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Towards an Untrepreneurial Economy: The Entrepreneurship Industry and the Rise of the Veblenian Entrepreneur

date Dec 12, 2020
authors Hartmann, Krabbe, Spicer
reading time 18 mins
category research paper


General trend: positive outcomes are becoming rarer

First, entrepreneurial outcomes are immensely skewed. Only a very small subset of entrepreneurial ventures make a meaningful contribution to growth, job creation or productivity improvements. The average entrepreneurial venture typically ends up as economically marginal, undersized and poorly performing enterprise, or a ‘Muppet’. The second finding is that the skewness of the outcomes distribution seems to be decreasing over time, because positive outcomes are becoming rarer.

Entrepreneurship Industry

This is an industry focused on encouraging and supporting the pursuit of entrepreneurial opportunities by providing goods and services specifically for entrepreneurs.

Veblenian Entrepreneurship

This form of wasteful entrepreneurship is what we refer to as Veblenian Entrepreneurship. That is entrepreneurship that masquerades as being innovation-driven and growth-oriented but is substantively oriented towards supporting the entrepreneur’s conspicuous identity work.

Rarity of Unicorns and Gazelles

While it is certainly true that entrepreneurs play an important role in economic development and industrial transformation, it is also true that only some entrepreneurs have this kind of impact. While popular accounts of entrepreneurship tend to focus on billion-dollar companies (‘Unicorns’) and fast-growing firms (‘Gazelles’), these kinds of entrepreneurial successes are incredibly rare and the outcomes of entrepreneurship are, in the scholarly literature, increasing described as Pareto distributed.

When does veblebian entrepreneurs increase in numbers

A profusion of Veblenian entrepreneurship is especially likely during periods of rapid growth in new industries, where entrepreneurs flock ‘contagiously’ into an emerging field. Such rapid entry is already recognized as a potential cause of bubbles, which may be detrimental to technological progress.

Things to be aware of as a Veblenian Entrepreneur

Overconfidence, optimism, overestimation of quality and abilities

Psychological explanations tend to emphasize characteristics like overconfidence, risk tolerance and optimism. These factors lead entrepreneurs to overestimate the quality of their ideas, their individual abilities and their likelihood of success.

Increase in activity does not mean increase in performance

…that consumption of the industry’s products increases entrepreneurial activity but lowers both entrepreneurial performance and survival chances. Taken together, this suggests that an expanding Entrepreneurship Industry – or ‘Entrepreneurship-Industrial Complex’ – might be complicit in growth-oriented entrepreneurs failing to execute on their intentions.

Appears dynamic, but lacks true innovation

This an economy that outwardly appears dynamic and entrepreneurial, but is rife with inefficiencies and lacks substantive innovative capacity. The Entrepreneurship Industry leverages the Ideology of Entrepreneurialism to create products and services that can be marketed to aspiring and active entrepreneurs. The industry grows its own market by encouraging greater entry into entrepreneurship and persistence in entrepreneurial ventures, irrespective of their likelihood of success.

Difference: economics to conspicuous consumption

In doing so, it has transformed entrepreneurship from a generally gainful economic activity driven by the pursuit of (potentially) valuable opportunities into a largely wasteful form of conspicuous consumption motivated by aspirations to ‘live the tech entrepreneur lifestyle’ and the socially attractive identity of ‘being an entrepreneur’.

Low productivity, low innovation

As a result, they are poor performers: they have low productivity and low levels of innovation, and generate churn rather than economic growth”. By implication, it is quite reasonable to ask whether both society and the entrepreneur might not have been better off not pursuing the opportunity in the first place.

Identity of an entrepreneur

and started to see myself as an entrepreneur. In fact, that’s a very safe title to have. I mean you bump into so many ‘founders’, ‘co-founders’, ‘CEOs’ all the time, but no one knows how big your company is—is it a one-man show, how much revenue you’ve gen- erated, or how successful your business is—no one has to know.”

Entrepreneurial opportunity vs desire to be an entrepreneur

Veblenian entrepreneurship is not triggered by entrepreneurial opportunities. Veblenian entrepreneurship is triggered by the desire to be an entrepreneur, to build the identity of being an entrepreneur and to ostentatiously project that identity to an audience witnessing and appraising the entrepreneur.

Socially fun activities

Pitching, networking and idea competitions have substantial value-adding purposes for innovation-driven entrepreneurs, while for Veblenian entrepreneurs, networking events are mainly an opportunity to socialize, have fun, maybe even get drunk in good company and pick-up a date.

