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)
Stage: Under Review
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.
"The Strategic Cost of Startup Acquisitions (Job Market Paper)"
Abstract: Over the last few decades, incumbent firms have increasingly acquired startup companies, commonly motivated by a desire to bring in new talent. However, unlike regular 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. The lack of worker agency may result in a preference mismatch between the acquired employees and the buyer firm, leading to excessive turnover relative to organic hires. Using employee-employer matched data from the US Census, I find that acquired workers are much more likely to leave compared to regular hires. By constructing a novel peer-based proxy for worker preferences, I show that acquired employees who prefer to work for startups – rather than established firms – are the most likely to leave after the acquisition, lending support to the preference mismatch theory. Moreover, these departures demonstrate a deeper strategic cost of competitive spawning: upon leaving, acquired workers are more likely to found their own firms, many of which appear to be competitive threats that impair the buyer firm’s long-run performance.
"Entrepreneurship and Innovation at MIT: Continuing Global Growth and Impact" (with Ed Roberts and Fiona Murray)
Link to 2015 Report: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2772695
Abstract: This report analyzes the economic impact of MIT alumni-founded companies and highlights the key trends in the MIT entrepreneurial ecosystem between 1950 and 2014. This study estimates 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.
"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.