
Towards an Untrepreneurial Economy? Rise of the Veblenian Entrepreneur (2019) - npalli
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3479042
======
neilk
This is fascinating. In passing, they mention how the highly privileged may
conspicuously consume 'immaterial' goods for status, and the less privileged
do more traditional conspicuous consumption of expensive goods.

So if wantrepreneurism is a form of conspicuous consumption for the privileged
- or those who desire to become so - what's the equivalent for the less
privileged?

I think it has to be MLM and Instagram influencing. The wantrepreneur wants to
be a mini-Jobs, but the MLM/Insta dreamer wants to be a mini-Kardashian,
hawking products with a glamorous image. But their desire is exploited
ruthlessly by a system that promises success but will mostly drain their
wallet. Nevertheless a lot of them feel the need to keep going, largely
because they've publicly bought into the image.

Maybe it's about what forms of success one is exposed to and what one sees is
popular among one's peers?

~~~
notahacker
> So if wantrepreneurism is a form of conspicuous consumption for the
> privileged - or those who desire to become so - what's the equivalent for
> the less privileged?

> I think it has to be MLM and Instagram influencing. The wantrepreneur wants
> to be a mini-Jobs, but the MLM/Insta dreamer wants to be a mini-Kardashian,
> hawking products with a glamorous image. But their desire is exploited
> ruthlessly by a system that promises success but will mostly drain their
> wallet. Nevertheless a lot of them feel the need to keep going, largely
> because they've publicly bought into the image.

Interesting idea, with the sad conclusion that whilst the average
wantrapreneur suffers the opportunity cost of missing out on salary, they
might well actually be able to pay themself from some sort of funding and come
out with an enhanced CV and personal network, whereas the MLM dreamer who's
less able to afford it probably spends more on inventory than they earn on
sales and burns their personal network with irritating sales pitches.

~~~
neilk
I think the negatives are often underappreciated.

I know founders who ruined their credit, destroyed their friendships, ended
lifelong relationships, lost their sanity, and in one case, probably committed
suicide. Some do move on to other things and have a lingering sense they are
failures, because they knew one or two people who exited with millions who
seemed no better than they were. And they don't think they can talk to anyone
about any of this, because who would have sympathy?

I don't have data, but I think the negative or ambiguous outcomes hit the
founders from middle-class or working class backgrounds way harder. This was
their one shot. Someone who falls back to their parents' millions will get
other chances.

~~~
notahacker
I think this is true and nearly referenced the psychological downsides in my
OP, I'm just perhaps uncharitably assuming the 'wantrapreneur' class dreams of
riches and enjoys pitch sessions but has less commitment than most founders to
actually executing their idea and hitting targets, and fewer staff and
customers to feel they've let down.

------
scottishcow
So universities are conspicuous consumption, internships are conspicuous
consumption, entrepreneurship is conspicuous consumption.

Perhaps the simple fact is that most people are motivated by the need for
social validation, and only a tiny tiny fraction of the population is driven
instead by things like intellectual curiosity, desire to help others / solve
societal problems, etc. So any class of activity that becomes open to a
sufficient number of entrants will eventually turn into a form of conspicuous
consumption.

Now scientific research is conspicuous consumption (MIT Media Lab?), book
authorship is conspicuous consumption, and political candidacy is conspicuous
consumption. Are there any activities left that _doesn’t_ function as a form
of conspicuous consumption?

~~~
pdonis
_> universities are conspicuous consumption, internships are conspicuous
consumption, entrepreneurship is conspicuous consumption_

 _> scientific research is conspicuous consumption (MIT Media Lab?), book
authorship is conspicuous consumption, and political candidacy is conspicuous
consumption_

Is the paper making all these claims? I don't see them.

~~~
scottishcow
Never said it does, was it confusing? Maybe my English needs more work.

~~~
pdonis
_> Never said it does_

Then I don't understand who this question is supposed to be directed at:

 _> Are there any activities left that doesn’t function as a form of
conspicuous consumption?_

My answer would be that none of the activities you list (with the possible
exception of the kind of wannabe entrepreneurship the paper is talking about)
are conspicuous consumption. But it seemed like you were directing the
question at the authors of the paper, not me.

~~~
scottishcow
> Then I don't understand who this question is supposed to be directed at:

To the HN community of course.

> My answer would be that none of the activities you list (with the possible
> exception of the kind of wannabe entrepreneurship the paper is talking
> about) are conspicuous consumption.

That’s a valid response, although I don’t agree. Note that I’m not regarding
these activities to be _entirely_ about conspicuous consumption, just like the
paper doesn’t claim all of entrepreneurship is veblenian. Fwiw the paper does
cite another work that claims some internships can be viewed as a form of
conspicuous consumption.

