Can It Be? An Entrepreneur Bubble?
Uh-oh. Be careful. Be very careful. Something's up. I can't be entirely sure, but I think another bubble is building. Yes...all the signs are there.
A bubble happens when the value of something becomes wildly, artificially inflated, mainly due to unexplained cultural popularity and exuberance. It happened to the value of tulip bulbs in the 17th century, stocks in the 1920's, all those dot-coms in the 1990's, and most recently to real estate. And it always results in the same outcome: a sudden drop in prices, followed by market fallouts, recessions, financial panics, and a documentary narrated by Morgan Freeman. But today it's not any of these things. It's something different. It's the entrepreneur bubble.
Why do I think a bubble is building? How do you know when there's a bubble? It happens when ignorant investors get into worthless stocks, factory workers buy over-appreciated properties, and normal people sink their life savings into things they just don't understand. And instead of being warned or ridiculed, society applauds them.
Today, instead of owning a hot stock or a tulip bulb, the hot thing to do is to become an entrepreneur. You go to cool events hosted by TechCrunch or Lean Startup, get feted by venture capitalists, see yourself written up on this site and others like it. You appear on Shark Tank or get featured in a Verizon campaign. You're talked about by presidential candidates and praised by society as our saviors. Non-profits hold "startup weekends" for you around the world and Ivy League institutions launch their own "entrepreneurial studies" programs to create more people like you. You become the start-up wizard and the tech innovator. You are asked to speak at TED conferences and get interviewed by CNN. You are the entrepreneur. You are the "in" thing. You're also part of the bubble.
Reality shows are created about you. People on Wall Street want to be like you. Famous Hollywood directors want to work with you. GQ names you Man Of The Year (in Russia, at least). And when does the bubble reach its peak? When people who have no business going into business are...going into business. And the celebrities want to be part of it too. That's when people like Dr. Dre and Justin Bieber, Jessica Biel, and Justin Timberlake jump into the game. Yes, you can throw up now.
Does this bubble actually burst? No, it'll never burst. But for most of us, like our bodies after the age of 40, it will begin to alarmingly deflate. It takes about a year or so. It's around then that reality starts to sink in.
That's when you realize that all those people in your class of "start-ups" at the local SCORE have either gone bust, taken jobs, or are still being supported by their spouse. Or when you read about the 22-year-old who just had his company valued at a billion dollars and realize that the guy is a hundred times smarter than you, went to Stanford, and has a cousin who knows Mark Zuckerberg. And then you think about all the other millions of dopey 22-year-olds walking around and participating in Occupy protests, and you begin to understand the odds of just one of them becoming a billionaire. Or when it dawns on you that Justin Bieber, Jessica Biel, and Justin Timberlake each have millions in the bank, lucrative day jobs, and are risking relatively nothing to be an "entrepreneur," but have all the public relations benefits to gain. That's when reality sets in. That's when the bubble deflates.
Because, despite this week's celebrated entrepreneur who has a chocolate milk dispenser in his basement and hand-cut toilet paper in his bathroom, most entrepreneurs know that being an entrepreneur can be a thankless, difficult, and--yes--unprofitable life.
It's about never having enough money. Because you're not getting funding from those high-powered Silicon Valley VC firms you read about. You're using your bank savings, taking a second mortgage, cashing in your retirement funds, living off your spouse or partner's income. You're working out of your house, financing your payroll with credit cards, and begging your supplier for a few scraps of material that you can use for testing and development. It's about missing a car payment, listening to your brother-in-law's self-congratulatory stories while you wait for the right time to ask him for a loan, and driving to a customer's office at 6AM because you know he gets in at that time--and he owes you money. And you're doing all of this as you watch your neighbor glide off to his corporate (or, even worse, government) job in a new BMW while his wife signs up for more tennis lessons and his kids wait for the car pool to private school. But that's cool. You're an entrepreneur. You're changing the world!
It's about never having enough time. Justin Bieber's got enough time to canoodle with Selena Gomez in Central Park. Jessica Alba has enough time to run her own small business while making timeless movies like The Love Guru and Little Fockers. But you? You're up at 5AM and working until midnight. You're missing dinners and school plays. You're running around the country talking to anyone who has the remotest interest in your ideas and might be willing to buy your products or invest in your company. You're answering stupid questions from your employees and annoying queries from your accountant, and ignoring warnings from the IRS about a minor filing you missed that's slowly turning into a major headache. People are calling to sell you stuff. Inc. wants to interview you about how cool it is to be an entrepreneur. You want the publicity. But you don't want to lie about it. And what's the difference? You don't have the time!
It's about fear, worry, and pain. From the moment you wake up until you fall asleep the same questions keep nagging at you. Why did you leave your job? How can you find the right people? What is that potential competitor in the Valley working on? How does Jessica Alba do it? She's really something else, isn't she? Meanwhile, you worry, worry, worry. Your spouse or partner is patient, but for how long? Thanksgiving's coming up and you're going to have to face your brother-in-law and tell him you can't pay back his loan...yet. You're way behind schedule. You're all alone. It's a cold, dark world. The Saints haven't won a game yet this season. All seems lost.
And still, so many people fuel the bubble and choose the entrepreneurial lifestyle. That's because we want independence. We want control. We want our ideas to change the world. We want to make our little mark during our very short stay on this planet. And we're willing to risk so much to do that. Oh, and a few bucks wouldn't hurt either. Just sayin'.
That's the reason there will never be a shortage of people wanting to become entrepreneurs. How else to explain the proliferation of cupcake stores, gourmet street vendors, frozen yogurt franchises, nail salons, and apps that make our smartphones fart? Why would Jay-Z invest in a basketball team? How in the hell is Kim Kardashian worth $35 million? And I know I asked this before but how does Jessica Alba do it? She's really something else, isn't she?
Is there an entrepreneurial bubble? No, of course not. I'm wrong about this. You can never have enough entrepreneurs in this world. But a sequel to The Love Guru? OK, that's where I'll draw the line.
GENE MARKS | Columnist | Owner, Marks Group
Gene Marks is a columnist, author, and small-business owner. He oversees the Marks Group, a 10-person technology consultancy to small and medium-size businesses. A certified public accountant, Marks has also worked in the entrepreneurial services arm of KPMG. He writes for The New York Times, Forbes, and The Huffington Post.