TMBA 297: Why You're Going To Have To Become an Entrepreneur Eventually (So You Might as Well Do It Now)

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This week longtime friend of the show Taylor Pearson drops by to talk about his new book, The End of Jobs. We don’t typically invite guests on to the show to promote their books, but Taylor has had such a huge part in the growth of our product business. His new book also stemmed in part from some discussions that the two of us had after the Dynamite Circle Conference in Bangkok last October. On this week’s episode, we’re gonna talk all about why Taylor decided to write this book, the books that are defining this exciting location-independent movement, and why the jobs that were once considered the safest are now being called into question.

Listen to this week’s show and learn:

  • Why the traditional career trajectory might not be the smartest choice today.
  • The real difference between having a job and being an entrepreneur.
  • Why the strength of a market is far more important than most people realize.
  • How you can make a $200,000 salary for most of your life and still end up having to become an entrepreneur.
  • How the process of starting a product business has changed in the last ten years.
  • Why Taylor wrote “The End of Jobs” and what he hopes will resonate with its readers.

People on this episode:

Mentioned in the episode:

Listening options:

Thanks for listening to our show! We’ll be back next Thursday morning 8AM EST. Cheers, Dan & Ian

Published on 06.18.15
  • Chris Cage

    Interesting discussion if being an entrepreneur or having a job is more risky. Definitely agree on the “emotional risk” front for a lot of people that a job is riskier. Super excited for the book launch.

  • http://moveelo.com Clinton Skakun

    I’ve been working out of Mexico for 3 1/2 years doing various web design and online product gigs. There’s less risk for sure. Mainly because I’m doing what I want.

  • http://www.LimitlessMindset.com/ Jonathan Roseland

    There was some book called ‘Don’t Check Email Before 11AM’ (or something like that), which is a great title (for me!) because I know exactly what the book is about and I’m definitely not going to read it.

    In the same vein ‘The End of Jobs’ is a terribly unoriginal proposition. I also found the interview itself to be a canned remix of the ‘Being an Entreprenuer > Having a job’ philosophy that has been beat to death and necrophilied by the blogo-podcasto-sphere for the last 10 years.

    Am I just blinded by confirmation bias here or would it be way more interesting to hear a discussion from Tropical MBA about the nuance of naming your content something that piques curiosity?

  • http://www.tropicalmba.com/ Dan Andrews

    possibly from our view, what I find interesting about Taylor’s book is that his proposition is that it’s ‘safer’ which is an important beachhead in the conversation, but yeah we are having this conversation a lot ( i do IRL too!). I’m sure Taylor would be very interested in any ideas for re-positioning. Thanks for listening man! appreciate feedback always

  • http://www.tropicalmba.com/ Dan Andrews

    good point!

  • http://www.tropicalmba.com/ Dan Andrews

    me too!

  • Kwame Robinson

    Clutch episode! I have to agree with Dan, Taylor is one of the better bloggers out there looking forward to his book.

  • http://www.tropicalmba.com/ Dan Andrews

    thanks for listening Kwame!

  • http://taylorpearson.me/ Taylor Pearson

    Been thinking a lot about the emotional risk aspect as well. Feels like there is a lot more definition needed around that concept. Pressfield’s War of Art is definitely the best thing out there on it ATM.

  • http://taylorpearson.me/ Taylor Pearson

    Thanks for listening and appreciate the feedback!

    I agree that the being an entrepreneur > having a job proposition has been beat to death to a large degree over the last ten years. I was hesitant to write the book for that very reason, but felt like there was still something to be said about why that is for reasons beyond personal preference or passion.

    Questions like:

    How is the nature of work changing and what’s are some frameworks to think about that and it’s impact on the future of people’s careers/businesses? What does career safety and security mean in a post-industrial economy? How does demand shift as economies evolve?

    These were questions I didn’t feel like had been beat to death and so that was what I got into in the book.

    Though, as you’ve pointed out, this is sophisticated audience and I probably could have done a better job of diving into less frequently articulated concepts.

    Thanks again for taking the time to leave feedback.