~~~
pdonis
_> Note that I’m not regarding these activities to be entirely about
conspicuous consumption_

If your definition of an activity being conspicuous consumption is that
somebody, somewhere, _can_ use it for conspicuous consumption, I think you're
right that it's going to be hard to find an activity that isn't "conspicuous
consumption" by this definition. But I would say that's a problem with your
definition.

~~~
scottishcow
Well surely it's a matter of degree (and also chronological trends) we're
talking about here. My writing may not be perfectly clear but other commenters
seem to understand my point, nuanced discussions may be difficult but not
impossible if we're engaging in good faith.

------
NicolasGorden
I read the actual research and it seems to me the authors are confounding a
lot of things. I believe people with a decent background in business and
economics should see this. A few things that jumped out at me:

1- The rise of specialized services that lower the entrance bars for many
industries.

2- The rise of the wantrepreneur.

3- "Inefficient market offerings" that reduce innovation.

The answer to these:

1- Yes by lowering the entrance bar with SAAS products, regular people can
create companies more easily. This means many people that shouldn't be company
owners are now. But this is hardly a bad thing. The converse to this is that
many people who should be entrepreneurs that weren't are.

2- This is really complex. And yes, the ease of starting a business and
businesses that service businesses will always play into this segment. But
it's hard to blame mailchimp for the rise of the wantrepreneur, which seems to
be a logical conclusion if we follow the premise of the study. Since that's
not a logical conclusion, it follows the study's premise isn't very sound.

3- As I understand it, inefficiencies in the production of services means more
people offering a service than can be sustained by the demand of such
services. Such events are normal when industries are in flux. It's actually a
good thing, as it fosters competition and the surviving brands are stronger,
leaner and smarter than they would be if there wasn't such 'inefficiencies'.

I'm really not sure what people see in this study. Even the language used
is... emotional? lacking? I mean, it's just not language that lends to nuance
and understanding. It's almost marketing like. And I say this as someone who
is a digital marketeer, so I'm not using it as an insult. It just feels out of
place, I expect analytical language in a study.

~~~
Animats
I've read Veblen's "The Theory of the Leisure Class", and I don't see that it
applies here. The author writes:

"This rapidly growing industry has transformed the nature of entrepreneurship
and encouraged a particular form of low-quality entrepreneurship. It has done
so by leveraging the Ideology of Entrepreneurialism to mass-produce and mass-
market products that make possible what we term Veblenian Entrepreneurship."

I'd agree with the first sentence, but not the second.

We really do have "entrepreneurship as a service" now. Or did, pre-epidemic.
Wannabe writes a pitch deck or a white paper, and convinces VCs, Kickstarter
users, or ICO investors to put in money. Get space from WeWork, technology
infrastructure from AWS, and turn traffic into revenue with Google Ads. Show
the traffic climbing and you're a success, even if not profitable. Some such
businesses even succeed in the end.

