2 ms·

From the article: "I hate to deflate egos, but on the other hand I want people to have a realistic understanding of things. The industry a person picks to star

by mixmax 19y ago

From the article: "I hate to deflate egos, but on the other hand I want people to have a realistic understanding of things. The industry a person picks to start a business has a huge effect on the odds that it will grow. If you go back 20 years or so, about 4% of all the startups in the computer and office equipment industry made the Inc. 500, 0.005% of startups in the hotel and motel industries made that list, and 0.007% of startups in eating and drinking establishments." This ignores cause and effect. Presumably a lot of business in the hotel and motel industries are simple mom and pop shops with no intention of growing. This is almost never true for "the computer and office equipment industry" Also presumably there there is a significant difference in the capabilities of founders in these two industries. I hate when writers cannot see beyond their numbers, and cannot distinguish between cause and effect. That being said I found it interesting that "you have to hit the top 10% to have income as an entrepreneur better than what you would have gotten working for other people." Maybe if I hadn't done those startups I would have a red ferrari by now ;-)

mechanical_fish 19y ago
Presumably a lot of business in the hotel and motel industries are simple mom and pop shops with no intention of growing. This is almost never true for "the computer and office equipment industry" Well, I don't think you can assert that without statistics. I wouldn't be surprised if the "median" computer company is a one-person consulting firm -- a services company. Also presumably there there is a significant difference in the capabilities of founders in these two industries. Well, there, I agree -- I suspect that the average grocery store owner has a lot more business skill than the average computer-industry founder. ;) By necessity -- the grocery business is more complex, with literally thousands of moving parts; there's more competition, and the margins are a lot smaller. Having said that, your basic point is correct -- computer startups have a much better chance of making big money, for reasons that have been explored ad infinitum around here -- low overhead, low cost of volume manufacturing, cheap distribution, large and international markets, etc. And that's exactly what this guy is saying when he suggests that you "choose the right industry". His argument isn't addressed to the folks around here. It's primarily addressed to the "average" founder -- the person who founds a corner store, a dry cleaner, a hair salon, or a decorating business. These are the folks who go to "entrepreneurship" seminars (featuring lots of photos of the guys from Yahoo, Google, McDonalds, and Pepsi) and imagine that any chain of hot-dog stands could lead to similar financial success -- whereas, in fact, it's likely to cost them money. Of course, running your own company also makes you much happier, on average -- a point which the author readily concedes.
- zaidf 19y ago
  "I wouldn't be surprised if the "median" computer company is a one-person consulting firm -- a services company." This is one thing pg has been very clear about: a start-up isn't about taking away a monthly paycheck. It is about scoring big. If your start-up is helping pay for your apartment, that is good but hardly the goal of your start-up. Founders know that. When your consulting firm is helping pay for your bills, the end goal is reached. Little growth happens once you reach that goal. There are exceptions--and almost any business can be transformed into a start-up(doesn't mean it will succeed). Infosys would be a good example of starting out as a small consulting firm and transforming itself into a start-up and now a giant.

by mixmax 19y ago

mechanical_fish 19y ago

Presumably a lot of business in the hotel and motel industries are simple mom and pop shops with no intention of growing. This is almost never true for "the computer and office equipment industry" Well, I don't think you can assert that without statistics. I wouldn't be surprised if the "median" computer company is a one-person consulting firm -- a services company. Also presumably there there is a significant difference in the capabilities of founders in these two industries. Well, there, I agree -- I suspect that the average grocery store owner has a lot more business skill than the average computer-industry founder. ;) By necessity -- the grocery business is more complex, with literally thousands of moving parts; there's more competition, and the margins are a lot smaller. Having said that, your basic point is correct -- computer startups have a much better chance of making big money, for reasons that have been explored ad infinitum around here -- low overhead, low cost of volume manufacturing, cheap distribution, large and international markets, etc. And that's exactly what this guy is saying when he suggests that you "choose the right industry". His argument isn't addressed to the folks around here. It's primarily addressed to the "average" founder -- the person who founds a corner store, a dry cleaner, a hair salon, or a decorating business. These are the folks who go to "entrepreneurship" seminars (featuring lots of photos of the guys from Yahoo, Google, McDonalds, and Pepsi) and imagine that any chain of hot-dog stands could lead to similar financial success -- whereas, in fact, it's likely to cost them money. Of course, running your own company also makes you much happier, on average -- a point which the author readily concedes.

zaidf 19y ago
"I wouldn't be surprised if the "median" computer company is a one-person consulting firm -- a services company." This is one thing pg has been very clear about: a start-up isn't about taking away a monthly paycheck. It is about scoring big. If your start-up is helping pay for your apartment, that is good but hardly the goal of your start-up. Founders know that. When your consulting firm is helping pay for your bills, the end goal is reached. Little growth happens once you reach that goal. There are exceptions--and almost any business can be transformed into a start-up(doesn't mean it will succeed). Infosys would be a good example of starting out as a small consulting firm and transforming itself into a start-up and now a giant.