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Entrepreneurship is dying in America and it should concern us all. https://www.census.gov/newsroom/blogs/research-matters/2018/02/bfs.html https://www.census.g

Entrepreneurship is dying in America and it should concern us all. https://www.census.gov/newsroom/blogs/research-matters/2018/02/bfs.html https://www.census.gov/newsroom/blogs/research-matters/2018/... While unemployment and asset prices have recovered in the past decade, business starts have remained at historic lows. When these small businesses die they aren't being replaced by upstarts. I wish we knew why. I'm worried the future will be a small handful of oligopolist mega-corps. You see this consolidation in every industry: banks have consolidated (there are fewer banks now than at any point in modern US history), a few leading tech firms, agriculture, energy, etc.

pochamago 8y ago
A few reasons I would guess at: Business startup by necessity has gone down. It's much easier to get hired by an international company in a niche field and work from home now, so people no longer are required to start a business to work in the field of their choice It's more difficult to start something really innovative, related to the slowdown of Moore's Law It's more difficult to start a business in an established field, as licensing laws have come to cover so much more of the landscape. You can no longer just decide to become a barber and hang out your shingle.
- nomagicbullet 8y ago
  This is the first I hear about the "slowdown of Moore's Law." Do you have any data to share? Thx.
  - teraflop 8y ago
    Moore's law originally stated that the number of transistors per IC would double every 18 months. For a long time this was a remarkably accurate empirical law, but it has slowed down dramatically in the last decade or so. As an individual example: in 1998, Intel's top-of-the-line CPU was the Pentium II with about 8 million transistors. In 2008, they released the Core 2 Extreme QX9770, with about 820 million transistors; this is a 100-fold increase in 10 years, which is almost exactly what Moore's law predicts. Fast-forward another decade to 2018, and Intel's highest-end Xeon chips have something like 7 billion transistors, which is less than a 10-fold improvement in the same timeframe. EDIT: that said, I think it's a real stretch to go from "the slowdown of Moore's law" to a sweeping claim about innovation in general being more difficult. There are a ridiculous number of different fields in which someone could start a business; relatively few of them are dependent on enormous, ever-increasing amounts of computational power.
    - tracker1 8y ago
      I'd go even further to say, that we're at a point where not EVERYTHING needs to be smaller... our mobile devices are so small and difficult to hold, we're putting things on the back to make them easier to hold. They're so thin and fragile, we're putting thick cases on to protect them... I'd love to see a production cell phone that is already thick with a relatively huge battery, more rugged case, and a slightly better protected display. I'm willing to bet there's a market for this, just based on otterbox sales, and the sales of backpack battery covers. Similarly a home media player like the roku, shield tv or fire stick are plenty small. That has nothing to do with being able to innovate and create newer or better experiences.
  - modeless 8y ago
    From 1987 until 2011, Intel created a new manufacturing process every 2 years like clockwork. In 2013, their 14nm process was delayed one year to 2014. The next process, 10nm, is delayed 3 years, assuming it is not delayed again before the currently planned late 2019 release. https://en.wikichip.org/wiki/intel/process https://en.wikichip.org/wiki/intel/process
- batty_alex 8y ago
  > It's more difficult to start a business in an established field, as licensing laws have come to cover so much more of the landscape. In my experience, it's been a problem with banks and small business loans being hard to obtain these days. Banks want a LOT of leverage, you have to already be doing pretty well. Folks that are already pretty well-off aren't going to take the types of risks that create small businesses.
- heavenlyhash 8y ago
  If either of the first two propositions was true, then we should be able to look at other first world countries around the world that should be experiencing the same pressure, and we would see a similar slump in small business creation, right?
mrguyorama 8y ago
The average American has so little buying power that they have become absurdly price conscious. If a big player muscles into my business, they can undercut me and ruin me with no recourse. Why would I get into that?
- plantsbeans 8y ago
  How do you know that Americans are unusually price conscious?
  - tracker1 8y ago
    You generally don't have to go much further than a search on Amazon, and the shear number of knockoff products undercutting the more branded products.
- nine_k 8y ago
  Did an average American have higher buying power in 1930? In 1900?
  - ravenstine 8y ago
