[ams6110]

Except those other people are not risking their assets to create that employment opportunity. Most entreprenurial undertakings fail. The high reward for the ones that succeed is the carrot that entices people to take those risks and create the opportunity for a lot of other people to earn a more modest reward but for far less personal risk.

[binxbolling]

A massive number of people are making big salaries that have risked absolutely none of their assets. Then when they suck, not only did they not risk or lose anything materially, they'll get huge severance checks.

And if you require a carrot that takes you from, say, $2M to $2.5M salary, maybe re-consider what motivates you and try to find something more intrinsic to the work & company itself.

[hoorayimhelping]

>And if you require a carrot that takes you from, say, $2M to $2.5M salary, maybe re-consider what motivates you and try to find something more intrinsic to the work & company itself.

Who are you to tell someone their motivations are wrong? I agree with you for myself wholeheartedly but I'm not about to go dictate to people what they should be motivated by. How incredibly arrogant.

[seivan]

But is that such a massive number in comparison? It sounds like you're talking executive levels.

Not that I disagree with you, I just think the numbers don't add up to be called massive.

[RobertoG]

I'm a little sceptic about that narrative.

It's very common but do we have any proof?

Surely, personal circumstances are very important if you are going to try to start a business.

There is psychological circumstances like: did you grow up in a family or an environment where the idea of start a business was present?

And more practical like: Do you have technical abilities that you can sell if your project fail? Do you or your parents, wife, etc. have money that will stop your fall if the project goes wrong?

Was really Bezos or Gates or Page really "taking a risk"? And I mean a real risk.

Anyway, even if we, as a society, want to reward the "job creators", we probably don't want to live in winner take all world.

[lujim]

Half of all small business fail in the first 3 to 5 years. Imagine taking a job where you had to pay for your office, office supplies, computer, and every thing else out of pocket. And oh yeah, half the people are fired within 3 to 5 years without being reimbursed for their expenses. While some people have more resources or come from a more privileged background that is a social discussion. It's still pretty risky in terms of cash, assets, and time no matter who you are.

[fnordfnordfnord]

>Half of all small business fail in the first 3 to 5 years.

I'm curious about that statistic. A lot of these business could be hobby or other casual enterprises, tax avoidance schemes, and doomed businesses started by naive people. It doesn't mean a whole lot without some more context.

>Imagine taking a job where you had to pay for your office, office supplies, computer, and every thing else out of pocket.

Become a teacher!

>...that is a social discussion.

Social factors aren't irrelevant. People behave differently based upon socio-economic incentives. Not just entrepreneurs, either; take two engineers, one comes from a family with "fuck you" money, the other is a first generation college graduate. They both have started their own families and have young children at home. Now, imagine how their reactions might differ when placed in various ethical dilemmas.

[lujim]

> I'm curious about that statistic. A lot of these business could be hobby or other casual enterprises, tax avoidance schemes, and doomed businesses started by naive people. It doesn't mean a whole lot without some more context.

All models are wrong, but some are useful. That particular stat covers a pretty good cross section of legitimate small businesses. Some small businesses may be a cover for an underground marinara sauce operation used by the mafia to funnel dollars to a dog fighting operation..... Sure we could muddy it up more, but I don't think that stat is all that malicious or disingenuous.

> Become a teacher!

This claim does seem to be a bit disingenuous and exaggerated. Sure teachers cover an unfair amount of supplies and get paid very little. Do they really rent their classrooms, buy their own computers, and pay for 100% of everything out of pocket?

> Social factors aren't irrelevant.

My post was refuting the claim that entrepreneurs aren't taking real risk. Granted if you come from a wealthy family you aren't taking as much risk starting a business as someone taking a small business loan. I still contend that the risk to an individual (relative to them-self, not others) is greater when starting a business than taking a job.

[fnordfnordfnord]

>This claim does seem to be a bit disingenuous and exaggerated. Sure teachers cover an unfair amount of supplies and get paid very little. Do they really rent their classrooms, buy their own computers, and pay for 100% of everything out of pocket?

