
Myth: Entrepreneurship Will Make You Rich - peter123
http://gigaom.com/2009/10/18/myth-entrepreneurship-will-make-you-rich/
======
davidu
1) Being an entrepreneur, for me, isn't about being wealthy, it's about being
successful.

2) Rich is a variable term, and intended to be so.

Entrepreneurship may not make you wealthy, but it can certainly make you rich.

I enjoy the freedom and independence afforded by starting EveryDNS and
OpenDNS. Both contain a passion for a system I love, the DNS, and both have
let me help millions of consumers around the world. I even like knowing I
control the DNS for millions and millions of Internet users. That's an awesome
responsibility and it certainly makes me feel rich about everything I do.

And when it comes to money, Eric is only somewhat right. He says you should
get a job that rewards and promotes effort. But lots of lawyers and finance
kids in New York thought they had stable jobs that would make them rich. Ask
them today and most will tell you a different story altogether. Now they hate
their jobs and have no job security or path to becoming really wealthy.

So like I said, being entrepreneur, for me, isn't about being wealthy, it's
about being successful. That's a measuring stick that's far more important.

PS- Eric is awesome and I like that he's beating the drum on this stuff, I
wish I were doing more of it. :-)

~~~
gits_tokyo
Can't agree more.

People that I've spoken with in the past more often than not associated the
idea of me doing a startup in the tech industry with gaining massive wealth.
While I may entertain this, deep down I find it lacking as there's so much
more than wealth to be had.

How about, living in a world... some distant future from the everyday-everyday
where day-by-day you toil piecing together a vision, one day injecting it into
the present, in order to influence a whole new set of social behaviors while
also unfolding valuable opportunities. How about, the day of flipping that
proverbial switch, releasing this vision out in the wild. How about, the
potential of millions interacting with your vision, it becoming a staple part
of a users online experiences. There's something undeniably provoking about
all this, rush of my life.

Wealth, although a welcomed aside pales in comparison. Hell I would even go so
far as to say, in a world where sex is constantly peddled as a cure all, let
me say it, sex pales in comparison to the feeling I get from being an
entrepreneur.

~~~
hallmark
> sex pales in comparison to the feeling I get from being an entrepreneur.

Ha, and they suggest that software developers are naturally weird.

[http://ask.slashdot.org/story/09/10/18/1557210/Are-
Software-...](http://ask.slashdot.org/story/09/10/18/1557210/Are-Software-
Developers-Naturally-Weird)

Kidding.. sorta. ;)

------
ellyagg
Straw man. Nothing is guaranteed to make you rich. Entrepreneurship certainly
has vastly more potential to make you rich.

And if we're not talking about being rich strictly, but are implicitly
including a quality of life component, well, the information I've seen[1]
implies that entrepreneurship is near the income level of other professionals
and has a higher sense of well-being.

[1] [http://www.gallup.com/poll/122960/business-owners-richer-
job...](http://www.gallup.com/poll/122960/business-owners-richer-job-
types.aspx)

~~~
tptacek
Many more people become rich from careful career planning and money management
than do from starting companies. The difference between the approaches isn't
the potential, it's the speed and the risk.

~~~
pfedor
What's career planning and how does one go about it?

~~~
tptacek
"I eventually want to be rich, so I'm going to be a lawyer, not an artist."

"I eventually want to be rich, so I'm going to move to Ann Arbor to go to
Michigan for law, instead of staying with my friends in Phoenix."

"I eventually want to be rich, so I'm going to join a major firm after law
school, not a nonprofit."

"I eventually want to be rich, so I'm going to find out what the merit comp
scheme is at my law firm, and put extra effort into doing that stuff."

"I eventually want to be rich, so I'm going to work 80 hour weeks to impress
the partnership selection process".

etc, etc, etc.

Was that what you wanted to know?

~~~
pfedor
I see what you mean but I'm having trouble translating this from lawyers to
computer programmers. You can get a programming job at a large company and
then impress someone with your skills and become a tech lead and an
engineering director and eventually a Senior VP, is that what you mean? The
odds for a hard working hacker of getting rich that way seem worse than for an
attorney of becoming a partner, or for the same hacker of getting rich through
a startup.

In my experience everyone who got rich did it by owning a significant stake in
a business (not necessarily a startup or even anything high tech.) I'm aware
there are people who got rich from writing bestsellers or becoming movie stars
but I don't know anyone like it and I think such people are extremely rare.
And I may be wrong but I would be inclined to classify hackers who got
promoted to VPs and CTOs together with the movie stars.

