"The $100 Startup" is not a very good book

This is a review of "The $100 Startup," by Chris Guillebeau. For a previous book review, see "Pound Foolish" is a pretty good book.

Chris Guillebeau has a lot of interesting friends and acquaintances

The conceit of "The $100 Startup" is that entrepreneur extraordinaire Chris Guillebeau had a flash of inspiration: everywhere he went, he met people who shared their stories of achieving "freedom" (a concept we'll return to in a moment) through low-startup-cost enterprises: at its most basic, just a website, an e-mail address, and a PayPal account.

So Guillebeau, being an entrepreneur extraordinaire, decided to survey, compile, and analyze the experiences of those entrepreneurs to see if he could identify the general principles which led to the success of their micro-enterprises, and share them with the world.

Unsurprisingly, Guillebeau's profiles of entrepreneurs are the highlight of the book. It is genuinely interesting to read about a variety of ways people are getting by in an era where anyone can be paid by anyone for anything they feel like paying for.

Guillebeau is not a particularly effective storyteller

If that sounds familiar, it's because for the last 15 to 20 years, anyone with access to the internet has access to thousands of stories of entrepreneurs starting with virtually no capital developing successful online products. Many of those articles are well-written and informative for people considering starting their own online businesses.

This is a fascinating topic that has been treated extensively by the news media, which knows a good story when it sees one. But Guillebeau brings no particular expertise to this storytelling project. Rather, he roots around in his survey data until he finds a piece of Talmudic wisdom, like, "Offer an incredible guarantee, or don't."

Well, yes, Chris, those are the options.

For someone supposedly concerned with "freedom," Guillebeau is oddly obsessed with financial success

Guillebeau frames his book as a series of stories, including his own, of entrepreneurs who, often accidentally or via unexpected misfortune, find themselves forced to support their families through small businesses of their own design.

But the more you read, the more you find that he's talking about businesses that are so profitable they replace the income the entrepreneur was earning through traditional employment. In other words, this is a world much closer to traditional entrepreneurship than he lets on: it's ambitious, money-oriented, self-motivated people making middle-class incomes through sole proprietorship.

Here's one of his informants talking about her business philosophy: "Remember that the goal of business is profit. It's not being liked, or having a huge social media presence, or having amazing products that nobody buys...Business is not a popularity contest...There's nothing wrong with having a hobby, but if you want to call it a business, you have to make money" [165].

Needless to say, that philosophy is deeply ingrained in American society — yet Guillebeau appears to believe he can claim to have discovered the profit motive by cloaking it in the language of "freedom."

Of course anyone would be excited to discover that they can make as much money from a small business as they do from formal employment; it's no doubt an incredibly exciting thing to discover. But Guillebeau never gives a coherent explanation for why formal employment is "less free" than self-employment; why making wedding dresses at home is "more free" than making wedding dresses in a factory; why making award bookings for strangers (yes, Gary Leff is one of the case studies) is "more free" than running a North Carolina research center. More profitable, maybe, but that's a much less interesting claim than the one Guillebeau seems to think he is making.

"The $100 Startup" misses the trees for the forest

Guillebeau repeats variations on the following mantra throughout the book: "You can open a PayPal account in five minutes and receive funds from buyers in more than 180 countries" [xvi].

But astonishingly, his only anecdote from an actual entrepreneur using PayPal is devastating: "The problem was access to money. Because Naomi is Canadian but has lived in the United States, the United Kingdom, and elsewhere, she often has issues with her PayPal account being closed as she travels the world, leaving her with plenty of funds in the account but no way to access them" [181, emphasis in original].

Instead of turning this into a teachable moment about the vagaries of using PayPal for your online payments processing (which I'd be happy to tell Chris all about), he describes her borrowing money from a stranger to pay conference registration fees. I'm glad Naomi worked something out, but for your typical entrepreneur who foolishly depended on PayPal for worldwide payments processing, this situation would be simply devastating.

And indeed, the entire book is full of inspirational aphorisms rather than concrete advice on the mechanics of running a small business.

Guillebeau is either gullible or naive about the 1099 economy

Repeatedly through "The $100 Startup," Guillebeau refers to people "deciding" whether to work or employ workers as employees or independent contractors.

Regarding a designer who returned to work after leaving her job to start a small business, he writes, "Also, Tsilli now worked as a contractor instead of an employee, and that gave her an unexpected but important sense of still earning all her income 'on her own,' with roughly half coming from the studio and half from her business" [230].

Regarding a transcription service: "Then she made another key decision: not to hire employees but only hire contractors. By building the team on a contract-only basis, she had more flexibility to increase or downsize the numbers, depending on market needs...(The contractors all understand that the work is cyclical and future projects aren't guaranteed)" [222].

Let me be clear: a wide swath of the American workforce is improperly classified as independent contractors in order to reduce the payroll tax burden on their employers. Employee and independent contractor status is not properly a "decision" made by either the employee or the employer: it's a legal determination based on the facts and circumstances of their employment. And the default, absent a raft of mitigating circumstances, is for employee status.

Guillebeau's studied ignorance of this problem treats the classification as a "business decision." It's not, and he invites abuse by suggesting it is.

I run a $205 startup, and I'm glad I didn't read this book before I started

Over two years into this project, I've made a lot of mistakes, many of which I recognize in the stories in this book (can you say affiliate links?). But if I had in mind the mechanistic, profit-oriented vision this book proselytizes when I started, I don't think I would have made it to my one-year anniversary, let alone still be blogging over two years later.

Guillebeau's vision of entrepreneurship is deadening, profit-oriented, and capitalistic, red in tooth and claw. That's fine: American culture is deadening, profit-oriented, and capitalistic. But his attempt to reimagine that culture and the role of the entrepreneur within it as a lone voice crying out in the wilderness for freedom does a disservice to those who truly reject the relentless pursuit of wealth as the principle goal of life.