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Business Unplugged™
This blog features Carol Roth's tough love on business and entrepreneurship, as well as insights from Carol's community of contributors.

Why Really Smart People Make Lousy Entrepreneurs

Written By: Carol Roth | No Comments
In the context of entrepreneurism, sometimes smarter isn’t better

Sometimes ignorance really is bliss, especially when you think about starting an running a business.  I have been surrounded by Ivy League graduates, Mensa members and other ridiculously smart people for most of my life and they usually aren’t the best entrepreneurs.  Here are some reasons why:

The Golden Handcuffs Issue: Really smart people often have a lot of really lucractive career options available to them.  So, in terms of a new business, the risk / reward ratio is sometimes way out of whack.  To put it simply, if you earn $40,000 a year, a 50% increase (or $60,000 per year from a business) is more achieveable than if you are seeking a 50% increase on a $300,000 a year salary.  The higher the opportunity costs, the more you have to make to justify the risk.

They are Missing the Scrappiness Gene:  Ok, it might not be genetic, but those without a good fall back position (I can always go back to being a lawyer/consultant/VP) often hustle to find a way to make something work.  Those with a cushy  Plan B often don’t work hard, smart or creatively enough to ensure that the business succeeds.  

Overcomplication:  The smartest people often like to complicate matters (I have been guilty of this quite often).  There is a reason the phrase says “Keep it simple, stupid”.   Strong, scalable businesses are usually those that can be simplified, not those that are complicated.

Ego Factor: Smart people often have big egos.  They are unwilling to do things that help ensure their success because they have an MBA or a high IQ.  They think that just because they know about something they can run a business doing that same thing or may be unwilling to take a low-level job as a trial to gain experience, two issues that can torpedo their entrepreneurial efforts.

Now there are plenty of smart entrepreneurs and smart folks often have capital and connections.  But being street smart and scrappy may help you overcome some of the typical smart-people stumbling blocks.

Article written by
Carol Roth is a national media personality, ‘recovering’ investment banker, investor, speaker and author of the New York Times bestselling book, The Entrepreneur Equation. She is a judge on the Mark Burnett (Shark Tank, The Voice, Survivor, The Apprentice) produced technology competition series, America's Greatest Makers, airing on TBS and Host of Microsoft's Office Small Business Academy show. Previously, Carol was the host and co-producer of The Noon Show, a current events talk show on WGN Radio, one of the top stations in the country, and a contributor to CNBC, as well as a frequent guest on Fox News, CNN, Fox Business and other stations. Carol's multimedia commentary covers business and the economy, current events, politics and pop culture topics. Carol has helped her clients complete more than $2 billion in capital raising and M&A transactions. She is a Top 100 Small Business Influencer (2011-2015) and has her own action figure. Twitter: @CarolJSRoth