Entrepreneurship is a Profession, Not a Cool Pastime

While traveling in the Valley I had a chance to catch up with a few local entrepreneurs and accelerators. Many of them are doing interesting work, but I noticed a disturbing trend: entrepreneurship has become “cool” for a whole generation.

As a an entrepreneur who had gone through several popular accelerators told me, “It used to be that if you didn’t know what to do at the end of college you would go to grad school. Now the same people go to accelerators instead.” And they bring with them their culture: beer games, lawn chairs, geek gadgets, and “bro culture” galore. Everybody is a ‘rebel,’ but in exactly the same way.

As much as I applaud entrepreneurial energy, I believe that this trend is a bad news for society in general. Entrepreneurship is risky business, requiring highly skilled, disciplined and motivated people.  Encouraging entrepreneurship among individuals who lack any of these three characteristics is setting them up for failure, and setting society up for a big bill in the future.

The parallels to graduate school are strong. While I am a strong advocate of graduate studies, I also spent much of grad school surrounded by people without clear goals or motivation. Putting the same crowd into startups achieves nothing. If you lack the drive, self-control and people skills to finish a PhD in 3-4 years, then you likely won’t be building strong businesses either. These “Peter Pan” grad students won’t drive the economy even if they become trendy entrepreneurs (or whatever the next cool thing might be).

Instead, society pays for their leisure. This is obvious for grad students, because educational subsidies are fairly visible in our economy. For trendy entrepreneurs, government new business grants can play the same role, but the real economic cost is less visible. My parents produced economic value from the age of 17, contributing to social security and their own retirement savings. Whether unfocused grad school or unfocused entrepreneurship, we are creating a generation that delays this kind of societal contribution for years, decades or even forever – burdening the rest of society with their bills.

I am a strong believer in progressive taxation. The wealthy should pay more than their fair share because society has a moral obligation to fight poverty and support those unable to improve their lives for reasons of intellectual, social or physical hardship. But this kind of system is weakened when capable individuals delay their social contribution indefinitely. “Lifestyle poor” students and entrepreneurs are not in the same camp as those with true hardship. Their lack of economic productivity is due to personal choice, a lack of discipline, or unrealistic expectations. They are potential net contributors to society who decide to become net beneficiaries instead – robbing the truly disadvantaged twice, by first reducing the available resources, and then competing for the smaller resource pool [1]. This hurts our collective future.

Both entrepreneurship and graduate studies should be goal oriented, execution focused, and make a net contribution to the world. Entrepreneurship, like graduate studies, isn’t about wearing a hoodie, speaking at conferences, following people on Twitter, or reading the latest buzzword ebook. It’s not even about building a great website or product. Entrepreneurship is about building a scalable business with people, products and meaningful financials.

That requires pretty specific skills and beyond average discipline that not a lot of people possess[2]. Given that you either succeed as an entrepreneur or you don’t, it is irresponsible to perpetuate the myth that everybody can be an entrepreneur (or should be). It is as amoral as encouraging lottery participation in poorer neighbourhoods, or home ownership for those without sufficient income. Somebody will make money, but it won’t be the ill-suited entrepreneurs, and it won’t be society as a whole.

[1] This is not an issue of personal financial balance. It doesn’t matter whether you have a lifestyle that “works” with $10k a year or not. Unless you live on the moon, society *does* subsidize your lifestyle whenever you earn less than the average income level for your age group (government debt and the degree of progressive taxation in your country modify that bar a bit but it is a good first-order approximation). You don’t get the subsidy cheque but it flows into everything from the streets that you walk on, the food that you consume, the energy that you consume and so forth.

[2] The tough part is finding out whether you are one of the few people who can build businesses instead of working in one. There are no ultimate rules for this but a good indicator is whether you have the discipline to consistently succeed in non-entrepreneurial activities that your peers have difficulty with (e.g. making your marriage work when 50% of them fail, getting through college without debt when 80%+ of students have debt, etc.).

15 thoughts on “Entrepreneurship is a Profession, Not a Cool Pastime

  1. Helge –

    This is an outstanding post. I agree entirely. Entrepreneurship requires discipline, focus, and an ability to endure uncertainty and hardship that is a-typical. It is not for ‘most’.

    Entrepreneurship as a lifestyle choice for people without the requisite skills and commitment is an expensive frolic that we cannot afford.

    Neil Milton

    • Thanks for the comment Bruno. I agree but what happens then? Public folklore is encouraging people to “fail fast” which provides a nice justification for those who really shouldn’t be doing this in the first place. I can easily see a bubble contraction being passed off as a giant “pivot” (the “this is too hard, I am going to give up and do something else that appears easy at first” kind).

