"A Garage and an Idea: What More Does an Entrepreneur Need?" by Pino G. Audia
and Christopher I. Rider, published in California Management Review (Fall 2005):
Research Objective
The article critically examines the widespread belief known as the "garage myth"—
the idea that many successful entrepreneurs start their companies in garages,
symbolizing innovation, hard work, and independence. The authors investigate three
key questions: How popular is this garage belief? How accurate is it in describing
entrepreneurial reality? And why does this belief persist despite evidence to the
contrary? The study aims to clarify what entrepreneurs truly need beyond just a
garage and an idea.
Core Ideas and Theoretical Framework
The "garage belief" is deeply embedded in American entrepreneurial lore, with iconic
examples such as Hewlett-Packard (HP), Apple, Walt Disney, Mattel, and Wham-O
often cited as companies that began in humble home spaces like garages. This
belief evokes powerful images of bootstrapping, ingenuity, and the American Dream
of upward mobility through hard work and self-reliance.
However, the authors argue that this myth presents an undersocialized and overly
simplistic view of entrepreneurship. Instead, they propose the concept of
entrepreneurs as "organizational products"—individuals whose entrepreneurial
success largely stems from psychological and social resources acquired through
prior work experience in existing organizations, especially within related industries.
The theoretical framework highlights four critical resources that organizations provide
to potential entrepreneurs:
1. Confidence (Mastery Experience): Employees build self-efficacy by
successfully performing tasks relevant to entrepreneurship while working in
organizations.
2. Vicarious Experience: Observing peers succeed in entrepreneurial efforts
within or related to the organization helps build belief in one’s own potential.
3. Access to Information: Organizations serve as conduits for fine-grained
industry knowledge and entrepreneurial opportunities that outsiders typically
lack.
4. Social Networks: Employment provides access to social ties with colleagues,
customers, suppliers, and investors, which are essential for mobilizing
resources to start a new venture.
Key Findings
Popularity of the Garage Myth
,Surveys conducted among business school students and the general public reveal
strong familiarity with the garage entrepreneur image. For example, 89% of business
students and 87% of a random sample of adults could name at least one company
started in a garage, basement, dorm room, or kitchen. Respondents estimated that
roughly 30-48% of entrepreneurs start businesses in such informal settings.
Media analysis from 1980 to 2003 shows a strong correlation (0.95) between the
number of news articles referencing entrepreneurs and garages and the amount of
venture capital invested annually. This suggests that the garage myth gains
prominence alongside peaks in entrepreneurial activity, especially during the dot-
com boom.
Accuracy of the Garage Myth
To test the myth’s accuracy, the authors surveyed 32 startups that had received
venture capital funding in 2004. Only 25% of these companies actually began in
garages, basements, dorm rooms, or kitchens—and even then, these were
temporary arrangements until more formal office space was secured.
More importantly, 91% of these startups were related to the founders’ prior work
experience, and 66% were founded by individuals with strong prior social ties, such
as former colleagues, friends, or family. This supports the view that entrepreneurship
is a social process deeply embedded in prior organizational contexts.
Case Studies: Hewlett-Packard and Apple
The article revisits the founding stories of HP and Apple, two of the most famous
garage startups, to illustrate the organizational product perspective.
● Hewlett-Packard: Founders William Hewlett and David Packard met at
Stanford University and gained valuable experience at General Electric, MIT,
and Stanford’s labs before starting HP. While they did work in a garage in
Palo Alto, much of their early product development occurred in professional
labs and workshops. Their social networks, technical knowledge, and
business skills were cultivated through these prior organizational experiences.
● Apple: Steve Jobs and Steve Wozniak met years before founding Apple and
had worked at Atari and HP, respectively. They were active in the Homebrew
Computer Club, a community of hobbyists and engineers. Apple’s first
computers were assembled in Jobs’ parents’ bedroom and later the garage,
but the founders’ confidence, knowledge, and social ties were built through
their prior organizational roles and networks. The garage was a temporary
workspace rather than the source of their success.
These case studies demonstrate that while garages are part of the narrative, the
critical entrepreneurial resources come from prior organizational experience and
social connections.