    It depends on how you look at it. I don't have data that goes back that far, but the graph in this article should be of interest to everyone: https://www.forbes.com/sites/timworstall/2016/10/03/us-wages-have-been-rising-faster-than-productivity-for-decades/#3c86b1367342 https://www.forbes.com/sites/timworstall/2016/10/03/us-wages... Essentially, up to the 1970s, wages followed closely with productivity. Quite suddenly, wages stopped growing while productivity has continued to grow with no sign of catching up. Take a look at this chart from the BLS: https://pbs.twimg.com/media/DJ9l_q6VYAERRDt.jpg https://pbs.twimg.com/media/DJ9l_q6VYAERRDt.jpg What we can take from that is while prices for certain things have declined(e.g. technology, new cars, software, toys, clothes), the price of arguably more important things (child care, medical care, college tuition, textbooks, housing, food) has gone up. Sure, we've been bearing those costs, but the maximization of profits from those expenditures will inevitably cause an adjustment when Americans can't pay for those things anymore. Americans might technically have a higher buying power than 1900, and especially 1930, but not necessarily in every area or even the areas that are important. If we were to say that Americans have more access to food, clothing, computers, education, etc., it doesn't mean that Americans are actually paying for those things; a lot of the wealth we think we have is coming from record amounts of debt that were unseen in the early 20th century. The things that make it seem like we have more spending power than we did a century ago are being made possible by what could be a ticking time bomb.
prolikewh0a 8y ago
>I'm worried the future will be a small handful of oligopolist mega-corps. I think we're already here, or closer than a lot of people realize.
madengr 8y ago
Health insurance costs and education savings. I'd like to hang out my shingle, but steady employment with health insurance is needed for my family of 4, along with savings for kids college and my retirement. It's all a risk mitigation.
onetimemanytime 8y ago
>>* Entrepreneurship is dying in America and it should concern us all.* One angle: A lot of stuff is moving online. Good luck with Google, Facebook, Amazon having their own interest$ etc being gateways to your site. Most people will not make it, so why even try? Risk vs reward.
nopinsight 8y ago
Large businesses have long been more efficient than small ones on average but they often could not customize their products and services to cater to each locality or niche very well. Advancing technology has enabled a greater economy of scale as well as mass customization beyond what was possible, thus increasing the competitiveness of large businesses. Examples include customized shoes from big brands, e-commerce recommendation algorithms taking the roles of local shopkeepers, IT systems reducing the costs and increasing the effectiveness for managing far-flung enterprises.
plurgid 8y ago
completely anecdotal, but the reason from my perspective is that the system has been overwhelmingly rigged against being able to take economic risk. I would have started my own business by now ... heck I'd probably have started and failed several by now if not for one thing. Well three: 1) you cannot afford prescription drugs in America unless you have good health insurance. At least in my state (Alabama), the federal health marketplace offers exactly one option from exactly one provider. It has a ridiculously high deductible and is (no shit) not accepted at nearly all doctor's offices in my town. 2) I cannot afford to lose my access to prescription medication and healthcare, because my wife has diabetes and I survived cancer a few years ago. We're in fine health now, but we DO have medical expenses ... things that should NOT be that expensive (yearly CT scans and insulin are hardly breaking technology), but have been SO inflated in price by a bogus, rigged third-party-payer system that we literally can't afford those things without "insurance". 3) I had kids early in life, and since my adult working career began, it has been an absolute baseline requirement that I be able to get them medical care and otherwise provide for them. ok ... having kids early was my decision, and I'll accept that this decision limited my universe of personal options. Getting sick. Having a wife who got sick. These were not personal decisions. They are just things that happen to people. Our system in America is designed to keep me at my desk, working for someone else, doing mostly meaningless work. Why? Because it'd be a complete nightmare for those at the top, if every last one of me out there in the workplace could afford to take a risk that might not work out. There'd be a helluva lot more competition out there. America is dying because of this. Not just our economy. But our society. The world would genuinely be a better place with the companies I would have started in it. And that is true for every other stymied inventor/would-be-entrepreneur in america. There is always a downside to risk, and there is always a risk involved in starting a new Enterprise. But what we have right now is so far out of whack that taking even a minor risk, can straight up kill you or your kids for lack of access to proper medical care.
- nine_k 8y ago
