An award-winning business writer dismantles the myths of entrepreneurship, replacing them with an essential story about the experience of real business owners in the modern economy
We're often told that we're living amidst a startup boom. Typically, we think of apps built by college kids and funded by venture capital firms, which remake fortunes and economies overnight. But in reality, most new businesses are things like restaurants or hair salons. Entrepreneurs aren't all millennials--more often, it's their parents. And those small companies are the fabric of our economy.
The Soul of an Entrepreneur is a business book of a different kind, exploring our work but also our passions and hopes. David Sax reports on the deeply personal questions of entrepreneurship: why an immigrant family risks everything to build a bakery; how a small farmer fights to manage his debt; and what it feels like to rise and fall with a business you built for yourself. This book is the real story of entrepreneurship. It confronts both success and failure, and shows how they can change a human life. It captures the inherent freedom that entrepreneurship brings, and why it matters.
David Sax is a journalist, writer, and keynote speaker specializing in business and culture.
David's latest book, The Revenge of Analog: Real Things and Why They Matter looks at the resurgence of analog goods and ideas, during a time when we assumed digital would conquer all. It's available in various formats, but especially in paper, and was a Washington Post Bestseller. David's first book, Save the Deli: In Search of Perfect Pastrami, Crusty Rye, and the Heart of Jewish Delicatessen and won a James Beard Award for writing and literature, as well as other awards and the praise of deli lovers everywhere. His second book is The Tastemakers: Why We're Crazy for Cronuts but Fed Up with Fondue, which is chronicles how food trends emerge, grow, and ultimately make a difference in our world.
In April 2020, he will publish The Soul of An Entrepreneur: Work and Life Beyond the Startup Myth, which examines the meaning of entrepreneurship and working for yourself.
The “why” of entrepreneurship varies by entrepreneur. My core “why” is money. I want, and have always wanted, money, for what money can do. Whether that is avarice, or wisdom, or both, we can discuss another day. No surprise, in the 1980s song by The Nails, “88 Lines About 44 Women,” one of the couplets has always resonated with me: “Kathleen’s point of view was this / Take whatever you can grab.” Along similar lines, when asked what the mission statement of my company is, I like to respond, entirely accurately and completely, “To put sweet cash in the pocket of Charles.” I am consistent, at least.
Money is a core part of any business venture, if for no other reason than if you are losing money, you will eventually be out of business. But beyond staying a going concern, different drives lie behind different entrepreneurs, and avarice is only one. David Sax, Canadian author of popular works on various social phenomena, in "The Soul of an Entrepreneur" does a good job of exploring the “why” of entrepreneurship, mainly through telling, and commenting on, the stories of several different entrepreneurs. As I discussed in connection with Daymond John’s Rise and Grind, entrepreneurship is not for most people. But who should be an entrepreneur is not my focus today. Rather, today I will combine my thoughts about entrepreneurship with Sax’s, in the hopes of adding value to the reader.
Sax sketches, through his stories, several different “whys.” Sometimes entrepreneurs are starting over, as in the example of a Syrian immigrant family opening a restaurant in Toronto, having lost holdings in the Middle East, and needing to make a living. In Sax’s interpretation, such people are looking for a fresh start, not just a way to make a living. Others are looking for “lifestyle businesses”—as in the example of a woman who runs a bakery in Rockaway Beach, the flexibility of which allows her to surf frequently. I had no idea one could surf in New York, nor did I know that one could smoke weed constantly, as this woman does, and still function—but then, by definition, a lifestyle entrepreneur doesn’t have to do everything that could be done, just enough to support the lifestyle, which involves buying a lot of weed, apparently. Still others want to “give back” (an odious term), or continue a family legacy, or accomplish something that satisfies an internal drive. All these appear in Sax’s book.