  • http://taylorpearson.me/ Taylor Pearson

    Thanks! Looking forward to hear what you think :)

  • shahreemashah

    it was a different and interesting article – Romantic-Shayari

  • Joe

    What does everyone think of Dan’s math regarding the $200k salary retirement? I think Dan and Ian are great, I listen to every episode and am living the jobless lifestyle, but I don’t think Dan’s math would persuade any traditional job worker.

    Someone making $200k could easily put $30k/yr into a 401K since it is pre-tax, and a standard employer “401K match” would be another $20k (10%).

    So $50k * 20 years would be $1,000,000 plus compounded interest at 10% doubles your money every 10 years, so lets just say conservatively you end up with $2,000,000 in your 401k at retirement. Spread that out over 30 years is $67k+ SS money.

    But I believe it would actually be way more than $67k because your 401k would continue to accrue interest on the $2 million, a 5% to 10% interest rate would be another 100k to 200k a year.

    I read Anti-Fragile and know crazy things happen, but I think strictly mathematically speaking it DOES work out to a nice retirement and I believe that is what traditional job worker would argue.

  • http://taylorpearson.me/ Taylor Pearson

    Hey Joe,

    Thanks for posting this. Dan forwarded me your email and I’m glad you posted it. I’m definitely not a pro at this stuff, but a few questions I have about yours (or anyone’s) calculations on this stuff.

    1. My understanding of 401k is that they are not tax free, but tax deferred and you can only withdraw once you’re retirement age (59.5). So you’re going to pay tax eventually on the $2mill.

    The point being for our person in this scenario that you are waiting another 10 years to touch that money without paying an early withdrawal penalty.

    Once you do withdraw, you’re still paying tax on that $67k (albeit at a lower rate than $200k/year) so I’m guessting it’d be more like $50k/year post tax.

    That being said, employer match wasn’t something we thought about and definitely a good point.

    2. Where are you getting the 10% number from? Based on Piketty’s work in capital in the 21st century, 6.5% would be amazing and accessible only to people with large amounts of capital to begin with while 2.1% was typical.

    “from 1987 to 2013, the global rate of return on the wealth owned by the average adult was 2.1%. During that same period, the rate of return on wealth owned by the average billionaire was more than 6.5%.”

    Source: http://ideas.ted.com/thomas-pikettys-capital-in-the-twenty-first-century-explained/

    I think part of our contention (or mine at least, won’t speak for Dan) is that a lot of assumptions about retirement are built around the notion that what happened in the U.S. stock market from 1948-2000 will happen again from 2000-2050.

    That seems highly unlikely given black swans, globalization, etc. If you look at Warren Buffett’s track record, his early track record is much more impressive. Part of that is because more capital certainly makes it harder to invest at high rates of return, but I feel like it’s not unreasonable to attribute part of that to a changing economy.

    3. The impact of Black Swans is probably underestimated and the math is compelling/frightening.

    Consider the scenario that two black swan events happen over the course of your 35 year retirement.

    If you get to $2,000,000 at 50 and lose half in a black swan, you’re at $1 million. Then you make 50% of that back over the next few years with interest so now you’re at $1.5 million. Then you lose half of that in another black swan, and now you’re at $750k. You make half that back on interest, now you’re at $1.125mill. If you have two large losses, you don’t break even, you lose money.

    That’s also assuming you aren’t touching the principal and are living off a portion of the interest (which is getting smaller as the principal declines) so that more interest is still accruing and adding to the principal.

    When the 2008 financial collapse struck, a lot of individuals around retirement age found themselves on retirement paths that they assumed were safe only to see their savings wiped out.

    They were also out of the work force and so their skills were out of date. Now they have less savings than they expected AND they need to invest some of that savings to go acquire new skills since they haven’t been actively working in the industry while retired.

    Overall, my main contentions are:

    A) All this math and assumptions based on what happened in the second half of the 20th century is built on this HUGE assumption that the next 30-50 years will operate by the same dynamics when every indication seems to be the opposite.

