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.