Before he discusses his case studies, though, Sax makes the key point that most people are today served a distorted view of what an entrepreneur is. From the media, we absorb that entrepreneurs are young, tech-oriented, funded by venture capital, obsessed with rapid growth, and aspiring monopolists. Everyone else isn’t a real entrepreneur. Which raises the question—what is an entrepreneur? The author cites the eighteenth-century economist Richard Cantillon, who defined entrepreneur as a man of business who bore a personal financial risk and received uncertain returns—in other words, receiving no fixed wages, and facing the possibility of ruin. This strikes me as exactly right, and something most people who see successful entrepreneurs fail to appreciate—that ruin is very real for most entrepreneurs, because usually to get started they take on liabilities far exceeding assets. Thus if the business fails, it’s not that they just get a job like everyone else—they either declare bankruptcy, or they are crushed by debts for years, and they certainly aren’t able to raise money for another try.
This is little known, or little acknowledged, though certainly acknowledged by Sax. In part this is because stories about bankrupt entrepreneurs are rare—they’re not sexy, so don’t appear in the media, and failed entrepreneurs themselves are unlikely to broadcast their failure. In part this is because the failures we do see are Silicon Valley failures, but in truth very few, if any, of the so-called entrepreneurs in Silicon Valley are actually entrepreneurs in Cantillon’s definition. They face no downside risk, much less ruin. Capital is provided by other people, and loans are not personally guaranteed. If a business fails, the founders simply get excellent regular jobs, free of any past liabilities, or start another entrepreneurial venture with other people’s money. But only a tiny slice of “entrepreneurs” have this path available to them. Hence what we are fed is an “entrepreneurial myth.”
Such pseudo-entrepreneurs get glowing media coverage, though, “entrepreneur porn,” as Sax calls it, exemplified by often-covered successes such as Steve Jobs and Elon Musk (or once-apparent successes, such as Elizabeth Holmes), but those are only the brightest stars among many. Looking at the starting end, the pipeline that leads to the next Jobs or Musk (or Holmes), Sax follows two Stanford students who, like many Stanford students, were starting a business while they are in school. They created an internship-matching platform named Scheme; it has since failed (after this book was sent to press), and the two founders are now employed by Lotus and Goldman Sachs. They are embodiments of the entrepreneurial myth. What is more, Sax shows that it’s obvious to the Stanford students themselves it’s a myth. That’s the most interesting thing, the feeling that much of this is a consensual collective delusion among the dominant classes in America.
Part of the reason for this delusion is that everywhere across the United States, academics, whose pronouncements are foolishly treated as those of archimandrites by our ruling classes, purport to teach entrepreneurship. Such “teaching” has always struck me as bizarrely stupid. Entrepreneurship, like leadership, cannot be taught (although a few neglected yet teachable skills are of great value to entrepreneurs, most of all financial bookkeeping—but that’s not what those who teach entrepreneurship teach about). Sax talks to numerous academics (none of whom, of course, are successful entrepreneurs themselves), showing how entrepreneurship “education” focuses on that tiny percentage of companies fitting the myth.
When this is pointed out to academics, they respond that Silicon Valley-type companies are the only companies that matter. That may actually be true at Stanford, where professors often take a piece of their students’ companies, in exchange for advice and, perhaps more importantly, introductions to connections. But it’s not true overall, yet all these academics reject that someone who runs “a boring box factory” is an entrepreneur, or relevant to the advancement of our society. As someone who has made a great deal of money from a “boring bottle factory,” I beg to differ. True, my view is a creature of own experience, a capital intensive manufacturing business which I started with my entire life savings of $70,000, knowing nothing about the business and making it up as I went along. If I had failed miserably, I might still regard Silicon Valley as the main viable entrepreneurial model, and be awed by the glittering media coverage. I just know better from experience.
Which raises the question—when does a business create value and advance society? Sax criticizes Silicon Valley “entrepreneurship” for ignoring actual value creation as a metric, rather spending a lot of time fundraising, and measuring success by money raised, and then by money received on exit. He seems agnostic if Silicon Valley companies do create value. As I have discussed before in connection with the calculation of GDP, I am fascinated by what creates value, and what does not. Being unprofitable, of itself, does not show that a business is not creating value. Sax notes, while criticizing academic emphasis on such businesses, that “of the dozen top unicorns (companies valued over $1 billion) expected to go public in 2019, just one was profitable. Not Uber or Lyft, WeWork, Spotify, Snap, or Dropbox.” The academics call these, and many others similar that hope to become like them, “high potential businesses.” This is accurate, up to a point—the point at which it become obvious whether there is really potential.
