
Entrepreneurism Is Overrated - paulpauper
http://greyenlightenment.com/entrepreneurism-is-overrated/
======
pxue
I think the author fail to distinct between how "entrepreneurism" and "venture
backed business" differ.

A one man consultancy operation is as much entrepreneurism as serving billions
of users world wide.

I think we have this misconception that success mean you need to have hockey
stick growth on bunch of metrics, anD that you must make your investors 10x
return on their investments.

Fundamentally the wrong approach. As an entrepreneur I don't strive to "make
money", I strive to learn, adapt, and survive. Money and success depends
solely on how well I can iterate those three things.

~~~
rixrax
Well said. I should add that as an entrepreneur you don’t have to work for
some moronic boss or organization. Bearing in mind that if you employ anyone,
then you may be it. Either way, this is a biggie for me.

And of course there’s always a boss somewhere, whether it’s the client or the
bank or something else.

~~~
JohnFen
> And of course there’s always a boss somewhere, whether it’s the client or
> the bank or something else.

Yes. To paraphrase Don Lancaster, it's better to get one nickel each from 100
different sources than 100 nickels from a single source. When someone is
supplying all your nickels, they begin to think they own you in some way and
will dictate how you do business (for instance, by requiring you to work in a
particular place and time). When you get one nickel from each, then you are
free to get rid of the sources that become overly demanding.

------
codegeek
__" The most successful people I know didn’t do it with entrepreneurship, but
rather they got good-paying jobs, kept expenses low, and invested whatever was
left in the stock market or real estate, taking advantage of compounding" __

Yea, this guy doesn 't get what it means to be an entrepreneur. It is not just
about the money. It is an itch that has to be scratched. It is an addiction.
Only real entrepreneurs feel that itch. The rest are wantrapreneurs.

Entrepreneurs create something of value. They create a product/service that
solves problems. The problems can be big/small but a business cannot exist if
it doesn't solve a problem. They love creating teams and putting a bunch of
people together to achieve something. Big or small. Unicorn or bootstrapped.
Doesn't matter. What matters is that they created something that will exist
for some time and leave a legacy (hopefully). Entrepreneurship has nothing to
do with just making money or compounding or playing it safer. It is in fact
complete opposite. Getting rich as an entrepreneur is literally a side effect.
Yes, that is one way to get rich as well but if you just want to be rich with
minimal risks, there definitely are better ways.

So yes, it is overrated for those who really don't have the itch. Like I said,
you can make good money doing many different things and probably with better
probability. But that is not what entrepreneurship is all about. Not even
close.

~~~
sdinsn
> Yea, this guy doesn't get what it means to be an entrepreneur. It is not
> just about the money. It is an itch that has to be scratched. It is an
> addiction. Only real entrepreneurs feel that itch. The rest are
> wantrapreneurs.

Nice gatekeeping. There are plenty of entrepreneurs who are doing it for
purely the money.

~~~
codegeek
I know. That is why I said not _just_ about money.

~~~
sdinsn
> Only real entrepreneurs feel that itch. The rest are wantrapreneurs.

Implies that people that do it for only money are 'fake'. This is the
gatekeeping part

~~~
JohnFen
Yeah, there is a taste of the No True Scotsman fallacy there, certainly.

That said, I've known and worked with a shedload on entrepreneurs over the
decades, and I honestly can't remember a single one that was doing it purely
for the money.

In my experience, people who are driven purely by money avoid starting
businesses. They tend to invest in startups or get great-paying jobs in
established businesses.

I think the reason is that starting a business is a high-risk activity that
will consume pretty much all of your time and energy. You need to be driven by
something more than just money in order to be willing to do that.

If you're just about money, there are much easier and lower-risk ways of going
about doing that.

------
j-c-hewitt
>Overall, entrepreneurship is overrated. 5 successes for every 100 failures

This is so ridiculously untrue. There are so many businesses you can run that
are almost impossible to fail. There are so many failures that are actually
just "OK" in that they break even or lose a little money or whatever but don't
actually cause you any problem to wind down.

You have to have a certain personality type to do well as an employee and you
need to fit a certain mold that employers demand. As an entrepreneur you just
have to give your customers and clients what they want and nothing else really
matters. You do not even really need many employees to make a very good living
doing a whole lot of different things.

If anything, being an employee is overrated particularly when people have
career instability in midlife. Unexpected expenses like divorce and medical
crisis often hit employees and people in general very hard because it both
makes them less employable and disrupts their retirement plans. As soon as an
oldster has a major gap in their resume, their ability to continue to ride on
the employee gravy train diminishes by a massive degree.