  Can relate. My wife could afford to start a few small businesses over the years only because I have health insurance from my employment, and can get her, and our kids, to the family plan. If Obamacare did something good to people not on lowest-paid jobs, it is giving at least some options of health care to entrepreneurs who are not yet raking in millions (that is, most of them).
cityzen 8y ago
Because America doesn't care about small businesses. John Oliver had a whole segment about it: https://www.youtube.com/watch?v=00wQYmvfhn4 https://www.youtube.com/watch?v=00wQYmvfhn4
bduerst 8y ago
It's possible that capital isn't as readily available as it was before the great recession, as banks have tightened lending guidelines. Are there any correlations between business formations and capital availability?
lsc 8y ago
So, I have a theory: "the sharing economy" no, seriously. I have family that ran busineses. I have run businesses. Most successful small business don't pay much better than driving for uber, and driving for uber is a lot less risk, a lot less effort. (there's also a lot less upside, but let's be honest here... making a small business that pays better than working for google that isn't just contracting, even when you have the same skills, is extremely difficult.) - if you drive for uber, at least the capital you blew is on something that is still useful after you quit the business. I know a lot of people with a bunch of branded cups and other junk from their previous failed ventures. I mean, I had some pretty marketable skills when I started my own business, so I did better than the uber driver, but I worked hard and made like 1/4th of what I get working for other people. The other thing is that unless you are in the business of getting funding, it's way easier to start a business when the economy is shit. In '09, nobody tried to undercut me. Now? I would not want to be in that market anymore, just 'cause there is so much competition that is willing to lose money to buy marketshare. In '09, I was able to pick up good people who were temporarily unemployed as employees; now? if you wanna hire someone good, you are competing with people willing to pay netflix level money. (I mean, all this, I think, is actually pretty great. But it is not so good for facilitating a small self-funded company)
mdorazio 8y ago
I'm in the process of shutting down my business, so anecdotally: 1) Globalization has made it almost completely impossible to make things in the US unless they are massively overpriced goods (ex. luxury items or niche specialty goods). Customers simply won't pay enough to cover your costs. And there's a good chance that if you are successful, someone will copy your stuff, make it in China, and sell it for half your price within 12 months. 2) In California at least, costs are pretty ridiculous for small businesses. Between state, county, and city taxes, high labor costs, ridiculous healthcare costs, rent, insurance costs, etc. etc. It is far more expensive to start a business today as a percentage of expected revenue than it was a few decades ago. 3) The US IP protection and regulatory systems are out of control. Fending off patent trolls, tiptoeing around trademarks, dealing with licensing systems specifically designed to be too burdensome for small companies to bear, spending time and money to deal with regulatory compliance, etc. puts small businesses at a massive disadvantage. 4) Unpopular opinion, but I think today's workers are less suited to small businesses than they used to be. Many younger workers say they want to work for startups, but what they really want is a venture-backed cushy office with catering and perks completely untied to actual business revenue. These types of businesses account for a tiny percentage of actual small business starts in the US, which are often not places today's workers want to work at, let alone stay loyal to.
- cylinder 8y ago
  Deleted
  - dragonwriter 8y ago
    > It's sad that you were able to make all of these very valid points without even needing to mention the "health insurance costs for self employed people and their employees" That was mentioned along with a litany of other things in point 2.
- pm90 8y ago
  Since you didn't refrain from airing an unpopular opinion, I will counter with another one: you failed in your business likely because you didn't adapt quickly enough to changing market situation (locally and globally) and were unable to recruit and motivate today's workers in the industry in which you operated in. Generalizations offer very little insight though older folks seem to love to complain that the youth/next generation are just not suited/hardworking enough.
sjg007 8y ago
Student loans, high housing costs, risk aversion.
JohnWilcox 8y ago
Not just entrepreneurship, but even competition itself, in a world that has seen nothing but consolidation and centralization of power and wealth over the last 20+ years as ever fewer organizations have been gobbling up and devouring and squashing any notion of competition and entrepreneurship in its infancy. It is arguably the sole model of the technology sector, the pump and dump, setting a "startup" up to appear as appealing to one of the monopolistic behemoths or titans. It's even somewhat of a model in the smaller tech company sector as free money paid for by tax dollars is sloshing around and companies are consolidating and creating ever larger conglomerates that take ever more air our of the entrepreneurial landscape. It's not healthy, and no matter what the consequences will be, I cannot envision an outcome where any of this leads to positive things. But maybe it's just my own "bias" that I have positive associations with not being a subject to a hive mind of centralized power and control.
