Umm, yes Senior Lecturer

The myth suggests that anyone can build a business from scratch, entering a market of their choice and end up, with hard work and determination, making a fortune.

This is not true. Modern capitalism has evolved to make sure that markets do not work.

This in the year that Google turns 21.

20 comments on “Umm, yes Senior Lecturer

  1. FFS

    Someone go on his site and suggests he Googles “top young entrepreneurs” to find list after list of people who have done just what he says can’t be done.

    then suggest (as you mention) he ponders that today’s internet behemoths are all the result of young entrepreneurs.

    Then ask him to reflect on how financially unsuccessful he has been despite claiming to know everything…..

  2. Nothing could offend Capt. Potato more than someone building a business from scratch, entering a market of their choice and ending up, with hard work and determination, making a fortune.

    So much so that he tirelessly promotes policies to prevent it.

  3. Building a business from scratch, mortgaging your assets to fund it, working all the hours God sends for years – this is just the price of a ticket in the lottery of life. Lots of clever people with good ideas and reasonable business sense do this, and fall flat on their faces through bad luck or bad timing. A tiny minority become billionaires.

    Such is life.

  4. Typical Murphy.

    He cherry picks two facts, the decrease in number of publicly held companies and the decrease in companies choosing to go public, and then grandly pronounces that “markets are failing”. Why?

    Reasons. And as with any grand pronouncement by Murphy, we never get to see his work that actually justifies anything he says. What we get are a couple of graphs (done by other people) that, in and of themselves, don’t prove a thing.

    There are various reasons that could account for a decrease in listed companies and a fall off of new listings that have nothing to do with “market failure”. Here’s one possibility: The rise of venture capitalism offers companies an alternative to going public to acquire funding for growth. Here’s another: Cost. Going public is an expensive proposition. And once public, there are significant compliance costs to be incurred. And those costs have continued to rise, especially over the past ten years or so. Here’s another: The rise of LLCs and LLPs. These two forms of organization provide an enormous amount of flexibility in forming and organizing joint ventures… far beyond what a partnership, s corporation or c corporation can provide. Those are just three that popped in my head. I’m sure there are quite a few others.

    So what do we have? Personal prejudice dripping with resentment. Or, to put it another way, Typical Murphy.

  5. The first comment on RM’s blog:

    So because the number of companies floated per annum is declining you assume the “market is more concentrated and keeping out new entrants to preserve monopoly power”..how misleading a single chart can be!

    What your conclusion fails to grasp is the size and growth of unlisted private companies such is the source of capital in this area..McKinsey in their Private Markets review in 2018 showed the private market grew 18% in 2018 and since 2000 it has grown by 7.5 times https://www.mckinsey.com/industries/private-equity-and-principal-investors/our-insights/mckinseys-private-markets-annual-review

    The term “disrupter” is thrown around all the time and that is another definition for small businesses attacking the market share of established businesses. After all it matters not to the end consumer if a company is listed or not. Increasingly it matters less to investors as they can easily access private markets through managed funds.

    RM’s response? Respectfully, 18% of what?

    What’s beautiful about RM’s response is that he tacitly concedes that (1) he doesn’t know the size (in either capitalization, sales, or anything else) of privately held companies in the USA, and (2) he hasn’t accounted for them in his grand pronouncement.

    The man’s a genius.

  6. One of the great myths of modern capitalism is that markets work

    As Straw Men go this is right up there. If he cares to look at countries run along his principles, he’d find them working even less well – Venezuela, anyone?

    I like the idea that the number of IPOs being in decline is his indicator for ‘Market failure’ – truly the man’s ignorance is boundless. He seems in unusually prolific form at the moment. Almost every post contains new levels of stupidity,

    Tim

    I take it you’ll be reading ”The Progressive Economy Forum general election guide’ to provide yourself with the necessary dose of daily laughter the doctors recommend?

  7. Who needs to quote Americans when the richest guy in the UK – James Ratcliffe grew up in a council house? There’s another James (Dyson) done pretty well and dozens who are merely millionaires.

  8. He says I can’t do what I have done?

    And am still doing.

