What drives US entrepreneurship?

How does running a business differ around the world? In a new series, the BBC News Website is speaking to successful entrepreneurs from around the globe about the secrets of their success, and the challenges they have faced. In the first instalment, three US business people explore what drives American entrepreneurship.

Tom Ryan is just your typical, easy-going American entrepreneur – he wants to take over the world.Mr Ryan is founder of restaurant chain Smashburger, one of the fastest-growing companies in the US.

From just one outlet in Denver in 2007, it now has more than 150 branches nationwide, and will later this year open its first foreign sites in Kuwait, Canada and Costa Rica. Europe and Asia are then due to follow.Aiming to reach 500 US branches within the next few years, Smashburger’s current global ambition is for ultimately 2,000 international outlets.

Mr Ryan, a restaurant industry veteran, says: “Everyone said the burger industry in the US was too crowded for a new entry, but I was sure there was a place for a new chain offering much higher quality than the established players.”

Backed by a private equity firm, Smashburger was immediately popular with American consumers, and its expansion quickly started.

Mr Ryan adds: “Obviously I’m delighted with how things have gone. I knew we had a strong concept, and therefore a fighting chance.”

Smashburger is far from unique in the US.

The likes of Google, Twitter and Facebook may not make hamburgers, but all three were also just start-up businesses not too many years ago. Facebook was only established in 2004, and Twitter was not set up until 2006.
Facebook was first started in a university dormitory, and Google’s early days were based in a garage.But as the US continues to produce a wealth of start-up companies that quickly grow to dominate their marketplaces, what are the reasons behind America’s continuing entrepreneurial success – and can they be copied?

And are successful entrepreneurs born or bred?

Californian Eric Ries may be just 33, but he’s a Silicon Valley veteran.
With a number of technology sector start-ups behind him, “some successful ones, and some failures”, he is now an in-demand start-up adviser, and author of The Lean Start-Up.

Mr Ries says that when it comes to supporting entrepreneurship, the US has some key advantages over Europe and other parts of the world.

“There are definitely cultural factors in the US’s favour, perhaps most importantly a willingness to tolerate failure,” he says.

“In Europe if you fail in business you are going to find it very difficult to borrow money the next time around, but in the US it is almost seen as a useful experience to have gone through.”

Mr Ries adds that this all makes American entrepreneurs more willing to take risks.”On top of this, some European countries have very high personal liability levels for entrepreneurs, which is a terrible mistake,” he says.

“Regulations are also lower in the US for smaller firms. Add all these together, and you can see the advantage the US has.

“But it is not all one-sized; there are still some great firms in Europe.”

‘Smaller governments’

Julie Meyer is a US entrepreneur who lives and works in London, where she is chief executive of investment fund Ariadne Capital.This invests £55m per year in early stage technology businesses.

Ms Meyer agrees that more Americans are willing to take a chance on starting up their own company, which she says is a “cultural thing”.
“But I don’t want to stress the US market too much. I believe we have excellent entrepreneurs in the UK, it is just the available financing and tax policies that lag behind.

“The UK government needs to cut taxes for small firms to help spur growth and act as an incentive. “Overall this would mean more successful small firms and therefore more tax revenues.”

Looking across Europe in general, Ms Meyer says generations of left-leaning governments have held back entrepreneurship.

“The welfare states across Europe have not helped boost entrepreneurship, because governments have told people ‘don’t worry, we’ll look after you’ instead of ‘you have a unique contribution to make’,” she says.

“Instead governments need to be much smaller, with more focus on individuals. And we are now heading in that direction, because European governments suddenly realise they cannot afford to be so large.”

‘Right stuff’

But if European nations want to copy more of American-style entrepreneurship, how easily can this be achieved? Or is it simply that more entrepreneurs are born in the US?

Mr Ries says: “I’m definitely not one of those people who say that entrepreneurs are born with the ‘right stuff’.”It is teachable, but countries have to change their cultures and rules to help support successful start-ups. That’s the US’s cultural advantage.”

Julie Meyer also says she doesn’t believe entrepreneurs are born.

“You aren’t born, rather I think entrepreneurs are nurtured,” she says.
“My father was an entrepreneur, so I realised it was not the easiest choice to make. But I knew it was what I wanted to do, and I had that experience to draw upon.”

Smashburger’s Tom Ryan says that while entrepreneurs may have “a little bit of creativity that is not inherent in others”, the first two key factors to success in business are your product and your business model.He adds: “The third is work with great people; you need these to make everything come together. Entrepreneurs can’t work on their own.”

By Will Smale Business reporter, BBC News

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