True innovation-driven entrepreneurs vs Veblenian entrepreneurs

Innovation-driven entrepreneurs often depend on relatively deep technical knowledge to create their product and take inspiration for business and management ideas to shape their strategies. In contrast, Veblenian entrepreneurs rely on much more superficial levels of insight. They do not possess the deep technical knowledge required to understand the affordances, complementarities and potential improvement trajectories of technologies. They only have a minimal viable conversancy which allows them to engage in tech-talk with other Veblenian Entrepreneurs and to effectively ‘bullshit’ to similarly non-technical audiences.

Lack of experience as imaginative and creative!

Veblenian entrepreneurs often see their lack of industry experience an asset that sets them free to imagine grand alternatives, irrespective of the viability of those alternatives.

Getting VC funded

For Veblenian entrepreneurs, the very act of trying to acquire venture capital is an end in itself. Doing so signifies that one is indeed a ‘true entrepreneur’, irrespective of whether that funding comes from ‘serious’ venture capitalists or from friends and family. In this way, venture capital is an object which helps to justify the entrepreneur’s legitimacy and authenticity. For the Veblenian Entrepreneur, technology similarly ceases to be the tool that it is to the innovation-driven entrepreneur. Instead, it becomes a fashion statement. Using a fashionable technology (Blockchain being the flavor of the current moment) is a sign that the entrepreneur is working with something truly visionary and cutting-edge and that the entrepreneur is forward-thinking and up to date.

Emulating successful entrepreneurs

The Veblenian Entrepreneur’s primary purpose is signaling and emulation of successful entrepreneurs. They may therefore appear more like successful entrepreneurs than actual innovation-driven entrepreneurs, who might be less concerned with outward appearances. Paradoxically, Veblenian Entrepreneurs may therefore be easier to pattern match to previously successful entrepreneurs.

Inspiring work vs labor market

It enables individual to conform with the dominant ideology of meaningful and inspiring work despite the constraints imposed by the realities of the labor market, by creating work for oneself and side-stepping labor-market demands, provided of course that one can finance an extended period without actual income, for instance through an allowance from parents or supported by a gainfully employed spouse.

Types of activities

Budding entrepreneurs can partake in bootcamps, internships and networking events where their dreams of creating meaningful ventures will be affirmed, supported and insulated from actual market forces. They can read books and magazines affirming that they too can achieve success as entrepreneurs. They can actively seek out environments with other entrepreneurs and receive encouraging feedback. Such consumption offers a new aspiration for the individual to pursue a fulfilling, exciting and socially esteemed career path which is unhindered by bureaucratic constraints of corporate life and socio-economic realities of their labour market.

Pitching to an audience of VC is a rite of passage

By forming and pitching an entrepreneurial venture, the individual commits to moving beyond being a ‘hang-around’ to becoming a full participant. In their study of student entrepreneurship in a university, Chen and Goldstein (forthcoming) found that the act of pitching a venture was an important rite of passage into the entrepreneurial community. They observed that “giving a pitch to an audience of potential investors is the accomplishment that dubs thee entrepreneur.

Theatre of entrepreneurship

Through intensified consumption of these goods, aspiring entrepreneurs refine their conformity to the tenants of the entrepreneurship. They become increasing competent performers of the entrepreneurial ‘habitus’ in what Chen and Goldstein (forthcoming) call ‘the theatre of entrepreneurship’. This often means becoming adept performers at using the right rhetoric and dressing, talking and interacting like others in the entrepreneurship community.

Disregard to substantive milestones

The kind of substantive milestones and successes that innovation-driven entrepreneurs might achieve (e.g. first product ready to ship, first sale, profitability, etc.) rarely materialize in the Veblenian Venture. This means Veblenian Entrepreneurs must rely on consumption to build legitimate participation.

Reframing negatives as positives

Rather, it a kind of learning involving advisors in the Entrepreneurship Industry and more experienced peers (who are also Veblenian Entrepreneurs, with few experiences of success, if any). They help the new Veblenian Entrepreneur reinterpret market signals that non- entrepreneurs would view as negative and re-frame them as positive.

Reframing failure as a positive

Users of the products of the entrepreneurship industry learn how to use them correctly, then are also coached to recognize their effects, but most crucially to interpret what would otherwise be seen as negative outcomes (such as failure) as being a positive (a chance to learn). Such negative feedback might include both weak and strong signals that the technology or market is not attractive or viable

Failure as a badgeof honor and then going onto becoming a startup mentor, coach, advisor

They can explain this move to themselves by thinking that having a failed start-up is in fact a ‘badge of honor’. In this way, failure may be taken as a blessing in disguise, because it sets the Veblenian Entrepreneur free to pursue new and more currently fashionable opportunities. The result is further consumption of the products of the Entrepreneurship Industry. Finally, in case of failure reaching a threshold value for the individual, he or she may choose to abandon entrepreneurial aspiration in order to participate in the Entrepreneurship Industry by becoming a start-up mentor, a coach in an accelerator or something similar. In other cases, they might exit the field of entrepreneurship all together, abandoning the identity and attempt to construct another sense of self to sustain them.

