Effects Of Entrepreneurship Of Savings (Graph)

http://jordancooper.wordpress.com/2010/01/13/effects-of-entrepreneurship-of-savings-graph/

by jordancooper • 17 years ago

26 12 17 years ago

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NyxWulf3• 17 years ago

It's interesting to see that, but not being a follower or a reader of his it's difficult to put that into context.

Are his savings dwindling because his business is struggling and he is not making a profit, forcing him to live on his savings? Or are they dwindling because he's pumping more money into his business to make it grow faster?

On what basis is he extrapolating his experience to all entrepreneurship in general? Entrepreneurship is a complex and difficult field, being a VC doesn't make you qualified to be an entrepreneur any more than being a programmer, engineer or manager does.

Seems like he's having a rough day, and I sympathize having been through a very similar process of watching my savings dwindle to zero. However I believe it's important to realize that effect happens primarily due to a lack of understanding of the process of starting a business and is generally not representative of a good startup.

If you are really interested in entrepreneurship, I highly recommend taking a look at the lean startup concepts - they are specifically geared toward helping people to avoid exactly this cycle.

Entrepreneurship is not about taking the plunge, living on your savings, and hoping you become profitable before you run out of money. That's just a wing and a prayer.

Anyway, sorry for the longish rant, but I get tired of these types of posts.

volida• 17 years ago

It's called bootstrapping. I am sure you already know it.

http://en.wikipedia.org/wiki/Entrepreneurship#Financial_boot...

jordancooper3• 17 years ago

I am now on my second business, and I am a student of lean startup...which by the way perpetuates this graph, not prohibits it. lean startup would argue that you find product/market fit before capitalizing a company and paying yourself a salary. this graph is a result of bootstrapping my first business, taking a half salary after capitalizing it with VC/Angel money, failing at that business, and now bootstrapping my new business until we can prove product/market fit and raise at a 3-4x step up in valuation (as well as prove to ourselves that this is worth replicating/scaling)...

I'm not having a bad day at all...I'm having a great day and time in life in general...I think you missed the point of the post...I sort of laugh when I look at this graph...money is just money my friend...

NyxWulf3• 17 years ago

One of my favorite quotes comes from the movie Quiz Show, where Charles Van Doren says "You'll forgive me, but anyone who thinks money is ever "just money" couldn't have much of it." I agree with the gist of that statement but in a more general sense. I would suggest that anyone who thinks money is just money doesn't understand it's nature. Money is imho, always, far more than just money.

Anyway, that personal note aside. The whole point behind Lean Startups is to avoid or minimize that type of burn rate. I couldn't disagree more that the graph is a "result" of being a lean startup. That graph is a result of living on your savings before the company is generating enough money to support you. I'm not passing any judgment on whether that is a good idea or not, just suggesting that the decline in your savings is independent of the startup type. For instance, some of us choose to work a day job while building our startups so we don't have to burn through our savings - but that is a fairly personal choice.

aresant• 17 years ago

The part that this graph is missing is the effects of entrepreneurship on savings when you get traction.

Many entrepreneurs I know have a graph like that for a year or two and then what we call "hockey stick" growth in the opposite direction.

CytokineStorm• 17 years ago

This post might have some merit if the graph included another 10 years of data showing the return on his investment.

johnohara• 17 years ago

Hmmm, looks like a lot of graphs in 2008-2009.

Home values, savings, wages, employment, manufacturing jobs, consumer confidence.

On the bright side, processor energy consumption, cost of entry into software development.

gprisament• 17 years ago

Could also be titled: "Effects of Homeownership on Savings".

rphlx• 17 years ago

Rent is also cashflow negative. If anything, it's better to be a home owner in the US; you can stop paying the mortgage and probably still live in the house for 3+ months for free (or even cashflow positive if you rent part of it out).

Effects Of Entrepreneurship Of Savings (Graph)

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