David’s Articles

David has been writing and publishing since 2006.  

This post was written and published prior to September 2023 when David and his prior firm, Family Capital Strategy, merged with Greycourt.  Views expressed reflected David’s personal views at the time and do not necessarily reflect the views of Greycourt.  Posts and information may be out of date and should not be relied upon for investment advice.

Fingers in the Ears? – Wealth, Hubris and Entrepreneurship While Wealthy

Aug 26, 2021 | Family Wealth

Photo by Garrhet Sampson on Unsplash

Earlier this summer, we asked the question if “Already-Wealth Families make good entrepreneurs?”  

In that first post, we considered whether wealth has a negative affect on the family’s ability to put in the hard work of new venture formation.  We referenced Elon Musk’s timeless quote, “Running a start-up is like chewing glass and staring into the abyss.  After a while, you stop staring, but the glass chewing never ends.”  For some families, the anesthetic effect of wealth is simply too great to overcome, and the odds of future generations in engaging in new venture formation is likely to be quite low.

Today, I want to consider a slightly different dimension of wealth’s impact on entrepreneurship.  Paul Schervish, Professor Emeritus and Founding Director of the Center on Wealth and Philanthropy at Boston College, has articulated a valuable concept when describing the wealthy, a term he refers to as hyperagency.  Schervish defines hyperagency as, “the array of dispositions and capacities that enable individuals to relatively single-handedly produce the social outcomes they desire, as well as the conditions within which they and others exercise their agency. If agency is the capacity to make choices largely within the rules and resources that are socially given, hyperagency is the capacity to be a creator or producer of those rules and resources.”

Hyperagency is an important, but under-addressed topic.  In my experience this results from the fact that for wealthy individuals, hyper-agency is so embedded in their way of thinking and behaving that it seems ‘normal.’  For outsiders, they simply may not have the level of familiarity or access to see hyperagency at work. 

For entrepreneurship, hyperagnecy is both a super-power and a super-liability.

On the positive side, the ability to imagine differing outcomes and having the resource base to bring them to life, both monetarily and relationally, should not be discounted.  Very few individuals have the ability to be objective enough about their lives to envision something different.  Similarly, very few have the ability to affect an outcome, even if they can imagine a different future.

This same super power is a liability though.  It is one thing to use one’s hyperagency to envision a better customer service experience, shape an event, envision a home improvement, etc.  Such activities are functionally one sided transactions where the hyperagent is able to affect an action and have others respond to their prompt.

The challenge is that while entrepreneurship may begin with an exercise of agency, it quickly shifts to a two sided market where the entrepreneur presents a product or service, and the market responds in the form of revenue.  

The feedback from the marketplace is instrumental in evolving the product over time until it reaches product market fit.   Each new customer provides additional data about how the product should improve.  As the product does so, it grows in both delivered and perceived value to each additional customer.   As any venture capitalist would tell you, achieving product-market fit is no small accomplishment.  Those who do it well, and create new spaces of demand are rewarded with compelling returns.

For our ‘hyperagent’ the challenge comes in how such an individual responds to the feedback the market is providing.   It is highly unlikely that the first version of the product will be what the market desires.  The question is if the entrepreneur is willing to adapt and pivot, or are they so headstrong that they confidently assert that they in fact know better than the market? The wealthy entrepreneur / hyperagent has the wherewithal to go full Quixote and tilt at these windmills for a potentially long period of time, and never execute the changes the market is suggesting.

What matters then for any entrepreneur is epistemological humility instead of hubris.  The softness of spirit and ego to listen to the market’s dictates and adjust accordingly.  Dangerous it will be for the hyperagent to assert their epistemological dominance into an essentially indominatable sphere.


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