Apalla #5 - Entrepreneurship, Part 1

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Our next topic is on entrepreneurship. I know the majority of my reader-base thus far is the startup crowd, and though I hate to further the stereotype I imagine some entrepreneur tips are what you guys are looking for.

Take in mind that this episode will be very focused on starting companies. We won’t go too deeply into managing one; that’s on a different document!

Now, as a generalization, there are two different types of companies we can start: startups and income-generators. Startups are for those who wish to be the next billion-dollar sensation, drumming up hundreds of employees to create immense value for future generations. Income-generators are for those who simply want to, well, generate income; a small business that provides them with much more rewards (both extrinsic and intrinsic). The main goal of a startup founder is to be the next Steve Jobs or Elon Musk. The main goal of an income-generator founder is to live guilt-free, on their own accord, in the middle of Bali or otherwise. Startups are Zero to One. Income-generators are The Four Hour Workweek

Take in mind this important tip: Most people think they want to be a startup founder when they really want to be an income-generator founder. Startups involve a lot of grueling work and stress over something that is essentially rooted in luck (If you want some examples of how hard it is, read Ben Horowitz’s blog!). Income-generators, while by no means easy work, don’t involve as much chance and suffering. Of course, the reward aspects also reflect that -- good luck becoming a billionaire working on an income-generator!

The one thing both of these sides need, however, is great understanding of how markets work. The early game of businesses is essentially all markets. No, really. You’d be surprised how much being an Economics major preps you for starting a company. 

You’ll see the term Product-Market Fit a lot. This is essentially shorthand for “Do people really want to buy your product?”. For startups, this is really hard -- it’s hard because they’re going “zero to one”, meaning that their goal is to create something so innovative it doesn’t exist yet. Income-generators, on the other hand, are just playing the game of supply and demand. As an income-generator, you’re arbitraging markets rather than creating new ones.

Generating the idea is one of the hardest parts of the process. Fortunately, Peter Drucker provides us with seven sources of ideas: unexpected occurrences, incongruities, process needs, industry and market changes, demographic changes, changes in perception, and new knowledge. Phew, that’s a lot of words! What do those words mean? Well, it essentially boils down to finding changes in markets such that an inconvenience has been created. The internet is created, but we can’t find the sites. Trading is cheaper, but no one is commission-free. Streaming is good, but where are the movies? You can guess the companies who took on each of those inconveniences. But really, that’s all there is to it. Read markets, understand markets, act on markets.


Next week, we’ll be continuing with entrepreneurship, getting more into the funding and exiting of businesses. To stay in touch, hit the subscribe button up on the top of this post!