Why are there Veblenian entrepreneurs

No other opportunities

One explanation suggests that entrepreneurs may pursue their ventures because they lack good alternative options. These ‘necessity entrepreneurs’ might not be pursuing a venture because they want to do so, but simply because they cannot find other work to fit their skills.

Sustaining entrepreneur identity through peer recognition and social esteem

Once the entrepreneur has founded a venture and become more intense consumers of the Entrepreneurship Industry’s products, several dynamics get going that contribute to intensifying this consumption. These are peer recognition, distortion of market signals and identity addiction. Peer recognition can come from other entrepreneurs as well as from one’s wider social circle. Saying you are an entrepreneur or CEO of a start-up sounds impressive to friends and family who might have little idea of what this practically entails. Such recognition can affirm entrepreneurs that what they are doing is indeed socially esteemed, and therefore worth doing. Non-entrepreneurial peers may admire Veblenian Entrepreneurs’ grand visions and their commitment to living the dream.

Gainful employment of a failed entrepreneur

Certainly, there are some employers who appreciate employees who are risk-taking and bold, but there are unlikely to be many employers who appreciate employees who consistently fail and consider these failures a great virtue. Moreover, having learned to tolerate failure may lead entrepreneurs to not learn from their experiences in subsequent paid work, because failure does not occasion pause and reflection.

Entrepreneurship Industry

Types of activities in the “Entrepreneurship Industry”:

  • conferences and expos
  • scholarly books and journals
  • mass audience books and magazines
  • infomercials and programs for TV and radio
  • administrative, legal and accounting support
  • training seminars
  • consulting and advisory services
  • entrepreneurship-focused web-based content and commerce
  • government-support programs
  • entrepreneurship-focused university programs

Similarity with other industries: management, leadership, CSR, innovation

The products of this growing industry are best construed as “cultural products” marketed specifically to help realize ambitions of entrepreneurial success. In this way, they resemble the products of the wider industry for management ideas, which includes more specialized sub-industries like the ‘leadership industry’, the CSR industry or the ‘innovation industry’.

Workshiping entrepreneurs

This ideology provides a way of thinking and talking about entrepreneurship that extolls entrepreneurship and risk-taking as virtuous and lionizes entrepreneurs and their contribution to economic progress.


This ideology has also contributed to making it socially acceptable and even glorious to invent, start businesses and get rich from doing so, and likely led to a reallocation of effort by individuals rich in initiative and skill from unproductive or destructive activities such as pursuing wars towards more (economically) productive ones

Motivated individuals

“The raison d’être of [the Entrepreneurship Industry] is to promote the belief that individuals who are motivated to develop opportunities through entrepreneurial action have the potential to harvest lucrative outcomes”

Products that works on empwoerment and inspiration, but doesn’t produce any tangible results

This might imply that the industry is perversely incentivized to provide products and services that do not actually have positive effects, but still satisfy the entrepreneur-consumers and give them a sense of having been empowered and supported.

Muppet factory producing poorly performing ventures

the Entrepreneurship Industry is perhaps best thought of as a ‘Muppet Factory’: an industrial-scale manufacturer of products and services ultimately produce poorly performing ventures.

Role of the universities

The authors examined how the university made encouraging entrepreneurship the centerpiece of its own agenda. Like many other universities, they set up business incubators, pitching competitions, coaching programs and various entrepreneurship fairs. Many students joined and sought to launch ventures. Third-wave feminist sociology students would remodel themselves as bio-tech entrepreneurs. They would receive support and mentoring from the various entrepreneurship programs offered by their university and they would build and pitch their venture. But the vast majority struggled to get beyond even the first stage. Eventually, many put aside the life of a (failing) entrepreneur to find steady jobs and start paying off their substantial debts from college. Often the results were a far cry from the grandiose ambitions they were encouraged to pursue.

Socially valued, but no economic outcome

The wider cultural celebration of entrepreneurship that is enabled by the Ideology of Entrepreneurship and propagated by the Entrepreneurship Industry can turn entrepreneurship into an activity that it is socially valued to partake in irrespective of its economic outcomes. It can also turn entrepreneurship into an activity that can support identity work.

Conspicuous consumption

Conspicuous display of the identity

This is entrepreneurship driven primarily by the desire to build an identity of ‘being an entrepreneur’ and to conspicuously display that identity by enacting the lifestyle of the ‘tech entrepreneur’. In the lifecycle of the Veblenian venture, entrepreneurs launch ventures that outwardly appear as innovation-driven. Veblenian entrepreneurs can, however, be trapped in vicious recursive cycles of failure, escalating consumption, positive peer responses and distortion of market signals that make them persist in ventures that would have been best abandoned.

