The Dream Factories

Why do people start companies?

At the heart of capitalism is the small start-up—the new project founded on an idea and some hustle that creates something new out of nothing. If the idea catches on, the founders can become quite wealthy. If the idea falters, the founders learn what doesn’t work and move on.

Many entrepreneurs fail in their first few tries. It’s an expensive tuition. That’s because there are far more things that don’t work than do. It’s like science: knowledge grows by proving what doesn’t work. But experimenting with your life can be a volatile experience.

Most startups are founded by technicians—engineers, design professionals, cooks—who understand how to make a product, but not necessarily how to run a business. They pick up the business skills along the way. Sometimes, the idea is so good that they never have to pick up the skills. But they don’t usually do it for the money; they do it for the adventure, or because they have a vision, or because it gives them a sense of control over their own future, instead of wilting inside a corporate bureaucracy.

Start-ups succeed because new ideas often do not scale well. Sometimes there is a payout at the end, more often there is not. But a startup allows its founders to dream. And they believe, as some have said, that if you can dream it, you can do it.

Douglas R. Tengdin, CFA

Chief Investment Officer

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