Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

If You Are So Smart, Why Aren't You an Entrepreneur? (Study)

ideas.repec.org

Post reply on HN
Print view View original

21–30 of 31 posts

Re: If You Are So Smart, Why Aren't You an Entrepreneur? (Study)

#21

Post by jarek »

nostrademons wrote: post #19
jarek wrote: post #15

Earlier quoted context omitted.

Around 2000, highest earning occupations are by far in finance. Some entrepreneurs will make more, but when comparing 10 smart people in finance and 10 entrepreneurs, the average earnings aren't even close. Prestigious depends very heavily on who you ask. I don't think you can come up with one answer even 50% of a population would agree on today.

Controlling for ability? Entrepreneurship has no barrier to entry the way finance does; there's no job application to say "You didn't go to an Ivy League college, so no job for you". So if you take ten random entrepreneurs and compare them to 10 smart people in finance, of course the average earnings won't be close. I suspect that if you limited your applicant pool - say, "10 people who could get into YC" or "10 peop…

Sorry - that should have read "10 smart people in finance and 10 smart entrepreneurs". I was being careful to stay gender-impartial and left a crucial word out as a result...

I must admit being a bit out of my depth regarding U.S. finance hiring. In Canada, Ivy or equivalent is not required, though of course it's not going to hurt. As far as I can see, it's one of the better fields when it comes to recognizing and rewarding hard work and ability and motivation (provided a baseline social/IQ ability). The luck component is still pretty important, but nevertheless much less so than in entrepreneurship.

Unfortunately neither of us have data here. I can't go digging for mine right now, which is a bit of a shame as I would like to continue this discussion. Some other time?

Re: If You Are So Smart, Why Aren't You an Entrepreneur? (Study)

#22

Post by stretchwithme »

tsotha wrote: post #17
kiba wrote: post #16

Earlier quoted context omitted.

Large organizations can suffer from diseconomy of scale. Office politics, slow response time, and duplication of effort are some of the problems that decrease the efficency of large corporations. Which is to say, big doesn't alway win either.

Not always, but the rise of information technology allows big groups to cut the large company overhead in a way they never could in the past. Recent technologies favor large (sometimes stupendously large) groups over small ones, so if large corporations were viable at all in the '70s, they're much more viable now.

I think my point is that the cost of integrating the work of many into a small business are going to drop.

I believe (and am probably alone in this belief :-)) that there is still an inherent tax advantage to having everything in one entity that probably outweighs the disadvantages of coordinating a large group.

A group of 100 members trades internally without paying taxes on these transactions, but everything between independents has some tax effects for at least one side.

If this advantage were removed by some kind of tax reform, I suspect corporations would be smaller on average.

Getting back to the entrepreneur, even if there are many standard-izable things in a process, there are costs to outsourcing those things. Automation of physical logistics may greatly reduce these costs, making it possible to focus on just the unique value one can add and be rewarded.

Re: If You Are So Smart, Why Aren't You an Entrepreneur? (Study)

#24

Post by gregschlom »

wccrawford wrote: post #4

Maybe I'm not an entrepreneur -because- I am so smart. See, I know what I want. And I really, really like my free time. Money doesn't matter nearly so much to me as it seems to for most people. So the answer to that question is: Because you don't know me.

>And I really, really like my free time. Money doesn't matter nearly so much to me as it seems to for most people.

That's funny because this is precisely the perfect reason to be an entrepreneur. If you don't mind not making any money for a year or two, and if you want to be in total control of your time, instead of selling 1/3 of it to some company, then being an entrepreneur may be the right opportunity.

(Not saying that this is what you should do of course, I don't know you, either. Just saying that the reason you gave is much more in favor of entrepreuneurship than not.)

Re: If You Are So Smart, Why Aren't You an Entrepreneur? (Study)

#25

Post by tsotha »

stretchwithme wrote: post #22
tsotha wrote: post #17

Earlier quoted context omitted.

Not always, but the rise of information technology allows big groups to cut the large company overhead in a way they never could in the past. Recent technologies favor large (sometimes stupendously large) groups over small ones, so if large corporations were viable at all in the '70s, they're much more viable now.

I think my point is that the cost of integrating the work of many into a small business are going to drop. I believe (and am probably alone in this belief :-)) that there is still an inherent tax advantage to having everything in one entity that probably outweighs the disadvantages of coordinating a large group. A group of 100 members trades internally without paying taxes on these transactions, but everything betwee…

Where I live you only pay sales taxes at the retail level - companies earlier on in the supply chain don't pay anything. I think that's pretty standard, actually, and for the reasons you discussed.

Or were you talking about some other kind of tax?

Re: If You Are So Smart, Why Aren't You an Entrepreneur? (Study)

#26

Post by ryanpetrich »

buckwild wrote: post #23

what law states entrepreneurs are smart? Not to be a downer, but you've probably only heard of the successful ones. I'm sure there are plenty more who aren't successful. Smart is a consequential call, isn't it?

Survivorship bias

Re: If You Are So Smart, Why Aren't You an Entrepreneur? (Study)

#27

Post by stretchwithme »

tsotha wrote: post #25
stretchwithme wrote: post #22

Earlier quoted context omitted.

I think my point is that the cost of integrating the work of many into a small business are going to drop. I believe (and am probably alone in this belief :-)) that there is still an inherent tax advantage to having everything in one entity that probably outweighs the disadvantages of coordinating a large group. A group of 100 members trades internally without paying taxes on these transactions, but everything betwee…

Where I live you only pay sales taxes at the retail level - companies earlier on in the supply chain don't pay anything. I think that's pretty standard, actually, and for the reasons you discussed. Or were you talking about some other kind of tax?

bingo. Companies that only trade with companies still pay income taxes on their profits, at least here in the US.

Not sure how big an effect this is or it has been studied at all.

I guess the costs of doing business with another entity should also be considered and maybe they are more significant. Just having to evaluate vendors, do POs, trying to collect, etc, are also costs avoided inhouse.

Re: If You Are So Smart, Why Aren't You an Entrepreneur? (Study)

#30

Post by al05 »

buckwild wrote: post #23

what law states entrepreneurs are smart? Not to be a downer, but you've probably only heard of the successful ones. I'm sure there are plenty more who aren't successful. Smart is a consequential call, isn't it?

I've met dumb academically, but successful entrepreneur types to.
Post reply on HN