No doubt you can live well on a good salary and investments, but it is not the
best option for everyone nor is it the only option. It is the best option for
a certain kind of personality but not for everyone. I know people who dream of
starting businesses but are employees but all their side projects suck and
don't go anywhere in part because they are just not suited for independent
business.

~~~
kwxza
>There are so many businesses you can run that are almost impossible to fail.

Can you give examples of some of these businesses?

~~~
seppin
It's not that failure is eliminated, but you can run a business with almost no
risk or capital exposure. If that business fails, you walk away with no damage
done.

~~~
canaus
>capital exposure

Really, what type of companies are those? I've always seen the comment of,
"there are so many more ways of making money than X" without the actual
proposition of said companies. Hell, even Sam Altman said it in the Stanford
Start-up class, but didn't give any examples.

~~~
ams6110
Small consultancy or web dev business. Your risk is the cost of a laptop and
your time.

~~~
j-c-hewitt
Right. If you bill one hour and don't have to issue a refund, you're in the
green. Nearly impossible to mess up. Harder to mess up than being an Uber
driver with lower capital requirements.

------
Gruklair
A hairdresser or a gardener is an entrepreneur too. I dont know where this
moronic idea that everyone wants to create some new Facebook or Google just
because they want to be on their own.

What happened to growing a sustainable business around the craft you believe
you are good at?

~~~
ekanes
No, the hairdresser/gardener/accountant etc is self-employed. It's a spectrum,
but basically it goes from self-employed but not novel all the way across to
world-changing. Both are self-employed, but to the difference between the
hairdresser and Elon Musk or Steve Jobs isn't scale. It's novelty.

~~~
AstralStorm
If so, then Microsoft was not an enterprise and Bill Gates was not an
entrepreneur when they started. After all, they bought their software and sold
for and established company. Zero novelty involved.

(In that vein, almost all enterprises failed, the second coming of the
innovation is where things usually happen. Or later.)

------
CPLX
This is just the unfocused ramblings of someone who works in finance and is
convinced it’s the best possible option.

If your only metric for success is money and you aren’t particularly creative
that’s almost certainly true.

If you live in New York and have wandered into the wrong bar or dinner party a
couple times you’ll find this sort of self-satisfied pseudo-intellectual rant
from a young finance guy pretty familiar.

~~~
smallgovt
It may be unfocused, but it makes a valid point that is applicable to the
masses of young Silicon Valley entrepreneurs who attempt to create the next
unicorn and fail on a yearly basis.

If all you want to do is make money and you're a smart quantitative graduate
from a good school, go into finance, because the expected value there is
higher and less volatile than building the next unicorn.

The value systems of these young graduates in New York and SV are one in the
same -- they are both people who primarily value money. But, the Silicon
Valley kid is the one who's wrong about the best solution.

Now, if you're a fresh college grad who values things other than money, like
contribution, autonomy, creativity, innovation, etc., then startups are a
better fit.

We can sit here and make value judgments, but in my experience, it's
impossible to change someone's value framework when they don't want to. So,
might as well point them in the right direction.

~~~
icedchai
There’s no reason to “go into finance.” Just get a decent paying job, save,
and invest. In some industries this is difficult... but anyone in tech can do
this and become a millionaire in 10 to 15 years.

~~~
smallgovt
The reason to "go into finance" is you can expect on average to become a
millionaire in 4-6 years instead of 10-15 years. So, do that, if you can and
all you care about is money. Note: this only applies to smart, quantitative
graduates from good schools.

~~~
WilliamEdward
The irony is you've deviated so far from the average population that it's
worthless to tell people to just "do this" because virtually no one is
listening.

Yeah, if you come from a good school, got a job with no experience and a
degree with no loans, and you are 'smart', you can easily become a
millionaire. I'm sure all 3 people with these qualities are thanking you right
now.

Actually, you will not become a millionaire within 4-6 years of graduation.
That's ridiculous.

Graduates do not get paid 250k p/year. Not even in finance positions. And
reliable stocks are too long term of an investment to expect a payout in 4
years with no risk. You live in a fantasy world, sir.

~~~
smallgovt
>> Graduates do not get paid 250k p/year. Not even in finance positions.

You’re right. They make more when you factor in bonuses — in some cases double
that.

