The dark side of entrepreneurship

https://journals.aom.org/doi/full/10.5465/amd.2018.0194.summary

by rustoo • 5 years ago

181 82 5 years ago

journals.aom.org

yawnxyz• 5 years ago

I'd go on a limb and say that the "dark", "down" and "destructive" sides are what makes entrepreneurship so special... these are all attributes that normal jobs won't ever be able to offer. This is what makes a bootstrapped startup so much different from an "internal startup".

Of course you don't ever WANT to be destructive or losing money and feeling naked and exposed, but those are the conditions for something to thrive and grow and blossom. I think those are the necessary conditions for something great to come out the other end, for better or worse.

ido3• 5 years ago

Excuse the bluntness, but that's bullshit (as in: I don't think you're lying, just that you are wrong).

What makes entrepreneurship so special is the freedom. A lot of these downsides are accompanied/caused by that freedom but you got the direction of causation wrong.

worthybox• 5 years ago

I think the experience varies from person to person. Some may be in it for the money, some for the thrill (and many for both).

Pyramus2• 5 years ago

I'm an entrepreneur and parent makes a valid point even though they are exaggerating.

Hardship and pressure can indeed fuel startup success - it makes a huge difference if you are running out of cash in X months and know you have to fire everything and bury what you exclusively worked on for the last X years. That captures the dark side of entrepreneurship perfectly.

I believe we can see this effect also in countries like Israel or many African countries.

a0zU• 5 years ago

I mean I doubt anything in that article would come as a huge surprise to a nascent or prospective entrepreneur? It seems like most of article's point is just an anecdotally obfuscated version of, "Entrepreneurship takes time, effort, and has no gauruntees of success." A fairly obvious message I doubt anyone who has seriously considered starting a business hasn't realized.

bredren• 5 years ago

Perhaps the culture of the valley has changed, but in my experience this is very common in startup accelerators.

Many are too young to realize the financial and relation hardships that can result from chasing a dream and failing to deliver a fraction of hoped for results.

It doesn’t help to have stories like the Airbnb founders with binders of maxed out credit cards.

ido3• 5 years ago

Even if you "know" it, you don't really know it until it happens to you.

I'm running a small startup (5 months old tomorrow) and everything is "fine" - I have funding (part of it signed, other parts seems very likely to be signed in the immediate future), a team, development is going well - but there are constant obstacles and setbacks and it's a lot harder to keep my cool/spirits than as an employee.

Rationally I know whatever happens I'll be ok (at worst I'll have to get a well paying job as a developer somewhere else) but emotionally it's different, especially when you have employees depending on a salary you're paying.

One thing I found helps a lot is to talk to other entrepreneurs who have been where you are now & I'm very fortunate to have several people like that in my professional network.

achow• 5 years ago

Yes, but also..

There are just not enough such writings to balance out the (mega) success stories which are obvious result of survivorship bias.

justicezyx• 5 years ago

Really, if one cannot figure out the lack of aithenticy in most of such success stories, I think they figure out quickly when they jump into the cold water of running a start-up.

It's not that the success stories have any convincing ideas for any aspiring founders anyway.

hn_throwaway_99• 5 years ago

Perhaps, but this is true for just about any endeavor where there are a teeny amount of winners and legions of unreported failures.

I mean, the Olympics are on, and I love it when they interview a gold medalist or their family and they say "this makes all the sacrifice worth it." I always then think of the literally multiple thousands of non-gold medalists who tried just as hard and sacrificed just as much and think "well, that must suck."

Same thing goes for Hollywood actors, you only hear about the stars who were barely making a living before their big break, not the other thousands who were barely making a living and never got a big break so they ended up doing porn on drugs.

PragmaticPulp• 5 years ago

Maybe not news to anyone who has been around for a while, but I’ve been pitched by a lot of naive entrepreneurs who think doing a startup is as simple as asking investors for money and then using that money to pay engineers to build your product.

It’s very common for graduates of our local MBA school who often form teams of 3-6 co-founders who want to split the equity among themselves, take C-level titles, and then hope they can find some technical people to get the work done. I try to have some honest discussions with those who will listen to advice, but many don’t want to hear anything that doesn’t make their journey sound easy

grp000• 5 years ago

Fuck those people. When I was starting out, I had to work with a company like that. No questions for me, no resources or backup, minimal direction; I was never once relied on for direction or advice despite being the one most qualified to give it, which I did on many occasions, none of it taken.

