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The Dynamics of Crowdfunding | Ethan Mollick

Biography

Wharton School of Business
Associate Professor of Management

Prof. Ethan Mollick studies innovation and entrepreneurship, and has published papers in top academic journals on topics ranging from crowdfunding to entrepreneurial strategy. He is a Schultze Distinguished Professor and Kauffman Foundation Junior Faculty Fellow.

Prof. Mollick also coauthored a book on the intersection between video games and business that was named one of the American Library Association’s top ten business books of the year, and has studied the way that games can be used to motivate performance and to educate. His entrepreneurship simulations and games are used by tens of thousands of students around the world.

Prior to his academic career, he was cofounder of a company and a management consultant. Prof. Mollick has worked with organizations ranging from DARPA to General Mills on innovation and entrepreneurship.

Ethan Mollick received his PhD (2010) and MBA (2004) from MIT's Sloan School of Management and his bachelor's degree from Harvard University, magna cum laude, in 1997.

Ethan Mollick (Working), Swept Away by the Crowd? Crowdfunding, Venture Capital, and the Selection of Entrepreneurs.

Jason Greenberg and Ethan Mollick (2016), Activist Choice Homophily and the Crowdfunding of Female Founders, Administrative Science Quarterly, Forthcoming. 0001839216678847

Abstract: In this paper, we examine when members of underrepresented groups choose to support each other, using the context of the funding of female founders via donationbased crowdfunding. Building on theories of choice homophily, we develop the concept of activist choice homophily, in which the basis of attraction between two individuals is not merely similarity between them, but rather perceptions of shared structural barriers stemming from a common social identity based on group membership. We differentiate activist choice homophily from interpersonal choice homophily that is based on the perceived similarity between two individuals, as well as from “induced homophily,” which reflects the likelihood that those in a particular social category will affiliate and form networks. Using lab experiments and field data, we show that activist choice homophily explains why women are more likely to succeed at crowdfunding than men and why women are most successful in industries in which they are least represented.

Ethan Mollick (2016), Filthy Lucre? Innovative Communities, Identity, and Commercialization, Organization Science, Forthcoming.

Abstract: Online communities play an increasingly important role in developing innovation. However, relatively little is known about the ways in which community affiliation is associated with innovations and products generated in these communities are commercialized. By examining Open Source Software (OSS) as an example of an innovation community, and using both a quasiexperiment and a longitudinal survey, I seek to shed light on this issue. In the quasiexperiment using the launch of the Apple App Store, I find a lower propensity towards commercialization among individuals associated with online community innovation. I then examine the mechanisms for this lower commercialization with a novel longitudinal survey of OSS community members. Despite the history of OSS as an anticommercial community, I do not find that anticommercial attitudes play a role in commercialization decisions. Instead, differences in selfidentity between communitybased innovators and entrepreneurs have large significant effects on the propensity to commercialization. I conclude with a discussion of the implications of these findings for both the literatures on entrepreneurial identity and community innovation.

Ethan Mollick and Venkat Kuppuswamy, “Crowdfunding: Evidence on the Democratization of Startup Funding”. In Revolutionizing Innovation: Users, Communities, and Open Innovation, edited by Dietmar Harhoff and Karim Lakhani, (2016),

Ethan Mollick and Alicia Robb (2016), Democratizing Innovation and Capital Access: The Role of Crowdfunding , California Management Review, 58 (2).

Abstract: This paper focuses on if, and how, crowdfunding might democratize the commercialization of innovation. We examine research in three key areas related to democratization. First, we examine how crowdfunders decide what effort to support, and compare the decisionmaking process of the crowd to that of experts. Second, we investigate whether crowdfunding democratizes access to capital by asking whether or not groups that have historically been underrepresented in capital markets, on both the supply side and demand side, gain additional access to capital markets through crowdfunding. Finally, we investigate whether crowdfunding leads to the growth of new firms in the same way that traditional funding does.  Taken together, these questions point at a potentially vast alternative infrastructure for developing, funding, and commercializing innovation. By offering some early glimpses into how this world operates, we hope to inform researchers, managers, and policy makers.