I don't really know much about the ownership structure of law firms, but I
always assumed becoming a partner is a big deal because it means co-owning the
firm in some sense, and getting a share of profits directly, not through
salary and bonus. So that's why I figure this is different.

~~~
tptacek
I'm having a hard time addressing your concern, because your notion that it's
harder for a developer to eventually become a director or VP than it is for a
lawyer to become a partner is neither (a) supported with any evidence or (b)
apparent from my experience.

I don't know anybody that you know who became rich, and so that whole second
paragraph sails right past me. Especially when it concludes with a suggestion
that hacker VPs are as rare as movie stars.

As for the partner track at law firms, uh, fine. Substitute MBA -> investment
banker, or CPA -> CFO, or Med School -> Anesthesiologist, or any number of
other careers that don't have partner tracks.

Even if your salary never breaks $110k as a dev, you're still fantastically
lucky to get that in any career, and perfectly capable of becoming a
millionaire. So, I guess, cry me a river about how hard it is for techs to
succeed without starting entirely new businesses?

Finally, let me just leave you with an uncomfortable truth: it is a safe bet
that you will never get rich starting a company, or any number of companies.

~~~
pfedor
If your definition of rich is $110k salary or owning $1M in assets (which
translates to relatively safe passive income of $40k before tax, according to
the financial planning books I read) then sure, you can absolutely achieve it
with careful career planning. I don't believe that's what most people would
call "rich" though. There are actually people who will tell you that $100k in
the Bay Area is "barely breaking it even" (not that I agree.)

I freely concede I could be wrong with respect to directors and partners. I
work at a software company and my girlfriend works at a law firm.

I absolutely agree with you that the odds of getting rich by starting a
company are low, all I'm saying they're better than the odds of getting rich
by other means.

------
lionhearted
Major error with this line of thinking:

> A more rational career path for money-making is one that rewards effort, in
> the form of promotions, increased security, salary and status.

You trade off _a lot_ if you're getting paid for effort instead of for
results. No one wants effort. No one wants a badly burnt steak, not well
cooked pie, crummily engineered car, and so on. But people will gladly pay a
lot for results. Desiring to get paid despite burning steak ("rewarding
effort") is a path to much less wealth than you could make, but even more
scary, it's a path to much less happiness. Getting paid while failing to
deliver what people wanted destroys your self esteem. Doing interesting work
and needing to get it right is engaging and stimulating. Harder, more risky,
sure. But much more enjoyable and fulfilling.

> Startups, unfortunately, punish effort that doesn’t yield results.

Right - no wants to pay _for_ burnt steak. You want to get paid for turning on
the grill, regardless of how it comes out? Don't expect to get paid much, or
to have a particularly stimulating work life.

~~~
leelin
All true, but at least I can better predict my ability to output effort than
predict my ability to output results, even if I am good at what I do.

~~~
lionhearted
Definitely true - stability is worth something, especially if you've got a
family or just want a life with less stress.

But if you don't have serious economic commitments and can handle a little
stress, why not freelance after hours for a little while and see how it goes?
Can wade in slowly some. If you're willing to focus, you can make 3x, 10x what
you'd make salaried if you go self employed.

I remember reading somewhere that the average employee gets something like 2.5
productive hours of work done every 8 hour day: The rest is shuffling papers,
meetings, chatting, goofing off online. If you can focus intensely for 5-6
hours a day, you can make a lot more money and have a more free, stimulating,
enjoyable life. It is legitimately more intense and stressful, but I'd
recommend almost anyone take a crack at it. The rewards are very, very good,
definitely worth taking a year or two to see if it suits you. And I mean, why
not give it a try? It's huge for you if it works out, and employers more and
more are respecting the guy coming back to industry after working for himself
for a while.

~~~
gommm
My experience with freelancing mirrors this. It is a bit more stressful
because I'm actually working much more efficiently and seriously but I earn
twice as much and I can choose my own schedule...

It's liberating. In my old job, I was frustrated and not as happy... now I've
got more money, do some really fun projects (because when freelancing you do
get to pick your clients a bit more) and I'm trying to grow bigger so as to
launch my own product... Life is good...

So to anyone frustrated with his work, I would definitely recommend trying to
freelance...

------
protomyth
For the US dwellers, it does say "the pursuit of happiness".

My brother pointed out to me that being rich really isn't the goal. Being able
to control your own schedule while paying all the bills is a pretty good life.

~~~
wynand
That is exactly why I want to become an entrepreneur. I just seem to do badly
in a corporate environment.

~~~
davidu
If you're really successful, you will inevitably be working in a corporate
environment, even one of your own creation.

Some people make the transition happen really well, some don't.

~~~
cglee
It also depends on where you are in the corporate machine. As someone else
mentioned on HN once, perhaps Gates couldn't even move up in today's
Microsoft, but he makes a pretty good CEO.

