came up with something entirely new that shattered an old paradigm, is a romantic idea, but is actually a complete myth. In the real world, innovation takes place over the course of tiny steps through the trials and errors of many people working in the field.
One reason we believe the myth is the menace of patent records. They have names attached to particular inventions and list no credits to those who came before, those who were working simultaneously on the same invention, and those who came after and improved it to make it actually serviceable and usable. These patents records are a major reason why we believe the myth of the sole creator.
The Wright Brothers myth is the favorite American story. It’s not entirely a myth that they were the first to accomplish a manned, controlled, powered, heavier-than-air flight over a substantial distance. But engineers the world over had been making progress in this direction for the better part of a century.
In fact, the most famous photograph of the first Wright Brothers flight could have been taken in many countries over the previous 50 years. For this reason, the newspapers refused to even report the now famous event because it seemed like no big deal.
The innovation of the Wright Brothers was actually quite marginal: a method for steering that allowed the maintenance of aircraft equilibrium. That’s significant, and it made a huge difference, but the patent alone would seem to imply that they depended not at all on the hundreds of others who had been making advances in manned flight.
Their patent did terrible damage to innovations in American flight after, as the litigious brothers hampered American engineers in their ability to improve the airplane, while engineers and entrepreneurs in European countries made much more rapid progress over the next 10 years. That’s the secret legacy of the Wright invention: It dramatically slowed down progress in flight technology.
The myth encourages would-be entrepreneurs to think about innovation in an entirely incorrect way. Another example of Godlike innovation that I’ve always heard is the case of Albert Einstein, whose equation E=mc2 caused the entire world of physics and philosophy to be revolutionized. Until now, I’ve never really questioned it. Maybe Einstein was, indeed, the great outlier in history, a rare case in which a single individual brought about a quantum leap.
Well, an article in The European Physical Journal says otherwise. It turns out that Einstein, too, must share credit with others. Stephen Boughn of Haverford College and Tony Rothman of Princeton University say that Friedrich Hasenohrl of Vienna deserves as much credit, given that he came stunningly close to discerning the same insight. Further, it was Max von Laue of Germany who gave the theory its legs by showing the equation was true not only for electromagnetic radiation, but for all forms of energy.
The point is not to take away from Einstein’s achievement or brilliance, but simply to observe that progress in knowledge is dependent on learning from others and hardly ever (maybe never!) takes place in gigantic leaps.
It’s the same with business. The software industry grew and improved through small increments of change. It was the same with the telephone, steel, electricity, steam power, telegraphy, printing, and every other invention. The patent trail is highly deceptive, chronicling only those who raced to the government office and filled out the right paperwork. It is not a record of those who deserve credit for the progress of humankind.
Innovation is dependent on emulation. Emulation is dependent on learning. Learning is dependent on access. And this is precisely why there is great reason to be wildly optimistic about the prospects for innovation now and in the future. Despite government regulations and ever more attempts by the powers that be to freeze the world in place and even roll back progress, progress will not be stopped.
The reason is the explosive advance in online learning and the sharing of information. This has always been the precondition for social advance. The Internet has completely revolutionized our capacity to learn from each other, which I regard as the most bullish sign for the state of humanity that I can imagine.
Consider just one learning platform: coursera.org. This platform allows anyone in the course to enroll in the world’s greatest college courses for free. If you take a minute to look through what it offers, one wonders why anyone pays for college at all, unless they absolutely have to. The education is right there, which is why in its short life, the website has already enrolled 2.4 million students who have taken 214 courses from 33 universities.
The knowledge capital of civilization is taking flight as never before.
What does this have to do with starting a business? Commerce is all about serving others. The making money part comes only after the service part is in place. To do that requires absorbing and processing information from wherever you can find it, copying those who have already done this successfully, and then making a tiny improvement that puts the enterprise over the top.
Oh, one more thing: In a world of universal knowledge distribution, you can never stop improving. Your competition is always watching and copying you. This is the life of business: total dedication to making unrelenting progress in the service of the wants and needs of others.
Contrary to what you might have heard, that’s what capitalism is all about.
Laissez Faire Club