An idea whose time has come: Entrepreneurialism has become cool(economist.com)
economist.com
An idea whose time has come: Entrepreneurialism has become cool
http://www.economist.com/specialreports/displaystory.cfm?story_id=13216053
11 comments
This will become important to know as Whitman is running for Governor of California in 2010.
It's unbelievably hard to unseat them. I knew the Yahoo Auctions team well back in 1998-2001, and they had a better product for free. Sellers and buyers preferred it. But there weren't many buyers because the sellers weren't there, and there weren't many sellers because the buyers weren't there. So even with Yahoo's network and brand they didn't win. (They did win big in Japan where eBay was slow to localize.)
Auctions have worse lock-in than you'd expect. You might think, if there's a marketplace with X buyers and another with X/10 buyers, most sellers would make the effort to list in the X/10 marketplace because they can increase their sales 10%. But with auctions, the sales price is a strong function of excess demand. Those extra 10% sales would be at significantly lower prices, and eBay merchandise tends to have low margins. When sellers lost money they quickly left.
Auctions have worse lock-in than you'd expect. You might think, if there's a marketplace with X buyers and another with X/10 buyers, most sellers would make the effort to list in the X/10 marketplace because they can increase their sales 10%. But with auctions, the sales price is a strong function of excess demand. Those extra 10% sales would be at significantly lower prices, and eBay merchandise tends to have low margins. When sellers lost money they quickly left.
It's interesting that eBay does seem to be the first web auctioneer of any note. As many have pointed out, others sold books on the web before Amazon, there were many search sites before Google, etc. But eBay basically invented it and has held onto it.
It has been said that Columbus wasn't the first to discover America, but he became famous for being the last. After his legend spread, none could again make that claim credibly to the public.
It has been said that Columbus wasn't the first to discover America, but he became famous for being the last. After his legend spread, none could again make that claim credibly to the public.
Thanks for providing that insight. I read that story in an online article sometime ago - and couldn't sum it up better.
Also I personally know a few people who work in an european eBay cubicle farm and can attest (through second-hand knowledge) to their abysmal corporate culture. Some of the stories I hear are straight dilbert material - and sadly that seems to be the rule, rather than the exception.
Also I personally know a few people who work in an european eBay cubicle farm and can attest (through second-hand knowledge) to their abysmal corporate culture. Some of the stories I hear are straight dilbert material - and sadly that seems to be the rule, rather than the exception.
I just (voluntarily) left a comfortable job at a behemoth corporation to start my own company with a friend from college. I thought I was being brave, but apparently I'm just succumbing to a fad?
I don't think it's that starting a business is "cool"; I mean, I guess it is, in some sense, although paying for your own health care isn't very cool. For me, this quote was apt:
"People’s attitudes to security and risk also changed. If a job in a big organisation can so easily disappear, it seems less attractive. Better to create your own."
It's not just about job security. After spending two years in a large corporation, I firmly believe that these shops provide less security, less on-the-job learning, less valuable experience, less opportunities to improve society, and in many cases less pay than ambitious young people can achieve otherwise. IMO, working at a large corporation, now more than ever, is an excellent way for you to hide, duck for cover, and defensively draw a paycheck. And mediocre people who take this posture are very clever indeed about ensuring they won't be laid off.
But if you actually want to do something meaningful with your life and happily spend your days working on a project you believe in, big corporations will rarely satisfy your needs.
Although I had a relatively good experience in my two years at my behemoth corporation (my last day is today, incidentally), the best thing I learned is how I'd rather not repeat the experience. I also look back on the two years and think that my most memorable moments (even technical achievements) happened outside of work.
With the means of production well within my grasp as a software engineer, and with big corporations going into a holding pattern and nixing interesting projects just to "keep the lights on", it seems like a no-brainer. For me, entrepreneurship isn't cool -- it's the only rational option.
I don't think it's that starting a business is "cool"; I mean, I guess it is, in some sense, although paying for your own health care isn't very cool. For me, this quote was apt:
"People’s attitudes to security and risk also changed. If a job in a big organisation can so easily disappear, it seems less attractive. Better to create your own."
