Unpopular opinion: Being an entrepreneur is a bad deal for most people.
Having grown Soundwise to an 8-person team, I realize everything I was told about entrepreneurship was wrong.
Here are 4 common myths about starting companies, and what you should do instead👇
1. Starting a company is not an escape from your sucky job
People unhappy at their job daydream about being their own boss. They think it’s a way to make quick money and be free. It’s anything but.
Entrepreneurship is not an escape. If you don’t like working, quitting a job to start a company is like jumping out of a frying pan to walk into a volcano. You will work more, not less. You will have more stress, not less.
If you think “being unemployable” is something to brag about, or working for someone else is beneath you, guess what? You have an ego problem more than anything else.
Being a founder means you need to lead others. If you don’t know how to follow, you don’t know how to lead. It would be like telling your children to live a responsible life while you spend all your money on partying and drugs.
2. You don’t ever “work for yourself”. You always work for someone
When you own a business, you have many bosses— customers, suppliers, investors— anybody that has a big say on your cashflow can tell you what to do. This is no different than depending on an employer for your paycheck.
I’ve known founders who took on outside investments and ended up feeling worse than a waged slave working for not-so-nice investors, and others who had large customers who insisted massive product changes or they’d leave.
Starting a business doesn’t automatically grant you freedom. In many cases it’s the opposite.
3. You will work on many things you don’t like to do
When you’re an employee, you’re usually hired to do one thing. When you’re a founder, you need to juggle ten things at any time.
Some of these things may not be your cup of tea or fit your skillset at all— accounting, legal, hiring, vendor relations.
Yes, you can have cofounders or hire people for things you don’t do well. But make no mistake: you will always need to work on more things when you found a business, comparing to being an employee.
If you’re the best rocket scientist in the world, you are better off doing rocket science, rather than starting a rocket company. With the latter, you’d have to spend a lot more time selling rockets than studying them.
4. You will be responsible for other people’s livelihood
Think being a parent to one child is tough? How about being one to 10 or 100?
When you run a company, you’re responsible for employees, customers, investors. Their livelihood depends on you making the right decisions and moving the company forward. The bigger your company, the more responsibility you have.
This is the opposite of a carefree life, in case it’s still not clear.
So what do you actually get as a founder?
Being a founder is an immensely rewarding experience and starting Soundwise is one of the best decisions I made, but not for the reasons people typically associate with entrepreneurship.
As a founder, you get to
- a) create something valuable from scratch
- b) provide opportunities for your team
- c) create values for your users
- d) grow as a person (skills, resilience, resourcefulness, patience, to name a few)
- e) make meaningful contribution to society
But notice what’s not on the list? Money and freedom.
If your venture is successful, yes it will make good money. But is that better money than a senior position at a bigger company? Probably not. And keep in mind unicorn startups are one in a million. 95% of startups fail.
As for freedom? If you still think being an entrepreneur allows you to do whatever you want and have a hassle-free life, go back to read sections 1-4 above.
This leads me to—
The more practical path to freedom for most folks
In 1937, Nobel Prize winner Ronald Coase famously proposed a theory called “the nature of the firm”.
His insight is that the boundary between company and market is porous. A company is a means of organizing economic activities and exchanges. A market is an alternative way of doing the same. Which way is better depends on the transaction costs of a particular time and setting.
The way most people think about working for an employer vs working for oneself is misleading. Either way you’re exchanging something (skill, product) for something else (money). Either way you are working with some people and for some people.
As the internet lowers “transaction costs”, companies are becoming flatter and they operate more like markets— a group of people exchanging skills and needs. Open-source projects and the emergence of DAOs (decentralized autonomous organizations) are some manifestations of that.
Even traditional organizations are becoming less hierarchical and using more contractors. In the future the boundary between being an entrepreneur and being employed will be more and more blurred.
It doesn’t matter what your work arrangement is, the real question is: are you happy?
Typically, you are at your happiest when you are working with people you like, respected for your skills, making positive contributions and being acknowledged for those, and having high level of autonomy and creative expression.
And you can achieve those—or not— regardless of whether you’re working “for yourself”, for someone else, or running a company.
What you really need is to find the “positive feedback loop” for yourself: an environment where you enjoy —> you create values for the environment—> it reinforces your reputation and grows your skills—> you enjoy it more.
While you hone your positive feedback loop, think about how to . Ultimately that’s what expands your freedom, no matter for whom or where you work.