It was exaggerated a bit!

>Do they really rent their classrooms,

Of course not, but increasingly, my own resources are being put to use on behalf of my / my employer's students. Furthermore, remuneration in my field is easily several times what it is in education; and I think that's true for a lot of teachers. Sure, there are other benefits, but the pay is poor, approaching minimal, and that's not going to get you the best teachers.

>buy their own computers

Often enough, yes.

> and pay for 100% of everything out of pocket?

Far, far too much out of pocket.

[lujim]

I think we went of the tracks a few posts ago. I was saying that entrepreneurs take significant personal and financial risks and there is a high rate of attrition for even good businesses. My point was that after a physically, emotionally, and financial draining 5 year period there is a high probability that you end up with significant debt and no source of income (lol kind of like my college experience I guess). I know that teachers get crapped on and are underpaid. I get that it's unfair and it sucks.

[falcolas]

Most business owners are risking very little out-of-pocket money. Most are either funded via business loans against the business assets, or from investors.

Only a small number of bootstrapped companies (few of whom are represented on Hacker News) are risking their own money, and even then only the brave (or foolish) push it to the point where they can't sustain themselves if the business fails.

[lujim]

Don't forget about opportunity cost. It's common to discount opportunity cost and equity as "not as real as the money you spend on your credit card". However when the house payment keeps showing up every month and you decided to strike out on your own instead of taking that $6000 to $10000 per month you could have made in a stable software development job you are going out of pocket whether you realize it or not. That $300k you missed out on because you failed to cover expenses for 4 years when you could have been working as a software dev in some employers cubicle are real dollars.

Also some business owners do leverage some retirement savings when starting a business. It's a pretty good way to get low interest money. They can sustain if things fail, but they certainly feel it if they fail.

[serge2k]

Bezos was coming out a extremely well regarded company, Gates did drop out of harvard but isn't his family quite well off?

Kind of interesting to think about what the negative consequences actually would have been for Bezos if Amazon couldn't survive the dotcom bubble.

[manicdee]

In this case the CEO had been on a million-plus salary for a while, so he wasn't risking anything except the future performance of his staff.

[vtlynch]

First of all, there is not "far less personal risk" for employees. If the company you work for goes under, every employee is hurt by that, not just the founder.

The founder may have lost more money, but he had more money to gamble with. The employee does not, and losing his personal income stream is probably equally or more damaging to him.

[whatok]

So I'm a small business founder who had to take out a bank loan, mortgage the house, and forego a salary until business is good. That's somehow less risky than a standard employee who can likely walk away with no baggage after the business shutters?

[lujim]

Not everyone that starts a business is wealthy. They have take on debt or sold equity to finance their venture. They may have much less money in the bank than their employees. If you're financing your business with your retirement from a previous job or from personal savings you have much more at stake than lets say, a software dev that is getting non stop calls from recruiters for high 5 or 6 figure jobs that start tomorrow. Full disclosure, I'm the second guy who wishes I had the risk appetite to be the first guy.

[vtlynch]

"sold equity to finance their venture."

Oh yes, I forgot about the masses of un-wealthy people who have equity.

[lujim]

You can sell equity to anyone interested in buying it. Does your friends lower middle class uncle that retired from that factory job at Chrysler ten years ago have an extra 20 grand? You can sell him a chunk. You can't hold yourself out to the general public, but you can sell shares if that's what you want to do. There is a very real concept called cost of equity. It's a percentage comparable to loan interest. It's often much higher than the cost of taking a loan if your company is successful.

[whatok]

Equity in their business? You can create vtlynch LLC tomorrow if you wanted to and if you found someone to buy it, you could sell equity in it. What does that have to do with personal wealth?

[vtlynch]

Yes I'm sure thats exactly the situation lujim was describing

[whatok]

That's exactly how I read it. Taking on debt or selling equity are some of the most common ways of financing businesses. I could see if "take on debt" was not in that sentence but even then many (non-VC funded too!) businesses sell ownership in their business to finance it.