Example of how conspicuous consumption has changed from upper middle class to poor

For instance, one study of upper-middle class consumption patterns in the United States found that many members of this group used the consumption of immaterial goods such as yoga classes, organic foods and costly education as ways of signaling their status. In contrast, poorer parts of the US populations would tend to engage in showy consumption of material goods.

How work has become a conspicuous consumption

As the boundaries between work and leisure have become blurred, work has also become a site of consumption and ceased to be ‘just’ a site of production. Work has taken on an expanded meaning and no longer serves only as to a source of security and a stable income, but also to be a place to experience autonomy, be creative and express oneself. It has become a site where people engage in ‘identity work’ and try to ‘be themselves’.


For instance, young people from wealthy families might undertake a lengthy series of internships at prestigious organizations or in high-status industries in order to signal their social worth. These internships are often very costly to undertake because they are being paid little or nothing and require people to live in very costly global cities like New York, San Francisco, Paris or London. Sometimes this social status and experience can be transformed into gainful employment in the industry, but all too often this kind of activity is simply a very costly status marker.

Lessons to learn in other areas

Moving out resources

For instance, if communities recognize that encouraging large amounts of young people to become entrepreneurs is resulting in few success stories and many more costly failures, then they might begin to reflect on the value of continuing to push their ideological commitments and funding the Entrepreneurship Industry. Such a process of reflection may lead to resources being moved out of this industry and into others.

Laour market

As regards the labor market, Veblenian entrepreneurship has helped soak up the increasing supply of highly educated young people who struggle to find employment in large organizations which match their skills and expectations. This means that instead of languishing in un- or under-employment (e.g. college-educated baristas), skilled young people can take part in the simulation of work provided by Veblenian entrepreneurship before joining the more traditional labour force. This effectively eases pressure on the labour market and helps to deal with the potentially dangerous collective resentment that might be created by having a large population of well-educated young people with few opportunities.

Societal delusion

It is clear that entrepreneurship can be economically valuable, and that some element of entrepreneurial activity is immensely important to society. However, a profusion of Veblenian entrepreneurship can create a series of societal delusions about entrepreneurialism. With Veblenian entrepreneurship, a society can seem to be rife with initiative and growth-oriented entrepreneurs, while the quality of that entrepreneurship is actually low and unlikely to contribute to any widely-shared policy goals.

What does glamorous startup hubs attract?

Supporting start-ups directly is likely to have substantial deadweight and substitution effects especially when Veblenian Entrepreneurship is prevalent. Indirect funding of the material and social infrastructures (e.g. cluster initiatives or lavishly funded entrepreneurial hubs) intended to support entrepreneurs and to create a vibrant ‘start-up scene’ can easily end up attracting mostly fashion-following Veblenian entrepreneurs who are drawn to the ‘vibe’ of a cluster but are unlikely to succeed.

Gov funding

When governments contribute to ‘hyping’ up entrepreneurship, a substantial portion of that investment will likely end up financing the expansion of the local Entrepreneurship Industry and not the high-quality ventures that it aims for.

Lose of other creative pursuits

Conceivably, the romanticizing of entrepreneurship could finally lead creative individuals to channel their energy and talent that might otherwise have gone into cultural production or collective action. Instead of starting a band, creating experimental art, making films, doing political work or attempting community organizing, they might be convinced that real counter-cultural impact is achieved through grandiose and failure-prone entrepreneurial ventures (e.g. ‘Disrupt the financial industry!’) which produce little or no real social value.

VC funding is affected

We can also imagine that the presence of many Veblenian entrepreneurs will increase the risk of seed stage investments, leading to an actuarial increase in the price of equity. This could deter investment by venture capitalists and reducing the overall level of funding available for early stage ventures. It could also drive high-quality entrepreneurs out of the venture capital market as they look for investors elsewhere, because they find the market value of their equity unsatisfactory. Both dynamics – crowding out and price increases – may lead potentially valuable ideas to go unfunded, slowing down rates of technological progress and, by implication, slowing down economic growth.


  1. It may be prudent to refocus policies on enabling entrepreneurship by older, more experienced people rather than the young and inexperienced
  2. It may be important to appreciate how policies interact with the Entrepreneurship Industry.
  3. Educators are complicit in marketing of the ideology of entrepreneurship and ignoring the substantial risks that individuals incur when undertaking entrepreneurial ventures and the negative societal consequences that can arise from encouraging people to ‘be an entrepreneur’ when they lack skills and ideas to succeed.