It's not just about job security. After spending two years in a large corporation, I firmly believe that these shops provide less security, less on-the-job learning, less valuable experience, less opportunities to improve society, and in many cases less pay than ambitious young people can achieve otherwise. IMO, working at a large corporation, now more than ever, is an excellent way for you to hide, duck for cover, and defensively draw a paycheck. And mediocre people who take this posture are very clever indeed about ensuring they won't be laid off.
But if you actually want to do something meaningful with your life and happily spend your days working on a project you believe in, big corporations will rarely satisfy your needs.
Although I had a relatively good experience in my two years at my behemoth corporation (my last day is today, incidentally), the best thing I learned is how I'd rather not repeat the experience. I also look back on the two years and think that my most memorable moments (even technical achievements) happened outside of work.
With the means of production well within my grasp as a software engineer, and with big corporations going into a holding pattern and nixing interesting projects just to "keep the lights on", it seems like a no-brainer. For me, entrepreneurship isn't cool -- it's the only rational option.
That's what they mean about changing attitudes though... once upon a time, people got jobs with 'good companies' that made more than a token effort to take care of them even when things were a bit rough. There's value in that if you have a family and kids. Nowadays, though, you're right - the big companies will throw you to the wolves with no second thoughts, so what's the point?
Also, big companies do have a lot of resources that they can bring to bear on problems that startups will never have. Think of all the cool things created by ATT and IBM, for instance, in decades past. However, I think those days are gone, as I am not sure even big companies have the budget to keep around too many "pure" R&D types any more.
> For me, entrepreneurship isn't cool -- it's the only rational option.
I think I agree with this, but sort of grudgingly/sadly... I'm not sure I am or really want to be an "entrepreneur". I like to build cool stuff, not run companies, sell things, bargain with people, and all the businessy things. I think I can learn those to some degree, but I'll never be someone who lives for that part of things. So in some ways it's sort of limiting to feel that "it's the only rational option". I hope that makes sense:-)
Also, big companies do have a lot of resources that they can bring to bear on problems that startups will never have. Think of all the cool things created by ATT and IBM, for instance, in decades past. However, I think those days are gone, as I am not sure even big companies have the budget to keep around too many "pure" R&D types any more.
> For me, entrepreneurship isn't cool -- it's the only rational option.
I think I agree with this, but sort of grudgingly/sadly... I'm not sure I am or really want to be an "entrepreneur". I like to build cool stuff, not run companies, sell things, bargain with people, and all the businessy things. I think I can learn those to some degree, but I'll never be someone who lives for that part of things. So in some ways it's sort of limiting to feel that "it's the only rational option". I hope that makes sense:-)
I'm 22 years old and you hit the nail on the head about why I want to go into business for myself eventually. When I was growing up I was constantly told that starting your own business was too risky, that a stable job with a big company is the most secure way to go.
And then for the last 10 years I've seen my father move from job to job, fear for his employment constantly, and right now is batting down the hatches because his PHB-dominated company is going through another round of restructuring because they can't build a product if their lives depended on it. Yay.
I look at this and wonder how secure a "real job" really is, and given how little security there is in a job these days, is there a good reason to take one?
And then for the last 10 years I've seen my father move from job to job, fear for his employment constantly, and right now is batting down the hatches because his PHB-dominated company is going through another round of restructuring because they can't build a product if their lives depended on it. Yay.
I look at this and wonder how secure a "real job" really is, and given how little security there is in a job these days, is there a good reason to take one?
I sort of wonder if things won't swing back towards 'stable jobs' a bit. I don't think a lot of people want to run around taking all the risk on themselves... it's pretty stressful and can be quite distracting. I could see a company doing well by really being a good place to work that takes care of its own.
given how little security there is in a job these days, is there a good reason to take one?
Yeah, you get an automatic paycheck. Entrepreneurs can go months or years without making any money at all.
Yeah, you get an automatic paycheck. Entrepreneurs can go months or years without making any money at all.
Despite some cutbacks, IBM and HP still do a significant amount of basic scientific research. Look at recent patent filings and journal publications for evidence.