------
alexitosrv
_Startups, unfortunately, punish effort that doesn’t yield results. In fact,
the biggest source of waste in a startup is building something nobody wants.
While in an academic R &D lab, creation for creation’s sake will often get you
praise, in a startup, it will often put you out of business._

The best articulation of why I'm fond of entrepreneurship world instead of
academic world...

~~~
martincmartin
To succeed in academia, you need to build things that please your customer,
its just that your customer is a funding agency and/or your community. There
are many, many publications that nobody sites, which is the equivalent of
products nobody buys.

------
Sthorpe
I really like Eric, saw him down at stanford a couple of weeks ago.

Honestly, I am poor. Dirt poor. But I LOVE what I do. I consult to pay the
bills. Right now, I'm hyper focused on starting a new business so I haven't
been spending a lot of time getting new clients.

I had a client that fell on my lap the other day and I was so frustrated with
them. The only reason they wanted to start their company was to make a lot of
money and get rich. No passion, no iconoclastic idea's. Just, lets do this
because it will make money.

I would love to see less money grubbing jerks and more passionate people who
just love to create stuff. So i'm with Eric in getting the word out. This
won't make you rich! Only do this if you love it. *pushes aside pulpit.

~~~
fuzzmeister
You have most likely already seen this, but Guy Kawasaki often talks about a
similar annoyance with people involved in entrepreneurship purely for the
money:
[http://video.google.com/videoplay?docid=-3755718939216161559...](http://video.google.com/videoplay?docid=-3755718939216161559&ei=zb_bSoW2FIO2qQKa8dDjAQ&q=art+of+the+start#4m25s)

------
joez
I'd echo PG's words in that a startup is about compounding your work life into
a few years. Even if your startup fails, you'll get a massive amount of
experience in seeing it through. Employers will appreciate all the experience
you gained in launching a product.

~~~
timwiseman
All true, but the question for many isn't about the potential ROI (effectively
unlimited), but the expected ROI (for the average startup, it is not much more
than that experience you talked about). Is that expected experience
substantially more valuable than say grad school which is less stressful?

~~~
philwelch
"Valuable", in a market sense, means people are willing to pay for it. Apply
for the same set of jobs, once with a graduate degree and once with a failed
startup under your belt. See how many companies are willing to pay for your
services.

My hypothesis is that there are disjunct sets of employers who will value one
over the other, but the set of employers who value startup experience value it
more than the set of employers who value grad school experience value grad
school.

~~~
timwiseman
My suspicion, and only suspicion, is that you are largely right. Of course, I
also think it matters how far along you got in the process and waht kind of
stories you can tell from it.

I suspect that the founders of a company that put out an actual product with
real users, hired non-founder employees, and perhaps got VC level funding at
one point is much more valuable in the market than someone who filed the
papers to officially incorporate but died while still working out of a garage
with no non-founder employees and few users.

------
rokhayakebe
There we go again. If anyone understand the mind of an entrepreneur, they will
stop trying to tell them to do anything other than what they are doing.

If you want to help entrepreneurs, help them refine their ideas, execute
against them, and get closer to success.

Anything else is a waste of your time.

------
benofsky
It may be a myth upon people who are not entrepreneurs but I'm pretty certain
money is not what drives entrepreneurs rather being successful, doing what you
love, etc.

------
dsplittgerber
He doesn't say the participants at seedcamp wanted to get rich. He doesn't
name any sources for such a "myth" existing. The way I see it, people value
entrepreneurship for a whole bunch of reasons, guaranteed financial success
most certainly NOT being amonst those. He wants to write an article on his
perceptions, fine. He just doesn't base it in reality, though.

~~~
wpietri
I suspect he doesn't feel the need to justify it because it's a commonplace in
his world. It sure is in mine.

This was especially problematic during the dot-com bubble. This town filled up
with MBA-holding locusts and greasily slick smooth talkers. They were in it
for the money, and nothing else. Of course, most of their businesses failed,
and they went off to plague somebody else. Good riddance, I say.

The problem still continues, though, and it's not limited to high tech. The
big MLM scams are funded mainly through taking money from idiots who believe
that they'll quickly get rich through _this_ exciting new turnkey business
opportunity, even though they've gotten totally screwed on the last three. You
want some data points, go to an Herbalife convention.

------
CSunday
This article doesn't make much sense, to be honest...

But anyways if you ask me, entrepreneurship is about becoming successful,
rather than rich, because once you are successful, the money will naturally
come -- at least you'll love what you do, and not starve while doing it :)

------
danbmil99
Excellent article. Not exactly a myth, but the wrong goal. Striving to
maximize financial return is simply not the sort of motivation that is most
likely to result in a successful startup.

------
maxer
Truth: Entrepreneurship leads to contentment

