4 ms·

Statistically this is the worse advice possible.

WalterBright 4y ago
Yes, it's risky running your own business. But if you want to make it big, it's the best route. More risk, more reward. If you want to play it safe and have someone else take the risk, be an employee. But safe means less return. You can't have both safe and lucrative.
- monodeldiablo 4y ago
  I've known way too many lawyers, doctors, tech bros, and finance bros to believe in these silly platitudes. It might have once been the case that reward correlated closely to risk, but the economy has fundamentally changed faster than our attitudes. We believe that the US is still the meritocracy it was when we were young, but loads of economic studies show the US has steadily declined in this regard. More than ever, money circulates among the well-connected and wealthy. The real secret to getting rich today is to be born rich.
  - epups 4y ago
    The system doesn't have to be completely fair for it to work. Of course being born rich means you are likely going to be rich. However, if you're trying to climb the ladder, the advice you reject as a platitude is fundamentally true. Being an employee you're accepting a limited compensation and getting certain benefits in return, including safety. If you have marketable skills, nothing stops you from building up a business to sell these skills directly, at greater risk but also increased compensation if it succeeds. This is true for an enormous variety of fields, but especially tech.
    - nosianu 4y ago
      > the advice you reject as a platitude If you claim that, how about your own comment? And with > nothing stops you from building up a business to sell these skills directly you pretty much completely ignore what OP wrote. Sure, you can claim "technically correct" because indeed nobody is stopping you. You just leave out the statistics about the result. What is stopping people is looking at their actual chances, so sure, you can technically claim they are stopping themselves. Only that it's highly misleading. I left awell-paid software job in the US and returned to Germany, opened a small business with a friend after looking around. We barely managed to sell it off at cost, leaving the next person to find out it really did not work (he saw everything but thought he could do better). Then I did freelance jobs, very highly paid. Also extremely unsatisfying. The especially well-paying corporate jobs especially so, more often than not what I had worked on was discarded after I left, because of company merger or internal politics leading to a stop on the project. Now I'm in a business started by a former CTO of a famous successful startup, where he made lots of excellent connections and also has the brand name recognition now. I only do tech now. And no, you can't just easily connect to the right people. Some few one-in-ten-thousand people can do that. Most people have the necessary connections through birth or from previous employment. Creating them from scratch is incredibly hard. When giving general advice about something and not to somebody specific for a specific situation, I suggest to always scale your advice, from "works for anyone" to "works for everyone". Many of those suggestion fall apart right then and there. How about if we already are in a situation where everybody does their very best? It's just that the equilibrium created from that is what we have now. Because the system does not work when "everybody" does it. You get a dynamic equilibrium with lots of losers and a lot of effort just not being worth it. Despite starting out with everybody highly motivated and adventurous. So "try harder" IMO has already happened long ago and we now are in a much later state of the dynamic system. What happens in the "everybody works hard" phase is a lot of pain and the winnings going to a few winners who sit at key points in the network.
      - epups 4y ago
        You mentioned statistics and provided anecdotes. Also, ironically, you perfectly exemplified the risk/benefit trade-off: you took some risk with the idea that you could make more profit, but ultimately that failed - which is why being an employee is sometimes a good deal for those who would rather have peace of mind. Your example of your current boss, who both founded and worked for another successful startup, is precisely the other side of the coin here. Let's look at statistics then. In the US, it seems that about 30% small businesses are successful enough to last over 10 years [1]. Your personal failure in one particular venture is not out of the norm, but your rant against entrepreneurship is totally wrong. By the way I don't think anyone is arguing that the system is fair, that people who don't start businesses are lazy, or that everybody can make it. I don't know where you came up with these arguments. All that has been argued is that trying to start a business on your own is a risk/reward trade-off strategy that can pay off, and often does. [1] https://www.fundera.com/blog/what-percentage-of-small-businesses-fail https://www.fundera.com/blog/what-percentage-of-small-busine...
        scarface74 4y ago
        And “successful enough to last ten years” says nothing about whether they actually make more than median wage in the US or how much capital they put in to start their business. Most “independent business owners” who own franchised locations for instance have owners who work 50-60+ hours a week, and have spouses and their children providing free labor. If you look at the net income of most franchise locations, they average around $60-$70K berz
        epups 4y ago