In fact, after I left, I came to the realization that the leadership team had first licensed the initial product, then basically contracted out all the changes they could do to patent it separately, essentially doing none of the actual developmental work themselves.

Unsurprisingly, it was a shitshow.

pototo6664• 5 years ago

I used to be one of them. I got money, but failed. The process and failure took me hard, both mentally and bodily.

Before my startup, I read a lot about startup. I knew that it would be hard. But knowing is so different from experiencing.

On hindsight, all the stories have successful ending, or the author of the book are successful. Among all the hardship described in the book, the overall tone is optimism.

We should read more about failure, than success.

Now I am on my second startup journey, fulling understand what is awaiting me.

zhdc1• 5 years ago

AOM insights is a short, condensed blurb to publicize research. The actual articles themselves by Dean Shepherd and others goes into number of different situations (e.g., grief recovery, family business loss, corporate project failure, and natural disaster recovery).

paulryanrogers• 5 years ago

I don't think the lack of accountability, such as from perverse incentives, is a problem unique to solo entrepreneurs.

Still, the entrepreneur worship may be contributing to some work-is-life subcultures. Failure should be culturally destigmatized at the personal level, without propping up those unfit/unequipped to lead.

jandrewrogers3• 5 years ago

Starting a company is a crucible in every sense, brutal but transformative. For some people, they come out the other side a better person in almost every sense, with a much stronger identity and mental fortitude. For other people, and I might argue most people, it is destructive in a very real way and I know of many examples. People who haven’t done it truly underestimate the level of pressure across many aspects of life that entrepreneurship entails, even if you are vaguely successful. It isn’t to be envied per se, though I’ve done it multiple times and would place myself in the former category.

It is a calling. I don’t recommend it for almost anyone but some people are compelled to do it. There is little to recommend that lifestyle. Society won’t reward it one whit unless you are spectacularly successful.

But… There is much to be said for the opportunity to take that risk nonetheless. You can’t do that everywhere.

jyscao3• 5 years ago

For some people, they come out the other side a better person in almost every sense, with a much stronger identity and mental fortitude.

Could you elaborate a bit more on this point, based on your own personal experience with entrepreneurship?

iamstupidsimple• 5 years ago

The comment below put it rather succinctly.

Avoiding pain and hardship is hardly a way to discover life.

Strife is character building, and can lead to a more experienced, well-rounded person, if you're lucky. Of course, it can go the other way too.

jandrewrogers3• 5 years ago

Every personal weakness is exposed. Entrepreneurship requires you to be a relatively “complete” person to be successful. In my estimation, I, like most people had to learn how to be that person on the fly. That is not easy. You realize just how much you don’t know when faced with decisions and problems that you alone are required to address. It is a rough learning experience.

If you don’t get ground up in that process, you come out the other side a different and much more capable person. It almost gives you superpowers, even in large corporate structures, because few people know what you know about how to make things happen. For me, I came out the other side able to land in almost any organization and have an immediate impact at scale no matter how large those organizations were. It was a powerful education though I did not understand it at the time.

AlbertCory• 5 years ago

I'm blown away by the depth and intelligence of all these comments. So unlike other social media.

As for personal experience: I went through two startups. The first cratered and was a horrible experience from start to finish. The other IPO'ed.

Did the first make me a better person? It would be hard to make that argument. I spent 10-15 years recovering from it. However, it made me realize that the startup is, as the cliche goes, "the lengthened shadow of one man." The folks who ran the second one are not just smarter than I am, they are better people.

The old-fashioned notions of "character" really do apply here. You can also make money in a place led by bad people, but you have to more careful because they won't hesitate to screw you.

arvinsim• 5 years ago

It is a calling. I don’t recommend it for almost anyone but some people are compelled to do it. There is little to recommend that lifestyle. Society won’t reward it one whit unless you are spectacularly successful.

Doesn't help that the message that SV culture is imparting is "Start a business if you want to get rich unless you want to be a lowly employee."

xvilka• 5 years ago

But it's true. Entrepreneurship is the only thing apart from investment that can make you rich. It's just chances are very low. But it's next to impossible to do that as an employee, even for a C-suite, with a few exceptions.

rmason• 5 years ago

It's also addictive. I never looked at working for someone else the same way again.