Venkat Kuppuswamy and Ethan Mollick (Under Review), Second Thoughts About Second Acts: Gender Differences in Serial Founding Rates.

Abstract: Men are far more likely to start new ventures than women.  We argue that one explanation of this gap is that women respond differently to signals of past entrepreneurial success due to the “male hubris, female humility” effect. We argue that as a result women are disproportionately less likely to persist in second founding attempts than men when they have succeeded or failed by large margins.  Using a data set of serial founders in crowdfunding, we find evidence supporting this prediction. We then turn to a unique survey of founders in crowdfunding in order to examine alternative explanations. We find support for a variety of systematic differences between male and female founders, but the persistence effect remains. While decreased persistence in the face of low quality opportunities benefits women individually, we argue that it disadvantages women as a group, as it leads to 25.3% fewer femaleled foundings in our sample than would have occurred if women reacted similarly to men.

Ethan Mollick (Draft), Delivery Rates on Kickstarter.

Matthew Bidwell and Ethan Mollick (2015), Shifts and Ladders: Comparing the Role of Internal and External Mobility in Executive Careers, Organiztion Science, 26 (6), pp. 16291645.

Abstract: Workers can build their careers either by moving into a different job within their current organization or else by moving into a new job within a different organization. We use matching perspectives on job mobility to develop predictions about the different roles that those internal and external moves will play within their careers. We propose that internal and external mobility are associated with very different rewards: upwards progression into a job with greater responsibilities is much more likely to happen through internal mobility, but external moves will nonetheless offer similar increases in pay, as employers seek to attract external hires. We also examine how these predictions change when moves take workers across job functions as well as when external mobility happens involuntarily. Analyses of data on the careers on MBA alumni are used to support these arguments. Despite growing interest in boundaryless careers, our findings indicate that internal and external mobility play very different roles in executives’ careers, with upwards mobility still happening overwhelmingly within organizations.

Ethan Mollick and Ramana Nanda (2015), Wisdom or Madness? Comparing Crowds with Expert Evaluation in Funding the Arts, Management Science, 62 (6), pp. 15331553.

Abstract: In fields as diverse as technology entrepreneurship and the arts, crowds of interested stakeholders are increasingly responsible for deciding which innovations to fund, a privilege that was previously reserved for a few experts, such as venture capitalists and grantmaking bodies. Little is known about the degree to which the crowd differs from experts in judging which ideas to fund, and, indeed, whether the crowd is even rational in making funding decisions. Drawing on a panel of national experts and comprehensive data from the largest crowdfunding site, we examine funding decisions for proposed theater projects, a category where expert and crowd preferences might be expected to differ greatly. We instead find substantial agreement between the funding decisions of crowds and experts. Where crowds and experts disagree, it is far more likely to be a case where the crowd is willing to fund projects that experts may not. Examining the outcomes of these projects, we find no quantitative or qualitative differences between projects funded by the crowd alone, and those that were selected by both the crowd and experts. Our findings suggest that crowdfunding can play an important role in complementing expert decisions, particularly in sectors where the crowds are end users, by allowing projects the option to receive multiple evaluations and thereby lowering the incidence of "false negatives."

Matthew Bidwell, Shinjae Won, Roxana Barbulescu, Ethan Mollick (2015), I Used to Work at Goldman Sachs! Status, Careers, and Competitive Advantage, Strategic Management Journal, 36 (8), pp. 11641173.

Current Courses

MGMT802 Innov, Chg And Ent

Designed for students with a serious interest in entrepreneurship, this course will provide you with an advanced theoretical foundation and a set of practicaltools for the management of startups and entrepreneurial teams in fastchanging and innovative environments. Building on the skills of Management 801, every class session is built around an experience where you have to put learning into practice, including the awardwinning Looking Glass entrepreneurial simulation, roleplaying exercises, and a variety of other games and simulations. The goal is to constantly challenge you to deal with entrepreneurial or innovative experiences, as you learn to navigate complex and changing environments on the fly, applying what you learned to a variety of scenarios. Management 802 is built to be challenging and will require a desire to deal with ambiguous and shifting circumstances. ,Format: Lectures, discussion, interim reports, class participation, readings report, and presentations, and an innovation assessment in PowerPoint format.

