The article ignores the sentiment that applies to me and probably others on this site. I would rather earn the $1k working on my own products than $10k working for someone else.
There is also the potential that the $1k will grow over time.
I therefore don't think it's reasonable to value my time at $10k for the purpose calculating my profits.
[The figures will obviously vary on a person by person basis.]
More broadly, I view this from the E-Myth [1] perspective:
If you work within the business as a job, you're selling yourself short if your business is generating $1k a month when you could be earning $10k working for someone else. The money you have left on the table has a real opportunity cost to you as an individual and should probably be valued closer to the shortfall you are taking of $9k.
However, if you view your business as a system - something that has money going out (product, marketing, people you pay) and money coming in (sales) then that money is a genuine excess that the system is kicking out and into the entrepreneurs pocket and is most certainly profit from his endeavor, whether $1 or $1MM.
A year later I ran into my former boss from Apple when I was out eating lunch. He asked how it's going, I said well. Then he asked, "Ok, are you making more, or less, than you were at Apple?"
Embarassed by the question, I admitted the answer was "more".
I think his question captured perfectly the real issue here.
I think his question captured perfectly the real issue here.
I guess it depends on your perspective. If the only goal of doing a startup is to make more money, then sure. But if your goals involve having more control over your own destiny, fulfilling a desire to build something for the sake of building it, or having a kind of freedom you could never have when working for $BIGCORP, then it doesn't really matter if you're making more or less than you would at $BIGCORP. As long as you are either "ramen profitable" or have runway left to burn, you still have a shot at fulfilling that ambition, which is what matters, IMO.
There is also the potential that the $1k will grow over time.
I therefore don't think it's reasonable to value my time at $10k for the purpose calculating my profits.
[The figures will obviously vary on a person by person basis.]
More broadly, I view this from the E-Myth [1] perspective:
If you work within the business as a job, you're selling yourself short if your business is generating $1k a month when you could be earning $10k working for someone else. The money you have left on the table has a real opportunity cost to you as an individual and should probably be valued closer to the shortfall you are taking of $9k.
However, if you view your business as a system - something that has money going out (product, marketing, people you pay) and money coming in (sales) then that money is a genuine excess that the system is kicking out and into the entrepreneurs pocket and is most certainly profit from his endeavor, whether $1 or $1MM.
[1] http://www.e-myth.com/