I’m guessing you aren’t in the industry or have an outdated perspective. In
recent years, the competition for ML talent at hedge funds has become fierce
and compensation has skyrocketed.

~~~
WilliamEdward
[https://www.indeed.com/salaries/Data-Scientist-Hedge-Fund-
Sa...](https://www.indeed.com/salaries/Data-Scientist-Hedge-Fund-
Salaries,-New-York-NY)

(quantitative analysts do not differ much from this in salary, but youre being
to vague with your job titles so im not sure what you mean)

Either way, you are ridiculous. Unless this magical position requires more
advanced knowledge in which case your claim about it being a simple "finance"
position is wrong. Not even true in machine learning either. At this point
it's no longer a straightforward and safe career path like you said it would
be. Maybe you misunderstood and thought we were talking about PhD graduates.
My point still stands.

Please, please, do not mislead people down career paths.

~~~
smallgovt
Even if we work with averages, it takes on average 2 years [0] to make it from
entry level quant at a hedge fund to senior analyst. Senior analysts make on
average $750k/yr [1] in total compensation (primarily bonus based) at a
mediocre hedge fund. The expected value after 6 years even at a less than
mediocre hedge fund puts you north of a million post-tax.

The typical track is 2 years as an analyst @ $200K/year and then 4 years as a
senior analyst @ $750k/year. Do the math.

[0]: [http://www.streetofwalls.com/finance-training-
courses/hedge-...](http://www.streetofwalls.com/finance-training-
courses/hedge-fund-training/hedge-fund-analyst/)

[1]: [https://news.efinancialcareers.com/us-en/266401/the-
salaries...](https://news.efinancialcareers.com/us-en/266401/the-salaries-and-
bonuses-of-investment-professionals-at-large-hedge-fund-compensation)

------
ytNumbers
>Overall, entrepreneurship is overrated. 5 successes for every 100 failures

If failure is defined as going out of business, and success is defined as
surviving, then the real five year survival rate for new businesses is ten
times higher than the author has written.

[https://www.fundera.com/blog/what-percentage-of-small-
busine...](https://www.fundera.com/blog/what-percentage-of-small-businesses-
fail)

~~~
AstralStorm
Surviving is not enough, you need at least sustainability and preferably
profit and growth.

That said, a business that is alive for 5 years and not running on VC funding
for that time is probably sustainable in medium term.

------
veryworried
Personally I have found it a bit sad that in the recent decade people have
been so lured by the wealth and glamour of popular startup culture that we
have forgotten the value of being in service to others. To master one’s craft
for the benefit of others is an egoless endeavor that enriches the soul and
not just the wallet.

~~~
GalacticDomin8r
There is something to be said for an apprenticeship relationship that teaches
the respect for learning, method, quality and dedication that a skilled craft
requires. However an "enriched soul" doesn't appear anywhere on the list of
things I'd be willing to say about it.

------
achillesheels
The author presupposes the goal of being an entrepreneur is getting rich. Yet
his outlier examples all infamously eschewed lavishesness. They were about
building something to impact humanity.

No doubt many successful entrepreneurs have a goal of wealth in mind, but for
what aim? I can justify my efforts at financial independence to live freely
and not to live under any conditions which compromise my personal ethics, as
one priceless example.

------
jondubois
>> if I had to choose between putting a large sum of money, say, $200,000 into
a small business, which has a 90% chance of failing within 5 years, or the S&P
500, the choice is obvious..

Unfortunately, I've come to think that investing in the stock market
(especially index funds) is unethical because it gives more power to
corporations to lobby for regulations which will further distort the market,
increase centralization and increase failure rates for small businesses. It's
a vicious cycle, a self-fulfilling prophecy. Without mega-corporations, small
businesses would have a much better success rate and consumers would benefit.

Blindly investing in the S&P500 is just feeding the corporate machine. You're
giving real money to real companies and you don't know what they're doing with
it. In my view, large index funds should be outlawed completely.

~~~
Mikeb85
> You're giving real money to real companies and you don't know what they're
> doing with it.

You're really not. You're more than likely buying some other investor's
shares. Companies aren't constantly raising money on markets, if they did,
shares would get incredibly diluted. Almost all volume is between investors.

~~~
fulafel
Most of those sellers are stock market specialized institutional investors who
have mostly those same problematic motives.

------
Jhsto
I feel like I am reading an article from someone who never has run their own
business. You start a tech company because you want to do something new, not
to get rich.

Further, I don't think it's that uncommon for entrepreneurs to see the
employer-employee relations as the following:

\- being an employer is a status in which you take risks

\- being an employee is a status in which you avoid risks

Blaming the other for their current status is dumb, regardless of on which
side you are.

~~~
jampekka
Definition of entrepreneurship in English: The activity of setting up a
business or businesses, taking on financial risks in the hope of profit.

[https://en.oxforddictionaries.com/definition/entrepreneurshi...](https://en.oxforddictionaries.com/definition/entrepreneurship)

~~~
droithomme
Is it your belief that it is better to make a loss rather than make a profit
in return for one's labor?