All these companies, which we can call “Silicon Valley-type startups,” or SVT’s, produce new goods and services, so unlike the financial industry, which is the classic example of a nearly wholly parasitical industry, there does not, at first glance, appear to be a problem. After all, people will pay for what is offered by the SVTs. Just because Uber loses money does not mean it is a stupid business; it is quite convenient for its users, after all. That it has no obvious path to making money does imply it may be a stupid business, as does the company’s occasional suggestion that they will make money when self-driving cars arrive (that is, never). But you never know how a business will develop, and Uber is paying its bills so far. Dropbox and Spotify seem to provide a reasonable service—I can’t tell why they don’t make money, but they do provide value. Somewhat different are the companies where the user does not pay and is himself the product, such as Facebook and Snap, or Twitter. But perhaps people would pay for those, if that was presented as an alternative model—pretty clearly people feel those services have value, because they choose to spend a lot of time using them.
This positive-leaning sketch ignores several important truths, though. First, just because people will pay money for something does not mean that it has societal value; we may choose to forbid it because we do not approve, and that principle should not be limited to products or services that harm others. Second, most SVTs primarily benefit our dreadful professional-managerial elite, most of whom obtain their money from working BS jobs, spending it on SVT goods and services, while the SVTs grind down and atomize the working class. That’s not a great setup. Third, these companies often impose costly negative externalities on society that offset any value produced. Frequently, those externalities are imposed on those who would never dream of using the services of these companies. Many times those externalities are hard to analyze—for example, it seems like Uber harms cab drivers, but the reality is that until Uber came along, most money in the taxi industry was made by politically-connected wealthy people who monopolized taxi licenses, not the drivers, who may be happier as Uber drivers. Something like Dropbox has no obvious negative externalities; nor does Spotify. WeWork, though a stupid business, as has been exposed, didn’t create harm; it just wasted its investors’ money. Social media companies, on the other hand, impose huge externalities, mostly hard-to-quantify erosion of social bonds. And the one negative externality common to all SVTs seems to be the imbecility imposed on America by woke capital, in which all SVTs are leading participants. Massive direct contributions, in money and in kind, by all these companies to evil organizations such as Black Lives Matter (and many other racist grifter ethnonarcissists) and Planned Parenthood are hugely destructive of our society. So perhaps SVTs are often net negative value providers. But that has little to do with the nature of the entrepreneurship behind them.
The real problem with SVTs is the problem Tim Wu covers so well in The Curse of Bigness—excessive concentrations of economic power are detrimental to a functioning republic, or, really, to any functioning government that is even remotely responsible to the people as a whole. Thus, because of their nature, they should be hobbled in direct proportion to their power, the more so the more monopolistic. The precise mechanics of that hobbling should vary by company. Platforms that are common carriers for speech, such as Facebook and Twitter, should be forced to never hinder any speech the government itself could not hinder. Amazon should simply be broken up—any convenience benefit Amazon adds is exceeded by the destruction it causes. Dropbox and Spotify can probably be ignored. Again, though, the problems SVTs create are not due to the nature of how they were originally formed.
Anyway, after hazing Silicon Valley, Sax provides statistics that show real entrepreneurship has declined in recent decades. One in ten Americans works for himself; thirty years ago, it was two in ten. Millennials are “the demographic least likely to start a business and work for themselves in a hundred years.” Almost every industry has far fewer startups than it used to. I suspect this is part of why social mobility has declined in the United States. But why has entrepreneurship declined? Sax never answers why, though he nods very obliquely to regulation, which, along with predatory lawyers, is probably most of the answer. In large part, he confines himself to exploring entrepreneurs outside those trying to be the next SVT, focusing on why they do what they do. And, of course, he wrote before the Wuhan Plague, or rather the stupid, hysterical overreaction to it, destroyed millions of American small entrepreneurs and handed massive economic power to giant corporations such as Amazon, exacerbating the problems caused by the SVTs. So however bad the problem a year ago, it’s worse now.