snarf21 8y ago
The reward simply isn't worth the risk. Why compete against mega corp when you can invest that same money in their stock and get 10% gains? Plus, you can work normal hours, have healthcare and lower stress instead.
beckler 8y ago
I worked with a guy who freelanced for a while, and he had an interesting observation. When the economy is shit, most large companies outsource a lot of work because they can't afford or don't have the workers for the amount of work they have. So if your a freelancer, business can be pretty good. When the economy is great, those same businesses try to bring all those efforts in-house, so all those contracts dry up. Not sure how it relates with entrepreneurship, but this guy had to quit freelancing and get a full-time gig (which is how I met him) because no one was handing out the contracts he wanted anymore.
- westbywest 8y ago
  Vaguely similar observation from a previous employer in engineering: job health is effectively a derivative of the general economy. That is, if your job entails design/construction of something new, you job would be stable in an economy under flux, where clients have desire to hire your services. Not strictly just a growing economy, because effects like transition to new technology can also ensure stable job prospects. A stagnating or impeded economy, while possibly still ensuring stable jobs for other fields, would mean job reduction in design and engineering.
siruncledrew 8y ago
I think what's endemic among business and societal trends is an erosion of middle ground. The smaller players stall small while the bigger players swallow the medium ones. It's not rocket science to figure out this will have various implications on society, as economics play a huge role in daily life. Using banks as an example, look at the market share of total assets over the last 20 years: https://www.peakprosperity.com/sites/default/files/users/u31063/total_assets.png https://www.peakprosperity.com/sites/default/files/users/u31... The largest banks (JPMorgan, Citi, BoA, etc.) have decimated regional and mid-size banks while credit unions have essentially maintained the same role at the bottom. The big banks have more resources to invest in new technology and financial initiatives, thus having the ability to be market leaders and capture more money. In my opinion, digital also makes a huge difference. For example, JPMorgan is able to spend $10B on technology a year, which is more than the total assets of many small banks and credit unions. The banks that are midsize are in the hardest position because they don't have the capacity to outpace a big bank in R&D or IT, and are stuck in a position of being a lagging trend follower since they also can't spare a lot of risk tolerance. Further, it's hard to even leverage branch access and customer service as more individuals rely on digital banking to handle their finances, which actually pushes the big banks ahead in consumer satisfaction: https://assets.sourcemedia.com/dims4/default/0e422a4/2147483647/resize/680x%3E/quality/90/?url=https%3A%2F%2Fassets.sourcemedia.com%2Fa2%2F39%2Fd5eb32ac4967a0959a3782417277%2Fab020216power.jpg https://assets.sourcemedia.com/dims4/default/0e422a4/2147483... From a business side, it looks like we are headed down the path of oligopolist megacorps unless there's major changes. Money is the name of the game, and even in the startup world, the end-goal for investors is to pull off a lucrative exit (which usually means selling to a monopolistic megacorp) or IPO. Ask a megacorp CEO how much is "enough" for their business, and the goal will be to have as much as they possibly can. I don't know if entrepreneurship is actually dying, but my speculation is it's getting tougher to build a reliable business to employ others and depend on for one's livelihood within the remaining territory left. So much has been taken over by huge companies, it's difficult to find a niche or market opportunity to feasibly "disrupt". It feels like the megacorps have already cleared the fields and claimed the land and the rest of us entrepreneurs have a choice of: i) work for the megacorp that owns everything, or, ii) try to find solace in the few options left.
eldavido 8y ago
My theory is returns to scale are much, much higher. All this whiz-bang shit startups do like AI, machine learning, really even any kind of custom software or process innovation, just isn't possible when you're small. There's no scope for it. The reason it's a bigger problem now is because we have bigger markets globally and better tools, both of which create winner-take-all effects. 20-30 years ago you might start an auto parts distribution or manufacturing business, or a niche software business, or something else. It's a lot different when you have to compete with the best of the best globally from day 1 without any of the advantages the incumbents (e.g. data, existing channels to market, established brand) can bring to bear.

