[rpm]

For years, the internet has been touted as the last bastion of hope for the individual -- that place where anyone can make it. All you need is a good product and a website. Build it and they will come. "The Internet," they say, "is the last avenue for the American Dream."

When you talk to people in the real world and they ask what you do and you way, "I am starting an internet company." Their eyes get wide and they think, "The next millionaire right here."

Don't believe the hype. These are myths. Businesses do not get started on the Internet. The truth is, they get started in real life just like everywhere else. Internet businesses start with targeted mailers, human connections, networking, advertisements, trade shows, and the like. They do not start with a website and a software download or Web 2.0 Idea.

These people you read about making it big on the internet. Striking it rich and becoming the next billionaires, they didn't build these companies on the internet, they talked to their friends, they were part of Paypal and Google. They have connections in high places and graduated from elite universities.

To start a business on the internet may actually be more difficult than starting a business in real life. If you have a storefront, people will see you. They will walk by. They will not be inundated by every "small time entrepreneur" and his dog trying to spam you with his new idea -- and some of them are spectacular ideas. Some have been around a lot longer than these internet sensations you're hearing about. How many of you used Ebaum's world before the name Youtube even existed. "Why," might you wonder, "did youtube sell for $1.65 Billion when ebaum has been around for years and years?"

The reason, young entrepreneurs, is because Youtube was founded by two insiders. Have you ever wondered why the youtube guys say they built youtube so they could share videos with their friends, yet they have NO videos up on their site? Of course you have. The reason is because YouTube is a myth. It was started by two insiders, promoted by insiders, spread to every insider at the top and sold to insiders. Youtube was never about a site built by a couple guys in their garage so their friends could share videos. Youtube has been "build and flip" from the beginning.

It started in real life. Not on the internet. Ebaumsworld started on the internet and how many people on youtube have never heard of ebaumsworld.

Am I trying to discourage you? No, the internet is a great resource. Just don't fall into the trap of believing you can come up with a great product idea and sell it on the internet without going through all the same hurdles you'll face with a traditional business. You have to have connections. You have to have money. "Bootstrapping" a business on the internet means using funds from another company you just sold. It does not mean growing organically -- build it and they will come.

That is an illusion. It's an illusion spread by the insiders, to whom it feels like a reality. They are on the inside. They have connections with the VCs and the Angels. All they have to do is talk about an idea and they get millions. The rest of us on the outside, we can have a great idea -- implemented -- a great product. A great business model. A great vision.

Yet still, in the minds of those who can help our idea and product reach that vision -- we are noise. We are "just another link." We are just another crazy business plan.

And the reality is, most of us are crazy business plans. Who can blame them for ignoring us?

[chuff1026]

nice post dude

[chuff1026]

u got a blog?

[rpm]

Thank you chuff. No, no blog. I like the anonymity here. Probably rant here until they kick me out.

[akula]

Originally Posted by rpm

Thank you chuff. No, no blog. I like the anonymity here. Probably rant here until they kick me out.

yah man, if you've got something to say, it'll help if you to your resume

[garysomers]

huh? Akula I am confused by this.

-Gary

[akula]

this forum does not endorse anonymous know-it-alls
as a mod, I encourage posters to link to their resumes and put their credentials on record if they assume the responsibility of advising entrepreneurs
this is done to improve forum quality by limiting the number of quacks and self proclaimed experts

[byzantium]

Honestly, akula, I was depressed when I read this, but then I remembered, yeah you won't make billions, but few do. (There are about 450 billionaires in the US today out of 300 million people.) You will however make a nice amount of money, not huge but nice. Now here's the key, and this should be common knowledge but it's not: it's what you do with your modest income from your modest business that determines how rich you become. Do you invest it, or rush out to buy a bunch of junk? If you invest it, and invest it wisely, you can become modestly rich, not billions but maybe a nice $100 mil. That still puts you in the top 2% of Americans, and the top 1% of humans. I sure wouldn't turn it down. You can win $300 million in Powerball, but your odds of doing so are far worse than your odds of doing so by smart investing.

What are my credentials? A good dose of common sense and a voracious appetite for books. I don't have a business quite yet, but I'm working on it. I do know what to do with my profits however. I will make a little money, invest it, and hopefully it will turn into a lot of money. Unfortunately, common sense is uncommon, so most people will spend whatever they make and more no matter how much they make. If you gave them a $1 mil a year income they'd spend $1.1 mil.