The question is, is this diverting people from doing hard, useful things? Like
refurbishing buildings in bad neighborhoods. Installing solar panels and
inverters. Tree trimming near power lines as a service. Automating meat-
cutting plants. Don't know. We don't have enough of the latter, though. Those
things have no low-probability big upside, which is what VCs want.

~~~
notahacker
I'm not sure why you disagree with the second sentence, especially given your
followup paragraph.

It doesn't need to divert people from doing 'hard, useful' things to be a form
of conspicuous consumption, it just needs people who are willing to accept
less than they might otherwise earn in salary to have the social cachet of
being a Founder CEO and investors [and sometimes even acquirers] willing to
accept lower risk adjusted return to be associated with people and ideas they
see as innovative or play golf with other investors in.

If Veblen was born a century he'd be dripping with snark - justified and
otherwise - about everything to do with the Valley, probably including a lot
of the successful exits.

------
0x00B664
I find the premise to be rather Baudrillardian than Veblenian, or perhaps it's
simply that Baudrillard encompasses Veblen. In essence: the meta consumption
of the symbol of entrepreneurship, on the assumption that it increasingly
holds more social value than any economic output, imo extends the behavior
beyond mere Veblenian, i.e. conspicuous, consumption.

------
tathougies
> And society derives no obvious benefits from a profusion of poorly
> performing ventures.

This is where the paper goes from research to opinion piece. It is easily
argued that without the failures, there won't be successes. One can also see
that while there are many many business failures, there are also unicorns the
likes of which the world has not seen before. It is not obvious at all that
not having more failed entrepreneurs is a bad thing. Lower life-time earnings
is hardly a social cost. If these entrepreneurs ended up on welfare, then
perhaps there is an argument. But if they find a fulfilling life doing what
they do, and the consequence is they earn less... what problem is it of mine?
Why do I need to derive a benefit from them? That seems to be putting my
desire for 'stuff' (intangible or not) over their right to do whatever they
want with their life.

More examples of editorializing:

> In contemporary society, the infatuation with entrepreneurs is such that
> they “are seen as almost having a magical effect on economies—alchemists,
> whose innovative capacity allows for water to be turned into wine, lead into
> gold.” (Greene et al, 2008; p. 3). -- citing a source does not make it true

------
masona
I've been seeing a lot of that lately on Twitter: accounts post inspirational
quotes/images about being an entrepreneur and 'transparency' about how much
money they've made. Always followed by a link to their Gumroad: "Pay me to
tell you how to take advantage of people like you, who just paid me."

------
jackcosgrove
Grades are inflated. Ambitious high school juniors are running bogus charities
and non-profits. The smart kids do track and cross country so they can be two
sport athletes. Harvard has the same curriculum as Penn State honors.
Instagram lives are fabulous and fake. Wantrepreneurs start shell companies to
put on their resume.

It's all down to our increasing ability to satisfy human material needs.
Instead of allocating stuff so people can survive, the economy allocates
status so people can be popular. It's an economy of likes rather than an
economy of needs.

~~~
ReticentVole
We need a grand strategy. Our first order of business should be to end the
burning of fossil fuels, second order being to establish permanent presence
beyond Earth.

Otherwise it feels like we are just twiddling our thumbs, redistributing
wealth (upwards), and slowly dying.

~~~
bonestormii_
I want space colonies as much as the next guy, but we really need to try to
end homelessness, poverty, and extreme gaps in wealth inequality. Otherwise
the rich will just fly off into the sky after they are done with the planet
anyway.

The production is there. The money is there. If we simply won't do this, we
aren't worth preserving as a society.

~~~
ReticentVole
The willpower and genetic heritage of the poor and homeless isn't there. Most
people at the very bottom are in that position because of mental or genetic
problems. You cannot continue to throw money at it - you will end up with an
endless burden. Instead just fund planned parenthood so that the cycle doesn't
continue.

~~~
bonestormii_
This perspective is a tragedy, and is just not the case.

Guess what--It's hard to get a good job with a criminal record, and it's easy
to have a criminal record when you are black/brown.

So you take a bad job. And with that job, you remain so poor that you cannot
handle the slightest emergency. A huge bill or disaster in your life (medical;
car; legal) can pretty much end you. If you don't have a strong network to
support you, you become homeless.

How do you reconcile the fact that most homeless people have some sort of
family structure that is _not_ homeless? I've never seen any evidence that
homelessness is an inherited condition.

You blame both will power and genetics. Why are you so anxious to believe that
society has no role in creating or solving this problem? If you make access to
education equitable; if you don't ruin people's ability to engage with the
economy with drug offenses that statistically appear quite racist in their
skew; if you treat mental problems with medical assistance rather than
criminal justice systems; if you regulate housing markets to prioritize making
housing affordable rather than prioritize generating passive income for upper
classes-- you can have a meaningful reduction of homelessness.

------
mementomori
Is it more desirable to "actually want to create real economic value" and less
desirable to "doing this just so I can tell people I'm an entrepreneur"? Maybe
there's some value in "people who shouldn't be owning companies" owning
companies, as it demonstrates a kind of economic freedom in a society. Whether
a small business is able to make a dent in the economy or even an industry or
a vertical is probably another topic of discussion. It's not actually that
easy to start and run a business, there's a lot of yak-shaving admin work.
Again, this is something that can be solved by throwing money at it
(accountants, attorneys). So it does seem like entrepreneurship is prone to be
used as social signaling by those who are already privileged. I don't know
what argument I'm getting at, but I just know to be more discerning between
the two types of entrepreneurs in my own networking activities and the people
I choose to build relationships with, so I don't waste time.

------
Thorentis
Some fascinating observations here. What they describe perfectly explains the
rise of places like IndieHacker. IndieHacker is basically a website for
Veblenian Entrepreneurs to show off how successfully they are, and how far
along they are to being real entrepreneurs. It is a place where their real
desires (success, social status, etc.) can be easily signaled to other people.

The increasing number of innovation hubs, incubators, development grants, boot
camps, etc. are taken together, what the article terms the "Entrepreneurial
Industrial Complex". An entire industry now exists around making money off
people that want to be entrepreneurs, or posturing so that they can profit
from the potential success of unicorns (e.g. Incubators that take a cut). SaaS
that let's you make a SaaS to provide people with tools for SaaS creation
anybody?

As others have said here before, in a gold rush, it is the tool makers that
make the money. And I think in this current "unicorn rush" that's exactly what
we're seeing.