Large technology companies have increasingly outsourced innovative product development to small start-ups. It turns out this delivers better ROI since even though acquiring a successful start-up is expensive, there is much less risk. Cisco in particular has been consistent and open about following this strategy. They have partially funded several networking start-ups, encouraged key Cisco staff to join them, and then purchased the ones the succeeded.
Large technology companies have increasingly outsourced innovative product development to small start-ups. It turns out this delivers better ROI since even though acquiring a successful start-up is expensive, there is much less risk. Cisco in particular has been consistent and open about following this strategy. They have partially funded several networking start-ups, encouraged key Cisco staff to join them, and then purchased the ones the succeeded.
It's a horrible title really.
Entrepreneurialism has always been cool. Everyone has always envied Bill Gates or Steve Jobs. Fred Smith's mythical paper is the stuff of business legend. Nothing has changed here.
But like the article correctly states, what's changed is that entrepreneurialism has been introduced to the middle class. It's been made so easy that all those future CEO's and ladder climbers are starting to realize there is another option. High quality talent sees another way of living life - and they like it.
Not touched on in the article is the fact that this change in viewpoint from "climb the corporate ladder to success" to "launch a business and iterate to success" could be as revolutionary as the printing press. Think about it - the appeal of being an entrepreneur attracts the same people that would find getting an MBA and working their way up to C level positions appealing. We could - in effect - be at the very early stages of an extended "brain drain" of talent leaving large corporations without the leadership they need to survive. As the company finds itself less and less attractive to high-end talent, they struggle to keep up. And the spiral continues.
What we actually may be witnessing is the very early stages of the death of the corporation as a viable entity - all due primarily to the birth of the internet. That type of changes is revolutionary - we're talking industrial revolution scales here.
We're living in amazingly exciting times. I would love to see what the history books say about us 250 years from now.
Entrepreneurialism has always been cool. Everyone has always envied Bill Gates or Steve Jobs. Fred Smith's mythical paper is the stuff of business legend. Nothing has changed here.
But like the article correctly states, what's changed is that entrepreneurialism has been introduced to the middle class. It's been made so easy that all those future CEO's and ladder climbers are starting to realize there is another option. High quality talent sees another way of living life - and they like it.
Not touched on in the article is the fact that this change in viewpoint from "climb the corporate ladder to success" to "launch a business and iterate to success" could be as revolutionary as the printing press. Think about it - the appeal of being an entrepreneur attracts the same people that would find getting an MBA and working their way up to C level positions appealing. We could - in effect - be at the very early stages of an extended "brain drain" of talent leaving large corporations without the leadership they need to survive. As the company finds itself less and less attractive to high-end talent, they struggle to keep up. And the spiral continues.
What we actually may be witnessing is the very early stages of the death of the corporation as a viable entity - all due primarily to the birth of the internet. That type of changes is revolutionary - we're talking industrial revolution scales here.
We're living in amazingly exciting times. I would love to see what the history books say about us 250 years from now.
I worked for a Fortune 500 out of college for 1 year. That was 1996. I have been an entrepreneur ever since with some success and lots of failures. I have been a lone founder to employing 40+ people.
It's hard, lonely (most of the time) work but it's rewarding and invigorating. And you learn a ton (about business, yourself and life).
I transplanted to Manila (from SV a few years ago) trying to convince young local hackers to start their own or join my startup (the call of MSFT, IBM, etc. is strong in these parts). I have infected some young minds and plan to infect more.
If you are from the Philippines, give me a shout. Startup entrepreneurs are still hard to come by.
It's hard, lonely (most of the time) work but it's rewarding and invigorating. And you learn a ton (about business, yourself and life).
I transplanted to Manila (from SV a few years ago) trying to convince young local hackers to start their own or join my startup (the call of MSFT, IBM, etc. is strong in these parts). I have infected some young minds and plan to infect more.
If you are from the Philippines, give me a shout. Startup entrepreneurs are still hard to come by.
Why the move to Manila? What is the difference in your opinion? Has it made success harder?
