Picasso, the Pre-War Period, and the Serial Entrepreneur Thing

I’ve written here various times about serial entrepreneurs, as well as on some of the associated myths. On the broader subject of long-term creativity — which is really what being serially entrepreneurial is all about — there is some fascinating recent research by economist David Galenson (whose fans include Malcolm Gladwell), who has been looking at the productivity patterns of the greatest artists of the twentieth century.

The following figure summarizes one aspect of his work, the output in their most productive years for various of the most-lauded twentieth century artists, from Picasso to Andy Warhol. I re-sorted Galenson’s data to look at which calendar years were the most creative ones, and what was interesting was how disproportionately often the pre-war years 1910-1915 popped up.

There are, of course, some obvious confounds here, including that 1910-1915 skews things by being some of Picasso’s best years, but it is still interesting stuff. In fact, there are strong parallels with entrepreneurship and company creation.

We all “know” that the pace of company creation rises and falls and rises over time. But these periods of profligate company creation — like periods of profligate art creation — are not necessarily correlated with high quality of production. In other words, just because we’re creating lots of art, as we are today — or creating lots of companies, as we were in the late 90s — doesn’t mean that any/most/some of them are high quality. Sure, it’s a numbers game, in part, but there are abnormally high-quality and fecund periods in the history of art, and such creative cycles hold whether we’re talking about art or companies.

Or do they? Are there historical periods when the best companies tend to spring up? Testing such a thing is tricky, not to mention fraught with auto-correlation, complex causality, and on and on. But who cares? This is a blog, not an academic journal, so scientific rigor be damned.

I started by trying to frame the question of “best companies”. I decided that I was really talking about something like the Fortune 500. While size isn’t everything, it helps, in companies as in some other things, so the Fortune 500 list is a good proxy for high-quality companies. So the question I wanted to answer was, Are there historical periods when more future Fortune 500 companies are founded than is the case in other periods?

Good question, but a tough one to answer. Fortune doesn’t provide founding dates for its F500 members, nor is it possible, near as I could tell, to cross-reference Fortune 500 membership with some other source that did provide founding dates, so I struck out there.

Blissfully, however, that wasn’t the end. A search of the business literature turned up a funky 1996 paper (“Founding Dates of the 1994 “Fortune 500″ Companies”) in The Business History Review. As you might expect from the title, it contained a wealth of fascinating data on the origins of the Fortune 500 list, albeit from a dozen years ago. Here, nevertheless, is the upshot: The following graph of periodicity in founding dates for the 1994 Fortune 5000, over which which I have layered a line-graph version of the figure above for artists.

Looking at the above, it seems clear that a variant on the same phenomenon I extracted from the Galenson article concerning Picasso and his peers apparently exists for Fortune 500 members. There are, in other words, better decades for companies to be founded — and there is a rough match between the two domains’ (art and commerce) most fecund early century period.

Why the rough correlation? One simple and appealing hypothesis is that waves of new and important art, like waves of new and important companies, are functions of economic and societal change. Put simply, when things are changing significantly in the ways that we live, work, and play, then things are going to change commensurately in how we respond to that change — via art — and how we service that change — via business.

Without turning this into another Ode to the Internet, some might argue that is precisely what is happening right now. There has been some fairly radical Internet-enabled changes in the ways that we live, work, and play. Companies have risen, companies have fallen, and the world would feel very different to someone who feel asleep as recently as 1990 and woke up today. Big changes are happening, and have already happened.

My guess is that some future historian will look back at this period and see something similar to what I’ve been  observing here about early twentieth-century creativity. That is, the early twenty-first century will give rise to a higher percentage of some of the most important artists of this century, just as it will give rise to some of the most important companies. Arguing otherwise would seem, at least to me, to be arguing against history.


  1. Derek Jones says:

    “Better” decades or decades in which random chance has thrown up more companies? What about technical and historical factors (eg, the widespread availability of electricity in the 1880’s and the breaking of the old order by the first world war)? The only potential pattern I would wave my hands about in this data is that most companies take at last 70 years to enter the Fortune 500 and most have left it after 160 years of business.

  2. Hey Derek — Ah, you’re too nervous about being a naive empiricist!
    Anyway, like I said above, there are plenty of confounds, but your comment about electricity, etc., in the late 19th century still fits in with my view that societal disruptions give rise to art and commerce.

  3. Duncan Stewart says:

    I love the analysis – I am always intrigued by grand unified theories of any type. I also like the implicit correlation between artistic creativity and entrepreneurial creativity. Too often the first is assumed to be creative while the second is assumed to be “mere” moneygrubbing. Meanwhile, most of the great paintings, sculptures and concerti that we revere as “high art” in the Western canon were in fact created for the very wealthy and powerful, and the “artists” in question were just trying to put bread on the table. “Of course I’ll paint a nice nativity for you, Prince XYZ, and I’d be happy to make the madonna resemble your mistress…”
    But I do have one methodological point to raise. Both the stock market (and therefore the Fortune 500) and the art market (and what has survived as opposed to being painted over) are to large extents POPULARITY contests. I would be willing to suggest that the curves you have generated for artistic and entrepreneurial creativity will remain more or less constant – NO MATTER AT WHAT POINT IN TIME YOU DRAW THEM.
    Music or drama aren’t bad examples – what is wildly popular around the time of its creation tends to fall out of fashion and spend some time in both popular and critical limbo. then after a sufficiently long period in the wilderness, they come back and enjoy popularity equal to the initial level, or even greater given the gravitas of history and the implied superiority of having survived when others have been forgotten. The works of Bach and Shakespeare both were popular at creation, almost vanished 50 years later, and then were revived to even greater heights after about 100-150 years. With our perspective it seems as if both have been “classics” forever…but that is emphatically not the case.
    There are similar periods of fashionability and unfashionability in stock markets. Hot IPOs turn into neglected orphans that almost perish who then crysalis-like turn into Fortune 500 butterflies decades later.
    While I agree that the innovation of the last few years will in fact transform society (for the better) (I wrote a National Post artice 5 years ago that argued that the Internet was going to usher in a new Golden Age like Pericletian Athens), to what extent do the data you show reflect a creative upwelling in the pre-WWI era, and to what extent to they demonstrate that companies and art both peak in popularity and success after about 80 years?

  4. There are also theories about generations having distinct personalities and attitudes. This might be related to the phenomenom you mention. According to Strauss and Howe, there are 4 different types of generations. Wikipedia: http://en.wikipedia.org/wiki/Generations_%28book%29