> Those that make money, an entrepreneurial profit, do so by breaking the status quo. They innovate. They either get their inputs for less or they sell their outputs for more.
A third possibility: they went all-in on a bet everyone else thought was bad, but happened to pay out.
The system is not closed: due to the presence of lots of other peoples' money sloshing around, it is very possible for moonshot entrepreneurs to personally make substantially more than employees/lifestyle entrepreneurs, even (I'd hazard "especially") at times when their underlying business is losing money.
But that only applies for a while, right? Today's big tech companies continue to make profits, but without great innovations. They are mostly iterations where the product is only marginally improved or even made worse.
I can accept that you need a competitive advantage to have above normal profits.
But that does not mean innovation at VC scale.
It's enough to be a good technician of some sort who'se good at relationship building and doing some successful marketing(a bit of luck helps) and slowly build a list of regular clients and with time you could make a lot of money, well above an hired technician.
The article says "Interestingly, these are the only strategies to create excess profit that Schumpeter’s model allows." The article doesn't mention going into a business with strong network effects and establishing a de-facto monopoly. See Thiel's "Zero to One". Schumpeter was writing in an era when railroads were trying to do that. They hadn't quite succeeded; there were still many small railroads.
The big change has been the development of businesses that scale really, really well, along with the management techniques to run them. The former is well known in Silicon Valley. The latter is less widely realized.
Big companies used to have a huge administrative problem. There were giant corporate headquarters buildings full of people literally pushing paper. "The World is Run on Tracks of Printed Paper" - Moore Business Forms slogan. Railroads had trouble keeping track of their freight cars. Auto companies had trouble keeping track of where their cars were in transit. Plants had to be self-sufficient and carry big inventories. These problems got worse with scale, for combinatoric reasons.
That was the real win of the era of mainframe computing. The problems of bureaucratic scale were gradually overcome. This removed old natural limits on the size of companies. At last, burger chains could be expanded to planetary scale.
With the administrative problems out of the way, any industry which had marketing or supply based network effect began to tend towards a very small number of players. It took a while, but now we're there. Today, the US has two major drug store chains, two major hamburger chains, three big banks...
Schumpeter didn't have examples that to look at. Railroads have a network effect, but that's because they are a network, and they were regulated, or, in many counties, state-owned. Telephone, telegraph, and electric power companies were recognized as natural monopolies, so they were regulated utilities.
Perhaps the closest example of his era was The Great Atlantic & Pacific Tea Company ("A&P"), once the largest grocery chain. They operated grocery stores from 1863 to 2015. But they were not strongly dominant in Schumpeter's day; that came a few decades later.
> 81% of founders have no desire to grow their business
I think that's probably true. I think the bosses of most small businesses are scared of growing bigger than about 10-15 employees, because they're terrified of delegating.
this is an uncharitable description of a rational decision: "I don't want this to be a soulless corporation run by bean counters. I'd rather keep it as a family-run business for my kids."
I have friends who have done exactly this. They grew a small agency to about 15 people and are happy with it. They enjoy what they do, it’s a nice place to work, they make plenty of money from it and have no desire to be rich.
The mist valuable thing money can buy you is time. If you make enough for a comfortable living, with a good work life balance and great people, and your own gig, I would consider you very rich in deed!
A third possibility: they went all-in on a bet everyone else thought was bad, but happened to pay out.