
Are founders significantly richer than most people? - transburgh
http://foundread.com/2008/01/30/are-founders-significantly-richer-than-most-people/
======
run4yourlives
I think this is a pretty good example of how averages can fail to really tell
you anything.

Entrepreneurs by their nature have more individuals at the end of each side of
the scale, whereas people who work are clustered in the middle.

All a higher average tells you in this case is that when you "win" as an
entrepreneur, those payouts are larger than when you "win" in the workforce.

Duh.

~~~
ALee
The end of the article is more enlightening though.

"Wealthy individuals with lower ability can start new businesses because they
are less likely to face the disciplining effect of external finance."

The author also writes that those same correlations occur in business school
and other upper tier schools, which lend themselves to perceptions of high
achievement.

At no time however have capital costs been low like in the software industry,
so perhaps the real key is to encourage more of the low income to hack away :)

------
webwright
That's just bad math... Using a mean when they should be using a median.

Throw Bill Gates onto a bus and the average bus rider earns billions a year...
That's not particularly meaningful.

"Sorry, this is another myth. Entrepreneurship creates a lot of wealth, but it
is very unevenly distributed. The typical profit of an owner-managed business
is $39,000 per year. Only the top ten percent of entrepreneurs earn more money
than employees. And the typical entrepreneur earns less money than he
otherwise would have earned working for someone else."

(from Scott Shane, the author of "The Illusions of Entrepreneurship via
<http://blog.guykawasaki.com/2008/01/top-ten-myths-o.html>)

~~~
icky
> The typical profit of an owner-managed business is $39,000 per year.

Before or after the owner/manager's salary?

If the owner/manager isn't paying himself a salary, then it's more of an
expensive hobby than a business.

~~~
aston
Proft = money left after paying expenses, salary included.

------
hugh
There are so many different kinds of entrepreneurs, and so many different
types of new enterprises (restaurants, used car dealerships, high-tech
startups, law firms) that statistics about the "average entrepreneur" aren't
very much use to anybody.

It's like trying to decide whether plumbing is a good occupation by looking at
the average salary of jobs starting with P.

------
bayareaguy
_Entrepreneurs are, on average, significantly wealthier than people who work
in paid employment. Research shows that entrepreneurs comprise fewer than 9
percent of households in the United States but they hold 38 percent of
household assets and 39 percent of the total net worth._

according to <http://news.ycombinator.com/item?id=107334>

------
mixmax
Cause and effect....

Why don't journalists and even academic writers get this simple point ?

~~~
edw519
Because in today's "journalism", correlation = causation. Makes more
sensational headlines like, "Rats Bring Garbage Into City"

------
daniel-cussen
Titles phrased as questions might as well end with "No." As in "...richer than
most people? No."