~~~
Barrin92
what this also reminded me of is a story about "fake influencers" I read which
are people on Instagram and so on who _pretend_ to be paid influencers, they
go on trips, shoot photos but actually nobody is paying them at all. On the
one side, of course, there is a real financial motivation to become more
famous, but on the other hand like the entrepreneurs, they just seem to want
to consume the influencer lifestyle and for a while just pretend like they're
engaging in the actual activity.

------
zamfi
Another commenter posted:

> It's simple, demand "pulls" the economy far better than supply pushes it,
> and we are a rotten insecure society with no demand.

I'm not sure it's so simple. In certain industries, we have a _ton_ of demand
that isn't really met: housing, education, healthcare, to name three.

But the reason we don't meet the demand for these (now highly-inflationary)
goods and services is political, not economic.

1\. We know how to build lots of really nice housing for not that much, but
the most in-demand regions _prevent that construction through the political
process_. Any innovation in construction tech has to contend with not just
limits on construction in in-demand areas, but also requirements ("all new
construction needs rooftop solar!" \-- I love solar, but the costs are way,
way lower at utility-scale) that increase costs.

2\. High-quality, public education used to be ~free, a reality that applied
significant downward pressure on private college tuition as well, but state
funding has entirely dried up as costs (often non-teaching-related) have
soared, in part thanks to (1)!

3\. Due to somewhat well-meaning regulation, healthcare has become a disaster
of hidden price signals, requiring a team of bureaucrats weeks to months to
decide how much money to exchange for a _service already provided_. Powerful
political organizations limit the number of new practitioners trained in the
US,

There are good and totally justifiable path-dependent reasons why we are where
we are in the three industries above. But they are now the largest category of
consumer cash outflows, pushing innovation to the margins (cell phones!
computers! ads!). The reason housing, education, and healthcare are so
expensive is because demand vastly exceeds supply, and supply is limited by
politics.

------
somewhereoutth
I've watched this kind of thing unfolding around where I am now - good to be
given words for the somewhat uncomfortable feeling I was having. I'd realised
that entrepreneurship was no longer some crazy people in a shed, but instead
now an established industry - but I hadn't quite elucidated the precise
identity and nature of the customer.

The most egregious example I'd seen was a clearly smart and talented guy ready
to torch his budding medical career in order to launch a tourism related
startup. Deeply ironic considering subsequent events.

------
Ericson2314
It's simple, demand "pulls" the economy far better than supply pushes it, and
we are a rotten insecure society with no demand. VC as a solution to chronicle
too small capital expenditures is like pushing a rope.

------
unexaminedlife
I genuinely believe most of the entrepreneurs who "make a dent" went in with
the best of intentions. I sort of feel that once the wrong investors get
involved (or the entrepreneur gets sucked into bad terms) the whole thing
(from an outsider's perspective) starts looking more like a ponzi scheme than
a traditional business that creates real value for consumers.

------
tathougies
There are two kinds of 'wantrapreneurs': one who wants to build a business
that provides services or goods to the public at large and another who wants
to build a business that provides services or goods to other wantrepreneurs to
increase their social standing. The internet seems filled with the latter, but
in reality, there are probably more of the first, methinks.

------
termau
I couldn't get all the way though it, it's almost as bad as the circle jerk
that is the start up 'industry'.

Reading it I just think why does it matter either way? You're either looking
for profit, looking for scale, or looking for someone to bankroll you to do
those things. The rest is all noise, so much noise.

------
alexmingoia
Veblenian academics.

------
vikramkr
Truly a miracle it is to witness the birth of new jargon.