        The question is not whether they make more than median wage actually, if you want to nitpick. It's whether they make more than they would as an employee. Yes you need capital and that's part of the risk. Also reducing the argument to be about "franchise owners" is a strawman.
        scarface74 4y ago
    - scarface74 4y ago
      We are talking tech salaries. If you are a CS major, can successful “grind leetCode” and get an offer at any of the major tech companies, you can get an offer in the mid $100s minimum. In five to seven years you can get $350K+. Realistically, what are the chances of your own business having that income trajectory?
      - epups 4y ago
        The article was not about only tech, and the parent mentioned many other fields as well. I also don't think your imagined career path reflects the reality of even 0.1% of tech workers in the world today.
        scarface74 4y ago
        And how much do you think “owning your own business” would net the people they profiled?
      - pclmulqdq 4y ago
        If you can get an interview at a big tech company (the hardest part, IMO), they don't seem too bad.
      - WalterBright 4y ago
        If the chances are low, then what is the problem with those that manage to become wildly successful?
  - WalterBright 4y ago
    So what's stopping you from being a lawyer, doctor, tech bro, or finance bro?
- bdbdjdndk 4y ago
  > more risk, more reward... Be safe means less return. You can't have both safe and lucrative. Taking a bigger risk could result in a bigger reward or also result in a bigger failure. Be safe doesn't necessarily mean less return, it means less return only if your risky bet pays off, if your risky bet fails you are likely better off yo have played it safe instead. Not sure what that has to do with what one is "really" worth as you put it.
  - WalterBright 4y ago
    > Be safe doesn't necessarily mean less return Yeah, it does. You can see it in stocks & bonds every day. More risk means more potential upside. Less risk means less upside. Across all the investments. You pay more for a new car because it comes with less risk. You pay less for a used car because it might be a clunker.
- ReflectedImage 4y ago
  Taking more risk is the same as saying start with a lot of money so you afford to take more risk.
- scarface74 4y ago
  What do you consider “lucrative”? Even when you hear anecdotes on HN after accounting for survivorship bias about posters who have their small “lifestyle business” rarely do they talk about netting in the mid $150s - the amount that a fresh college grad can get by “grinding LeetCode and working for a FAANG” (tm r/cscareerquestions) let alone the amount that you can get as a senior dev at the same question.
- tw98521358 4y ago
  Not everyone is a polymath like you. Some people are best at a company because they either can’t handle the business end or handle the people management or possibly the technical end. You have to be good at all 3 to make it. Or just lots of luck
eastbound 4y ago
Is it? How much deadweight does a company have to carry: Testers, PMs, consultants, CxO jets, they’re all useful but how much? How much money would you make if you could deliver a service while not putting 70% of the profit feeding the fruitflies? Statistically, you have much more chances of making money if you don’t have deadweight in your company. I’m making about 6x as a software founder as what I used to earn in a company.
- rightbyte 4y ago
  You consider testers dead weight?
granshaw 4y ago
Depends what kind of business Making yourself a one man consultancy or contractor is also a business and has a decent success rate if you’re actually good A Saas business, startup, or similar? Yeah much lower probability But even in the latter case if you don’t have much living expenses it can make sense to make a modest living and enjoy your day to day much more. Bottom line as with so many things in life: don’t do it for the money
- scarface74 4y ago
  Let’s talk about “consulting” and what the word actually means. First you have people who call themselves “consultants”. But they are really just staff augmentation. Those “consultants” are a dime a dozen and all in, can’t command a premium and would probably be better off working a full time job. You can find some just as good overseas and a lot cheaper. Then you have your actual strategic consultants who have “a seat at the table” and talk with people who control budgets. They can charge a premium. After working with both as a tech lead between 2016-2018 is what made me pivot to getting experience in “cloud” and specialize in “application modernization” - enterprise dev + cloud + “DevOps”. You have to both have a network and find companies willing to do C2C contracts. Those are also some of the first people to cut during a downturn. You saw that a lot right after Covid. I now work in the cloud consulting department at AWS. It’s a full time position and my compensation structure is like SDEs. I would hate to be constantly hustling for clients and take care of all of the other minutiae that I have an entire organization to handle.
  - granshaw 4y ago
    I agree with everything except the staff Aug part. Anecdotal I know but I myself found a subcontract(!) as my first solo gig that easily beat my previous fulltime jobs pay, which weren’t peanuts either. And this was just Rails web dev. My impression is that you can pretty easily beat fulltime pay doing fulltime staff aug, except faang salaries. Of course it helps if you have a spouse with health insurance. But in this new market, hard to say I guess
    - 4y ago