Upsides: Manila is way cheaper to live. I'm bootstrapping so it made/makes sense. Salaries are also cheap.
If your startup is B2B, Manila is great b/c the businesses here are so cheap. So you can find out if you are solving a real pain point, not a "nice to have".
English is an official language so communications is mostly a non-issue.
Apple opened an online store so hackers now have more options without paying 50% over US prices.
Downsides: startup community is non-existent. Graduates tend to flock to MSFT, IBM, etc. for a chance to go to the states but with the economic downturn and uncertain job security, that is changing. It's also harder to find the right kind of hackers for startups.
If you are looking for funding, it's very difficult.
Those are the major trade-offs. All in all, it was worth it for me and I now have a chance to positively affect the world wide movement towards entrepreneurship locally.
If your startup is B2B, Manila is great b/c the businesses here are so cheap. So you can find out if you are solving a real pain point, not a "nice to have".
English is an official language so communications is mostly a non-issue.
Apple opened an online store so hackers now have more options without paying 50% over US prices.
Downsides: startup community is non-existent. Graduates tend to flock to MSFT, IBM, etc. for a chance to go to the states but with the economic downturn and uncertain job security, that is changing. It's also harder to find the right kind of hackers for startups.
If you are looking for funding, it's very difficult.
Those are the major trade-offs. All in all, it was worth it for me and I now have a chance to positively affect the world wide movement towards entrepreneurship locally.
As usual, the economist is looking for its keys under the lamppost.
In their graph, "Ease of starting a business" is a measure of how long it takes to process incorporation and tax paperwork. That is not the hard part. The hard part is finding co-founders and investors willing to invest, and customers willing to buy from new companies. It's a function of optimism and risk taking, not on government procedures.
In their graph, "Ease of starting a business" is a measure of how long it takes to process incorporation and tax paperwork. That is not the hard part. The hard part is finding co-founders and investors willing to invest, and customers willing to buy from new companies. It's a function of optimism and risk taking, not on government procedures.
> how long it takes to process incorporation and tax paperwork. That is not the hard part.
Try it here in Italy and then say that. Sadly, that sort of thing does matter, when it really shouldn't. We all have different ideas about how much, if any, taxes people should pay, but it's really stupid to make people pay through the nose before they've even managed to start anything, let alone made any money at it.
Try it here in Italy and then say that. Sadly, that sort of thing does matter, when it really shouldn't. We all have different ideas about how much, if any, taxes people should pay, but it's really stupid to make people pay through the nose before they've even managed to start anything, let alone made any money at it.
It's an additive function including optimism, risk-taking, and government procedures, not an either-or situation.
We focus on the latter part because as startup junkies we're interested in that. But there are lots of low risk businesses which do not require partners and such. Running a hot-dog stand at the park, starting a small-engine repair service, doing horse-grooming, running an ice-cream truck. Sure, these things require optimism and capital (to some small degree), but you can get ramen-profitable with a bubble-gum vending company without partners or investors or any of the other stuff we talk about for technology startups.
What you can't get away from, however, is dealing with government at all of its levels.
We focus on the latter part because as startup junkies we're interested in that. But there are lots of low risk businesses which do not require partners and such. Running a hot-dog stand at the park, starting a small-engine repair service, doing horse-grooming, running an ice-cream truck. Sure, these things require optimism and capital (to some small degree), but you can get ramen-profitable with a bubble-gum vending company without partners or investors or any of the other stuff we talk about for technology startups.
What you can't get away from, however, is dealing with government at all of its levels.
If it's getting trendy, maybe now is a good time to go work for some huge behemoth corporation?:-)
Or start one. The smart contrarian will see early the comeback for corporate monoliths. And very slowly begin his work. :)
Figuring out how to make big organizations run nimbly is the next big challenge. Almost all successful start-up businesses will grow into large ones. Figuroug out how to make that transition gracefully and keep some of the agility is a key challenge for future entrepreneurs.
It's also the difference between millionaire and billionaire.
It's also the difference between millionaire and billionaire.
Shhhh.
