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You’re reading Let Us Reach, a newsletter-blog for thinkers and doers, movers and shakers. I’m Madhu Narasimhan. I’m a founder, lawyer, and policy advisor based in San Francisco. In this newsletter, I share my work and professional/intellectual interests, including entrepreneurship & technology, law, politics & public policy, global affairs, and grassroots service. You might think of this space as “Silicon Valley x Washington, DC” (but we’ll sub out the unbridled pursuit of wealth, power, and exclusivity for some healthier vibes). :) You can read the full archive of essays, starting in May 2024, here.

“Let us reach for the world that ought to be—that spark of the divine that still stirs within each of our souls.” —Barack Obama

TODAY’S CONTENTS AT A GLANCE

Today’s newsletter is long! (I suggest clicking "Read Online” in the top-right corner in case your email provider clips the newsletter; the original formatting is better preserved that way). Here’s what we’ll cover:

• The Essay: 

  • “The Categories of Entrepreneurship (or more plainly stated: The Types of Businesses You Could Start)”

  • A link to a prequel essay, “So you want to be an entrepreneur?”

• Subscribe to My Other Newsletter: Narasimhan’s Persimmons, on Substack

• Recommendations: A short book, The Art of Stillness: Adventures in Going Nowhere, by Pico Iyer

THE ESSAY

The Categories of Entrepreneurship (or more plainly stated: The Types of Businesses You Could Start)

In my corner of the world, the word “entrepreneurship” is often synonymous with VC-backed technology startups. A mention of “entrepreneurship,” then, immediately conjures up images of ramen noodle cups and pizza boxes scattered next to entangled wires and dual-monitor setups. Unintelligible scribbles of code and diagrams of the MVP have been on the whiteboard so long, they can no longer be erased. The room bears striking resemblance to a college dorm, but it’s actually the SF headquarters of a new climate-tech startup run by four sleep-be-damned engineers recently accepted into Y Combinator. 

Or perhaps “entrepreneurship” brings to mind an actual dorm, 35 miles south of the city, in sunny Stanford, where a Symbolic Systems major and a GSB student have just teamed up and received a $3 million vote of confidence from Sequoia. 

Here, in the land where PMF, RAG, and SAFEs are terms that need no further definition or explanation, we revere tech founders—and sometimes revile them too—but all too often, we forget (or dismiss) that there are other viable paths of entrepreneurship (or even other viable paths to help the world or find fulfillment in life) that don’t involve technology, venture capital, and hyper-growth strategy. 

Make no mistake: I am a believer in the good that has arisen, and can potentially arise, from the technology and VC ecosystem. Indeed, I’m a part of that ecosystem. But I do think it’s worth taking a moment, early on in the life of this newsletter, to zoom out and briefly examine all the categories of entrepreneurship. I’ll do that in just a moment, with three intended audiences for this particular exercise: 

1. Folks living in the SF / Silicon Valley tech ecosystem, so that we can expand our knee-jerk imagination of what entrepreneurship means.

2. Folks interested in starting some kind of business, whether full-time or as a side gig. Maybe you’ve already read my earlier essay, “So you want to be an entrepreneur?”. And you do want to be an entrepreneur. What, then, are the different options? Where could you turn to for inspiration or instruction as you get started? I have some suggestions.

3. Folks who are successful entrepreneurs and looking to add new projects to their plate. You’ve already crushed it in one arena. You’re now thinking about launching new projects in order to pursue other passions and build out multiple income streams. With your resources and time, could you perhaps even launch one project within each category of entrepreneurship?

With that preface, we’re off to the races. First, here are the two broadest categories of entrepreneurship:

(1) Producing or selling goods

• Here, I’m defining “goods” as tangible, physical products. Technically, the economic definition of “goods” includes intangibles (e.g., information) as well, and the truth is, the “goods vs. services” binary is not always so clear-cut (think restaurants, for example). But, for simplicity’s sake, I’m referring to “goods” as tangibles that emerge from processes like hand craftsmanship, manufacturing, construction, agriculture, or leveraging natural resources.

• Producing goods can be a capital-intensive endeavor (e.g., running a ceramics factory), but it doesn’t have to be if you start out operating at a smaller scale (e.g., making art in a home studio).

• If you aren’t interested in producing the goods yourself, you can still source, curate, and sell them, as a distributor, wholesaler, or retailer. 