Yes, it's risky running your own business. But if you want to make it big, it's the best route. More risk, more reward. If you want to play it safe and have someone else take the risk, be an employee. But safe means less return. You can't have both safe and lucrative.

monodeldiablo 4y ago
I've known way too many lawyers, doctors, tech bros, and finance bros to believe in these silly platitudes. It might have once been the case that reward correlated closely to risk, but the economy has fundamentally changed faster than our attitudes. We believe that the US is still the meritocracy it was when we were young, but loads of economic studies show the US has steadily declined in this regard. More than ever, money circulates among the well-connected and wealthy. The real secret to getting rich today is to be born rich.
- epups 4y ago
  The system doesn't have to be completely fair for it to work. Of course being born rich means you are likely going to be rich. However, if you're trying to climb the ladder, the advice you reject as a platitude is fundamentally true. Being an employee you're accepting a limited compensation and getting certain benefits in return, including safety. If you have marketable skills, nothing stops you from building up a business to sell these skills directly, at greater risk but also increased compensation if it succeeds. This is true for an enormous variety of fields, but especially tech.
  - nosianu 4y ago
    > the advice you reject as a platitude If you claim that, how about your own comment? And with > nothing stops you from building up a business to sell these skills directly you pretty much completely ignore what OP wrote. Sure, you can claim "technically correct" because indeed nobody is stopping you. You just leave out the statistics about the result. What is stopping people is looking at their actual chances, so sure, you can technically claim they are stopping themselves. Only that it's highly misleading. I left awell-paid software job in the US and returned to Germany, opened a small business with a friend after looking around. We barely managed to sell it off at cost, leaving the next person to find out it really did not work (he saw everything but thought he could do better). Then I did freelance jobs, very highly paid. Also extremely unsatisfying. The especially well-paying corporate jobs especially so, more often than not what I had worked on was discarded after I left, because of company merger or internal politics leading to a stop on the project. Now I'm in a business started by a former CTO of a famous successful startup, where he made lots of excellent connections and also has the brand name recognition now. I only do tech now. And no, you can't just easily connect to the right people. Some few one-in-ten-thousand people can do that. Most people have the necessary connections through birth or from previous employment. Creating them from scratch is incredibly hard. When giving general advice about something and not to somebody specific for a specific situation, I suggest to always scale your advice, from "works for anyone" to "works for everyone". Many of those suggestion fall apart right then and there. How about if we already are in a situation where everybody does their very best? It's just that the equilibrium created from that is what we have now. Because the system does not work when "everybody" does it. You get a dynamic equilibrium with lots of losers and a lot of effort just not being worth it. Despite starting out with everybody highly motivated and adventurous. So "try harder" IMO has already happened long ago and we now are in a much later state of the dynamic system. What happens in the "everybody works hard" phase is a lot of pain and the winnings going to a few winners who sit at key points in the network.
    - epups 4y ago
      You mentioned statistics and provided anecdotes. Also, ironically, you perfectly exemplified the risk/benefit trade-off: you took some risk with the idea that you could make more profit, but ultimately that failed - which is why being an employee is sometimes a good deal for those who would rather have peace of mind. Your example of your current boss, who both founded and worked for another successful startup, is precisely the other side of the coin here. Let's look at statistics then. In the US, it seems that about 30% small businesses are successful enough to last over 10 years [1]. Your personal failure in one particular venture is not out of the norm, but your rant against entrepreneurship is totally wrong. By the way I don't think anyone is arguing that the system is fair, that people who don't start businesses are lazy, or that everybody can make it. I don't know where you came up with these arguments. All that has been argued is that trying to start a business on your own is a risk/reward trade-off strategy that can pay off, and often does. [1] https://www.fundera.com/blog/what-percentage-of-small-businesses-fail https://www.fundera.com/blog/what-percentage-of-small-busine...
      - scarface74 4y ago
        And “successful enough to last ten years” says nothing about whether they actually make more than median wage in the US or how much capital they put in to start their business. Most “independent business owners” who own franchised locations for instance have owners who work 50-60+ hours a week, and have spouses and their children providing free labor. If you look at the net income of most franchise locations, they average around $60-$70K berz
        epups 4y ago
        The question is not whether they make more than median wage actually, if you want to nitpick. It's whether they make more than they would as an employee. Yes you need capital and that's part of the risk. Also reducing the argument to be about "franchise owners" is a strawman.
        scarface74 4y ago
  - scarface74 4y ago
    We are talking tech salaries. If you are a CS major, can successful “grind leetCode” and get an offer at any of the major tech companies, you can get an offer in the mid $100s minimum. In five to seven years you can get $350K+. Realistically, what are the chances of your own business having that income trajectory?
    - epups 4y ago
      The article was not about only tech, and the parent mentioned many other fields as well. I also don't think your imagined career path reflects the reality of even 0.1% of tech workers in the world today.
      - scarface74 4y ago
        And how much do you think “owning your own business” would net the people they profiled?
    - pclmulqdq 4y ago
      If you can get an interview at a big tech company (the hardest part, IMO), they don't seem too bad.
    - WalterBright 4y ago
      If the chances are low, then what is the problem with those that manage to become wildly successful?
- WalterBright 4y ago
  So what's stopping you from being a lawyer, doctor, tech bro, or finance bro?
bdbdjdndk 4y ago
> more risk, more reward... Be safe means less return. You can't have both safe and lucrative. Taking a bigger risk could result in a bigger reward or also result in a bigger failure. Be safe doesn't necessarily mean less return, it means less return only if your risky bet pays off, if your risky bet fails you are likely better off yo have played it safe instead. Not sure what that has to do with what one is "really" worth as you put it.
- WalterBright 4y ago
  > Be safe doesn't necessarily mean less return Yeah, it does. You can see it in stocks & bonds every day. More risk means more potential upside. Less risk means less upside. Across all the investments. You pay more for a new car because it comes with less risk. You pay less for a used car because it might be a clunker.
ReflectedImage 4y ago
Taking more risk is the same as saying start with a lot of money so you afford to take more risk.
scarface74 4y ago
What do you consider “lucrative”? Even when you hear anecdotes on HN after accounting for survivorship bias about posters who have their small “lifestyle business” rarely do they talk about netting in the mid $150s - the amount that a fresh college grad can get by “grinding LeetCode and working for a FAANG” (tm r/cscareerquestions) let alone the amount that you can get as a senior dev at the same question.
tw98521358 4y ago
Not everyone is a polymath like you. Some people are best at a company because they either can’t handle the business end or handle the people management or possibly the technical end. You have to be good at all 3 to make it. Or just lots of luck