Academic Research Supporting Entrepreneurs as Organizational Products
● Career History Studies: Research shows that a large majority of
entrepreneurs start companies related to their previous employment. For
, example, 70-85% of founders in various industries had prior experience in the
same or related fields.
● Spatial Distribution Studies: Regions with a high concentration of firms in a
particular industry tend to generate more startups in that industry, reflecting
localized social networks and knowledge spillovers.
● Social Networks: Trust and familiarity within social ties are more important
than complementary skills in forming founding teams and securing financing.
Conclusion
The garage myth persists because it resonates emotionally with American ideals of
opportunity, hard work, and independence. It offers a compelling, inspirational story
of humble beginnings and self-made success. However, this myth obscures the
social and organizational realities of entrepreneurship.
Entrepreneurs are rarely lone geniuses working in isolation; they are products of
prior organizational experiences that provide confidence, knowledge, information,
and social capital. Recognizing this reality has important implications for individuals,
companies, policymakers, and educators.
Relevance to Foundations and Forms of Entrepreneurship Course
This article is highly relevant to the course because it challenges a popular but
misleading narrative about entrepreneurship and replaces it with a nuanced,
research-based understanding of how entrepreneurs emerge. It emphasizes the
social and organizational foundations of entrepreneurship, highlighting that
entrepreneurial success depends not only on individual traits or ideas but also on
prior experience, networks, and access to resources.
For students, this insight encourages a broader perspective on entrepreneurial
preparation, stressing the importance of gaining relevant work experience and
building social capital. For educators and policymakers, it suggests that fostering
entrepreneurship requires supporting organizational environments and networks that
cultivate entrepreneurial skills and opportunities, rather than focusing solely on
business plans or startup funding.
"Why the Lean Start-Up Changes Everything" by Steve Blank
Purpose of the Article
Steve Blank’s article aims to explore how the Lean Start-Up methodology
fundamentally transforms the traditional approach to launching new ventures. It
investigates why conventional business planning often fails start-ups and how Lean
Start-Up principles—centered on rapid experimentation, customer feedback, and
iterative development—can reduce failure rates and foster innovation. The article
and Christopher I. Rider, published in California Management Review (Fall 2005):
Research Objective
The article critically examines the widespread belief known as the "garage myth"—
the idea that many successful entrepreneurs start their companies in garages,
symbolizing innovation, hard work, and independence. The authors investigate three
key questions: How popular is this garage belief? How accurate is it in describing
entrepreneurial reality? And why does this belief persist despite evidence to the
contrary? The study aims to clarify what entrepreneurs truly need beyond just a
garage and an idea.
Core Ideas and Theoretical Framework
The "garage belief" is deeply embedded in American entrepreneurial lore, with iconic
examples such as Hewlett-Packard (HP), Apple, Walt Disney, Mattel, and Wham-O
often cited as companies that began in humble home spaces like garages. This
belief evokes powerful images of bootstrapping, ingenuity, and the American Dream
of upward mobility through hard work and self-reliance.
However, the authors argue that this myth presents an undersocialized and overly
simplistic view of entrepreneurship. Instead, they propose the concept of
entrepreneurs as "organizational products"—individuals whose entrepreneurial
success largely stems from psychological and social resources acquired through
prior work experience in existing organizations, especially within related industries.
The theoretical framework highlights four critical resources that organizations provide
to potential entrepreneurs:
1. Confidence (Mastery Experience): Employees build self-efficacy by
successfully performing tasks relevant to entrepreneurship while working in
organizations.
2. Vicarious Experience: Observing peers succeed in entrepreneurial efforts
within or related to the organization helps build belief in one’s own potential.
3. Access to Information: Organizations serve as conduits for fine-grained
industry knowledge and entrepreneurial opportunities that outsiders typically
lack.
4. Social Networks: Employment provides access to social ties with colleagues,
customers, suppliers, and investors, which are essential for mobilizing
resources to start a new venture.
Key Findings
Popularity of the Garage Myth
,Surveys conducted among business school students and the general public reveal
strong familiarity with the garage entrepreneur image. For example, 89% of business
students and 87% of a random sample of adults could name at least one company
started in a garage, basement, dorm room, or kitchen. Respondents estimated that
roughly 30-48% of entrepreneurs start businesses in such informal settings.
