Culture Matters to Entrepreneurship

Culture Matters

All through childhood and adolescence you are a sponge absorbing cultural stimuli. From local billboard advertisements, to school curriculum stylized to your country; from conversations with your parents about the ways of the world to the thousands of local customs that dictate proper behavior in restaurants, queues, airports, homes, and driving on the road.

Culture matters. That’s the title of a compelling set of essays on whether some cultures are better at creating freedom, prosperity, and justice. It is politically incorrect to chalk up massive societal failures in places like Africa to culture — besides, the situation is always more complex than a single factor — but it seems safe to assert that the culture you come up in affects how you think.

In Robin Hanson’s post in praise of international travel, he writes:

our beliefs are severely distorted by our culture and training… We all know that we would have been inclined toward different beliefs had we been raised in different cultures or disciplines. We see consistent differences between folks trained in West vs. East, science vs. humanities, economics vs. sociology, and in different schools of thought of most any discipline.

By the time you’re 18 years-old, I believe a certain vision about how the world works glows in your head. You carry many assumptions. It’s possible to change these assumptions in adulthood — easier now thanks to the knows-no-physical-boundaries internet — but it is still hard, and most people would rather not expend the energy to develop a set of values about the world that are independent from their milieu defaults.

Governments Trying to Promote Entrepreneurship

Now pivot to this: virtually every county’s government is trying to promote entrepreneurship, create a mini-Silicon Valley, “become an IT island,” become a hub for innovation, etc. It makes sense: the data are clear that entrepreneurship is the engine of economic growth.

How should a government do it? As Amar Bhide says in From Poverty to Prosperity, the most important thing is for the basic government functions to work: property rights, provision of roads, water, electricity, etc.

The most common next step is for government to make starting a business as easy as possible, minimize tax and regulatory burdens on business, offer tax incentives, etc. These are all good things and are well within a government’s purview.

Chile has done both these things. By taking care of basic government functions, no small task, it has become a better place to be an entrepreneur than most other developing countries. You need only look at its dysfunctional, corrupt neighbor of Argentina to understand that when a government can’t take care of its own basic functions, nothing else matters. And by offering various tax breaks and incentives and helping VCs get new early-stage funds off the ground, Chile’s government carrots have made many entrepreneurs I know take a careful look.

Chile is 100x better place than Argentina to be an entrepreneur. But it’s still far away from rivaling the U.S. as an environment for entrepreneurs. Because here’s what it lacks more than anything: entrepreneurial culture. And no government program or law can change this overnight.

Lack of Entrepreneurial Culture

Here’s a seemingly trivial example but I think it’s telling: In Chile as in many parts of Europe and Latin America (and maybe elsewhere), kids usually live with their parents until into their late 20’s or until they are married. Think about the attitude that probably accompanies this custom: greater dependence and deference to the central authority figure you’ve had in your life. More significantly, in Chile as in almost everywhere except young America, they have a long history, and with history comes psychological burdens. Being conquered and then re-conquering. Living through a military dictator. This stuff seems to affect everything from a person’s propensity to trust strangers to their willingness to challenge the status quo. It’s harder to invent the future if you’re still debating and processing the past.

In Northern Cyprus government officials told me about the various incentives they were going to roll out to attract entrepreneurs and how they were going to have conferences to encourage young people to think about a career in IT. And I’m sitting there sipping my tea thinking, “How the fuck are you going to get people to want to be entrepreneurs when half your citizens work for the government and get off work at 3 o’clock in the afternoon and the other half feel like they deserve more handouts from Turkey?” It’s not an incentive problem; it’s a mindset problem.

I get emails from Koreans who have read the Korean translation of my book and they tell me that they want to start a company but if they do their family will think they are a failure.

This is the story in so many parts of the world. (China, as always, is complicated — they certainly today have a culture of hustling. Beyond that I can’t say.)

Why I’m Bullish on the U.S.

The single best reason to be long on the future of the U.S. is it has a culture of entrepreneurship. It was born this way. Contra Umair Haque — who thinks “it was the American way of life that ate America. And America’s real bankruptcy is a bankruptcy of the soul” — in fact it’s the American way of life and the American soul that are one of the redeeming and enduring attributes of the country’s DNA in this time of uncertainty. The free wheeling spirit, the self-reliance, the fearlessness, the celebration of youth, the permanent fresh start: these things remain, independent of the meltdown of our governance system.

Can You Change Culture?

Culture is really hard to change. It takes generations of time. There are a million levers you could possibly push and it takes way longer than a politician’s term to see any effects. People have pride in their habits.