pochamago 8y ago

A few reasons I would guess at: Business startup by necessity has gone down. It's much easier to get hired by an international company in a niche field and work from home now, so people no longer are required to start a business to work in the field of their choice It's more difficult to start something really innovative, related to the slowdown of Moore's Law It's more difficult to start a business in an established field, as licensing laws have come to cover so much more of the landscape. You can no longer just decide to become a barber and hang out your shingle.

nomagicbullet 8y ago
This is the first I hear about the "slowdown of Moore's Law." Do you have any data to share? Thx.
- teraflop 8y ago
  Moore's law originally stated that the number of transistors per IC would double every 18 months. For a long time this was a remarkably accurate empirical law, but it has slowed down dramatically in the last decade or so. As an individual example: in 1998, Intel's top-of-the-line CPU was the Pentium II with about 8 million transistors. In 2008, they released the Core 2 Extreme QX9770, with about 820 million transistors; this is a 100-fold increase in 10 years, which is almost exactly what Moore's law predicts. Fast-forward another decade to 2018, and Intel's highest-end Xeon chips have something like 7 billion transistors, which is less than a 10-fold improvement in the same timeframe. EDIT: that said, I think it's a real stretch to go from "the slowdown of Moore's law" to a sweeping claim about innovation in general being more difficult. There are a ridiculous number of different fields in which someone could start a business; relatively few of them are dependent on enormous, ever-increasing amounts of computational power.
  - tracker1 8y ago
    I'd go even further to say, that we're at a point where not EVERYTHING needs to be smaller... our mobile devices are so small and difficult to hold, we're putting things on the back to make them easier to hold. They're so thin and fragile, we're putting thick cases on to protect them... I'd love to see a production cell phone that is already thick with a relatively huge battery, more rugged case, and a slightly better protected display. I'm willing to bet there's a market for this, just based on otterbox sales, and the sales of backpack battery covers. Similarly a home media player like the roku, shield tv or fire stick are plenty small. That has nothing to do with being able to innovate and create newer or better experiences.
- modeless 8y ago
  From 1987 until 2011, Intel created a new manufacturing process every 2 years like clockwork. In 2013, their 14nm process was delayed one year to 2014. The next process, 10nm, is delayed 3 years, assuming it is not delayed again before the currently planned late 2019 release. https://en.wikichip.org/wiki/intel/process https://en.wikichip.org/wiki/intel/process
batty_alex 8y ago
> It's more difficult to start a business in an established field, as licensing laws have come to cover so much more of the landscape. In my experience, it's been a problem with banks and small business loans being hard to obtain these days. Banks want a LOT of leverage, you have to already be doing pretty well. Folks that are already pretty well-off aren't going to take the types of risks that create small businesses.
heavenlyhash 8y ago
If either of the first two propositions was true, then we should be able to look at other first world countries around the world that should be experiencing the same pressure, and we would see a similar slump in small business creation, right?

mrguyorama 8y ago

The average American has so little buying power that they have become absurdly price conscious. If a big player muscles into my business, they can undercut me and ruin me with no recourse. Why would I get into that?