In the beginning not having a boss is harder than you can imagine. It puts additional responsibility on your shoulders being responsible for your employees and their families.

But once you've had that experience you can't ever be content working for someone else again even if circumstances force you to do it. The world just looks different.

You say never again yet six months later you start writing down ideas for companies. You know that sooner or later you have to start another one.

matwood4• 5 years ago

This. We recently sold our company, and you're completely right. It was a good thing us and the employees, but the day after is certainly different. I think I skipped right over the never again part and am already in to writing down ideas.

The responsibility you mention is stressful and hard, but ownership (not just in the legal sense, but also in the control sense) matters. See an opportunity - take it. Don't like something - change it. Screw something up - deal with it.

pototo6664• 5 years ago

This.

I failed my first startup. Then I worked for a year. Quit. Now I am poor and working on my second startup. Never want to go back.

jjmorrison• 5 years ago

Avoiding pain and hardship is hardly a way to discover life.

vmception• 5 years ago

I think the denial is the biggest destructive downside

I had a cofounder always in denial of negative outcomes

“Whew that meeting went well!” uh the respected guy was on his phone the whole time, literally said the firm wouldn't invest, and barely listened to us

But at least that cofounder’s Ivy League pedigree and.. uh… other visual attributes for the US market got me into the room!

colordrops• 5 years ago

Oh, I thought this was going to be about all the sociopaths you encounter among investors and other startups.

jasfi2• 5 years ago

My startup (CxO Industries) aims to reduce the negatives. A lot of the downsides is because Entrepreneurs don't have much support.

murukesh_s• 5 years ago

interesting, can you elaborate how are you going to help? Financial, emotional support? Are you open to international companies?

jasfi2• 5 years ago

It's open ended, however I can't do everything from the start. I plan to start with helping people decide on their idea and whether to start it.

Financial advice and emotional support are two big areas I hope to cover. I think emotional support is where a lot of new founders find themselves unexpectedly in trouble.

Yes, this will be to help companies internationally.

adamnemecek• 5 years ago

Yeah but 9-5 for 40 years is fucking amazing.

inter_netuser• 5 years ago

serious or joke?

rl1987• 5 years ago

Pretty sure they were speaking ironically.

blueblisters2• 5 years ago

Even though we normally think of grief in the context of the death of a loved one, a broadly similar reaction can occur when a close relationship is ended through separation or when a person is forced to give up some aspect of life deemed to be important. When our family business died, my father exhibited a number of worrying emotions. There were numbness and disbelief that this business he had created 20-odd years ago was no longer ‘alive.’ There was some anger toward the economy, competitors, and debtors. A stronger emotion than anger was that of guilt and self-blame: he felt guilty that he had caused the failure of the business, that it could no longer be passed on to my brother, and that, as a result, he had failed not only as a businessperson, but also as a father. These feelings caused him distress and anxiety. He felt the situation was hopeless and became withdrawn and, at times, depressed.

This experience is eerily similar to the failure of a business of a family member. People who have built their business over decades will go to irrational lengths to save it, even when it would be prudent to wind it up and preserve your existing wealth, and mental and physical well-being. When traditional creditors refuse to lend more, I have seen homes getting mortgaged, willingness to take on high-interest loans from dubious people and a belief that things can be fixed if they can just have a little more money and time.

I think the attachment, and subsequent grief from failure, with business built over years and decades with little outside capital is significantly more than venture-backed businesses where entrepreneurs can generally share the fruits and failure with other investors/backers.

brundolf2• 5 years ago

Most people need at least one thing in their life to put their name on which acts like an external incarnation of their self-worth. I feel this way about my side-projects. Luckily those can't "die", though they can be threatened by eg an excessive employment contract.

madaxe_again• 5 years ago

I find it’s far easier to just accept that everything is transient, and that our works and deeds are insignificant. You can’t fight entropy.

Look on my works, ye mighty, and despair.

geoduck142• 5 years ago

Most people need at least one thing in their life to put their name on which acts like an external incarnation of their self-worth.