    Hey, didn’t he get involved with someone who started a business back when he was an accountant?
    Presumably came across multiple people who started with nothing and built up a business.

  9. How does the WGCE get to be 6 people in the Companies House database (at that address alone)?

  10. @Dennis

    I’d add:

    We seem to be going through a phase of mergers & acquisitions. I expect this will lead to a phase of demergers, spin-offs and listings.

  11. @Chris Miller

    Building a business from scratch, mortgaging your assets to fund it, working all the hours God sends for years – this is just the price of a ticket in the lottery of life. Lots of clever people with good ideas and reasonable business sense do this, and fall flat on their faces through bad luck or bad timing. A tiny minority become billionaires.

    This is very true. I don’t think anyone would claim that the distribution of assets reflects how clever or even simply how business-savvy people are. Two equally talented young entrepreneurs can end up in completely different places as a matter of chance.

    I think it’s true that for most people, their chance of becoming a serious multi-millionaire rests either on buying a winning lottery ticket or starting a successful business that manages to scale a bit. Not necessarily a fancy hi-tech thing, could just as well be in plumbing and central-heating, in subcontracted cleaning work, plenty of rich builders and so on. The alternative is to find a niche in a well-paid job and just keep saving/investing for decades until compounding works in your favour, but that strategy tends to work better for graduates (preferably from STEM or professional-leaning subjects at top universities) or people working in the high end of the trades, and is probably accessible to fewer people, particularly if they’ve “missed the boat” by the age of 30 or so. That’s likely the slower but surer way to become a millionaire eventually, but clearly isn’t going to make you a billionaire.

    There must be a cross-over point “X” where taking an entrepreneurial gamble makes you more likely to achieve wealth greater than X versus the plodalong-career-and-save-like-hell route. Perhaps a couple of million?

  12. @MBE
    Look at Bill Gates. He’s smart, shrewd and ruthless in business, but I doubt if he’d come top of his year for any of those categories even within Washington state, let alone the US or the entire world. His good fortune was to be born in the right year – a few years earlier or later and he’d have missed the PC revolution. And coming from a pretty wealthy family means you don’t have to worry unduly about dropping out of uni to start your own business.

  13. Well…. it is possible to build a business but it is very difficult and there are prodigious barriers to entry in developed markets.
    I`ve often criticised the static state picture of capitalism that the left unconsciously assume with questions like ” Why would you want to start a business just so you can put the people you employ on the board the moment it works “…and so on.
    Thats fair comment in my view but contending myth , that anyone can jump up and create a fortune is clearly cobblers as well. I started my own business. It was a boring a simple idea and ti worked well enough. It did not , however add up to looking after a family paying a mortgage and living some sort of reasonable life over the period available
    Lacking any safety net , I was obliged to re -enter the slave auction .
    You need a combination of things

    The skills
    The reputation
    The confidence
    The reason to take risks
    The money
    The right people around you

    Unless you have all that you will not succeed in terms of micro and sme biz as opposed to hobby sales .So why don`t you invent brilliant new marketing idea and become rich , is not something I would suggest you say to any of the people you are trying to make unemployed thanks to Brexit

    Its not that simple

  14. “but contending myth , that anyone can jump up and create a fortune is clearly cobblers as well. I started my own business. It was a boring a simple idea and ti worked well enough. It did not , however add up to looking after a family paying a mortgage and living some sort of reasonable life over the period available
    Lacking any safety net , I was obliged to re -enter the slave auction .
    You need a combination of things

    The skills
    The reputation
    The confidence
    The reason to take risks
    The money
    The right people around you”

    You are looking at the argument from the wrong end. Its not that anyone can be a billionaire, its that a billionaire could be anyone. As in the lottery – the average Joe Public punter is very unlikely to win, but the winner has to be a punter.

  15. Newmania – try selling on ebay. Start with £50. Build that up to £12k a year turnover in 3 years. Build further.

    Or try the markets – people buy stuff cheap to flog on the market. One lady on a stall near mine was selling for 15 times her purchase price and didn’t stop taking money at all during the day.

    There aren’t many barriers these days. Much easier now than it was even 30 years ago.

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