Published in the San Diego Union-Tribune, June 26, 2017
I recently returned from another day at Donovan State Prison where I spend time with Defy Ventures as a mentor to a group of 34 inmate entrepreneurs in training (EIT). There were 53 volunteers, many of them the repeat, usual suspects that my gang has assembled over time, but let me also give a shout-out to Denise Gitsham, who brought a group of 20-plus as well.
A theme that runs through the program is that our EITs are already entrepreneurial. They ran businesses with overhead and employees, they had revenue, gross margin, cost of goods and net profit; the only limiting issue to their success was that many of their schemes were illegal. But the idea of the hustle is deeply ingrained in my boys. They do not need to be encouraged to do the hard work. They are already highly motivated.
Richard Florida, who writes for the Atlantic magazine, tells this story. “I asked a very successful venture capitalist what it took to be successful at high-tech startups. He stared right back at me and blurted out, ‘About the same thing it takes to be a successful drug dealer.’”
Professors Ross Levine, UC Berkeley, and Yona Rubenstein, London School of Economics, ask the question: Are risk-taking young rule-breakers more likely to grow up to become entrepreneurs? And the answer behind door No. 3 is yes. “People who found their own businesses are more likely to have engaged in cutting classes, vandalism, shoplifting, gambling, assault, and using alcohol and marijuana.” But hang on, all is not lost. “They were also more likely to have higher levels of education, score higher on aptitude tests and have higher levels of self-esteem.” Wow, talk about a complex dichotomous puzzle. We applaud good behavior, but it appears that the “hustler” in us might be a more prevalent determinant of future earning power. (The study actually refers to an “Illicit Activity Index.”) I wonder if Homeland Security knows about this.
The study shows that the “incorporated entrepreneur” makes more money than the unincorporated. But the study also discounts that self-employment alone does not necessarily reflect entrepreneurism. (Yours truly does not agree here.) After all, the LLC vehicle (Limited Liability Company) is enormously prevalent today and any smart hustler would try to avoid the corporate double taxation of today.
Here comes the crusher. “Entrepreneurs were twice as likely as salaried employees to report having taken something by force in their youth. They were 40 percent more likely to have been stopped by the police.” Yikes. I had a misspent youth and didn’t know it. “It is the high-ability person who tends to break the rules as a youth who is especially likely to become a successful entrepreneur.”
The Donovan/Defy day has an exercise called “step to the line” where certain sentences are called out and if it applies, you step to the line. This is the moment when both the volunteers and the EITs look across at each other and are asked hard questions about their own past — education, crime, poverty, hunger, divorce, gangs, violence, abuse, loss of innocence — hard stuff. On each call out, when I looked down the line I was amazed to see many of the volunteers (all successful individuals) standing there with some darkness in their past. They had some personal scars, which I guess was why they had volunteered to come.
Now, there is always a study that can prove something, and I am inclined to take this one with two grains of salt, but the core finding gives me even more resolve to work within the prison system to teach and encourage entrepreneurship. My boys will hustle harder, and I am a believer in second chances.
Finally, the study touches the third rail of privilege. Even if the “smart and illicit” tendencies are predictive of entrepreneurship, the overwhelming majority of the people who fall under this category are white and well-off, who in slightly different circumstances (they did something illegal but did not get caught or had a good lawyer) might find themselves as Bubba’s cellmate. After all, when the question was asked if they had ever done something illegal (like driving under the influence or shoplifting), but gotten away with it, almost every volunteer was standing on the line.
Rule No. 527: There but for the grace of God go I.