In any case, the meat of the book is Sax profiling a range of entrepreneurs, from a wine-making family in Argentina to a man in California raising grass-fed beef. They are all very different, and different in their motivations, but what binds them all together is that they are real entrepreneurs, in Cantillon’s definition. Most have no expectation or hope of getting rich. Some enjoy the lifestyle—though it is important to distinguish true lifestyle businesses, which offer “work-life balance,” from businesses where the work itself is the lifestyle, and there is little life outside work. Raising cattle, for example, is risky and requires work around the clock, but those who do it enjoy the lifestyle—most of the time.
All these entrepreneurs ride what both Sax and my wife call “the roller coaster.” Sax does not focus on it, but no business can be successful if the entrepreneur is not obsessively focused on the business, where it becomes the backdrop of all his waking thoughts, and that correlates to up and down moods as business matters change. The Rockaway Beach bakery, for example, seems like a true lifestyle business—it is open by definition part-time, selling goods people expect to buy in the morning, leaving the afternoons free. And even so, its owner has to get up very early every morning, while others sleep. Beyond that, though, I suspect she thinks a great deal about the business, all day long—if she did not, it would go off the rails. It’s impossible for an entrepreneur to compartmentalize the business in his mind; if he does, the business will fail, no matter his “why.”
Sax does not draw grand conclusions . . . [Review completes as first comment.]
An entrepreneur is someone who risks his own capital to open a business to make a living. This book busted the Silicon Valley Entrepreneur myth. Real entrepreneurs are:
1. Immigrant pop-and-mom laundry and restaurant owners. 2. Minority hair Stylists and pedi-manicurists. 3. Small Farmers who struggle against the weather and new rules. 4. Majority of new business owners are middle aged, including in the tech industry. 5. Family businesses where tension abounds between parents and children.
To Sax, Silicon Valley Start-up entrepreneurs are not real entrepreneurs as they use other people’s money to build businesses that grow to grab market share but mostly lose money. He thinks those are mostly Ponzi schemes. Most entrepreneurs risk their life savings on their businesses so it is make or break. Most are not that wealthy.
By propagating the illusion of Silicon Valley entrepreneurship, we are discouraging real entrepreneurs from opening real businesses. That must change.
As someone who is not 'quite' entrepreneurial but has admired the spirit of "self made" for the longest time, the title of this book immediately caught my attention. It is an impressive account featuring many kinds of entrepreneurs, to illustrate the compelling argument that entrepreneurs are far more than the image the media tends to portray: young, tech-focused, brilliant at pitching and fundraising and constantly "failing up." Entrepreneurs are driven by a combination of personal, economic, cultural, and familial circumstances but all ultimately shoulder the entire risk of their enterprises in striking out on their own.
Sax starts by showing the hailed model of young bright students seeking funding for a technological platform. He then goes on to feature Syrian refugees mainly in Toronto who have founded restaurants, exemplifying how immigrants have to form self-sufficient networks to ensure livelihoods for others like them. For this kind of entrepreneur for which the "push" is much stronger than the "pull" of starting one's own business; it is driven heavily by necessity.
In terms of "wow, I wish I could do that," the chapter "Life's a Beach" was the compelling one for me. In reading about the surfer who owns a bakery on a beach just outside of New York City, one meets a "lifestyle" entrepreneur who is "asserting economic and social control of their work and everything that work touched," in "an act of people radically taking responsibility over their own lives." I liked the allusion to "the Buddhist requirement to seek out a 'right livelihood,' which brought financial independence and reward, as well as a sense of joy and purpose."
The most significant chapter that made me think "Wow, this is worthy of an entire book" was the one featuring Jessica Dupart, the kind of entrepreneur who is community focused intent on paying forward her success through mentoring and giving back so that women like her are similar empowered and self sufficient. The African American beauty business is especially unique in its community-centric focus and I was so pleased that this was profiled in the book.
