Myth: Entrepreneurship Will Make You Rich

http://gigaom.com/2009/10/18/myth-entrepreneurship-will-make-you-rich/

by peter123 • 17 years ago

74 68 17 years ago

gigaom.com

davidu2• 17 years ago

1) Being an entrepreneur, for me, isn't about being wealthy, it's about being successful.

2) Rich is a variable term, and intended to be so.

Entrepreneurship may not make you wealthy, but it can certainly make you rich.

I enjoy the freedom and independence afforded by starting EveryDNS and OpenDNS. Both contain a passion for a system I love, the DNS, and both have let me help millions of consumers around the world. I even like knowing I control the DNS for millions and millions of Internet users. That's an awesome responsibility and it certainly makes me feel rich about everything I do.

And when it comes to money, Eric is only somewhat right. He says you should get a job that rewards and promotes effort. But lots of lawyers and finance kids in New York thought they had stable jobs that would make them rich. Ask them today and most will tell you a different story altogether. Now they hate their jobs and have no job security or path to becoming really wealthy.

So like I said, being entrepreneur, for me, isn't about being wealthy, it's about being successful. That's a measuring stick that's far more important.

PS- Eric is awesome and I like that he's beating the drum on this stuff, I wish I were doing more of it. :-)

domodomo• 17 years ago

I heart OpenDNS! Just thought I would jump in and say so.

That is all.

gits_tokyo• 17 years ago

Can't agree more.

People that I've spoken with in the past more often than not associated the idea of me doing a startup in the tech industry with gaining massive wealth. While I may entertain this, deep down I find it lacking as there's so much more than wealth to be had.

How about, living in a world... some distant future from the everyday-everyday where day-by-day you toil piecing together a vision, one day injecting it into the present, in order to influence a whole new set of social behaviors while also unfolding valuable opportunities. How about, the day of flipping that proverbial switch, releasing this vision out in the wild. How about, the potential of millions interacting with your vision, it becoming a staple part of a users online experiences. There's something undeniably provoking about all this, rush of my life.

Wealth, although a welcomed aside pales in comparison. Hell I would even go so far as to say, in a world where sex is constantly peddled as a cure all, let me say it, sex pales in comparison to the feeling I get from being an entrepreneur.

hallmark• 17 years ago

> sex pales in comparison to the feeling I get from being an entrepreneur.

Ha, and they suggest that software developers are naturally weird.

http://ask.slashdot.org/story/09/10/18/1557210/Are-Software-...

Kidding.. sorta. ;)

ellyagg2• 17 years ago

Straw man. Nothing is guaranteed to make you rich. Entrepreneurship certainly has vastly more potential to make you rich.

And if we're not talking about being rich strictly, but are implicitly including a quality of life component, well, the information I've seen[1] implies that entrepreneurship is near the income level of other professionals and has a higher sense of well-being.

[1] http://www.gallup.com/poll/122960/business-owners-richer-job...

mrshoe• 17 years ago

I think that's just a link bait title which the author only addresses briefly. The rest of the article is actually quite valuable.

tptacek9• 17 years ago

Many more people become rich from careful career planning and money management than do from starting companies. The difference between the approaches isn't the potential, it's the speed and the risk.

Devilboy• 17 years ago

Yes the #1 way people become millionaires is still via buying real estate.

pfedor3• 17 years ago

What's career planning and how does one go about it?

danhak• 17 years ago

These approaches are not mutually exclusive.

pg• 17 years ago

Depends on the scale of rich.

owinebarger2• 17 years ago

Quibbling, perhaps, but "entrepreneur" is not a profession. Professions have codes of conduct, organizations that certify members as part of that profession, etc, etc. "Entrepreneur" appears to be on the opposite side of that spectrum.

tptacek9• 17 years ago

You're definitely quibbling.

nir• 17 years ago

Assuming the people defined as "business owners" in the Gallup data have been running their business for a while, they represent a very small minority of entrepreneurs, those who actually succeeded to some extent.

"Entrepreneurship certainly has vastly more potential to make you rich"? Well, you might be the next Larry Ellison, in the same way you might start a band and become as rich as U2. If wealth is your goal, an MBA and a job in investment banking is a far more reliable and reproducible path.