Might I recommend following Jesus and placing your self-worth in His Kingdom?

shreyshnaccount3• 5 years ago

sad, but true. that's the sunken cost fallacy. and it's rooted deeply in human brains, and is tremendously hard to overcome. trying to consciously practice empathy with those effected, especially with loved ones, and telling them that they are loved goes a long way. a therapist can also help them to get over these deep rooted emotional responses. on the other hand, mindfully making prudent decisions and not surrounding oneself with yes men is something that a business owner can do. having a 'third person' set of eyes is super important, but that's a role that consultants rarely play

blueblisters2• 5 years ago

having a 'third person' set of eyes is super important, but that's a role that consultants rarely play

I think there's a tendency of not trusting outsiders, especially when it comes to small/medium family-owned businesses. The prevailing wisdom being: you don't understand how this business works, I have been nurturing it, I know my customers and market. Why change things if it has been working for years? It must be the creditors and competitors who are screwing me up.

Perhaps the best piece of advice for business owners is not to tie success or failure with your self-worth, and to always have an emergency exit plan for yourself even if you feel your business can endure for ages.

AussieWog932• 5 years ago

that's the sunken cost fallacy

It's so much deeper than just sunk cost. The business represents your pride, your purpose and your identity.

A closer analogy would be a pet owner who spends thousands of dollars on surgery for a dying dog, just so it can live on in pain, rather than accepting the loss and putting it down.

matt89• 5 years ago

This may be slightly off topic, but it really resonated with me how you expanded on the definition of grief. I think a lot of people associate it mostly or solely with death. But grief, I think, is a very useful concept that can be very helpful in making sense of our emotions in hard moments in life. I was told this by a therapist when I was feeling shitty after my girlfriend broke up with me, and it was quite enlightening to get this new perspective.

I think grief can be basically felt as the result of any loss. Be it loss of a loved one, breakup (loss) of a relationship, loss of your job, loss of a piece of your life.

rnoorda2• 5 years ago

I'm not sure if I can completely describe this, but I have many times felt some level of grief at the loss of a what-if, a potential future. I make a choice (or someone else makes a choice) and some small part of my future feels closed off. It's a relatively small grief and doesn't compare to losing a loved one or a relationship, or even a job, but I don't feel I have a clear way to address it.

moondistance• 5 years ago

I had a horrific personal experience of this grief. It took me a long time to understand it was grief.

This resonated: https://twitter.com/FutureJurvetson/status/14004853611977973...

This also: “Grief, I’ve learned, is really just love. It’s all the love you want to give, but cannot. All that unspent love gathers up in the corners of your eyes, the lump in your throat, and in that hollow part of your chest. Grief is just love with no place to go.” - Jamie Anderson

Remember, as painful as it is, "this too shall pass"

All the best to all of you out there. You have my love.

There should be counsellors / therapists who understand and can help.

Heyso• 5 years ago

That quote from Jamie is really nice. This seem to correlate with my own experience. I still have strong feeling for someone I lost contact with, but I am not that much affected by the lost of my dog or grandfather. I liked my grandfather but wasn't that close, and also had more than enough occasion to express my emotion at the burial. And my dog, I think, regarding to said quote from Jamie, that I expressed my love of him without restreint.

I am less sure about "this too shall pass", for that one person that is still (probably) alive. For some case, there might be something more to be done. For it to heal.

pototo6664• 5 years ago

My mother just passed away. This quote touches my deepest feeling.

markdjacobsen2• 5 years ago

A few years ago, I presided over the failure of a nonprofit I'd founded. It was the most devastating experience of my life and involved all the emotions here: grief, anger, depression, self-blame, guilt, etc. I came to realize that this experience was fairly common for failed founders and business owners but almost NOBODY talked about it, and few people who hadn't been through the experience could understand.

If you'll permit me to self-promote a bit, I wrote a book out of the experience called "Eating Glass: The Inner Journey Through Failure and Renewal" to help others walk through this grief and healing season. Here is a link where I have a lot of free excerpts. [0] The chapters are broken down in topics like Burnout, Anger, Scars, Aftershocks, Health, Perspective, Courage, etc.

Here are a few lines touching on grief and the relentless drive to save a failing effort:

"Burnout is really about unrequited love. No matter how much you love your quest, it does not always love you back. Often the world does not align behind your glorious sense of purpose. Whenever some new twist or turn puts your goal further beyond reach, you must burn ever brighter to compensate. You seethe at the injustice. You choke back tears of disappointment. Despite all that, you do what you have always done, which is to hold it together through the sheer force of love. Eventually, this misalignment between your passion and circumstances opens a wound in your soul."