Past Courses

MGMT801 ENTREPRENEURSHIP

Management 801 is the foundation course in the Entrepreneurial Management program. The purpose of this course is to explore the many dimensions of new venture creation and growth. While most of the examples in class will be drawn from new venture formation, the principles also apply to entrepreneurship in corporate settings and to nonprofit entrepreneurship. We will be concerned with content and process questions as well as with formulation and implementation issues that relate to conceptualizing, developing, and managing successful new ventures. The emphasis in this course is on applying and synthesizing concepts and techniques from functional areas of strategic management, finance, accounting, managerial economics, marketing, operations management, and organizational behavior in the context of new venture development. The class serves as both a stand alone class and as a preparatory course to those interested in writing and venture implementation (the subject of the semesterlong course, MGMT806). ,Format: Lectures and case discussions ,Requirements: Class participation, interim assignments, final project

MGMT802 INNOV, CHG AND ENT

Designed for students with a serious interest in entrepreneurship, this course will provide you with an advanced theoretical foundation and a set of practicaltools for the management of startups and entrepreneurial teams in fastchanging and innovative environments. Building on the skills of Management 801, every class session is built around an experience where you have to put learning into practice, including the awardwinning Looking Glass entrepreneurial simulation, roleplaying exercises, and a variety of other games and simulations. The goal is to constantly challenge you to deal with entrepreneurial or innovative experiences, as you learn to navigate complex and changing environments on the fly, applying what you learned to a variety of scenarios. Management 802 is built to be challenging and will require a desire to deal with ambiguous and shifting circumstances. ,Format: Lectures, discussion, interim reports, class participation, readings report, and presentations, and an innovation assessment in PowerPoint format.

MGMT806 VENTURE IMPLEMENTATION

This advanced course on entrepreneurship focuses on developing a validated opportunity or concept into a venture that is ready for seed financing and/or launching the product or service. Participants in this course must previously have developed a validated opportunity, either in a previous course or through independent efforts. Students may participate as a team of up to three people. Ideally, participants are commited to pursuing their opportunity commercially, or at least to seriously explore that possibility. The course provides a practical guidance for developing the product or service, forming the entity, raising capital building the team, establishing partnerships, and sourcing professional services. After completing the course, you will be "pitch ready" whether submitting to campus venture competitions or to outside investors. Most coursework is focused on applying concepts and frameworks to project tasks in developing the venture. Students must have successfully completed MGMT 801 before enrolling in this course. Students must have successfully completed MGMT801 before enrolling in this course. ,Format: Highly interactive ,Requirements: Class participation, interim assignments.

  • Schultze Distinguished Professor of Entrepreneurship, 2016
  • McGrawHill/Academy of Management Innovation in Entrepreneurship Pedagogy Award, 2016
  • Reimagine Education Silver Award for MBA Education, 2015
  • AOMTIM Emerging Scholar Award, 2015
  • AOM Careers Division Best Paper Award, 2014
  • The 40 Most Outstanding BSchool Profs Under 40 In The World, 2014
  • Top 30 Influencers in Crowdfunding, 2014
  • Thinkers 50 Future Thinker Award Shortlist, 2013
  • Kauffman Junior Faculty Fellowship in Entrepreneurship Research, 2013
  • SMS Best Paper Award Nomination, 2012
  • Heizer Award for Best Dissertation in Entrepreneurship, Finalist, 2011
  • Teaching Commitment and Curricular Innovation Award, 2011
  • Graduate Management Council Ideas to Innovation Challenge, 3rd Place, 2011
  • American Library Association’s “Top Ten Business Books of 2009”, 2009
  • Kauffman Dissertation Fellow, 2007

  • Global Brands, Taking Cue From Tinkerers, Explore Crowdfunding, New York Times 01/07/2016

  • Kiva Sets New Rules for U.S. Borrowers to Get Crowdfunded Loans, Wall Street Journal 12/16/2015

  • Just 9% of successfully funded Kickstarter projects fail to deliver, CNBC 12/10/2015