So what do you do? I think you try everything, and you also try this: import people from countries who have the cultural attitudes you’re looking to cultivate in your country. Use them as implants. I know the Japanese do this with American consultants: they ship in “crazy Americans” to sit in on business meetings and blow up the enormously inefficient customs that still dominate Japanese business. For example, get right to the point instead of flattering the seniority of all the senior people in the room. Integrate the implants with the youth and hope that the power of example will cause more people to think different.

26 Responses to Culture Matters to Entrepreneurship

  1. Arjun says:

    Good post Ben, I’ve been reading your blog for some time now but this is my first comment. Simultaneous to the culture of entrepreneurship, I sense ambition, energy and drive (guys like Cal Newport, Scott Young, Paul Graham etc.) as some of the key traits in Americans (at least in many). I see similarities in India over the last few years. Have you visited India? What are your thoughts. (I’m from India but work in Australia, never visited US.)

  2. Glenn says:

    I’ve been thinking a lot about economic and business development lately, especially in the Southeastern United States.

    Even regionally, in the US, it’s interesting to think about the varying cultures and policies, and how that might explain some variance in modern economic development. A lot of states or counties are just beginning to realize that ‘buffalo hunting,’ or heavily recruiting large companies via low taxes and other incentives can work for so long, before it turns into a race to the bottom; these are also the areas that I would argue oftentimes lags in entrepreneurial development and lacks the educational standards that would promote growth from within.

  3. KarlSakas says:

    Re: changing culture, I agree it’s helpful to “import” someone with the attitudes you want. But that requires a commitment from someone with the authority to bring them in, unless it’s a guerrilla effort like ROWE at Best Buy.

    What about organizations where a negative culture is entrenched, and the leadership fights the very change that’s needed to ensure long-term viability? I see this frequently in volunteer groups suffering from founder’s syndrome.

  4. Ben Casnocha says:

    Yes, there are definitely similar regional policies employed by U.S. states.
    I think the incentive game works more here but it's not the only factor…

  5. Ben Casnocha says:

    I've visited India. (Search by blog for India.) It's so big it's hard to
    generalize. I think there's an entrepreneurial culture there. The basic
    government functions and poverty issue is the larger factor affecting
    entrepreneurship, though, not culture. But I'm hopeful.

  6. Chris Yeh says:

    Let’s just take a look at America’s salient characteristics:

    1) Too young to know better
    2) A born rebel (literally)
    3) Fiercely independent
    4) Constantly reinventing
    5) Tolerant of diversity and uncertainty
    6) Absurdly high expectations
    7) Stubborn as heck

    Yep, that’s an entrepreneur!

  7. Chris Yeh says:

    My favorite way to explain American culture is to cite an example from “Last Stand of the Tin Can Sailors,” the story of how a small force of destroyers and escorts fought off an entire Japanese fleet.

    One sailor tells his buddies at the anti-aircraft guns, “Don’t worry, we’re luring them into 40mm range.”

    At the end of the desperate battle, when the Japanese fleet turned away in retreat, another sailor on a battered, sinking US destroyer shouts, “Hey, they’re getting away!”

    While the sailors of many other cultures might also use humor to show their disdain for danger (the British would use cool understatement, the Russians be fatalistic, and French would sneer), I submit that those responses were prototypically American. We’re the wiseass John McClanes of the world.

  8. DaveJ says:

    Great post. Three comments:

    – Local and micro-culture is also important, perhaps more important than national culture. Entrepreneurial companies (sometimes even large ones) spawn entrepreneurs; some cities & towns are more entrepreneurial than others; and of course, individual families seem to do this.

    – Silicon Valley is the best example of how critical culture is. In a state where pretty much *everything* is broken in the government and infrastructure, people keep starting companies. (Imagine what it would be if it wasn’t broken)

    – I think you cut the age off too early. At minimum, people are susceptible to a lot of influence during their college years, and probably into their first career job. This is one reason why people who come to college in the U.S. from other countries often become entrepreneurs (see StartupVisa for analysis of this) despite anti-entrepreneur cultures back home.

  9. Kowboykoder says:

    “virtually every county’s government is trying to promote entrepreneurship, create a mini-Silicon Valley, “become an IT island,” become a hub for innovation”

    What I instantly thought of is, how does Section 1706, which destroys the viability of budding tech firms fit into this?

    It doesn’t.

    Countries, states and cities all SAY they want to encourage entrepreneurship, but what this always comes down to is they want to attract well established large companies to land a mothership in their jurisdiction and plant a bunch of jobs that don’t require many skills.