In the chapter "Serving and leading" Sax illustrates how business can do a lot more than just social good for marketing and PR purposes. He shares a very moving story of a business owner who took over and successfully oversaw the improved output from a conveyor belt factory. Although on paper the company was performing really well, he realized he wanted to give back and empower his employees int he meaningful sense, gradually doing so by making the employees owners of the company through Employee Stock Option Plans (ESOPs). It was here I was introduced to the notion of "servant leadership mentality:" where the job of the leader is to help their subordinates "become healthier, wiser, freer, more autonomous." I realized the best boss I ever had truly operated from this principle and that is what made him a good leader.
The chapter on "keeping it in the family" was an important one, highlighting how family businesses can be done with the intent of building a "legacy that will outlast your own mortality," while illustrating the difficulties that come with through a story of a family-owned wine business that went through a lot of internal and external challenges. It was not particularly profound for me, but it was an important view of entrepreneurship as family
Sax's concluding profile is that of a septuagenarian who is marrying blockchain technology with the shift away from fossil fuels. I greatly appreciated how the books starts with "young hotshots" and concludes with someone with significantly more experience, showing entrepreneurship does not have to be confined by age. In the same chapter Sax gives his concluding remarks: given the breadth of the definition of "entrepreneur" our thinking and education and training around the notion has to radically expand, and we need a newfound appreciation for how entrepreneurs touch so many facets of our lives.
This was a very interesting book but I'd only call it a "must-read" only readers who thrive off of business journalism. When I thought a little more about why it did not completely resonate with me, I realized that it was missing a chapter depicting an entrepreneur or more like the author himself: freelancers or consultants who have to constantly be making a name for themselves and have no guaranteed income. There was some allusion to this kind of living in the "lifestyle business" chapter but no dedicated focus on such workers in the "gig" economy. Their stories are probably less profound than the ones shown here, but given the prevalence of this form of work I would have liked to see more of that. Also, the writer's own incredulity at the prospect of "working for anyone else" is something that came across as a little too strongly, which was surprising considering how objectively he told all the other stories.
This is a business book, inside out. Even as I write this, I am curious about what (besides being quarantined due to COVID-19!) compelled me to read it all the way through and talk about it with so many people. Right now my guess is: 1. it was meant to introduce me to the notion of Servant leadership, which very much appeals to my core values, and 2. I'm risk averse as far as my livelihood is concerned and am overall very happy with the 9-5 life, but I deeply admire the entrepreneurial spirit. Hence, I needed to immerse myself in that alternate universe in this way.
Books cited of note: Small is Beautiful: Economics as if People mattered Servant Leadership by Robert K. Greenleaf
The Silicon Valley entrepreneurship myth is bad, real entrepreneurship is not about money or success, it's about people feeling independent and empowered.
There, you have it. You can now comfortably skip this book and read a book with some real content.
I think the book should have been an article (and it reads like a collection of articles). I truly think the author had great intentions but at least to me, the book didn't have a consistent message.
I think there are much better books out there about entrepreneurship (including non-SV style entrepreneurship). I do agree with most of the author's points about SV-style entrepreneurship, but that alone isn't enough for writing a book (especially writing a good book).
5 năm trước, ở tuổi 40, tôi đã chính thức rời bỏ cuộc chơi kinh doanh, khi đang là người đứng đầu của một tổ chức với gần 1000 người mà tôi là đồng sáng lập, cũng như đã xây dựng và phát triển nên. Đó là một quyết định phù hợp với cuộc sống của cá nhân tôi, với những gì mà tôi đang hướng tới cho phần còn lại của cuộc đời mình. Tuy nhiên, tôi vẫn thường tò mò tự hỏi về việc tại sao mình đã trở thành một doanh nhân (entrepreneur), với xuất phát điểm nghề nghiệp là một lập trình viên phần mềm? Ý nghĩa của hành trình làm doanh nhân là gì? Và cuối cùng đi nữa, tại sao nó (cuộc sống của một doanh nhân, là một doanh nhân) lại trở nên không phù hợp với bản thân mình?
