My main point, is that the high caliber people that get funneled into MBA programs and through the corporate cattle chutes are very underutilized at their own expense. Most of them would excel in spades had they been pushed down another path, one they may not even be aware is avialable to them.
As you drive around and notice those heavy equipment contrators, large commercial landscaping or tree removal firms, dry cleaning chains or auto glass repair chains, realize that each of those is run by a small business person who’s only real point of differentiation is their own human capital, their ability ot minimize mistakes, manage logistics effectively, lead others, make financial decisions, work long hours along the way, be motivated with minimal direction, etc. Each of those people in all likelihood makes more than a million a year and each of them could easily be any Top 10 MBA grad. They’re not disruptive, they’re simply reliable, effective and able to control costs.
The institutionalization of the educational system is one of the detriments of modern society. That being said, even an mba grab can pay off that debt as quick as possible and move into the entreprenurial stream.
i think one of the biggest things that separates the entrepeneurs from the salary workers is their ability to handle risk. Its a mentality that is totally different.
change your way of thinking and you can change the world
First to support a simplified tax code, but the effective tax rates of the rich are distorted by the hidden corporate tax, yes, this varies, and the lower return of tax-exempt investments, munis.
There is a point though… Is taxi business sexy? No, but now people can make a cool Uber company for that. Is food delivery sexy? No, but Seamless tech company is somehow sexy. Technology just enables new entrepreneurs to reorganize existing industries in more efficient ways.
Regarding the decision for individuals to enter entrepreneurship, rather than normal jobs: It still seems like the person would need a unique risk/reward preference to make such a decision, provided that they have decent normal job opportunities. The expected return from just doing a normal high paying job probably still exceeds that of entrepreneurship, especially on a risk adjusted basis. That’s why almost everyone here has a normal job and isn’t off programming in a Starbucks.
you highly overrate the average MBA grad, particularly their ability to run a business and manage people. just because they have an MBA doesn’t mean they’re not the number crunching nerd they were all their life. and remember, many MBA grads are not going into IB or equity research and many come from non-technical backgrounds, so this subgroup’s flatline IQ is pretty terrible. most MBAs go into huge corporations because they still lack the initiative to go out there on their own and take risks. 1: because they are generally not risk takers like the vast majority of the population or they wouldn’t have gotten an MBA in the first place, 2: they are still simply following the path of least resistance, 3: they are purusing prestige as knyc stated, 4: most lack the skills to be a boss right out of their MBA, unless they are highly technical and are falling back into their past field.
I have some real world experience in this area. I can tell you that quality of life weighed heavily in my decision. I expect it to take at least 5 years to reach my compensation last year as an employee, if I ever reach that level again. But I don’t care; I’m way happier now. I traded in my new luxury sedan for a 10 year old beater truck and couldn’t be happier. I think most entrempreneurs relish the journey as much as the payoff. It’s not about making $X, it’s about building something for yourself that is fulfilling to do every day. as long as it provides a basic means to live, it’s worth it to those types.
I don’t believe the NPV is lower, I actually think it’s higher (having lived in this circle) once you make the bayesian adjustment for their caliber. If you leave tech and programming out of it for a minute because I don’t think most MBA’s have an advantage there and I also believe it’s overly saturated at this point and focus on the brick and morter, I do think the average Top 10 MBA grad has a higher NPV using those skills in the small business / entrepreneurship sector. I do think KRNYC’s point about the perceived attractiveness of the roll does explain a lot but I think that reflects the naivity of early career individuals more than anything.
From my perspective, I chose this route because I enjoyed the academic aspect of the field. I’m torn because I’m basically of two minds. I love the perspectives I’ve gained along the way, but as of now, I’d rather be doing the machine and manual work I always had. My neighbor behind my house runs a contracting firm and everyday when I look at the equipment parked in his back lot I’m always jealous to be back there. As a side note, I’ve never met a mildly successful proprietor of a contracting firm without a georgeous home.
Ok fair enough. I was actually going to say there’s one guy on this forum who actually walked this path and hence can credibly speak about this. But for everyone else, their decision to continue working salaried jobs speaks louder than whatever fantasy they post here.
Yes and No. You have a lot of factors. For one, your point that we’re all in professional careers is more a factor of the Anthropic Principle… this IS a CFA site afterall… than anything. I’d be a little surprised if we were small business owners. If we were on a small business site singing its praises you’d just say we don’t know the wonders of CFA land. Beyond that, as I’ve stated, most successful entrepreneurs I know have low levels of debt and liabilities… so low cost of failure (otherwise your hurdle rate becomes too high and cost of failure becomes too high). I don’t think people with kids, later in their careeres, etc fit that bill. There’s also a theta optionality embedded there. For me, it was the fact that I was immature and just had to get off the farm. Since then, one of my brothers went back to the business, and I’m a bit jealous but I’ve always been an academic guy. The decision for me is as much about the fact that I get to read / learn for a living as anything. I don’t expect someone who enjoys painting to simply go be a construction contractor because the NPV is higher. So there are other factors too you’ve chosen to ignore. Beyond that, I grew up from birth through college graduation working in a small business (I could literally walk ~30 ft to the manfuacturing building) and surrounded by at least a dozen of my parent’s friends that had gone from nothing to similar levels of wealth along the same path (tree nursery, car dealership, construction firms were common, etc). To say ~15 years of working in that environment (photos of me around age 7 working on the floor) isn’t direct experience is silly.
I’m largely repeating exactly what those people would tell you if they were on internet forums, so you can take it from me or tune it out, but I can factually say they’re outperforming at all of the metrics that led you to create this thread.
As an additional edit, in undergrad (2004-2006) I started a landscaping firm with my roommate, we worked more or less full time from April through September and pulled in about $60k each running one rig each with one or two supporting hires. We did this for three years pretty successfully and could have grown it to more rigs with heavier equipment. I would describe my decision to go the office route rather than grow it out to a larger scale operation as more naivity and poor decision making than calculated and educated.
Not contractor, proprietor of a contracting firm. I know that can be volatile, but my experiences have been that they have beautiful homes. I may be influenced having grown up in a more rural area that is pretty isolated to the broader busts and booms. My friends back home commented at our 10 year reunion that 2008 felt more like a news event to them than anything and some of them were in construction. They didn’t really see the boom times though. But the core point I was getting at was that they usually can do most of the work themselves or have friends that will stop over and help out occasionally, so their homes are typically > their relative oncome.
I would argue the vast majority of mba types would fall flat on their face as, say, a general contractor. The OP has been surrounded by success stories. They should be commended. I’m with whoever said we’re giving average mba s too much credit.
I am aware of the survivorship bias, but all I’m doing is largely recounting conversations I’ve had with these people. I think the biggest difference I’ve encountered besides their resourcefullness and conservative financial profiles is their acknowledgement of a myriad of possible career paths. MBA types see 3-4 primary tracks, entrepreneurs see virtually any path as a viable one. I think most of the skills MBA’s lack are as much from being sheltered in academic professions as anything, I don’t think it’s lack of potential.