[FoRK] Interesting analysis of entrepreneurship and risk

Stephen Williams sdw at lig.net
Thu Aug 28 22:53:36 PDT 2008


Jeff Bone wrote:
> In case you missed this, an interesting study:  "THE BURDEN OF THE 
> NONDIVERSIFIABLE RISK OF ENTREPRENEURSHIP."
>
>   http://www.nber.org/papers/w14219
>
> 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.
Yea.  I'm either going to join a startup well along with a great idea, 
or another career job.  I did my own startup, ripped off by the 
management and money guys.  Helped others, mostly a waste of time.  I 
should have just done high-dollar consulting the whole time.  It was a 
good lesson.

And my startup ideas, I'm going to bootstrap them.  In particular, I'm 
creating a utility to sell directly to people to make direct use of a 
group of useful ideas, and then create a web site version as component 
ware and maybe a service.  If it takes off, I've got a year to try for 
patents, etc. if that makes sense.

Anyway, I'm in the middle of a reset and a graceful exit from being 
trapped in a gov. contractor for 7 years...  And, here in the valley, 
I'm in a target rich environment.  My problem is narrowing my options.  
I'm most interested in AI, robotics, visualization, communication, and 
scalable systems in general.  I have books to write, however I probably 
won't allocate enough time for that for a while, learning too much for 
the next 9 months.

But what ways to make money do you recommend?  Day trading and...

sdw
> jb



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