    I see throughout the US states “vying for jobs” which always means large car factories, power plants, and other such institutionalized jobs, while doing everything they can to clamp down on and drive away real entrepreneurship, which always starts at the level of the one or two man operation.

    If you squash the new 1 man firms, you don’t have the new 2 man firms, 5 man firms, or 10 and 100 man firms that grow from that.

    You just have established behemoths instead that are devoid of innovation and which always form an unholy alliance with the powers that be in government.

  10. Ben Casnocha says:

    There's a lot of truth to this. Thanks for raising it.

  11. Ben Casnocha says:

    Silicon Valley is indeed a good example of how even when everything else is
    going wrong, culture can still prevail.

    Agreed that 18 is probably too low. Perhaps 25 is the better marker.

  12. Stan James says:

    Last week in Berlin I was conversing with a girl in German and she asked what I did for a living. I gave the correct German translation, Unternehmer — entrepreneur. She recoiled a bit and said she was shocked I would say it, even if it were true. I had heard of the connotation before; only a horribly arrogant person who thinks they are better than everyone else would refer to themselves as such. This is a problem in Germany, and much of Europe.

    (
    I was once walking in by Greenwood cemetery in Brooklyn with a German friend when she suddenly asked, “There are a lot of people starting their own companies in Brooklyn, aren’t there?” I wasn’t sure what she meant, but agreed there probably were a lot. But why did she ask? “Well look, almost every building has a sign saying ‘Undertaker’ on it!” A direct translation of Unter-(under-)nehmer(taker)!
    )

  13. Frymaster says:

    You forgot SEXY!

  14. Frymaster says:

    New Englanders are looking at why the RT 128 cluster never really took off like they thought while SilVal went nuts. Wang, Bay Systems, etc, etc all gone or greatly diminished. Many point to the non-compete contracts that were standard practice on RT 128, but ILLEGAL in California.

    Thoughts…?

  15. Jake Russ says:

    Like the point you make about trying to change culture via importation. Recent conversations about unemployment remedies have led me to believe that human capital is an under-utilized potential export for the USA.

  16. Ben Casnocha says:

    Vivek wrote about this here:
    link to techcrunch.com
    left-bostons-route-128-in-the-dust/

  17. How strange to hear such perceptive commentary from someone whose avatar is the horned Beast of Bel Air.

    I hate to express any kind of solidarity with a guy who says he thinks shooting polar bears would be “awesome” (shiver), he being an apparent disciple of ‘all hat no cattle’ Reagan, but Kowboykoder’s comment here is right on.

    And James Fallows’ incisive analysis at The Atlantic on the question of continued US political and economic hegemony is very much to the point:

    “As the one truly universal nation, the United States continually refreshes its connections with the rest of the world—through languages, family, education, business—in a way no other nation does, or will.”

    A sentiment which I might temper with Vannevar Bush’s observation on our ‘connections':

    “I do think the military is too big now—- I think we’ve overdone putting bases all over the world.”

    I want to cheer when the estimable Fallows advises us that American advantage depends on “the pillars of American strength: continued openness to immigration, and a continued concentration of universities that people around the world want to attend.”

    But I crumple with laughter when James McGregor, the American businessman and author who has lived in China for years, laments: “I just wish we could put LoJacks on the foreign students to be sure they stay.”

    I will agree, now and forward, that “America will be better off if China does well than if it flounders.”

    The New Media Reader has it right about this much:

    “His [Vannevar Bush’s] vision of how technology could lead toward understanding and away from destruction was a primary inspiration for the postwar research that led to the development of New Media.”

    We already, unconsciously or not, practice the Bushian philosophy of using digital media to spread our vision of democratic technocracy.

    We can’t go wrong if we emphasize “the centrality of technological innovation and entrepreneurship for both economic and geopolitical security.”

    How far I’ve come since, and how fondly I recall, those quaint times when I did some shrooms and could have sworn the Red Chinese Army’s parachutes were landing on the beach.;-)

  18. Ben,

    Regarding culture, you may enjoy a post of Kevin Kelly on Brian Eno’s concept of “scenius”. It’s the idea that genius may sometimes reside more in a place and set of circumstances than in individuals. The post has some interesting examples and thoughts, although perhaps the main contribution is simply to name the phenomenon. Here’s a link: link to kk.org

  19. Ben Casnocha says:

    Awesome link. Very relevant.