Đó là những câu hỏi thú vị, tuy nhiên cũng chẳng cần phải gấp gáp để tìm câu trả lời. Gần đây, tôi có dịp đọc cuốn sách Giải mã doanh nhân của David Sax, và tôi tìm thấy khá nhiều hình ảnh và câu chuyện của mình ở trong đó, kể cả hình ảnh là một tác giả của David Sax – là những gì tôi đang làm hàng ngày ở thời điểm hiện tại. Tôi đồng ý với rất nhiều quan điểm, kết luận mà tác giả đã cất công tìm hiểu, nghiên cứu trong vài năm trời. Lâu lắm rồi, tôi mới lại ngồi xuống và viết lại các ghi chú từ một cuốn sách mà tôi đọc. Các bạn có thể tham khảo ở bên dưới. Và hi vọng đó là những tư liệu tham khảo hữu ích cho những ai đang là doanh nhân, muốn là doanh nhân, hoặc chưa biết rằng mình có phù hợp với cuộc sống doanh nhân hay không.
This a book of how entrepreneurship is far away from the myth of the entrepreneur Trinity (musk, jobs and suckerberg) and more about the struggle of building anything from scratch and keeping it alive without venture capital or all the glamour of silicon valley.
Its always good to remember that there's so many different kind of companies, and the path of each varies vastly. You'd better know what you are getting in, and what to expect (or not) about it. In the end it's all about certainly exchanged for freedom.
If you are looking for a classic book on entrepreneurship with stories of the likes of Steve Jobs, Elon Musk, Bill Gates, etc. - this is not your kind of book. This work is based on the concept that there is not only the Silicon Valley startup kind of entrepreneurship. There are also other millions of so to called lifestyle entrepreneurs that create a business just to pursue their lifestyle. This book tells stories of this kind of entrepreneur - like the story of the bakery owner who loved to surf - but also stories of craftsmen and farmers, and all those business owners who don't go after a millionaire exit, but that are themselves bosses and they do what they do just because they love it. The author also covers important topics such as stress, anxiety, depression, and even suicidal instincts (crazy that farmers are the ones with a higher suicide rate among entrepreneurs). Overall, it's an easy and nice read (or listening, as I did), with good real stories to know. Nothing transcendental, no secret formula revealed to make money - but just a reminder that there is not only one kind of entrepreneurship, and that one is not better, or more difficult than the other - and a nice final message reminding that you (we) are not alone.
This book was too long, now I want the last three hours of my life back. It can be summed up in a sentence or two: business isn't always like what you see in Silicon valley, entrepreneurs aren't always in it for the money or growth. It covers the stories of a couple of "lifestyle entrepreneurs", from bakery owners to farmers to restaurant owners. But I disagree - there's a difference between an entrepreneur and a small business owner. Entrepreneurs want to change an industry with a new and innovative product. The owner of a croissant bakery business doesn't fit into the category of entrepreneur. I'm not saying that they aren't commendable, it just feels like a stretch to say that they are entrepreneurs. And I agree with the false Silicon Valley startup myth, but 2/5 stars - not really worth taking the time to read.
I think when most of us think of Entrepreneurship we think of Elon Musk, Zuckerberg and Jobs, etc. there is an entire world of entrepreneurship outside of the Silicon Valley unicorns. It resides in family businesses, wine growers, surf shops, hair care product makers, farmers. Sax captures the true essence of the lives and struggles these entrepreneurs encounter to make a living, create a market or do what they know best. A very refreshing, different and underserved look at entrepreneurship. Pick it up now. Great business and people profiles behind them.
I read the book and was amazed by how inspirational it is.
Many books on entrepreneurship are so fluffy and hard to relate to!
This book is relatable and very motivational. I love how David is telling the stories of so many entrepreneurs. I love it! Thank you David for a GREAT book!
The book that needed to be written. The author David Sac totally blows away the Silicon Valley entrepreneur myth. This work is written about the other 99.9 percent of entrepreneurs.
I like that this was not a how-to book but more of an expand-your-idea-of-what-an-entrepreneur is book. I was also excited to find a business from my neighborhood featured!
A good reminder that the start-up myth doesn't define entrepreneurship, but I didn't find any actionable takeaways or insights to apply to my own entrepreneurial journey.
Interesting discussion of what we define as an entrepreneur and the many types or real entrepreneurs that exist. Full of engaging stories of real people. Great for anyone interested in starting a business or in small business in general.