Entrepreneurs Must Make Money Before Making Meaning | Hacker News Reader

Entrepreneurs Must Make Money Before Making Meaning

lovemytool.com

9 pointsgigamon14 comments

I always thought that Drucker said it best: "Profit is the cost of doing business."

Businesses exist for a purpose: to provide goods and/or services to customers. They don't exist just to make money. You can make money in plenty of other ways and not have a business. (Think about a lottery winner or speculator.)

But if you want to keep doing business, you have to make money, and you have to make money over and above the cost of capital. Otherwise, you'll never be able to marshal the resources necessary to keep providing your goods and services.

That's exactly right, thank you.

In some way, VC money is a contaminant and startups that have lots of VC money (my first startup was one of those) tend to forget this truth.

--Denny--

I'm not entirely sure playing the lottery and speculating are such good ways of making money. Someone who's in it solely for the money is probably going to start a business before doing either of these things.

This opens up another topic that is equally interesting, which is the relationship between entrepreneurs and risk management.

My observation is that entrepreneurs are NOT risk takers. They are very much risk-averse. This is a strange comment but as an entrepreneur, I differentiate between taking risk and mitigating ambiguity.

I don't gamble and I don't play the lottery. I think doing so would be taking undue risk because I have absolutely no control of the outcome.

On the other hand, doing startup is not risk to me because I believe I can control the outcome. It is just that the outcome is somewhat ambiguous which I know how to mitigate.

I suppose if I take a step back, this is not unlike the difference between an amateur gambler and a professional gambler. If I know how to count cards, I won't think that I am taking risk neither.

--Denny--

While we're quoting Drucker: The goal of business is to create a customer.

Somehow, it seems like making money and making meaning are two sides of a Mobius strip. They are really the same thing, although they appear to be different. Fooling oneself into thinking they really are separate things is harmful to the wealth of an entrepreneur.

I agree with that. I think they are closely related.

However, my experience is that as entrepreneurs we can lure ourselves into thinking that bringing good to the world and building a great company is the end and not the means. And if we do that, then money will follow. This is the primary message from Guy Kawasaki whom I have tremendous respect for.

However, my own experience is that this is true is if the stars and moons are aligned. So I am offering an alternative which is to focus on making money first.

This is in contraction to what a VC would want to hear. But I am of the opinion that taking VC money is not the prerequisite of building startup.

At the same time, I am not trying to demonize VC's. They have a place in our world and when appropriate, it can be very important to us.

In summary, I just want to provide some food for thoughts.

Thanks for your comment.

--Denny--

I don't know, what about criminals? They make money, too, but do they make meaning?

It depends entirely on the criminal ... ;-)

I think the ontology goes more like this.

Meaning is the metadata people derive from experience. It's always there, but it's representation becomes significant when people communicate.

Money is an efficient representation of a promise, which is a special kind of communication between people.

Money is the embodiment of a specific kind of meaning.

Naturally, you will pardon my wariness of clicking a link to "lovemytool.com".

Sorry about that. I hope all is forgiven.

--Denny--

After reading the article, all is indeed forgiven. Though you might want to consider rebranding to something less porny. ;-)

It is a tough call. The primary site, LoveMyTool, is an on-line marketing site for network monitoring TOOLs so at least there is some excuses for it.

It is a difficult name to forget.

--Denny--

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