
What the literature says about the earnings of entrepreneurs - BenjaminTodd
https://80000hours.org/2016/02/what-the-literature-says/
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jasonkester
So here's the Math for me. I recently dropped my nice fat full-time contract
so that I could either "go full time on my business" or "retire", depending on
how you want to interpret it.

Before: One of those Google/Facebook/Twitter "Total Comp" numbers that nobody
here believes whenever Bay Area salaries are discussed. Upwards of 40 hour
weeks, though I did drop down to 4 day weeks for the last year because, hey, I
can live on only 80% of a fairy tale number that nobody would believe if you
told them.

After: Normal Bay Area Developer money, of the sort that the other half of
that discussion above make. Or maybe a bit less. But the "Hours" side of the
equation is where it all gets made back up.

I just spent 3 months traveling through Southeast Asia with the kids, Rock
Climbing, Surfing, Getting Married, Riding Elephants and Building Sand
Castles. The biggest work week I had involved maybe 10 hours in front of the
computer.

Realistically, I could coast along like this indefinitely (thus the "retired"
interpretation of my current situation above), but more likely I'll go back to
5-20 hour weeks building out features in the existing products and shipping
the next one.

That's what you're buying with all this "Entrepreneuring". The ability to
replace your old income with a new one that doesn't necessarily require you to
work full time for it.

If you like doing things other than sitting a cubicle discussing where to go
to lunch, I'd highly recommend looking in to it.

~~~
Swizec
> That's what you're buying with all this "Entrepreneuring". The ability to
> replace your old income with a new one that doesn't necessarily require you
> to work full time for it.

Time is the limited resource, not money. You can always get more money, but
you can never get more time.

Many (most?) people forget that.

~~~
brahmwg
Cue the reference to the "time vs money for happiness" thread that was on HN a
while ago.

[https://news.ycombinator.com/item?id=10860517](https://news.ycombinator.com/item?id=10860517)

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swalsh
I recently registered an LLC, and opened a separate bank account. I did it
because I didn't want to "cross the streams"... however it felt more like a
switch was flipped in my head, and so far that's one of the biggest benefits.

Where as before when I had to spend some money for the business, it was very
difficult on an emotional level. I'm not the kind of guy who doesn't spend
money if he doesn't have to. However once I was spending money out of the
business account, it was easier somehow. My mindset was now a matter of "will
this help me grow the business? sure, let's go for it". Instead of "Can I
accomplish the same goal without spending the money?"... which there is almost
always a way to do.

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danieltillett
I am defiantly on the control-oriented side rather than the wealth-oriented
side. The appeal for me of being an entrepreneur is I have control over my
life, not the money (I am not saying that money is not great).

You only have one life and you almost certainly won't look back on your life
and say "I wish I spent more time making money".

~~~
cylinder
You only have control once your business steadily earns enough to employ
managers to run things for you. Until then you are at the whim of your
clients.

~~~
danieltillett
You can say no to your clients ;)

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stevetrewick
Much more interesting is the percentage of the value they generate that is
captured by entrepreneurs:

" _We conclude that only a minuscule fraction of the social returns from
technological advances over the 1948-2001 period was captured by producers,
indicating that most of the benefits of technological change are passed on to
consumers rather than captured by producers._ "

[http://www.nber.org/papers/w10433](http://www.nber.org/papers/w10433)

~~~
BenjaminTodd
Yes - I'd guess entrepreneurs have more social impact than salaried workers,
because they do more innovative work. We'll write more about this in the
future.

Note that the paper you cite is only about technological advances though, and
only a fraction of what entrepreneurs do contributes to technological advances
- a bunch of its just implementing stuff that's already best practice.

~~~
stevetrewick
AIUI implementing stuff that's already best practice - innovation driven Total
Factor Productivity growth - _is_ technological advance and is included in
Nordhaus' calculations. But IANAE.

~~~
BenjaminTodd
Good point. It still seems unlikely to me that all entrepreneurial activity
contributes to productivity growth though. I'll look into it some more.

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jonstewart
There's a bit of an implicit post hoc ergo propter hoc fallacy going on with
this article. That is, if someone quits their salaried job and incorporates,
then they'll make more money. I think the likely conditional for most
entrepreneurs is "if I incorporate a business to do X, then I'll make more
money." I think a lot of entrepreneurs have an X in mind before they start
their business (which is not to say it doesn't change, but, still).

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randomgyatwork
I've read that incorporation isn't worth the effort and cost if the business
makes less than 60k, maybe this is a hidden cost in some of these situations.