Media analysis from 1980 to 2003 shows a strong correlation (0.95) between the
number of news articles referencing entrepreneurs and garages and the amount of
venture capital invested annually. This suggests that the garage myth gains
prominence alongside peaks in entrepreneurial activity, especially during the dot-
com boom.
Accuracy of the Garage Myth
To test the myth’s accuracy, the authors surveyed 32 startups that had received
venture capital funding in 2004. Only 25% of these companies actually began in
garages, basements, dorm rooms, or kitchens—and even then, these were
temporary arrangements until more formal office space was secured.
More importantly, 91% of these startups were related to the founders’ prior work
experience, and 66% were founded by individuals with strong prior social ties, such
as former colleagues, friends, or family. This supports the view that entrepreneurship
is a social process deeply embedded in prior organizational contexts.
Case Studies: Hewlett-Packard and Apple
The article revisits the founding stories of HP and Apple, two of the most famous
garage startups, to illustrate the organizational product perspective.
● Hewlett-Packard: Founders William Hewlett and David Packard met at
Stanford University and gained valuable experience at General Electric, MIT,
and Stanford’s labs before starting HP. While they did work in a garage in
Palo Alto, much of their early product development occurred in professional
labs and workshops. Their social networks, technical knowledge, and
business skills were cultivated through these prior organizational experiences.
● Apple: Steve Jobs and Steve Wozniak met years before founding Apple and
had worked at Atari and HP, respectively. They were active in the Homebrew
Computer Club, a community of hobbyists and engineers. Apple’s first
computers were assembled in Jobs’ parents’ bedroom and later the garage,
but the founders’ confidence, knowledge, and social ties were built through
their prior organizational roles and networks. The garage was a temporary
workspace rather than the source of their success.
These case studies demonstrate that while garages are part of the narrative, the
critical entrepreneurial resources come from prior organizational experience and
social connections.
Academic Research Supporting Entrepreneurs as Organizational Products
● Career History Studies: Research shows that a large majority of
entrepreneurs start companies related to their previous employment. For
, example, 70-85% of founders in various industries had prior experience in the
same or related fields.
● Spatial Distribution Studies: Regions with a high concentration of firms in a
particular industry tend to generate more startups in that industry, reflecting
localized social networks and knowledge spillovers.
● Social Networks: Trust and familiarity within social ties are more important
than complementary skills in forming founding teams and securing financing.
Conclusion
The garage myth persists because it resonates emotionally with American ideals of
opportunity, hard work, and independence. It offers a compelling, inspirational story
of humble beginnings and self-made success. However, this myth obscures the
social and organizational realities of entrepreneurship.
Entrepreneurs are rarely lone geniuses working in isolation; they are products of
prior organizational experiences that provide confidence, knowledge, information,
and social capital. Recognizing this reality has important implications for individuals,
companies, policymakers, and educators.
Relevance to Foundations and Forms of Entrepreneurship Course
This article is highly relevant to the course because it challenges a popular but
misleading narrative about entrepreneurship and replaces it with a nuanced,
research-based understanding of how entrepreneurs emerge. It emphasizes the
social and organizational foundations of entrepreneurship, highlighting that
entrepreneurial success depends not only on individual traits or ideas but also on
prior experience, networks, and access to resources.
For students, this insight encourages a broader perspective on entrepreneurial
preparation, stressing the importance of gaining relevant work experience and
building social capital. For educators and policymakers, it suggests that fostering
entrepreneurship requires supporting organizational environments and networks that
cultivate entrepreneurial skills and opportunities, rather than focusing solely on
business plans or startup funding.
"Why the Lean Start-Up Changes Everything" by Steve Blank
Purpose of the Article
Steve Blank’s article aims to explore how the Lean Start-Up methodology
fundamentally transforms the traditional approach to launching new ventures. It
investigates why conventional business planning often fails start-ups and how Lean
Start-Up principles—centered on rapid experimentation, customer feedback, and
iterative development—can reduce failure rates and foster innovation. The article