eastbound 4y ago

Is it? How much deadweight does a company have to carry: Testers, PMs, consultants, CxO jets, they’re all useful but how much? How much money would you make if you could deliver a service while not putting 70% of the profit feeding the fruitflies? Statistically, you have much more chances of making money if you don’t have deadweight in your company. I’m making about 6x as a software founder as what I used to earn in a company.

rightbyte 4y ago
You consider testers dead weight?

granshaw 4y ago

Depends what kind of business Making yourself a one man consultancy or contractor is also a business and has a decent success rate if you’re actually good A Saas business, startup, or similar? Yeah much lower probability But even in the latter case if you don’t have much living expenses it can make sense to make a modest living and enjoy your day to day much more. Bottom line as with so many things in life: don’t do it for the money

scarface74 4y ago
Let’s talk about “consulting” and what the word actually means. First you have people who call themselves “consultants”. But they are really just staff augmentation. Those “consultants” are a dime a dozen and all in, can’t command a premium and would probably be better off working a full time job. You can find some just as good overseas and a lot cheaper. Then you have your actual strategic consultants who have “a seat at the table” and talk with people who control budgets. They can charge a premium. After working with both as a tech lead between 2016-2018 is what made me pivot to getting experience in “cloud” and specialize in “application modernization” - enterprise dev + cloud + “DevOps”. You have to both have a network and find companies willing to do C2C contracts. Those are also some of the first people to cut during a downturn. You saw that a lot right after Covid. I now work in the cloud consulting department at AWS. It’s a full time position and my compensation structure is like SDEs. I would hate to be constantly hustling for clients and take care of all of the other minutiae that I have an entire organization to handle.
- granshaw 4y ago
  I agree with everything except the staff Aug part. Anecdotal I know but I myself found a subcontract(!) as my first solo gig that easily beat my previous fulltime jobs pay, which weren’t peanuts either. And this was just Rails web dev. My impression is that you can pretty easily beat fulltime pay doing fulltime staff aug, except faang salaries. Of course it helps if you have a spouse with health insurance. But in this new market, hard to say I guess
  - 4y ago