plantsbeans 8y ago
How do you know that Americans are unusually price conscious?
- tracker1 8y ago
  You generally don't have to go much further than a search on Amazon, and the shear number of knockoff products undercutting the more branded products.
nine_k 8y ago
Did an average American have higher buying power in 1930? In 1900?
- ravenstine 8y ago
  It depends on how you look at it. I don't have data that goes back that far, but the graph in this article should be of interest to everyone: https://www.forbes.com/sites/timworstall/2016/10/03/us-wages-have-been-rising-faster-than-productivity-for-decades/#3c86b1367342 https://www.forbes.com/sites/timworstall/2016/10/03/us-wages... Essentially, up to the 1970s, wages followed closely with productivity. Quite suddenly, wages stopped growing while productivity has continued to grow with no sign of catching up. Take a look at this chart from the BLS: https://pbs.twimg.com/media/DJ9l_q6VYAERRDt.jpg https://pbs.twimg.com/media/DJ9l_q6VYAERRDt.jpg What we can take from that is while prices for certain things have declined(e.g. technology, new cars, software, toys, clothes), the price of arguably more important things (child care, medical care, college tuition, textbooks, housing, food) has gone up. Sure, we've been bearing those costs, but the maximization of profits from those expenditures will inevitably cause an adjustment when Americans can't pay for those things anymore. Americans might technically have a higher buying power than 1900, and especially 1930, but not necessarily in every area or even the areas that are important. If we were to say that Americans have more access to food, clothing, computers, education, etc., it doesn't mean that Americans are actually paying for those things; a lot of the wealth we think we have is coming from record amounts of debt that were unseen in the early 20th century. The things that make it seem like we have more spending power than we did a century ago are being made possible by what could be a ticking time bomb.

prolikewh0a 8y ago

>I'm worried the future will be a small handful of oligopolist mega-corps. I think we're already here, or closer than a lot of people realize.

madengr 8y ago

Health insurance costs and education savings. I'd like to hang out my shingle, but steady employment with health insurance is needed for my family of 4, along with savings for kids college and my retirement. It's all a risk mitigation.

onetimemanytime 8y ago

>>* Entrepreneurship is dying in America and it should concern us all.* One angle: A lot of stuff is moving online. Good luck with Google, Facebook, Amazon having their own interest$ etc being gateways to your site. Most people will not make it, so why even try? Risk vs reward.

nopinsight 8y ago

Large businesses have long been more efficient than small ones on average but they often could not customize their products and services to cater to each locality or niche very well. Advancing technology has enabled a greater economy of scale as well as mass customization beyond what was possible, thus increasing the competitiveness of large businesses. Examples include customized shoes from big brands, e-commerce recommendation algorithms taking the roles of local shopkeepers, IT systems reducing the costs and increasing the effectiveness for managing far-flung enterprises.

plurgid 8y ago

completely anecdotal, but the reason from my perspective is that the system has been overwhelmingly rigged against being able to take economic risk. I would have started my own business by now ... heck I'd probably have started and failed several by now if not for one thing. Well three: 1) you cannot afford prescription drugs in America unless you have good health insurance. At least in my state (Alabama), the federal health marketplace offers exactly one option from exactly one provider. It has a ridiculously high deductible and is (no shit) not accepted at nearly all doctor's offices in my town. 2) I cannot afford to lose my access to prescription medication and healthcare, because my wife has diabetes and I survived cancer a few years ago. We're in fine health now, but we DO have medical expenses ... things that should NOT be that expensive (yearly CT scans and insulin are hardly breaking technology), but have been SO inflated in price by a bogus, rigged third-party-payer system that we literally can't afford those things without "insurance". 3) I had kids early in life, and since my adult working career began, it has been an absolute baseline requirement that I be able to get them medical care and otherwise provide for them. ok ... having kids early was my decision, and I'll accept that this decision limited my universe of personal options. Getting sick. Having a wife who got sick. These were not personal decisions. They are just things that happen to people. Our system in America is designed to keep me at my desk, working for someone else, doing mostly meaningless work. Why? Because it'd be a complete nightmare for those at the top, if every last one of me out there in the workplace could afford to take a risk that might not work out. There'd be a helluva lot more competition out there. America is dying because of this. Not just our economy. But our society. The world would genuinely be a better place with the companies I would have started in it. And that is true for every other stymied inventor/would-be-entrepreneur in america. There is always a downside to risk, and there is always a risk involved in starting a new Enterprise. But what we have right now is so far out of whack that taking even a minor risk, can straight up kill you or your kids for lack of access to proper medical care.

nine_k 8y ago
Can relate. My wife could afford to start a few small businesses over the years only because I have health insurance from my employment, and can get her, and our kids, to the family plan. If Obamacare did something good to people not on lowest-paid jobs, it is giving at least some options of health care to entrepreneurs who are not yet raking in millions (that is, most of them).