[0] https://markdjacobsen.com/eating-glass/

warent• 5 years ago

Usually people's writing style on these topics come across as extremely pretentious, hollow broetry. I appreciate that yours seems really authentic. Ordered a paperback copy!

patrickwalton• 5 years ago

It was the most devastating experience of my life and involved all the emotions here: grief, anger, depression, self-blame, guilt, etc. I came to realize that this experience was fairly common for failed founders and business owners but almost NOBODY talked about it, and few people who hadn't been through the experience could understand.

Lessons From a Failed Startup is doing a good job helping people talk about this more: https://open.spotify.com/show/7IE4r9wIpCYbwvwAOcltq4?si=Txqa...

ignoramous• 5 years ago

Rejection and lack of recognition, for any entrepreneur, likely hits as hard as failure: Death by a thousand paper-cuts, as it were.

...where entrepreneurs can generally share the fruits and failure with other investors/backers.

In practice, this isn't true though, is it? Venture money brings with it an inordinate amount of pressure to execute. Some of the pressure might even be at odds with how an entrepreneur wishes to run their firm, and often they may be forced to make difficult decisions under duress.

And when that growth slows, Venture Capitalists are the first ones out the door and treat the company worse than dead-weight. An experience like that might be on-par with the grief any business owner experiences when the writing is on the wall.

Ref: The power law in Venture Capital https://archive.is/WK96N

phase5• 5 years ago

There's a big difference between entrepreneur vs business owner. Entrepreneurship refers to creative destruction which some people actually thrive on because it gives more meaning to their life as opposed to a mundane job or small business.

adwn• 5 years ago

Entrepreneurship refers to creative destruction

No, it doesn't. That may be the definition used by a small minority of people, but it's not a generally accepted definition.

maxrobot• 5 years ago

Biggest non-article ever...

k__• 5 years ago

Especially working with friends is dangerous.

Many friends wanted to start something with me, but I never gave in.

They did so with each other and it never worked out. No big fails, but still it was a quite sobering when the alpha of the group turned out to be only words and looks.

matwood4• 5 years ago

The problem with friends is the built in assumptions. A mentor (who has started and sold multiple companies, some successful some not) told me to always spell everything out in writing with your partners/founders. It's even more important if doing something with friends because of assumptions. Money and stress shows who people really are.

cweill• 5 years ago

Perhaps that's true. A startup will put your friendship through a crucible, and at the end, whether success or failure, if they are still there for you, you know they were a true friend. And true friends are the people you want to go into business with. We need to think of startups as a repeat game with multiple iterations. The optimal strategy is to cooperate, not defect. Your first startup does not need to be a success, but a great tool for finding worthy collaborators.

f32jhnjk33jj• 5 years ago

Entrepreneurship is especially bad in Europe. Before you deliver your first MVP, the bureaucracy will kill your startup. Each year the situation is getting worse and worse. This year they will introduce 'upload filter law' and couple of other startup-killing laws are already on their way.

mbustamanter• 5 years ago

I'm interested in knowing more about this, could you provide pointers to more information? I will be moving to the northern hemisphere after finishing my academic duties, and in my possibilities I consider the US, France or Germany. From what I have read on HN, Europe seems to be better if you are an employee, and the US better for entrepreneurship.

jnwatson• 5 years ago

“ I and my colleagues explored how entrepreneurs may say they value the environment, yet they disengage those values in order to take actions to pursue opportunities to make them rich, but destroy the environment. Logging trees to make paper, for example,”

Logging trees to make paper is not destructive to the environment.

Paper is made from new growth trees, planted for that purpose.

ggpsv• 5 years ago

It is destructive if demand for paper means cutting down more natural habitats to replace them with a monoculture of trees. Even if you're growing tress, there's significant loss of habitat and biodiversity.

carre12345• 5 years ago

Good Gawd. Enough with all the self-introspection and angst.

I remember back when most entrepreneurs were single location grocery stores, plumbing companies, small factories making an aquarium pump.

I guess that an economy led by large scale surveillance marketing allows for more overwrought behavior.

The dark side of entrepreneurship

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