• For inspiration: Goods are a broad category, of course, encompassing everything from the solo pottery artist displaying their works at a museum exhibition, to family-run strawberry producers giving out samples at the local farmer’s market, to, sadly, some of the planet’s largest polluters. How do you, then, create a meaningful goods business? Here, I’ll offer just one example in order to help create space for you to brainstorm the possibilities that matter to you. Take a moment to take in the quiet, luminous morning hues of Kinto, maker of Japanese tableware with a flagship store in Los Angeles. What good can you sell that is of purpose and beauty—and maybe of some good?

• For instruction: For some reading on goods entrepreneurship, consider Phil Knight’s Shoe Dog, the story of Nike.

(2) Selling services

• This is the other super-category of entrepreneurship. It includes everything from your uncle’s two-person, small-town architectural design firm to behemoth financial institutions with a global presence.

• Depending on what you’re doing, this could be a lot less capital-intensive compared to a goods business. But it is likely human-intensive and time-intensive.

• For inspiration: Think: What are you an expert at? What do your friends and colleagues seek you out for?

So those are the two super-categories of entrepreneurship. For a more granular reference guide to the different industries within “Goods” and “Services,” check out this page from the U.S. Bureau of Labor Statistics.  

…

I’ll now offer more specific categories to consider (these are all subsets, or some combination, of Goods and Services):

Technology startup (yes, I will spend some time talking about this category after all!)

• I opened this article talking about VC-backed tech startups. But there are actually two models to pursue a tech startup. 

• One model emphasizes rapid growth, often propelled by VC dollars. Typically accompanying those VC dollars is pressure to keep scaling as fast as you can, take on multiple rounds of financing to support that growth, and then get to a $1bn+ exit (i.e., M&A or IPO) that ensures your investors make a home-run return that more than compensates for the 90% of their portfolio companies that go completely bust. Achieving that exit can bring life-changing value for the founders too, but until that exit comes (5 years? 10 years?), I’d argue that you, as Founder/CEO, are essentially a W-2 salaried employee (perhaps making less than you would in another tech industry role)—rather than an “owner” in the traditional sense. If you’re okay with that, and if the day-to-day journey itself—not just the idea of a future exit—is compelling to you, it might just be an incredible ride.

• For instruction on this first model: YC's Startup School (the core curriculum as well as their broader library) is a great starting point. YC challenges some of the Silicon Valley orthodoxy (e.g., by recommending that you “do things that don’t scale”), but they also provide you a well-tested playbook for doing a fast-growing, venture-backed startup. You could also check out some books; Zero to One (though I should note I’m not a fan of the politics of authors Thiel or Masters) and The Lean Startup are widely read. To grasp the fundamentals of VC, check out The Power Law (a history of the field), Secrets of Sand Hill Road (an insider’s guide to the field and how to raise), Raise Millions (an approachable e-book on how to raise, released recently by Hustle Fund), and Venture Deals (demystifying the terminology and legal aspects of financings).

• A second model has become increasingly popular in recent years (perhaps as a result of tech founder burnout, the challenging VC fundraising climate, or founders just realizing that they want to build a different kind of business where they have greater freedom and flexibility). In this model, you can still work with innovative technologies, but likely in areas that don’t require large amounts of upfront capital. You skip the VC money; instead, you self-fund or raise from family/friends or angels. At most, you might do a “one and done” seed round from a VC firm or an accelerator program, giving away ~10 percent of the company upfront but eschewing the subsequent alphabet soup of financings that result in significant founder dilution. This can enable you to: grow on your own terms (and even if growth comes slower, you can focus on getting the fundamentals right); create a self-sustaining, cash-flow-focused business that doesn’t require infusions from outside; hold onto more equity; take ownership distributions along the way (rather than waiting for a massive exit that may not materialize); and preserve balance in your life (acknowledging that there’s more to experience in life than your work).

• For instruction on this second model: I see quite a bit of social media content on this new paradigm of running a tech startup. Greg Isenberg is one of the folks I follow who talks about this. I’m not sure if there’s an end-to-end “how to” resource (e.g., book, podcast, video/course) on this model. I have heard good things about The 4-Hour Workweek, The $100 Startup, and Million Dollar Weekend, and they’re on my reading list. As far as I know, these books aren’t exclusively focused on tech startups that are aiming for cash flow, but their lessons could nevertheless be applicable to this second model of running a startup.

E-commerce, simple SaaS, and Internet businesses that are more SMB than startup

• Unlike tech startups, these are not businesses that are based on cutting-edge technologies or require intensive coding. (But there may be some overlap between this type of business and the cash-flow-oriented model of a tech startup, described above). These businesses involve platforms you can set up quickly, maintain minimally, and leverage as hubs for sales. 

