Where do entrepreneurs come from? What makes technology-based startups tick? How do these nascent firms grow and scale in relation to their decisions around hiring, financing, and commercialization strategy?
My research draws from the rich interplay of phenomenon and theory in the area of entrepreneurship and strategy. My dissertation research is generously funded by the Kauffman Foundation and supported by the US Census Bureau.
"Is There a Startup Wage Premium? Evidence from MIT Graduates"
Published in Research Policy Vol. 47 No. 3 (2018): 637-649
Link to Paper
Abstract: While startups are the center of extensive policy discussion given their outsized role in job creation, it is not clear whether they create high quality jobs relative to incumbent firms. This paper investigates the wage differential between venture capital-backed startups and established firms, given that the two firm types compete for talent. Using data on MIT graduates, I find that non-founder employees at VC-backed startups earn roughly 10% higher wages than their counterparts at established firms. To account for unobserved heterogeneity across workers, I exploit the fact that many MIT graduates receive multiple job offers. I find that wage differentials are statistically insignificant from zero when individual fixed effects are included. This implies that much of the startup wage premium in the cross-section can be attributed to selection, and that VC-backed startups pay competitive wages for talent. To unpack the selection mechanism, I show that individual preferences for risk as well as challenging work strongly predict entry into VC-backed startups.
"Age and High-Growth Entrepreneurship" (with Pierre Azoulay, Benjamin Jones, and Javier Miranda)
Conditionally Accepted in American Economic Review: Insights
Link to Paper
Abstract: Do young people make better entrepreneurs? Many observers, and many investors, believe that young people are especially likely to produce the most successful new firms. We use administrative data at the U.S. Census Bureau to study the ages of founders of growth-oriented start-ups in the past decade. Our primary finding is that successful entrepreneurs are middle-aged, not young. The mean founder age for the 1 in 1,000 fastest growing new ventures is 45.0. The findings are broadly similar when considering high-technology sectors, entrepreneurial hubs, and successful firm exits. Prior experience in the specific industry predicts much greater rates of entrepreneurial success. These findings strongly reject common hypotheses that emphasize youth as a key trait of successful entrepreneurs.
"Predictable Exodus: Startup Acquisitions and Employee Departures" (Job Market Paper)
Link to Paper (Please email to access the latest version)
Abstract: This paper investigates the effectiveness of startup acquisitions as a hiring strategy. Unlike conventional hires who choose to join a new firm on their own volition, most acquired employees do not have a voice in the decision to be acquired, much less by whom to be acquired. Startup acquisitions therefore provide an empirical setting in which non-founding employees – from these individuals’ perspective – are quasi-randomly assigned a new employer. I argue that the lack of worker choice lowers the average match quality between the acquired employees and the acquiring firm, leading to elevated rates of turnover. Using comprehensive employee-employer matched data from the US Census, I document that acquired workers are significantly more likely to leave compared to regular hires. Moreover, I demonstrate that these departures can be largely predicted ex-ante. Leveraging population data on career histories, I construct a measure of “startup affinity” for each target and acquiring firm based on pre-acquisition employment patterns, and show that this strongly predicts post-acquisition worker retention. Lastly, these departures suggest a deeper strategic cost of competitive spawning: Upon leaving, acquired workers are more likely to found their own companies, many of which appear to later compete against the buyer.
"Entrepreneurship and Innovation at MIT: Continuing Global Growth and Impact" (with Ed Roberts and Fiona Murray)
Forthcoming in Foundations and Trends in Entrepreneurship
Link to 2015 Report: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2772695
Abstract: This study analyzes the economic impact of MIT alumni-founded companies and highlights the key trends in the MIT entrepreneurial ecosystem between 1950 and 2014. Based on a large-scale survey of all living MIT alumni in 2014, we estimate that MIT alumni have launched more than 30,000 active companies that employ roughly 4.6 million people and generate $1.9 trillion in annual revenues, which is approximately the size of the world's 10th largest GDP. We highlight the role of foreign-born students as entrepreneurs and innovators as well as key trends in the alumni-founded ventures’ industry composition, firm performance, and economic impact through job creation and sales. Lastly, based on the lessons from MIT in the past 60 years, we discuss various implications for university leadership for designing and implementing educational curriculum and programs to address the evolving nature of alumni entrepreneurship and innovation.
"Just Passing Through: Characterizing U.S. Pass Through Business Owners" (with Nathan Goldschlag and Kristin McCue)
Abstract: We investigate the use of administrative data on the owners of partnerships and S-corporations to develop new statistics that characterize business owners. Income from these types of entities is "passed through" to owners to be taxed on the owners' tax returns. The information returns associated with such pass-through entities (Form K1 records) make it possible to link individual owners to the businesses they own. These linkages can be leveraged to associate measures of the demographic and human capital characteristics of business owners with the characteristics of the businesses they own. This paper describes measurement issues associated with administrative records on these pass-through entities and their integration with other Census data products. In addition, we document a number of interesting trends in business ownership among pass-through entities. We show a substantial decline in both entry and exit with less churn among both owners and owned businesses. We also show that the owners of pass-through entities are older, more likely to be male, and more likely to be white compared to the working population.