  20. Kevin Burke says:

    This is interesting because I believe in poorer countries the percentage of people who own their own business is higher, and futhermore the conditions facing small business owners are more risky (hard to start a legal business, get credit, get insurance etc). Given the low income from running yet another mobile phone shop, corner grocery I’m surprised more people don’t try other things.

    Maybe the market’s bigger in the US.

  21. Seth Baker says:

    Nice post. I’m a long-time lurker but thought I’d chime in.

    I just spent a year in S. Korea and am currently traveling in SE Asia. All around me, I see small shops, people running their own internet cafes, bike rental places, food carts. The payouts aren’t huge, the businesses small, the hours are long…but they’re still entrepreneurs.

    In Korea, you had little family-run groceries on every block. Guys came onto the subway selling the strangest things (spandex arm socks, for example). Sure, a lot of Koreans want to work for one of the big conglomerates, but I felt there was more entrepreneurial activity in Korea than in many parts of the U.S., especially the Southeast.

    I feel like the culture of entrepreneurship in these places is more out of necessity; being an entrepreneur isn’t something you do because you want to ‘break out of the nine-to-five,’ but you do it because, for so many, there simply isn’t a ‘nine-to-five’ to break out of.

    Cheers,
    Seth

  22. Abhi S. says:

    Hope you’re holding up well, Ben.

    It seems to me like a major part of entrepreneurial culture is educational culture. I wonder how factors like total days/hours in school, curriculum rigidty, peer quality in classrooms, etc. affect entrepreneurship levels, particularly among the 18-24 year old cohort.

  23. MJ Guerra says:

    It’s so refreshing to read your blogs! It’s good to know there is a place in South America where entrepreneurship can be put to practice. I’m a US citizen living in Ecuador for a long time, and I have a bit of both cultures which gives me a wider perspective on social, political and economic issues. I wish I could say Ecuador is the place to make business but it’s not… the rules of the game are changed every single day which makes any investor in their right mind look toward other markets like Brazil and Chile. Being in the educational business I am planning on moving back to the States to make it happen for my own business, I love Ecuador and its people but unfortunately it’s a dead end.
    Cheers,
    Mary Jane Guerra

  24. Excellent post. Much of the literature focuses on the explicit forms of laws and economic coordination, and I imagine that’s because those are the variables that are easier to control as a policy maker. But the focus tends to imply that the right regulation and laws are the most important socioeconomic factors to positive outcomes.

    A thought experiment is to imagine the US with the exact same laws, but a culture of economic pettiness and untrustworthiness. In other words, imagine if every time someone got hurt at a friend’s house, they sued the friend. Or if every business dispute was legislated. Or even when lanes merged on highways, no one let every other car in. It’d be a horrible place to live, and trust would be so reduced that we wouldn’t be able to provide for each other economically.

    Rule of law is critical, but so is culture. Laws are relatively easy for a handful of leaders (e.g., elected officials) to change. Culture is not something a small number of individuals can change, and overall that’s a good thing. But if culture starts degrading (or needs upgrading), there’s not much of a lever to effect change.

  25. H. Lee says:

    Re: Michael Nielson

    The word genius itself contains the spark of scenius. That is, the genius of a person, gens(group of people who shared a surname) or place was the genius. That is, there already exists a concept for a spark of genius which resides in a place, not in an individual, and that is the genius loci. It’s not hard to say what the genius loci of Silicon Valley is. To say that you can legislate into place a genius loci is foolish: it is a function of culture.

  26. john says:

    what if you had a government who demeans wealth and thus the entrepeneurship that creates wealth, day in and day out?

    What if you had leaders who daily threaten business and entrepeneurs. ?

    What if you had a government that provides no certainty in taxation levels , (other than that it will be raised).?

    what if you had a govt that promises some of the highest taxes in the world, both corporately , and individually, especially to the successful?

    what if you had a government who promises never ending over regulation over every minute exercise of entrepeneurship?

    What if you had a govt that indicated they wanted to RAISE energy prices , and then systematically curbed production by using many govt tools to reduce the availability of cheap energy, on which ALL economic success is based.

    what if you had a government that sees entrepeneurship and captalism as a zero sum game, i.e., if one group is successful, they MUST have stolen what they have from another group

    What if you have a govt which casually dismisses a complaint about it losing other peoples money as in the probably corrupt Solyndra financing, as “some companies are successful some are not”, and then immediately launches a criminal investigation when a bank loses its own money, with no indication of anything other than poor trading

    What if the leader of the govt uses phrases like “I will not alow rich people to keep hundreds of thousands of dollars they dont NEED”

    What if America had a govt like that….what would THAT mean for entrepeneurship?

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