    B) Abdication of control – A primary difference between putting your money in a 401k vs investing in yourself/business seems to be abdicating control and trusting other people who don’t necessarily have your best interest at heart. I lived in Argentina for a while and in 2001 almost everyone in the country saw their savings lose 75% of the value when the government unpegged the peso from the US dollar overnight (or maybe over a week, but FAST).

    Honestly, a big part of it in that case seemed to be mindset. The more entrepreneurial people saw what was going to happen and believed they could get around it and were able to either reduce their losses or avoid them entirely.

    Most people though sat around listening to what the economic minister was saying and ended up in a really tragic situation as a result.

    Anyone please feel free to correct my math/thinking in the above. Those are all off the cuff thoughts/math.

    I would love to see a few dudes smarter than me duke it out on this stuff.

    I feel like there has to be a Youtube video or something in the vein floating around.

  • Joe

    Yes I understand the 401k withdrawals would be taxed just like a salary would. I did not know interest rates were that low, possibly less than inflation.

    Financial and health black swans is what makes the situation interesting.

    Thanks for the additional insights and good luck with your book!

    Joe

  • http://taylorpearson.me/ Taylor Pearson

    Re: 401k – Yea, wasn’t attempting to browbeat and appreciate the comment, just working out the numbers for myself.

    Would still love to hear someone with a more in depth knowledge than this riff on it from both perspectives.

    Thanks for the comment and good luck wishes!

  • http://derekdodds.com/ Derek Dodds

    I’d love to see (hear) another pc on this subject—going a bit deeper—my view is that this isn’t a question of money, that is simply a rational argument based on societal insecurities.

    I challenge you the reader (entrepreneur or not) to ask what kind of life do you want to create? How do you want to live?

    Envision your ideal lifestyle and create a business that supports YOUR vision.

    That’s not some hippy spiritual BS—the reality is that hardly anyone thinks about crafting a blueprint for life—it’s usually done up-side-down as a reaction to other people’s (parents, societies, peers) values and expectations.

  • http://www.howtobearocketscientist.com Brett Hoffstadt

    Great episode guys! Excellent comments here too. While a good part of the message was a re-hash, the big takeaway I loved (and have said often to others) is that what feels or looks “safe” according to the Industrial Age model isn’t anymore. Taking smart risks and being entrepreneurial–even if it means starting to do that as an employee in a big corporation, which is what I did–it can be scary but paradoxically it’s actually the safest way to succeed in our digital world. Seth makes this point in different ways too.
    When the book comes out I will be sure to write about it on my blog, Engineer Your Innovation. Do another show on the book when it’s out! You’ve got the platform and a book is a big deal. Kudos for writing it. Thanks, Brett

  • http://taylorpearson.me/ Taylor Pearson

    The thing that is interesting to me is that the actually possibilities have expanded. If you wanted to travel the world and you were born a peasant in Feudal France, good luck. Technology, most recently the internet, has changed the actual opportunities.

    Agreed on the value of figuring out what you want in a very deliberate sense. I think that was part of why the 4HWW was so powerful – it forced people to get really deliberate about choosing what they want. Something I had never truly done for myself before.

    It seems like the first step is realizing though what the actual nature of reality is before entering into that dialog to figure out what you can get out of it.

  • http://taylorpearson.me/ Taylor Pearson

    Thanks Brett!

    Seth has made the point in a number of ways and extremely articulately. Just read Tribes and he has a lot of great lines there.

    Would love to hear your thoughts when you get a chance to read it :)

  • Kyle G

    Such fortuity that I stumble into this week’s episode, just after I get done ranting about this topic to every unlucky bartender and Uber driver I run into. Cant wait to read, Taylor!

  • PT Palace

    If you a have a location independent income, then you have it pretty good in terms of operating cost. However, there’s still one cost that doesn’t go away when you work from home, and that’s taxes. Unless you live in a tax haven, you’ll have to shell out to the tax man.

    However, if you have a location independent income, and you are not a U.S. national, then it doesn’t have to be that way for you. You can eliminate the tax
    cost, and perhaps lower your other operating cost even further, by becoming a permanent tourist. Here at PT Palace, we make the process as easy as 1-2-3!

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