March 22, 2006
The High Costs of Glamour
"More people have probably become rich building such prosaic businesses as a shoe-polish or a watchmaking company than have become rich through high-tech businesses." - Peter Drucker (Innovation & Entrepreneurship, p. 125)
Over the past few years, I've become keenly aware of the high-costs of glamour. Everybody has a book or screenplay idea, wants to open a retail store, raise money for a high-tech business, etc. The only problem is just that, everybody wants to do it!
Some of the disadvantages of taking the glamour path seem to be:
- Increased Competition. With everybody going for the same goal, people are competing for limited resources. This pushes the margins down for everyone.
- Shake Outs.The success ratio is low. In their hey days, there were over a hundred railroad, automobile, and airplane companies. Now there are only a few.
- Certain Costs Go Up. There may be social pressure to live a high-cost lifestyle and/or the need to work in a metropolitan area, which has a high cost of living. Take education for example. The 'bottom' schools are cheap and fighting for applicants, even ones with great educational opportunities. The high-cost schools are extremely expensive and rejecting people with perfect test scores.
Me. I'd rather find a high-potential niche that nobody knows about, live somewhere cheap, and focus on the customer. That's right. Take it from somebody who lives in New York City and is the founder of a media & education company with focuses on books, speaking, and a high-tech online community.
Posted at March 22, 2006 11:00 AM
Michael,
This is my first time contributing however I have read your blog for the past two years.
I agree with a lot of your ideas but had some thoughts.
First, while costs go up benefits go up as well. The most valuable thing I have received from NYU is access to talented professors and amazing social network which would not have been possible to obtain at a "Cheaper" school.
Second, shake-outs are high in every industry. Think about how many pizzerias open up your time only to close within the year.
Lastly, I could not tell if you were being humerous but if you know of a "high-potential niche that nobody knows about" please tell me.
I really enjoy some of your posts and hope you keep it up.
-Adam
glamour is often a risk. but more deterimentally, can also produce non-starters -- preventing people from ever starting their business.
Our the flip side, the misperception that certain industries (like owning a restaurant) are glamourous does help get people interested in entreprenuership.
Guess Drucker brings up a good debate: Are you in it for the money? The glamour? Our as you'd probably say mike, The self-fitting lifestyle?
Hey guys,
Thanks for your comments. I definitely presented a one-sided opinion. However, I did so purposefully because that side is rarely presented.
I'm extremely happy that I went to NYU. At the same time, there are top professors at other schools whose tuition is much cheaper. I know people who graduated $100,000 in debt from highly-ranked schools and sometimes I wonder. I personally think that what people get from college often has more to do with what they bring and contribute, rather than the school itself.
Also, I wasn't joking about those niches. After graduating, I've met people who are in highly-profitable niches. They've told me about their businesses only on the basis of being sworn to secrecy. These niches aren't written in the media or talked about at school. From my experience, it seems like opportunities like these seem to come via social contacts, experience in an industry, systematically looking at opportunities, and, of course, serendipity!
Amen!Believe it our not, Glam can me a lonely place!
You mention Michael
"From my experience, it seems like opportunities like these seem to come via social contacts, experience in an industry, systematically looking at opportunities, and, of course, serendipity!"
I agree with you completely as I've also found numerous businesses run under the radar with very little competition that fit great niches.
