Tag Archives: Business startups

The Faith of Entrepreneurs, by Llewellyn H. Rockwell, Jr.

Anybody who thinks launching a business isn’t an act of faith has never tried it. From Llewellyn H. Rockwell, Jr. at lewrockwell.com:

Ludwig von Mises didn’t like references to the “miracle” of the marketplace or the “magic” of production or other terms that suggest that economic systems depend on some force that is beyond human comprehension. In his view, we are better off coming to a rational understanding of why markets are responsible for astounding levels of productivity that can support exponential increases in population and ever higher living standards.

There was no German miracle after World War II, he used to say; the glorious recovery was a result of economic logic working itself out through market forces. Once we understand the relationship between property rights, market prices, the time structure of production, and the division of labor, the mystery evaporates and we observe the science of human action making great things happen.

He is right that understanding economics does not require faith, but there are actions undertaken by market actors themselves that require faith (and Mises would not disagree with this)—immense faith, faith that moves mountains and raises up civilizations. If we accept the interesting description of faith by St. Paul (“evidence of things unseen”) we can understand entrepreneurship and capitalist investment as acts of faith.

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How to become a billionaire in five easy steps, by Simon Black

Companies that lose a lot of money and have no visible prospect of profits are raising copious funds on Wall Street. From Simon Black at sovereignman.com:

Every morning here in Puerto Rico, I wake up around 6am as the sun rises over the ocean in front of my house. And I pretty much head straight to the gym.

Once there, one of my favorite medieval torture devices is a fairly new exercise bike called a Peloton.

In case you haven’t used one before, a Peloton is like any other stationary exercise bike. You pedal a lot, and it sucks.

The key difference is that Peloton bikes are connected to the Internet, and the company live streams classes directly to the integrated monitor on your bike.

So instead of going to a spinning class, you can simulate being in a class and having someone yell at you from thousands of miles away.

You might be thinking– can’t you get the same experience on a regular stationary bike while watching some YouTube videos?

Why yes, that would pretty much be the same experience.

But Peloton prides itself on building wellness, connectedness, and happiness– all the ‘ness’s’ that Millennials love. So it’s pretty popular.

And following in the footsteps of WeWork, Peloton formally filed paperwork yesterday to go public on the NASDAQ under ticker symbol PTON.

The company anticipates a share price that will value the company at roughly $8 billion.

Yet according to its filing, the company lost $195 million in the fiscal year ending June 30, 2019. That’s four times worse than the company’s $48 million loss in Fiscal Year 2018.

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The number of new businesses in the US is falling off a cliff, by Michael J. Coren

Bad news: “It’s hard to put into scale the collapse of new business formation. We have no precedent for that rapid and steep of a collapse.”  So said John Lettieri, co-author of a report on new business formation and co-founder of EIG. From Michael J. Coren at qz.com:

We’re supposedly living in the age of startups when people can create new businesses, enrich themselves, and employ their fellow Americans. That narrative, like much economic optimism these days, is now mostly a tale for coastal cities, and a tenuous one at best.

Fewer new businesses were created in the last five years in the US than any period since at least 1980, according to a new analysis (pdf) by the Economic Innovation Group (EIG), a bipartisan advocacy group founded by the Silicon Valley entrepreneur Sean Parker and others. Businesses that did form are also far more concentrated than ever before: just 20 counties accounted for half of the country’s total new businesses. All of them were in large metro areas.

“It’s hard to put into scale the collapse of new business formation. We have no precedent for that rapid and steep of a collapse,” said John Lettieri, co-author of the report and co-founder of EIG, in an interview. “It will have a ripple effect in the economy. You‘re going to feel that impact five, 10, and 15 years in the future.”

The analysis of census data revealed two grim economic stories playing out in America. The first is that prosperity (at least in terms of new businesses) is consolidating in a few predominately urban places, mostly around large cities such as Los Angeles, Miami, Chicago, Dallas, New York, and San Francisco. Just 20 countries accounted for 50% of the new firms created during the post-recession recovery—a sharp break from previous years when new company creation was far more distributed.

Particularly hard hit were sparsely populated, rural areas. In the last post-recession recovery, counties with 100,000 or fewer people generated one-third of the country’s new firms (net) between 1992-96. By comparison, those counties lost 1.2% of their businesses between 2010-2014.

The second story is that the majority of new companies look more like tech companies than the construction firms and restaurants that have typically anchored middle-class prosperity. New business formation over the past five years tracked very closely with access to capital, particularly venture and other forms of risk capital, says the report. Of the top 20 counties, 13 were in just three states (California, New York, and Texas) with ample access to such money. That shift has given highly educated urban dwellers another advantage at the expense of everyone else, a disparity polls suggest is fueling the rise of Republican presidential candidate Donald Trump among working-class, rural Americans.

To continue reading: The number of new businesses in the US is falling off a cliff

Gallup CEO Blasts US Leadership “The Economy Is Not Coming Back,” from Zero Hedge

A disturbing article from the CEO  and Chairman of Gallup, Inc., Jim Clifton, via Zero Hedge:

The U.S. now ranks not first, not second, not third, but 12th among developed nations in terms of business startup activity. Countries such as Hungary, Denmark, Finland, New Zealand, Sweden, Israel and Italy all have higher startup rates than America does.

We are behind in starting new firms per capita, and this is our single most serious economic problem. Yet it seems like a secret. You never see it mentioned in the media, nor hear from a politician that, for the first time in 35 years, American business deaths now outnumber business births.

The U.S. Census Bureau reports that the total number of new business startups and business closures per year — the birth and death rates of American companies — have crossed for the first time since the measurement began. I am referring to employer businesses, those with one or more employees, the real engines of economic growth. Four hundred thousand new businesses are being born annually nationwide, while 470,000 per year are dying.

To continue reading: http://www.zerohedge.com/news/2015-01-14/gallup-ceo-blasts-us-leadership-economy-not-coming-back