A useful heuristic in most cases. I hope it does not work for this one. ;o)
If startups are cool everywhere, is Atlanta still just as hosed as Munich?
Not sure what that means. I'm in Atlanta and noticing a startup community here. I've nothing to compare it to, but I do note at least two exits (JungleDisk and FireThorn) recently, so somebody's making bank.
I'm in Atlanta too, and there is definitely a startup community, but what I was referring to was this: http://www.paulgraham.com/webstartups.html
"It's cities that compete, not countries. Atlanta is just as hosed as Munich."
Its another PG essay, and well worth a read.
"It's cities that compete, not countries. Atlanta is just as hosed as Munich."
Its another PG essay, and well worth a read.
An optimistic article, but I wonder if entrepreneurialism has become cool only in very limited circles - like here.
Out in the real world, with the crisis and rising unemployment, it is once again becoming a sign of life success to land a safe job in a large corporation. It seems that getting hired by (say) Google is even more impressive now than a few years ago.
Another thing that worries me is that there are no IPOs anymore, so the only options for small businesses are to stay small (and unimportant) or sell the business to a large corporation (making them even stronger). And with more regulations and bailouts from the government, corporations might just be getting stronger than ever. I hope it is not true, I'll be happy if you prove me wrong.
Out in the real world, with the crisis and rising unemployment, it is once again becoming a sign of life success to land a safe job in a large corporation. It seems that getting hired by (say) Google is even more impressive now than a few years ago.
Another thing that worries me is that there are no IPOs anymore, so the only options for small businesses are to stay small (and unimportant) or sell the business to a large corporation (making them even stronger). And with more regulations and bailouts from the government, corporations might just be getting stronger than ever. I hope it is not true, I'll be happy if you prove me wrong.
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Entrepreneurship has been cool for a while now - and is now a part of the establishment - all the major universities have jumped on the entrepreneurship bandwagon, and governments avidly promote their support for entrepreneurs.
So becoming an entrepreneur can now be a socially validated choice. But is this a good thing? Historically, entrepreneurs have come from the disenfranchised - religious nonconformists, immigrant communities - people who are forced to find another way of making money because they could not get on using traditional social paths. They can change the world because they have always seen it partly from the forced perspective of an outsider.
What a bunch of fluff. Criteria such as "ease of doing business" are so subjective they are essentially meaningless. According to the US Bureau of Labor Statistics as well as the US Small Business Administration, entrepreneurship has been trending downwards for years:
http://tinyurl.com/dyh6hs
I knew this from another article I read awhile ago, and went even further into debunking this myth, but could not find the link. But it does appear that the Economist article lacks substance.
http://tinyurl.com/dyh6hs
I knew this from another article I read awhile ago, and went even further into debunking this myth, but could not find the link. But it does appear that the Economist article lacks substance.
Wait, it wasn't?
"Meg Whitman grew rich by developing an online marketplace, eBay, where people could buy and sell without ever meeting."
I recommend the book Paypal Wars. It was written by one of the "Paypal mafia." The book goes into quite a bit of detail about the early Paypal-eBay story, with an epilogue covering events until 2006. The reality is exactly the opposite of what the article claims.
Under Pierre Omidyar, eBay was a nimble start-up, and by the time Whitman came in, had established such a lead that the network effect was sufficient for them to retain their monopoly in the online auctions space no matter what. Whitman brought a culture of suits, endless meetings and powerpoint presentations into the company and quickly transformed it into a beast that moved at a fraction of its former speed. The new eBay took years to effectively integrate the payment system BillPoint which they purchased; if they had moved quicker, Paypal couldn't have survived, since they depended very heavily on eBay at the time.
The corporate culture-shock that the Paypal employees experienced upon being acquired by eBay, and their consequent mass exodus is now famous. If there is one positive thing that came out of the Whitman years at eBay, it is the fact that the Paypal people dispersed and went on to do great things and truly change the world :-)
Ironically, it was only around the time Whitman finally departed last year that it became clear that eBay was ripe for disruption. It amuses me that most of the business world, knowing none of the back-story, will think of the Whitman years at eBay as a glorious success.