  • GoFundMe Gone Wild, New York Times 11/06/2015

  • Why are women less likely to be entrepreneurs than men?, NPR 09/28/2015

  • Open Season, The Economist 06/06/2015

  • What to do when a crowdfunded product hits a delay, Chicago Tribune 05/22/2015

  • Inside Kickstarter, CBS This Morning 05/05/2015

  • ZPM Espresso and the Rage of the Jilted Crowdfunder, New York Times 04/30/2015

  • Crowdfunding and Venture Funding: More Alike Than You Think, New York Times 08/15/2014

  • Women Are More Likely to Secure Kickstarter Funding Than Men, Atlantic 08/14/2014

  • Kickstarting Equal Pay, Time 08/14/2014

  • Kickstarter Closes the ‘Funding Gap’ for Women, Wall Street Journal 08/13/2014

  • How to Crowdfund Without Losing Your Shirt, CNBC 07/22/2014

  • Crowdfunding Tips for Turning Inspiration Into Reality, New York Times 01/23/2014

  • When Work is a Game, Who Wins?, New Yorker 09/17/2013

  • The Kickstarter Phenomenon, NPR 08/16/2013

  • Look After the Suits, Forbes 08/15/2013

  • Some Tech Firms Ask: Who Needs Managers?, Wall Street Journal 08/06/2013

  • Why 84% of Kickstarter’s top projects shipped late, CNNMoney 12/18/2012

  • Kickstarter: Dream Maker Or Promise Breaker?, Forbes 11/30/2012

  • Success of Crowdfunding Puts Pressure on Entrepreneurs, The New York Times 09/17/2012

  • When A Kickstarter Campaign Fails, Does Anyone Get The Money Back?, NPR 09/03/2012

  • After Raising Money, Many Kickstarter Projects Fail to Deliver, Bloomberg Businessweek 08/21/2012

  • Kickstarter: Crowdfunding Platform Or Reality Show?, Fast Company 07/18/2012

  • 4 Keys to a Winning Kickstarter Campaign, Wired 07/18/2012

  • 3 Ways to Be a Success on Kickstarter, Inc. 07/16/2012

  • Secrets Of Success Hidden In Kickstarter’s Numbers, Forbes 07/07/2012

  • Crammed Into Cheap Bunks, Dreaming of Future Digital Glory, The New York Times 07/05/2012

  • Facebook Dilemma: How Do You Value 900 Million Users?, CNBC 05/30/2012

  • Surviving the startup foundertoCEO transition, Fortune 04/21/2012

  • In praise of David Brent, The Economist 08/27/2011

  • Groupon, Twitter, other tech firms grapple with hypergrowth, USA Today 08/10/2011

  • Businessschool research: Game changers, The Economist 07/05/2011

  • Firms Turn to Online Games for Recruiting, CNBC 06/07/2011

  • Enough With ‘Call of Duty,’ Answer the Call in Room 417, The Wall Street Journal 06/06/2011

  • Something for the weekend, Financial Times 06/02/2011

  • “Surviving the startup foundertoCEO transition”, CNN Money 04/28/2011

  • Twenty Top Ideas for a Better MBA, Bloomberg Businessweek 01/14/2011

  • “Financial Games: It Can Pay to Play”, Chicago Tribune 10/29/2009

Knowledge @ Wharton

  • Disrupting the Disruptors: Startup Accelerators Feel Pressure to Evolve, Knowledge @ Wharton 07/28/2016
  • Why VCs Aren’t Funding Womenled Startups, Knowledge @ Wharton 05/24/2016
  • People Love Games — but Does Gamification Work?, Knowledge @ Wharton 02/03/2016
  • Why Are There More Male Entrepreneurs Than Female Ones?, Knowledge @ Wharton 12/14/2015
  • The Grass Is Not Greener: When Staying Put in a Job Pays Off, Knowledge @ Wharton 11/16/2015
  • What Is Art? Surprisingly, Crowdfunders and Experts Agree, Knowledge @ Wharton 05/21/2015
  • Live — and Lucrative? Why Video Streaming Supremacy Matters, Knowledge @ Wharton 04/20/2015
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