cityzen 8y ago

Because America doesn't care about small businesses. John Oliver had a whole segment about it: https://www.youtube.com/watch?v=00wQYmvfhn4 https://www.youtube.com/watch?v=00wQYmvfhn4

bduerst 8y ago

It's possible that capital isn't as readily available as it was before the great recession, as banks have tightened lending guidelines. Are there any correlations between business formations and capital availability?

lsc 8y ago

So, I have a theory: "the sharing economy" no, seriously. I have family that ran busineses. I have run businesses. Most successful small business don't pay much better than driving for uber, and driving for uber is a lot less risk, a lot less effort. (there's also a lot less upside, but let's be honest here... making a small business that pays better than working for google that isn't just contracting, even when you have the same skills, is extremely difficult.) - if you drive for uber, at least the capital you blew is on something that is still useful after you quit the business. I know a lot of people with a bunch of branded cups and other junk from their previous failed ventures. I mean, I had some pretty marketable skills when I started my own business, so I did better than the uber driver, but I worked hard and made like 1/4th of what I get working for other people. The other thing is that unless you are in the business of getting funding, it's way easier to start a business when the economy is shit. In '09, nobody tried to undercut me. Now? I would not want to be in that market anymore, just 'cause there is so much competition that is willing to lose money to buy marketshare. In '09, I was able to pick up good people who were temporarily unemployed as employees; now? if you wanna hire someone good, you are competing with people willing to pay netflix level money. (I mean, all this, I think, is actually pretty great. But it is not so good for facilitating a small self-funded company)

mdorazio 8y ago

I'm in the process of shutting down my business, so anecdotally: 1) Globalization has made it almost completely impossible to make things in the US unless they are massively overpriced goods (ex. luxury items or niche specialty goods). Customers simply won't pay enough to cover your costs. And there's a good chance that if you are successful, someone will copy your stuff, make it in China, and sell it for half your price within 12 months. 2) In California at least, costs are pretty ridiculous for small businesses. Between state, county, and city taxes, high labor costs, ridiculous healthcare costs, rent, insurance costs, etc. etc. It is far more expensive to start a business today as a percentage of expected revenue than it was a few decades ago. 3) The US IP protection and regulatory systems are out of control. Fending off patent trolls, tiptoeing around trademarks, dealing with licensing systems specifically designed to be too burdensome for small companies to bear, spending time and money to deal with regulatory compliance, etc. puts small businesses at a massive disadvantage. 4) Unpopular opinion, but I think today's workers are less suited to small businesses than they used to be. Many younger workers say they want to work for startups, but what they really want is a venture-backed cushy office with catering and perks completely untied to actual business revenue. These types of businesses account for a tiny percentage of actual small business starts in the US, which are often not places today's workers want to work at, let alone stay loyal to.

cylinder 8y ago
Deleted
- dragonwriter 8y ago
  > It's sad that you were able to make all of these very valid points without even needing to mention the "health insurance costs for self employed people and their employees" That was mentioned along with a litany of other things in point 2.
pm90 8y ago
Since you didn't refrain from airing an unpopular opinion, I will counter with another one: you failed in your business likely because you didn't adapt quickly enough to changing market situation (locally and globally) and were unable to recruit and motivate today's workers in the industry in which you operated in. Generalizations offer very little insight though older folks seem to love to complain that the youth/next generation are just not suited/hardworking enough.

sjg007 8y ago

Student loans, high housing costs, risk aversion.

JohnWilcox 8y ago

Not just entrepreneurship, but even competition itself, in a world that has seen nothing but consolidation and centralization of power and wealth over the last 20+ years as ever fewer organizations have been gobbling up and devouring and squashing any notion of competition and entrepreneurship in its infancy. It is arguably the sole model of the technology sector, the pump and dump, setting a "startup" up to appear as appealing to one of the monopolistic behemoths or titans. It's even somewhat of a model in the smaller tech company sector as free money paid for by tax dollars is sloshing around and companies are consolidating and creating ever larger conglomerates that take ever more air our of the entrepreneurial landscape. It's not healthy, and no matter what the consequences will be, I cannot envision an outcome where any of this leads to positive things. But maybe it's just my own "bias" that I have positive associations with not being a subject to a hive mind of centralized power and control.

