You may have heard this question several times on your social media lately: Do you want to have financial, geographic and time freedom? The answer for just about everyone is yes, this is a great trigger to grab your attention. There's nothing wrong with that, however, it's important to discern what comes next. Because addressing what can lead to conquer this is different from how you can conquer.
The preferred subjects in this marketing framework are the idealized personas of the Entrepreneur and Investor. Yes, most people who win freedoms have these roles, but the big question is how they got to this point. When a person opens a business or starts investing in variable income, the statistics are not favorable. In Brazil, according to the IBGE (Brazilian Institute of Geography and Statistics), about 50% of companies do not survive more than 5 years and around 70% of companies do not survive more than 10 years. A study released by FGV (Fundação Getúlio Vargas), which aimed to monitor the performance of “daytraders” in Brazil, showed that in a period of 5 years (2012 to 2017), 54% of people had a negative monthly gross profit, or that is, they lost money in the period considered and only 5% of them had a good performance (earnings above 10 thousand reais per month).
The entrepreneur myth
In the case of the entrepreneur myth, as mentioned above, there are people who conquer freedoms through this path, but like every journey, there are great obstacles and as most people are not prepared, they are forced to give up. To understand why they created a myth, it is necessary to answer a question:
Why do most people open their businesses?
Thinking romantically, the answer could be the realization of a dream, an entrepreneur who seeks profit, risking his capital. This is common sense on the subject, which is why American author Michael E. Gerber coined the term “Entrepreneur Myth” as the title of his first book 36 years ago. After several years of work and research, he found that the reason for the high rate of business closures in the United States would be the lack of an entrepreneurial vision. According to him, the individual has several roles in his life and the entrepreneur is not different, and for him, three roles are crucial: the technician, the administrator and the entrepreneur.
The Technician is the role focused on the present, is always preoccupied, likes to do one thing at a time. He is individualistic, he has the idea that if you want something done well, do it yourself. He has the habit of humanizing the work, he is suspicious of those who work with him, that is, the administrator and the entrepreneur, considering them a problem.
The administrator is the role focused on the past, he is always complaining, people are an obstacle to his goal. He is organized, clings to the status quo, trusts the business system and wants to keep things as they always have been, he is not open to change.
The entrepreneur is the role focused on the future, he sees the future through the lens of his dreams. He likes to be in control of the business, has a creative personality, and change and innovation are a necessity. He finds the best opportunities by asking the right questions for the business. He handles the company like it's big, even when it's still in its infancy.
The question is: What would this entrepreneur myth be?
Gerber argues that the balance of these roles in the figure of the entrepreneur is of vital importance for the survival and longevity of the business. According to him, most people are 70% technician, 20% administrator and 10% entrepreneur. And this disproportion is reflected in the failure of most companies. So, the technician is the one who opens more companies, and not the entrepreneur, hence the idea of the myth.
Where is the cause of the technician's failure? Those who start their businesses are very good at execution and have always been praised by their superiors and customers. As he considers the boss and the owner of the business a problem, at a certain point, motivated by being free of them, he decides to open his own business. This motivation can also come from the influence of some announcement about the conquest of freedoms, as we mentioned at the beginning. From there, the problem begins, as he is focused on the present, he continues to do the work he always did, but when he realizes it, he has a job, where he becomes a slave to a crazy boss, his own company.
The entrepreneur, who is rare, sees the business as his future, the company works despite his absence. For a business to have longevity, the entrepreneur needs to focus on creating a living system from the start, and while execution is crucial to survival, it alone won't get you anywhere. He will swim and swim and die on the beach.
The Entrepreneur Myth vs The Investor Myth
What does the entrepreneur myth have to do with the investor? The point is that the person who chooses to make investments, earns his income and has his leftovers, generally, when exercising some professional role mentioned above: technician, administrator or entrepreneur. However, what has now become a trend is to sell the idea that being an investor is a very lucrative profession, alluding to that successful people are great investors. In this view, the myth of the investor is also created.
According to Graham, in his book “The Intelligent Investor”, there are two roles in the investment world: the speculator and the investor. As mentioned above, the study by Fundação Getúlio Vargas shows us that achieving success as a speculator is a utopia, despite all the advertisements on the internet. However, I want to go beyond the “daytrader” issue. Despite the significant increase in the number of people on the Stock Exchange, there are still many who allocate their capital in a wrong and immediate way, imagining they are investors, but they are not.
Like this? Is the person who invests in the stock market not an investor?
The point here is that to be an investor, one needs to understand the intrinsic value of a stock. Investing in a disorderly way, or luckily, does not make you an investor, but a speculator, who bets on a stock price increase without taking into account the context and the business. To be an investor it is necessary to understand business and economics. The investor has a vision of the future and embarks on the vision of the entrepreneur who controls the business, contributing to the potential for growth. But if the investor doesn't have a clinical eye regarding a business and doesn't know how to perceive if it's a living system, and analyze only numbers, he also enters the role of the speculator. Hence the myth of the investor is reinforced.
The investor must understand the business he is going to invest in and, in addition, understand the context so that he can protect his assets effectively and not forget that what led him to conquer his fortune was not the financial market, but his main activity, which, normally, can be either a technician, administrator or entrepreneur.