As I see it, most just hope to be able to make a living building software (/playing music/farming/etc) independently. Getting rich is a very rare byproduct.

Sthorpe• 17 years ago

I really like Eric, saw him down at stanford a couple of weeks ago.

Honestly, I am poor. Dirt poor. But I LOVE what I do. I consult to pay the bills. Right now, I'm hyper focused on starting a new business so I haven't been spending a lot of time getting new clients.

I had a client that fell on my lap the other day and I was so frustrated with them. The only reason they wanted to start their company was to make a lot of money and get rich. No passion, no iconoclastic idea's. Just, lets do this because it will make money.

I would love to see less money grubbing jerks and more passionate people who just love to create stuff. So i'm with Eric in getting the word out. This won't make you rich! Only do this if you love it. *pushes aside pulpit.

fuzzmeister• 17 years ago

You have most likely already seen this, but Guy Kawasaki often talks about a similar annoyance with people involved in entrepreneurship purely for the money: http://video.google.com/videoplay?docid=-3755718939216161559...

protomyth• 17 years ago

For the US dwellers, it does say "the pursuit of happiness".

My brother pointed out to me that being rich really isn't the goal. Being able to control your own schedule while paying all the bills is a pretty good life.

wynand• 17 years ago

That is exactly why I want to become an entrepreneur. I just seem to do badly in a corporate environment.

davidu2• 17 years ago

If you're really successful, you will inevitably be working in a corporate environment, even one of your own creation.

Some people make the transition happen really well, some don't.

physcab• 17 years ago

Funny...what you described sounds an awful lot like being a grad student. :)

kelnos3• 17 years ago

Hehe, possibly true... but I think a lot of people have more than just "being able to pay the bills" on their list of financial needs. Most of the grad students I know are indeed able to pay their bills, but are also compulsive penny-pinchers and can't (or won't) really live any other way. Going back into academia isn't worth it to me based on that alone.

fpgeek• 17 years ago

Exactly, entrepreneurship is about autonomy, not money.

Sometimes they go together, but the autonomy is more important. People who feel otherwise end up becoming investment bankers, not entrepreneurs.

skmurphy• 17 years ago

"There is only one success--to be able to spend life in your own way." Christopher Morley

See also http://www.skmurphy.com/blog/2007/11/23/success-for-a-boostr... which expands on this.

joez• 17 years ago

I'd echo PG's words in that a startup is about compounding your work life into a few years. Even if your startup fails, you'll get a massive amount of experience in seeing it through. Employers will appreciate all the experience you gained in launching a product.

timwiseman2• 17 years ago

All true, but the question for many isn't about the potential ROI (effectively unlimited), but the expected ROI (for the average startup, it is not much more than that experience you talked about). Is that expected experience substantially more valuable than say grad school which is less stressful?

philwelch• 17 years ago

"Valuable", in a market sense, means people are willing to pay for it. Apply for the same set of jobs, once with a graduate degree and once with a failed startup under your belt. See how many companies are willing to pay for your services.

My hypothesis is that there are disjunct sets of employers who will value one over the other, but the set of employers who value startup experience value it more than the set of employers who value grad school experience value grad school.

kelnos3• 17 years ago

Yes, agreed. I just joined a small early stage startup. While I was deciding whether or not to accept their offer, I was thinking, "would I accept this job even if I knew right now that in a year the company will fail and I'll have to find a new job?" The answer to that turned out to be "yes." The pay is better than my old (non-startup) job, and I feel like the experience I'd gain would more than offset the hassle and worry about needing to find a new job.

Of course, I don't expect us to fail, but it's nice to take a pessimistic view into account ^_~.

lionhearted2• 17 years ago

Major error with this line of thinking:

> A more rational career path for money-making is one that rewards effort, in the form of promotions, increased security, salary and status.

You trade off a lot if you're getting paid for effort instead of for results. No one wants effort. No one wants a badly burnt steak, not well cooked pie, crummily engineered car, and so on. But people will gladly pay a lot for results. Desiring to get paid despite burning steak ("rewarding effort") is a path to much less wealth than you could make, but even more scary, it's a path to much less happiness. Getting paid while failing to deliver what people wanted destroys your self esteem. Doing interesting work and needing to get it right is engaging and stimulating. Harder, more risky, sure. But much more enjoyable and fulfilling.

