Starting a Business After Unemployment: Escape Can Work.
Starting a business after unemployment is not a doomed path, and in fact the evidence supports that. For example, German research found roughly two thirds of such firms still active across the first four years. So escape does not disqualify you, but it does not equip you either.
The founders a strict rule would have turned away.
For example, Adi Dassler came out of the First World War unemployed. Then he started making shoes in his mother's laundry room, and that company is Adidas. However, he was not pursuing a vision, because he needed work. Also, Whitney Wolfe Herd walked out of Tinder in 2014 and filed a harassment claim. Afterwards, her next company came straight out of what had happened to her.
What the numbers say about starting a business after unemployment.
First, German research followed firms founded by people who came out of unemployment. As a result, it found roughly two thirds still active across the first four years. Moreover, survival sat at around seventy per cent at the two and a half year mark. In short, those are not the numbers of a doomed category.
Where the demand for a perfect idea comes from.
In fact, the demand for a fully formed idea is a habit borrowed from venture capital. However, venture capital funds a tiny unrepresentative slice of all businesses. Instead, most businesses were started by somebody who needed money. So they looked around at what nearby people would pay for, which may well describe you.
Test your view of starting a business after unemployment tonight.
First, write down one person near you who started something because they needed money, and what they sell.
Then list two things the people around you already pay for, without judging whether they are grand enough.
From the book.
And there's a fairness point underneath all of it that I think is correct, because the demand for a fully formed idea before you are allowed to begin is a habit borrowed from venture capital, which funds a tiny unrepresentative slice of all businesses, and which has spent thirty years persuading everybody else that its filters are the laws of nature. They're not. Most businesses on earth were started by somebody who needed money and looked around at what the people near them would pay for, which may well describe you.
I Want to Start a Business but I Can't Quit My Job, chapter 8: The job might be the problem, and a business might not be the answer
Questions about starting a business after unemployment.
Does starting a business after unemployment mean you will fail?
No. In fact, German research found survival at around seventy per cent at the two and a half year mark.
Did Adidas start from a vision?
No, because Adi Dassler came out of the First World War unemployed and needed work.
So what is the catch with escape motives?
Escape does not equip you, and therefore confusing escape with building has a measurable cost.
Read the whole chapter.
This lesson covers one section of chapter 8, “The job might be the problem, and a business might not be the answer”. The book goes further, with the full evidence, the stories and every exercise.
Lessons in this chapter.
- 01 Starting a Business After Unemployment: Escape Can Work.
- 02 Don't Know What to Sell: You Are Typical.
- 03 Motivations for Starting a Business: Escape vs Ambition.
- 04 Going Back to a Job After Self Employment: The Loop.
- 05 Marx Alienation of Labor: Does Owning Work Cure It.
- 06 Survivorship Bias in Entrepreneurship: The Empty Slot.
- 07 Do I Want a Business or Just to Quit: Two Columns.
- 08 Wrong Reasons to Start a Business: Why Motive Matters.