  2. I started off my career with the Big blue and then went to do a master’s then got bit by the entrepreneurship bug* and worked with a couple of startups. But now realized i neither have the discipline, nor are my expectations calibrated to be strong enough to build a company. But guess what, the working at startups have helped me set personal goals that seem more meaningful than the ones i had when i started my career. So my answer is sure entrepreneurship is not the ideal solution for everyone, but as it stands, it’s better than a graduate degree. Sure neither graduate degree or entrepreneurship have the ideal set of work-incentive plans. But i am of the personal opinion that entrepreneurship has the better evil of the two.

    • Thanks for the comment Anand. That’s a good point. Entrepreneurship, like grad school, has some educational value beyond pure economic benefit. In that context it can be very useful and certainly more productive than grad school. That said, if you do it for education you should still approach it with discipline and focused goals. Just “doing it” because you can isn’t a good approach. Sounds like you did exactly that – tried it out for a limited period, evaluated the fit and then moved on.

  3. Great post Helge. I was with you all the way till the “entrepreneurs” as net beneficiaries. I think many people who start companies have real aspirations of job and wealth creation, though hopefully those are not the main reasons for starting their company. For some those aspirations are pipe dreams. And you’re right, accelerators are exacerbating that trend. But for others, they have genuine potential, but success and wealth are back-end weighted, so their contributions will hopefully come in the future.

    • Thanks for the comment Mark. The problem is that the term “entrepreneur” has been heavily dilluted over the last few years. It used to mean “business creator” which implies job and wealth creation (even if its not a lot of jobs/wealth and likely back-end weighted). Now the term often just means “self-employed”. I am all for supporting people and business that start at the bottom but have genuine potential to rise over time. Like you, I invest in those plays for a living. But the vast majority of pitches that I see are by “youtube content creators”, “social media experts”, “app hackers” and the like who have neither the personal capabilities nor anything even close to a scalable business model to ever realistically break out of low wage self-employment.
      As recently as 5 years ago these people who get rejected by the investment world and bounce back in the labour market. That filter is disappearing as the myth of “no money needed” takes hold. And yes, professional investors are occassionally wrong and there will be the odd successful business emerging out of this reject pool. Unfortunately though, more often than not they are right and these ventures just become subsidized citizens by choice.

  4. Helge, you touched on a topic that I have found to be both pervasive and disturbing, that is, the trendiness increasingly associated with being a “startup entrepreneur”. I have seen this first hand with the proliferation of Y Combinator-replicated tech accelerators and, unfortunately, university business plan competitions. Your perspective on this topic is very much on the mark.

    • Thanks for the comment Luc. Every trend becomes “cool” for the mainstream just before it collapses. The rise in Y-combinator clones really surprises me though. I can see that the high profile exists would excite future entrepreneur (regardless of their qualifications). But the Accelerator world really hasn’t had signature successes yet. Y-combinator itself is furthest along (and most successful) but really hasn’t had significant success yet (in terms of traditional measures such as money returned to limited partners or even general partners). Non-Y-combinator accelerator certainly haven’t shown any significant success yet. Following those game plans is a bit like baking a cake by copying a chef who hasn’t actually finished his own cake just yet.

  5. Entrepreneurship is a profession and also a very risky business. Lets look at the word profession for a moment. A doctor is a profession in his field but you will never see a doctor performing surgury on themselves. Many of times, I have seen the entrepreneur profession pull out the scalpel and try and perform surgery on thier own business management problems. That is one of the things that make the business-side-of-business so risky.
    If you are looking for good small business advice? Considering looking for outside expertise but not sure what steps to take? Or maybe your small business is already successful, however need more advice on marketing, finance, developing an online presence or team building? The business management hotline is a good place to start.

  6. Pingback: The Worst Enemy of Student Entrepreneurship « The Tech Entrepreneurship Blog

  7. Like you, I invest in those plays for a living. But the vast majority of pitches that I see are by “youtube content creators”, “social media experts”, “app hackers” and the like who have neither the personal capabilities nor anything even close to a scalable business model to ever realistically break out of low wage self-employment.

  8. I am all for supporting people and business that start at the bottom but have genuine potential to rise over time. Like you, I invest in those plays for a living. But the vast majority of pitches that I see are by “youtube content creators”, “social media experts”, “app hackers” and the like who have neither the personal capabilities nor anything even close to a scalable business model to ever realistically break out of low wage self-employment.

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