snarf21 8y ago

The reward simply isn't worth the risk. Why compete against mega corp when you can invest that same money in their stock and get 10% gains? Plus, you can work normal hours, have healthcare and lower stress instead.

beckler 8y ago

I worked with a guy who freelanced for a while, and he had an interesting observation. When the economy is shit, most large companies outsource a lot of work because they can't afford or don't have the workers for the amount of work they have. So if your a freelancer, business can be pretty good. When the economy is great, those same businesses try to bring all those efforts in-house, so all those contracts dry up. Not sure how it relates with entrepreneurship, but this guy had to quit freelancing and get a full-time gig (which is how I met him) because no one was handing out the contracts he wanted anymore.

westbywest 8y ago
Vaguely similar observation from a previous employer in engineering: job health is effectively a derivative of the general economy. That is, if your job entails design/construction of something new, you job would be stable in an economy under flux, where clients have desire to hire your services. Not strictly just a growing economy, because effects like transition to new technology can also ensure stable job prospects. A stagnating or impeded economy, while possibly still ensuring stable jobs for other fields, would mean job reduction in design and engineering.

siruncledrew 8y ago

I think what's endemic among business and societal trends is an erosion of middle ground. The smaller players stall small while the bigger players swallow the medium ones. It's not rocket science to figure out this will have various implications on society, as economics play a huge role in daily life. Using banks as an example, look at the market share of total assets over the last 20 years: https://www.peakprosperity.com/sites/default/files/users/u31063/total_assets.png https://www.peakprosperity.com/sites/default/files/users/u31... The largest banks (JPMorgan, Citi, BoA, etc.) have decimated regional and mid-size banks while credit unions have essentially maintained the same role at the bottom. The big banks have more resources to invest in new technology and financial initiatives, thus having the ability to be market leaders and capture more money. In my opinion, digital also makes a huge difference. For example, JPMorgan is able to spend $10B on technology a year, which is more than the total assets of many small banks and credit unions. The banks that are midsize are in the hardest position because they don't have the capacity to outpace a big bank in R&D or IT, and are stuck in a position of being a lagging trend follower since they also can't spare a lot of risk tolerance. Further, it's hard to even leverage branch access and customer service as more individuals rely on digital banking to handle their finances, which actually pushes the big banks ahead in consumer satisfaction: https://assets.sourcemedia.com/dims4/default/0e422a4/2147483647/resize/680x%3E/quality/90/?url=https%3A%2F%2Fassets.sourcemedia.com%2Fa2%2F39%2Fd5eb32ac4967a0959a3782417277%2Fab020216power.jpg https://assets.sourcemedia.com/dims4/default/0e422a4/2147483... From a business side, it looks like we are headed down the path of oligopolist megacorps unless there's major changes. Money is the name of the game, and even in the startup world, the end-goal for investors is to pull off a lucrative exit (which usually means selling to a monopolistic megacorp) or IPO. Ask a megacorp CEO how much is "enough" for their business, and the goal will be to have as much as they possibly can. I don't know if entrepreneurship is actually dying, but my speculation is it's getting tougher to build a reliable business to employ others and depend on for one's livelihood within the remaining territory left. So much has been taken over by huge companies, it's difficult to find a niche or market opportunity to feasibly "disrupt". It feels like the megacorps have already cleared the fields and claimed the land and the rest of us entrepreneurs have a choice of: i) work for the megacorp that owns everything, or, ii) try to find solace in the few options left.

eldavido 8y ago

My theory is returns to scale are much, much higher. All this whiz-bang shit startups do like AI, machine learning, really even any kind of custom software or process innovation, just isn't possible when you're small. There's no scope for it. The reason it's a bigger problem now is because we have bigger markets globally and better tools, both of which create winner-take-all effects. 20-30 years ago you might start an auto parts distribution or manufacturing business, or a niche software business, or something else. It's a lot different when you have to compete with the best of the best globally from day 1 without any of the advantages the incumbents (e.g. data, existing channels to market, established brand) can bring to bear.