Do you consider making a profit as opposed to making a loss to be equivalent
with "getting rich"?

Do people have a right to be paid for their work that benefits others?

------
huffmsa
The lack of a byline is incredibly telling, I wouldn't attach my name to this
drivel either.

> _just get a 6 figure job and invest in things created by entrepreneurs
> because the market is only going up, up up. But don 't be an entrepreneur
> yourself._

Y'all got any of them 6 figure jobs lying around back there?

For a 24 year old? One with job security, so like series C or later? I want to
get paid, but not take any risks.

~~~
jhgaylor
If you're willing to live in a densely populated metro area (where 100k
doesn't go as far as you'd think) you just have to learn some hot skill and
how to interview.

100k is north of entry level but certainly not a senior paycheck in Denver. If
you can explain blue/green deploys, know how http works, and can use terraform
to build out a "best practices vpc" then all you really have to do is tell
recruiters that and they'll get you lined for interviews where the hiring
manager won't balk at 100k.

It feels like there are Devops and Security hiring managers all around who
would love to talk to you.

------
rb808
Wow I never knew Bill Gates had a multi million dollar trust fund. Kinda puts
the drop out of Harvard and start a software company with your friend in
perspective.
[https://philip.greenspun.com/bg/](https://philip.greenspun.com/bg/)

------
dharma1
While I generally agree with the op's sentiment (if your goal is to gain
financial independence, a high income and saving+investing will get you to
that goal with less risk than starting a company), it's not really certain
we'll be seeing 15% or even 5% annual returns on S&P 500 for much longer.

The short term (10 years to retirement) plans are not going to work if there
is another global recession, especially if it's a prolonged one. And this time
around there isn't much firepower left for financial manoeuvring (QE+lower
interest rates)

------
pedalpete
The word "entrepreneur" has lost all meaning, and I say "good riddance". When
someone asks you "what do you do" do you answer "I'm an entrepreneur"? If so,
ask yourself why? Because you haven't answered the persons question, you've
only stroked your own ego because you believe saying "entrepreneur" has a
certain cache, which has been destroyed by everyone with an idea calling
themselves an entrepreneur.

Drop the pomp and just be what you are. I'm not an entrepreneur, I'm a
software engineer that runs a tech startup that is creating a new type of
media. That actually tells the person what you are doing. Other professions
describe what they do. A lawyer, they practice law. A doctor, they keep people
healthy. A chef, he cooks food. An entrepreneur... a well, I run a business.
Why? what does the business do? what do you do? Running a business can mean so
many different things (ok, sure there are all types of lawyers and doctors
too, so I can play devils advocate to my own BS).

But seriously, why do we need this word? I cringe when anybody calls me an
entrepreneur, and I recently agreed to be on the panel of a tv show about new
media. I got there to find out the show was called "The Entrepreneurs". I
cried...

~~~
JohnFen
> When someone asks you "what do you do" do you answer "I'm an entrepreneur"?

No, I say "I run a software company".

------
ikeboy
>The median success for the typical podcast, Amazon seller, or self-published
author in terms of income, after one factors in the number of hours involved
and start-up costs, amounts to less than minimum wage.

Potentially for the podcast and self published author, those are both highly
saturated niches. But I don't believe that's the case for Amazon sellers. I
know many people who make 6-7 figures a year profit on Amazon, well above
minimum wage.

~~~
moneywoes
Do you think there might be due to the availability heuristic though?

~~~
ikeboy
Could be, I see a decent number of people who aren't terribly talented doing
ok, though. I don't think the median attempt at doing it full time ends in
under minimum wage.

~~~
shadowprofile76
I'm surprised didn't expect those figures for Amazon sellers, sort of seems
like a saturated marketplace with razor margins for most sales. Would you be
willing to share a bit more detail on what kinds of things these fairly
successful Amazon sellers you know of sell on the site?

~~~
ikeboy
I know people doing many different categories. One guy doing a million a month
gross just in clothing. One guy doing used DVDs and making over 1k/day profit.
Many people doing wholesale in electronics, toys, grocery, health and beauty,
pets, and others.

I'm doing electronics and toys and have done as much as 500k gross in 30 days
at peak.

~~~
shadowprofile76
But the competition must be ferocious for such generic things, which is why Im
so surprised by these profit margins. I don't mean to pry with too many
questions but are these the sort of sales and margins created even by sales of
more or less generic products or do these people put heavy effort into
positioning themselves differently?