• For inspiration: Check out AppSumo, a software deals website founded by Noah Kagan, the author of Million Dollar Weekend (mentioned above). AppSumo was built for $60 over a weekend in 2010, and grossed $80 million in 2023. 

• For instruction: AppSumo’s "ultimate guide on how to start an online business" contains step-by-step guides for e-commerce, as well as several of the other categories of entrepreneurship that I’m covering here.

Writing, content creation, and related projects

• A full portfolio of content creation would include writing (e.g., a newsletter/blog), audio (e.g., a weekly podcast), and video—as well as distribution of that content via the major social media platforms, your email list, your personal website, and SEO efforts. 

• There are a range of options to then monetize your content, including introducing premium memberships, adding ads/sponsorships, giving out product affiliate links, and creating digital products (e.g., courses, e-books). 

• Content creation isn’t just the province of Gen Z TikTokers; it is the essence of how we share our thoughts in this day and age. (Hence why I felt compelled to launch the Let Us Reach and Narasimhan’s Persimmons newsletters this year). 

• Of course, it does take time and significant effort to create content and also build an audience, and the chase of building that audience can potentially pull you away from the topics you most want to explore.

• Related projects: If you’re successful at building an audience, you can also do media (e.g., an appearance on someone else’s podcast or perhaps a TV news show), speaking engagements, and conferences/events. You might also consider setting up a 1:1 advisory service to support people and organizations with your expertise (for more on this, see the next category of entrepreneurship below).

• For instruction: The AppSumo guide (previously linked) is a good place to get an overview of how to go about doing content creation. From there, you might delve into more specific tutorials (e.g., Ali Abdaal’s YouTuber Academy if you want to figure out how to create quality long-form video content).

• For inspiration: Check out the lovely and renowned essay “1,000 True Fans” by Kevin Kelly (founding executive editor of Wired magazine). Kelly points out that you need just 1,000 loyal followers—not millions—to support your work at ~$100/year in order to start making a living off of your creative work.

Expertise-oriented small business

• I alluded to this above, when talking about Services as a super-category. The question was: What are you an expert at? What do people seek you out for? I love advisory services (AKA consulting), coaching, teaching, and freelancing businesses because they usually don’t require any upfront capital, and you can share your expertise and passion while setting your own schedule. Advising and teaching others will also push you to keep leveling up your knowledge and skills within your domain of expertise. 

• Of course, you’ll be selling your time for money, which isn’t ideal if you’re seeking greater time freedom, but you can scale, hire others, and step back over time.

• For inspiration: Look at the Intro platform and MasterClass. What would your MasterClass be on?

In-person small business

• There are several options here. You can independently launch an in-person small business (for goods or services) that you dream up yourself. You can franchise. Or you can acquire an existing small business, add value to it, run it for a couple of years, and then sell it. Indeed, this latter model, Entrepreneurship Through Acquisition (ETA), with the support of search funds, seems to be all the rage these days among graduates of the most prestigious business schools in the U.S.

• From a brick-and-mortar ice cream shop to dog grooming services, from a yoga studio to guided tours of Japan, you can bring a sense of sheer delight to people.

• But, you may need some capital upfront, and you’ll need to be ready to be geographically rooted in one place in the early days, unless you have a day-to-day team managing the operations.

• For instruction: See The E-Myth Revisited for a classic treatise on small business. For resources on ETA and search funds, see the Stanford GSB primer on search funds, the HBR Guide to Buying a Small Business, and the book Buy Then Build. Many of the lessons in these ETA-focused materials should be applicable even if you launch your own, brand-new small business instead of acquiring an existing one.

Real estate

• I think of this category as not just standard residential or commercial real estate projects, but also property projects that include a travel-and-hospitality element: e.g., establishing hotels or Airbnbs. 

• Truthfully, out of all the categories, I know the least about real estate. Perhaps I’m scared off by the perceived capital requirements—or the amount of hands-on, on-site work that is likely required to see a project through to the point of renting out the property or else renovating and selling it. But I also know that it has been a tried-and-true path to long-term financial freedom for many. I take comfort in knowing that I’m close with quite a few people who know real estate very well, such that if I ever want to engage, I’ll be able to learn from the pros!

