Saras Sarasvathy, a professor at the University of Virginia’s Darden School of Business, 
asked the question “What is learnable and teachable about entrepreneurship?”
She identified 245 US entrepreneurs who met specific criteria and interviewed 27 of them to learn the answers to her question in order to teach aspiring entrepreneurs.
She presented each with a hypothetical start up and 10 decisions that the founder would have to make in building the venture. Then she listened and let the entrepreneur talk through the problems for two hours.
Here are the main principles Sarasvathy shared from the study:
1. The burden of affordable loss
Sarasvathy explained, “They don’t start with a clear goal, instead they look around and ask what can I do? What value can I create?” It’s not about cash flow, but what can I do that’s in my control (my strengths, relationships and knowledge) and what can I afford to lose. They itch to get to market as quickly and cheaply as possible.
Expert entrepreneur: “I’d just go sell it. I don’t believe in market research. Somebody once told me the only thing you need is a customer… I’d learn a lot, you know: which people, what were the obstacles, what were the questions, which prices work better. Even before I started production.”
Entrepreneurs ask themselves, “Would I do this even if I lost time, effort and emotion that I put in to it?”
2. Bring others on board who are “self selected stake holders” to shape the vision
Chief among influential partners are first customers.
Expert entrepreneur: “People chase investors, but your best investor is your first real customer. And your customers are also your best salesmen.”
Sarasvathy says expert entrepreneurs have learned the hard way that having a real customer as a partner is better than knowing 10 things about a thousand customers in a hands-off way.
3. The model embraces surprises rather than a plan
Rather than the belief that if one can predict the future, they can control it, entrepreneurs believe that if they can control the future, they don’t need to predict it. Entrepreneurs thrive on contingency. It is confidence in their ability to recognize, respond to and reshape opportunities along the way, allowing them to improvise their way to a desired outcome.
4. The pilot and the plane principle
“The future comes from what you and I decide to do and the way we want to shape our futures and not from trends or predictions.”
“If you give them data that has to do with the future, they just dismiss it. They don’t believe the future is predictable… or they don’t want to be in a space that is very predictable,” says Sarasvathy.
Sarasvathy summarizes how expert entrepreneurs think – “It’s an inversion of logic.”
The Society For Effectual Action is a global research community advancing the study and practice of the entrepreneurial method begun by Sarasvathy.
If you’d like to learn more about this particular study, it’s outlined in more detail in Inc. Magazine’s February issue, plus check out this video where Sarasvathy discusses the entrepreneur’s mindset with Q&A about the study.
