Why did you start your company?

2 Mar

By Huxley Nixon

Is it in your DNA?

Leigh Buchanan’s article in the March 2012 issue of INC. magazine, The Motivation Matrix, summarizes the findings of a fascinating study by two Harvard Business School faculty members who surveyed 2,000 founders and approximately the same number of non entrepreneurs about their motivations.  In an effort to better understand the motivations driving founders to start businesses, identify what they want out of life and how these change over time, respondents were asked to rank 13 motivations from the Most to Least influential.

Entrepreneurs are from Mars and Non Entrepreneurs are from Venus!

The study by Noam Wasserman and Timothy Butler revealed one of the key attributes about entrepreneurs is that they predominately make decisions with both their head and their heart.  The study looked at gender and those in the following age groups, 20’s, 30’s and 40’s plus.  With the exception of the over 40 age group for women, both men and women entrepreneurs of all age groups ranked AUTONOMY first and POWER & INFLUENCE  second.  By contrast, non-entrepreneurs ranked SECURITY and a CONGENIAL WORK ENVIRONMENT as their top two motivations.

Mergers and Acquisitions will experience huge growth over the next decade with the Boomer demographic turning 65 at the rate of 14,000 per day.  It is estimated that approximately 6 to 8 million Boomers own businesses and only about one-third will transition to family, employees, or third parties.   Businesses not sustainable after the founder’s departure will close their doors.  Others estimate in total there are approximately 10 million private businesses in the U.S. that represent approximately 60% of U.S. Gross Domestic Product and Labor Force, $8.75 Trillion and 92.6 million respectfully.   To understand how best to approach this difficult to reach segment of business owners to help them prepare for their inevitable exit, understanding what motivates them is critical.

The top seven Motivations selected by entrepreneurs (ranked from Most to Least Important) are:


Rich versus King Dilemma

Knowing these drivers helps identify an owner who is more likely to be a candidate willing to sell part or all of their company.  I frequently ask an owner which is more important to them: Wealth Creation or Control?  If it is control, they usually are not a good candidate to enter into a transaction where they have to give up control, regardless of the potential financial gain. Unfortunately, these companies rarely grow to be large companies because the owner refuses to hire top-level employees where the owner must relinquish his power and control over his pet areas.  By contrast, according to Wasserman, those entrepreneurs that place FINANCIAL GAIN near the top of the list ended up with an equity stake 52% more valuable on average than those who ranked AUTONOMY/POWER & INFLUENCE first (“Rich vs King Dilemma”).  See Inc. magazine article by Leigh Buchanan….

Two Iconic Entrepreneurs of Our Time

The best way to understand this Dilemma is to look at what were the driving motivations of two iconic Technology Entrepreneurs of the last forty years – STEVE JOBS and BILL GATES.  Both were motivated by AUTONOMY and POWER but also pragmatic in that they knew they had to bring in outside investors to launch their dreams.  Bill Gates was also motivated by FINANCIAL GAIN and was willing to license his Windows operating software to others manufacturing the computer hardware where Apple (JOBS) refused to do so.  Apple created a fully integrated solution for the user requiring them to buy all hardware and software from Apple.  More importantly this closed architecture meant other popular software applications in the 1980’s (i.e. Lotus spreadsheet) that businesses wanted could not be used on the Apple and Mac computers.  Yes, Steve Jobs was an unbelievable visionary who reinvented Apple upon his return in 1997 after being forced out ten years earlier and created the most valuable company on the planet (and died with an estate estimated to be $8+ Billion) but Bill Gates won the computer war and became the RICHEST person in the world (estimated net worth $56 BN).

Both Icons wanted to “Change the World”.  Gates used his gifts to build a massive fortune (“RICH”) and through his Charitable Foundation he is dedicated to bringing innovations in health, development, and learning to the global community.  Jobs (“KING”) was not motivated by money but is hailed for his genius and true achievement: his ability to blend product design and business market innovation by integrating consumer-oriented software, microelectronic components, industrial design and new business strategies in a way that has not been matched.  Click here to see the lost video of Jobs introducing “MACINTOSH” in 1984 – he was not introducing a computer, rather a way for us to “Think Different”! Oh WOW, Oh WOW, Oh WOW! (Steve Jobs last words)

Author: Huxley Nixon has been involved in M&A (mergers and acquisitions) for 35 years as a buyer, seller and intermediary.  He is founder of the M&A MARKETPLACE by CHC (www.mamarketplace.com) where the buyer pays all success fees and the process is only 120 days.  For owners of private companies considering a sale of part or all of their company – it provides a very quick, confidential and competitive alternative to current options less transparent and more disruptive for the owner.

DISCLAIMER:  Opinions and conclusions in this post are solely those of the author unless otherwise indicated.  This article is for general information purposes and is not intended to be and should not be taken as advice on any particular matter nor is it intended to be a solicitation regarding any securities transaction and or investment relationship.  For those desiring additional information please visit our website www.mamarketplace.com.

One Response to “Why did you start your company?”


  1. Where can I Invest my Proceeds from a SALE? « SellYourCompany.org - June 12, 2012

    […] Many would immediately respond that the reason the owner “walked” was “Greed”.  I disagree.  A recent study (Noam Wasserman and Timothy Butler – The Motivation Matrix) of 2,000 business founders were given 13 motivational traits to rank in order from the most to least important.  The TOP two motivations driving founders are AUTONOMY (cannot work for others – control) and POWER & INFLUENCE (likes to be the Boss).  Unfortunately, these founders rarely build large companies because they refuse to hire top-level employees where the owner must relinquish his power and control over their pet areas.  By contrast, according to Wasserman, those entrepreneurs that place FINANCIAL GAIN near the top of the list ended up with an equity stake 52% more valuable on average than those who ranked AUTONOMY/POWER & INFLUENCE first (“Rich vs King Dilemma”). […]

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