Stop Building Your Startup —The Economy Doesn’t Actually Need It

🌈 Abstract

The article discusses the changing landscape of entrepreneurship, where modern entrepreneurs are more focused on raising capital and crafting pitch decks rather than building revenue-generating businesses that provide real economic value. It argues that this trend is harmful, as it leads to a concentration of capital at the top and a decline in employment opportunities, which in turn negatively impacts local economies and the government's ability to raise revenue through taxes.

🙋 Q&A

[01] The Changing Landscape of Entrepreneurship

1. What was the author's experience with entrepreneurship as a middle schooler?

• The author's home economics teacher assigned them to research the career they wanted to pursue as an adult.
• The author wanted to be an entrepreneur, but the teacher didn't know what that was and instead offered a book on hot dog vending in New York City.

2. How has the perception of entrepreneurship changed over time?

• Entrepreneurship is now more in vogue, with figures like Jeff Bezos, Mark Zuckerberg, and Elon Musk becoming household names.
• There are now many "founders" in places like Austin, even if they aren't actually building anything substantial.

3. What is the author's view on the current crop of entrepreneurs?

• They want the rewards of being an entrepreneur without doing the typical hard work required.
• Their primary goal is to sell an idea rather than actually build a revenue-generating business.
• They are more focused on crafting pitch decks than building solid spreadsheets.

[02] The Shift Away from Value Creation

1. What are some of the biggest issues facing society that could benefit from new businesses?

• Affordable housing, access to childcare, fixing the healthcare system, caring for an aging population, and educating underprivileged students.

2. Why aren't more businesses being created to solve these problems?

• The author found that most of the entrepreneurs they met were building software-as-a-service (SaaS) products or managing technical agencies, rather than tackling these societal issues.
• Entrepreneurs seem more interested in the shortest path to success by quickly proving their concept, rather than building a viable long-term business.

3. How does the focus on fundraising over revenue generation impact the economy?

• It leads to a concentration of capital at the top, as non-revenue-generating companies are designed for a quick exit rather than creating economic value.
• This means there is no mechanism for capital to trickle down and create employment opportunities that generate tax revenue for the government.

[03] The Need for Real Businesses

1. How does the author define a "real business"?

• A business that sells products or services to generate a profit, rather than one focused solely on raising capital and crafting pitch decks.

2. What are the consequences of the lack of real businesses being created?

• It draws talent and capital away from businesses that could solve real societal problems.
• It leads to a decline in employment opportunities and tax revenues, as entrepreneurs are not creating stable, income-generating jobs.

3. What does the author suggest needs to change to encourage the creation of more real businesses?

• Hard work and long timelines need to be valued again, rather than just the ability to raise funds or get acquired.
• The esteem of real businesses that provide services and employment needs to be raised, so that more entrepreneurs are willing to build them.