[FoRK] Interesting analysis of entrepreneurship and risk
jbone at place.org
Thu Aug 28 19:54:57 PDT 2008
In case you missed this, an interesting study: "THE BURDEN OF THE
NONDIVERSIFIABLE RISK OF ENTREPRENEURSHIP."
In case you needed any additional evidence to suggest that, at least
apropos "startups", raising the long-term cap gains rate is a bad
idea. Russell will insist that Obama wants some kind of exclusion for
this type of activity, but I'll agree with James that this is both
smokescreen and entirely impractical from a legislative or
administrative perspective. In any case, doing so w/o carve-out
actually increases the entrepreneurial burden, the so-called
"certainty equivalent-value of the entrepreneurial opportunity."
How much would you *pay* for the opportunity to become a founder in a
promising startup? Turns out that for a risk-neutral individual, it's
about $4.4M. For a person with a normal level of risk-aversion, it's
barely positive. As a serial entrepreneur, clearly, I'm not
particularly risk averse. That should factor into how you folks think
about my statements about likely risks.
Myself, don't care much anymore from a personal impact perspective.
Out of that racket. On strike for almost 4 years now. I'm John
Cusack in Say Anything: “I don't wanna sell anything, buy anything,
or process anything as a career. I don't wanna sell anything bought or
processed, or buy anything sold or processed, or process anything
sold, bought, or processed, or repair anything sold, bought, or
processed, you know, as a career, I don't wanna do that...” Well,
anymore. Too many idiots trying to screw up your deal. Generally
even when you win, you lose. The economics don't justify the
frustration, at least for me anymore after several iterations; the
world's full of idiots anyway, you don't have to invite them over for
tea and crumpets. Far easier ways to make money.
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