> Startups, unfortunately, punish effort that doesn’t yield results.

Right - no wants to pay for burnt steak. You want to get paid for turning on the grill, regardless of how it comes out? Don't expect to get paid much, or to have a particularly stimulating work life.

leelin• 17 years ago

All true, but at least I can better predict my ability to output effort than predict my ability to output results, even if I am good at what I do.

lionhearted2• 17 years ago

Definitely true - stability is worth something, especially if you've got a family or just want a life with less stress.

But if you don't have serious economic commitments and can handle a little stress, why not freelance after hours for a little while and see how it goes? Can wade in slowly some. If you're willing to focus, you can make 3x, 10x what you'd make salaried if you go self employed.

I remember reading somewhere that the average employee gets something like 2.5 productive hours of work done every 8 hour day: The rest is shuffling papers, meetings, chatting, goofing off online. If you can focus intensely for 5-6 hours a day, you can make a lot more money and have a more free, stimulating, enjoyable life. It is legitimately more intense and stressful, but I'd recommend almost anyone take a crack at it. The rewards are very, very good, definitely worth taking a year or two to see if it suits you. And I mean, why not give it a try? It's huge for you if it works out, and employers more and more are respecting the guy coming back to industry after working for himself for a while.

rokhayakebe2• 17 years ago

There we go again. If anyone understand the mind of an entrepreneur, they will stop trying to tell them to do anything other than what they are doing.

If you want to help entrepreneurs, help them refine their ideas, execute against them, and get closer to success.

Anything else is a waste of your time.

alexitosrv• 17 years ago

Startups, unfortunately, punish effort that doesn’t yield results. In fact, the biggest source of waste in a startup is building something nobody wants. While in an academic R&D lab, creation for creation’s sake will often get you praise, in a startup, it will often put you out of business.

The best articulation of why I'm fond of entrepreneurship world instead of academic world...

martincmartin• 17 years ago

To succeed in academia, you need to build things that please your customer, its just that your customer is a funding agency and/or your community. There are many, many publications that nobody sites, which is the equivalent of products nobody buys.

kelnos3• 17 years ago

Yes, thank you! That was exactly my reaction. I don't believe that you should reward hard work for hard work's sake alone. You should reward purposeful hard work that yields beneficial results.

benofsky• 17 years ago

It may be a myth upon people who are not entrepreneurs but I'm pretty certain money is not what drives entrepreneurs rather being successful, doing what you love, etc.

maxer• 17 years ago

Truth: Entrepreneurship leads to contentment

danbmil992• 17 years ago

Excellent article. Not exactly a myth, but the wrong goal. Striving to maximize financial return is simply not the sort of motivation that is most likely to result in a successful startup.

dsplittgerber• 17 years ago

He doesn't say the participants at seedcamp wanted to get rich. He doesn't name any sources for such a "myth" existing. The way I see it, people value entrepreneurship for a whole bunch of reasons, guaranteed financial success most certainly NOT being amonst those. He wants to write an article on his perceptions, fine. He just doesn't base it in reality, though.

wpietri• 17 years ago

I suspect he doesn't feel the need to justify it because it's a commonplace in his world. It sure is in mine.

This was especially problematic during the dot-com bubble. This town filled up with MBA-holding locusts and greasily slick smooth talkers. They were in it for the money, and nothing else. Of course, most of their businesses failed, and they went off to plague somebody else. Good riddance, I say.

The problem still continues, though, and it's not limited to high tech. The big MLM scams are funded mainly through taking money from idiots who believe that they'll quickly get rich through this exciting new turnkey business opportunity, even though they've gotten totally screwed on the last three. You want some data points, go to an Herbalife convention.

CSunday• 17 years ago

This article doesn't make much sense, to be honest...

But anyways if you ask me, entrepreneurship is about becoming successful, rather than rich, because once you are successful, the money will naturally come -- at least you'll love what you do, and not starve while doing it :)

Myth: Entrepreneurship Will Make You Rich

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