This is backwards. If you make $1 mil you want to spend $200k and invest the rest. Most of the truly rich live on 20% of their income. John Templeton has said so. Warren Buffett is famous for driving Volkswagens long after he made his first billion, but what people don't realize is that he got more joy out of successfully investing $300k than spending it on a Rolls Royce. If you can adopt that view, you will be rich no matter how much or how little you make. Common sense, really.

[byzantium]

Books to read:

Rich Dad Poor Dad
The Richest Man In Babylon
Think And Grow Rich

All say essentially what I said. It can be found in the Bible too. I can't remember where it is, but there is a story where a father gives each of his three sons a gold coin (called a "talent"). One son buries it in the ground, another son spends it on drink, and the third son buys a goat and then sells its milk, earning five gold coins. When the father asks his sons what happened to the coin, one son goes and unearths his coin and presents it to his father, one confesses that he got drunk, and the third presents his father with the goat and five gold coins. The third son is chosen to be the father's heir. The message is pretty clear.

[ADVERTISE HERE!]

Originally Posted by byzantium

Honestly, akula, I was depressed when I read this, but then I remembered, yeah you won't make billions, but few do. (There are about 450 billionaires in the US today out of 300 million people.) You will however make a nice amount of money, not huge but nice. Now here's the key, and this should be common knowledge but it's not: it's what you do with your modest income from your modest business that determines how rich you become. Do you invest it, or rush out to buy a bunch of junk? If you invest it, and invest it wisely, you can become modestly rich, not billions but maybe a nice $100 mil. That still puts you in the top 2% of Americans, and the top 1% of humans. I sure wouldn't turn it down. You can win $300 million in Powerball, but your odds of doing so are far worse than your odds of doing so by smart investing.

What are my credentials? A good dose of common sense and a voracious appetite for books. I don't have a business quite yet, but I'm working on it. I do know what to do with my profits however. I will make a little money, invest it, and hopefully it will turn into a lot of money. Unfortunately, common sense is uncommon, so most people will spend whatever they make and more no matter how much they make. If you gave them a $1 mil a year income they'd spend $1.1 mil.

This is backwards. If you make $1 mil you want to spend $200k and invest the rest. Most of the truly rich live on 20% of their income. John Templeton has said so. Warren Buffett is famous for driving Volkswagens long after he made his first billion, but what people don't realize is that he got more joy out of successfully investing $300k than spending it on a Rolls Royce. If you can adopt that view, you will be rich no matter how much or how little you make. Common sense, really.

I just had to laugh when I read this. I suppose technically you're right in stating that "a nice $100 mil ... puts you in the top 2% of Americans, and the top 1% of humans," but I don't think you realize what you're saying. Basically, you're saying that one out of every 50 Americans is worth $100,000,000, and one out of every 100 humans is worth that much. Couldn't help but laugh.

[byzantium]

That's another way to look at it, I suppose. I never was good with statistics, honestly. I studiously avoided the class in college, choosing not to go for a bachelor's degree and settling for an associate's rather than endure statistics. I was looking for some sort of analogy. There are about 10 million millionaires in America, meaning people with net worth over $1 million, which is very broad, including senior citizens who bought a house in West LA for $60,000 40 years ago and have no mortgage, or people who have lots of expensive toys. That's what, 1/30 or 3%?

Once you get past $50 million, you start getting into the real entrepreneurs and CEOs. I don't really know how many people have a net worth between $50 million and $1 billion. I don't think anybody keeps track. It's certainly not as attractive as having $1 billion. Most billionaires are under $10 billion. Even Barron Hilton, who has had a whole lifetime to build his hotel business, is at around $2 billion. There are probably no more than two dozen people on the planet who have a net worth above $10 billion, including the children of Sam Walton, Michael Dell, Bill Gates, Warren Buffett, and Carlos Slim (the latter two are my personal heroes).

If your definition of rich is being above $1 billion, then yeah, you likely won't make it unless you're a standout genius or a whiz entrepreneur (or both). But if your definition of rich is having $50 million, you likely can do it in your lifetime. The billionaires' club is generally for those with rich families. Bill Gates fits in this category, as does Donald Trump. Slim is unique in that he cracked the $60 billion mark in just two generations of wealth building (his father, Youssef Salim, arrived in Mexico from Lebanon in 1902; Slim was born in 1940). Warren Buffett, I don't know much about, but he is an undisputed financial genius, as well as having willpower of steel. He is utterly unique. The rest of us, who are not uncommonly gifted in parentage or brainpower, do have little hope of cracking $1 billion. But that's not my goal anyway.