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Comment by WalterBright | Hacker News Reader

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.

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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.

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.

> 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.

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-busine...

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

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.

Is it really a “success” as a business owner to make less than the median wage and have to put capital at risk? No serious investor would settle for less than average return and not have a risk premium.

If you work at a bakery and earn minimum wage but somehow save enough to open your own shop, the fact you may now earn less than median wage is not relevant. Do you understand now or would you like me to draw you a picture?

How much does it cost to start a bakery? What would be the future risk adjusted cash flows of opening a bakery compared to just putting the money in risk free inflation adjusted bonds? What’s the relative risk of putting the money in an index fund?

And no I’m not just throwing out financial terms. I’m a proud MBA dropout (undergrad in CS)

How would that have turned out if you invested that money in your own store and opened it in February 2020? What happens if you open your store next to a store like Walmart or in a mall next to one of the major chains and they closed or moved reducing foot traffic (saw that plenty of times)?

If you can save up enough money to open a store, you can also save up enough money to go to technical school and learn a trade that is a lot less risky.

I'm not sure whether you're willingly obtuse or just obtuse, but I also don't think it matters.

These are all standard questions that you should ask before making any investment and questions any experience investors are going to make.

I think before accusing others you should have a hard look at your own comments.

> works for everyone

Nobody said that. Nothing human is 100%.

> How about if we already are in a situation where everybody does their very best?

Strawman, because nothing human is 100%.

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?

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.

And how much do you think “owning your own business” would net the people they profiled?

If the chances are low, then what is the problem with those that manage to become wildly successful?

If you can get an interview at a big tech company (the hardest part, IMO), they don't seem too bad.

So what's stopping you from being a lawyer, doctor, tech bro, or finance bro?

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

> 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.

> 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.

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.

Taking more risk is the same as saying start with a lot of money so you afford to take more risk.

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