For academics working on understanding things like societal/economic dynamics,
perhaps take a moment to consider that for the work to have any real impact,
it needs to be understood by laypeople? Biologists can get away with naming
things all sort of nonsense because the everyday person doesnt interact with
it, but if you're trying to highlight destructive dynamics in the
entrepreneurial sector, saying "this is an example of Veblenian
Entrepreneurship!" doesn't communicate anything. Most of the writing that
actually influenced the field use terms that are understandable and
communicable build on terms already understood by practitioners, like minimum
viable product or strategic inflection point. Making an argument with a whole
bunch of jargon like "Ideology of Entepreneurialsm" or "Veblenian" just means
anyone that wants to engage with the text has to go look up a bunch of random
terms to figure out that you're referencing some 1800s era economist that
coined the term "conspicuous consumption." It also makes you wonder if this
level of being divorced from the actual practice impacts the analysis and if
the findings are based on an actual understanding of the field or just an
academic bubble. If, as they say at the end of the paper, this should be used
as a catalyst to change entrepreneurship education- I wonder if they
understand first how many people start companies because they majored in
entrepreneurship, and second if they understand just how accessible this
terminology and jargon is and if it would be getting in the way of making
actual impact on curriculums

~~~
dang
" _Please don 't post shallow dismissals, especially of other people's work. A
good critical comment teaches us something._"

[https://news.ycombinator.com/newsguidelines.html](https://news.ycombinator.com/newsguidelines.html)

Reflexive, generic comments are much more boring to read than they are to
write, and they take threads in uninteresting directions. With a submission
like this, if you don't find something to engage with in the article, there
are lots of other things to read on HN's front page.

~~~
vikramkr
I didnt mean this as a shallow dismissal. I tried to write examples into the
comment and discuss how the way the article was framed is counterproductive to
it's own stated goals in its conclusion paragraph of generating change in how
entrepreneurship is taught. I apologize if it came across as shallow, but I
spent time trying to make it substantive by including counterexamples etc.

~~~
dang
I hear you, and I know it stings to get a moderation reply like that, so I
hope you won't take it personally or feel discouraged.

I'm not really seeing other examples in the comment. In any case, the main
problem is that its core point is a misunderstanding. As other users have
pointed out, the term "Veblenian entrepreneurship" means a lot: it instantly
communicates the idea of entrepreneurship as a status signal, rather than for
an economically productive purpose. In fact, if there's a problem with the
term, it might be exactly the opposite: it already communicates so much that
the mind could start to assume that it's a thing, and then find
rationalizations for believing it.

That's the reason I called the comment a shallow dismissal: it dismissed an
entire field based on a misreading. Also, there was snark at the beginning.

By the way, the problem with such comments is not that they're so bad in
themselves—it's that threads are sensitive to initial conditions and they tend
to choke out better, more specific discussion. This has something to do with
the reflexive/reflective distinction:
[https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que...](https://hn.algolia.com/?dateRange=all&page=0&prefix=true&query=by%3Adang%20reflective%20reflex&sort=byDate&type=comment)

------
stupidcar
It's weird to see stuff like this published as a "paper", as if it were a
scientific endeavour, when there doesn't seem to be any experiment,
mathematics, or even data involved. Just a lot of conjecture sprinkled with
citations. It seems like the epitome of Feynman's cargo cult science. I'm
actually very sympathetic with the idea being advanced, I'm just not sure what
really separates this and a blog post.

~~~
talentedcoin
A paper needs an idea that is well-thought-out and well-cited. Outside of math
or the natural sciences, it does not need experiments, mathematics, or data.

~~~
rini17
If you label one sector of economy as harmful and another one as beneficial,
why not use actual data to support your claim? Unlike thesis like "goto
considered harmful" there are enough data out there. Authors even mention the
actual size of the untrepreneurial industry in $, but don't dig any further.

~~~
talentedcoin
Yeah, I tend to agree with you there. I get the impression that was just more
work, or not the focus of this specific paper. For what it's worth, they do
say

> Rather, we seek to provide a description of a subset of the population of
> ventures which appear to be growth-oriented entrepreneurship but on closer
> inspection are not. The exact size of this sub-set is a matter for further
> empirical study.

So, I'm looking forward to the follow up I guess :)

------
ackbar03
Ouch. But it also seems that the quality of research is falling? I guess it's
cause I come from a technical field but a paper with a bunch of text,
citations, and a general concept can be called research in the business field?
Is it any wonder there is so much bs out there?

~~~
dang
" _Please don 't post shallow dismissals, especially of other people's work. A
good critical comment teaches us something._"

[https://news.ycombinator.com/newsguidelines.html](https://news.ycombinator.com/newsguidelines.html)

Reflexive, generic comments are much more boring to read than they are to
write, and they take threads in uninteresting directions. With a submission
like this, if you don't find something to engage with in the article, please
find something else to read that you do find interesting.

