Outlier entrepreneurs: Nonlinear paths and novel ventures

Outliers in entrepreneurship are founders who are markedly different—both quantitatively and qualitatively—relative to the “normal” population. We use a power law perspective to hypothe- size that, in order for new ventures to persist, founders with outlier endowments are more likely to have novel expectations about the opportunities they pursue and greater variation in the exe- cution methods they employ, while normal founders are more likely to have much lower expecta- tions and engage in a manner that is confined to fit within the smaller scope of explicit market de- mand. We leverage data from the Panel Study of Entrepreneurial Dynamics II, a longitudinal rep- resentative sample of 1214 nascent entrepreneurs organizing resources in preparation for startup, and employ fuzzy set qualitative comparative analysis to investigate our hypothesized relation- ships. In support, the results suggest that founders need to stay in their lane for their ventures to persist: whereas outlier founders have the option to successfully pursue more ambitious opportu- nities—those that are innovative, growth-oriented, and international focused—normal founders are primarily resigned to niche opportunities. Even more interesting, ventures are much less likely to persist when there is a misalignment between endowments, expectations, and engage- ment (i.e., when outlier founders pursue niche opportunities and normal founders pursue aspira- tional opportunities). This study makes meaningful contributions to the power law perspective, to the growing interest in outliers and exceptionality in entrepreneurship, and to the domain’s ag- gregated knowledge of new venture persistence.