~~~
ikeboy
For wholesale it's difficult to position yourself differently than anyone
else, you need to get stuff at the right price. I'll have suppliers with
thousands of products and I only buy ten of them, have to be very selective.

Other people buy from stores at discounted prices, or any number of different
sourcing methods.

~~~
shadowprofile76
Sincere thanks for the followup. Interesting points to consider. I'll have to
look into products/providers more. Any general sources you'd recommend?

~~~
ikeboy
Attend trade shows for wholesale and talk to potential suppliers.

------
jamii
Judging by the comments, a lot of people value entrepreneurship for the
personal freedom and autonomy.

The article suggests being able to save 89k per year. Under reasonable
assumptions, 7.5 years of saving at this rate will support an income of 31k /
year (the median US salary) for the rest of your life, leaving you with ~50
years of runway for whatever else you care to do.

This is especially interesting if the thing you actually want to do is
something that is valuable to society but not profitable eg maintaining free
software or raising a child.

[https://networthify.com/calculator/earlyretirement?income=12...](https://networthify.com/calculator/earlyretirement?income=120000&initialBalance=0&expenses=31000&annualPct=5&withdrawalRate=4)

------
Mikeb85
"Entrepreneurism" is the only way to make money in many industries. Things
exist outside of the internet. For instance, restaurants, which are one of the
nation's largest employers, which everyone spends money on, but where workers
are often paid very poorly.

For example, I can take the $200k in the article, build a small restaurant,
and expect it to do $500k-$1m in revenue per year over the next decade. Given
good management and a reasonable lease, it'll net 10-20% per year, plus pay my
salary and those of a few other people.

Hair dressers, landscapers, any construction really, and lots of other
industries benefit from entrepreneurs. Yeah, moonshot tech companies usually
fail, but that doesn't mean "entrepreneurism" is overrated.

------
edoo
I think you have to look at it as a journey as with anything. A good analogy
is computer programming. When you first try to write a program you will fail
miserably but it will be a major learning experience, with each successive
attempt being better than before and offering new learning experiences.

If you are in one swoop starting your first business to share your major
passion in life with the world there is a good chance the near inevitable
failure will be the end of your entrepreneurship. If you realize that is an
almost guaranteed part of the journey you might keep trying.

I want to see the stats on failed entrepreneurship where the person gives at
least 5+ good attempts.

------
m0llusk
Lives are complex and have many related factors. Leaving the corporate world
to make and sell things on my own has changed everything about my life. It is
true that I have less money, but it is also true that I have vastly more focus
and don't spend time on things I consider irrelevant. Despite the financial
losses involved becoming an independent business person greatly improved my
quality of life.

------
JohnFen
> The most successful people I know didn’t do it with entrepreneurship, but
> rather they got good-paying jobs, kept expenses low, and invested whatever
> was left in the stock market or real estate, taking advantage of
> compounding.

The author here is clearly defining "successful" as "wealthy". That means that
he isn't talking to entrepreneurs like me, though, as I define it rather
differently.

------
klaudius
He's comparing the best employment outcome ( cushy working conditions, a six-
figure salary, and generous stock options ) with worst entrepreneurism outcome
( failure, small commodity business, too much work ).

There is a BIG difference between what is called "small business" and
"startup". Small business doesn't scale, while startup starts small, but it
can scale globally and create better moat ( scale, network effects, brand ).

People here are interested in startups, not small business.

Tech entrepreneurism is actually underrated since nowhere else do you have low
starting costs, global audience, low marginal costs etc. (
[https://signalvnoise.com/posts/3324-commercial-
freedom](https://signalvnoise.com/posts/3324-commercial-freedom) ) .

------
rafaelvasco
It is and it isn't. For who? Everything is relative. Anyone that says X is Y
is fundamentally biased and as such 50% right and 50% wrong.

------
icedchai
This is the “get rich slowly” method. It does work, but most people don’t have
the discipline to do it.

------
ezekg
> 5 successes for every 100 failures

Never tell me the odds.

~~~
JohnFen
Indeed!

Here's how an entrepreneur would look at those odds: they mean that I only
need to start 20 companies to have one be a success.

------
xmlblog
s/corrections/connections/

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theyoungwolf
tldr: Making it by doing your own thing is most likely going to fail. You are
better off being successful working at a high paying job and investing in the
stock market.

~~~
theyoungwolf
article seems to just focus on the idea of wealth or making money (more likely
on fire). doesn't account for what success is defined as or what people want
in their life other than money. eg. lots of people rather be their own boss
than be a corporate drone.