• For instruction: For now, I’ll just suggest the classic Rich Dad Poor Dad. I happened to come across it many years ago, and at least one of the core principles has stuck with me: the home you live in should be considered a liability; go beyond that and learn to hold true assets, such as investment property. Years later, the application of this principle is very much a work in progress for me. I’m still a renter. :) 

Investing and other financial activities

• This might include the following:

  • Earning dividends, ownership distributions, or capital gains by investing in financial markets/instruments, cryptocurrencies, commodities, businesses (e.g., as an angel/VC/PE investor), or some other asset class

  • Earning interest (e.g., via lending)

  • Earning rental income (see above: Real Estate)

  • Earning royalties (e.g., from intellectual property you license out)

  • Earning from pensions/annuities

• But when are these activities “entrepreneurship” versus just “personal finance”? Not that the distinction matters a whole lot for practical purposes, but I’d argue you’re wading into entrepreneurship if you (1) set up your investment activities to be housed under a fund or an institution of your own creation and (2) showcase that vehicle publicly. So, if you’re a prominent angel, VC investor, PE investor, hedge fund, family office, or like my friend who’s currently setting up a real estate-and-small-business-focused investment fund, I’d say you’re not just an investor but an investor-entrepreneur. 

• There’s obviously tons of resources out there on investing—and I need to delve deeper myself—but, for now, let’s try a quick exercise of the imagination instead. For inspiration: Take out a sheet of paper and title it “[Your last name] Capital.” You’ve just launched your own investment firm. How much capital can you deploy? What is your thesis, and why? In what and whom do you aspire to invest? In what geographies? On what timeline/lifecycle? How do you plan to execute? (e.g., I’ll paraphrase a good friend’s strategy: “I’d put all of it in a low-cost S&P-tracking fund because that keeps things simple, and it’s just really hard to beat the returns of the market year after year. I’d be laughing at the VC firms and hedge funds in due time; they’ll be doing all this analysis and diligence, and they’ll still fall short of the market.”) 

Social entrepreneurship

• At the end of the day, entrepreneurship is about so much more than building wealth. Profit creation may be a significant consideration/component of starting businesses, but the core of this whole entrepreneurship thing, in my view, is about creative expression and enhancing the quality of life for other humans. 

• If you agree very strongly with that sentiment, you might consider launching a mission-driven social enterprise. You can set that up as a for-profit corporation, a nonprofit, or as a hybrid entity (e.g., benefit corporation, social purpose corporation). Think through the outcomes (profit-oriented as well as societal) you hope to achieve, and the most fitting legal structure can then be derived from there. 

• But know that social enterprises can be tough to run, especially if you don’t know which metric (profit vs. societal good) is more important to you when push comes to shove. Your stakeholders will scrutinize your results according to the metric that’s most important to them.

• Remember: You don’t have to officially declare something a “social enterprise” in order to have an impact on the world. You can pursue any of the categories of entrepreneurship and still make a significant difference in people’s lives.

• For inspiration: An abstract of an HBS case study on California’s own outdoor brand and world-class social enterprise, Patagonia. 

Now, having reached the end of my list of the categories of entrepreneurship, I’m realizing that I actually spent quite a bit of real estate (no pun intended) on the tech startup, despite my pontification in the preamble. Perhaps I’m proving my own point—that most Silicon Valley folks are a bit more fluent with tech startups than with any of the other categories of entrepreneurship. Ultimately, perhaps there’s nothing wrong with that; it’s just what we’re surrounded by. But, in any case, I’m glad we ran through this birds’ eye view of entrepreneurship; I myself see now where I could afford to do some deeper learning, and I hope this was a useful summary of the possible paths you can take.

…

How should you decide what category of entrepreneurship to pursue?

You’ve examined the different categories of entrepreneurship. Perhaps you have some ideas that you’ve brainstormed within each of those categories. Now, what project should you actually pursue?

While there are a multitude of factors you could consider, here are some I’d suggest thinking about, evaluating each category of entrepreneurship (or each specific project idea) against the others:

• How much capital is required to get this idea off the ground? (The tech startup, brick-and-mortar small business, real estate, and investing might all be a bit more capital-intensive, while content creation and the expertise-oriented small business probably require less to get off the ground. Goods entrepreneurship and e-commerce/simple SaaS could go either way, depending on what you’re envisioning).

• Building off of that first question: Do you already have the necessary capital on hand? Have you factored in your own salary? (Or will you continue to work a day job and do entrepreneurship on the side?) Are you prepared to bring on investors, even if that increases the pressures on you?

• On what project do you have the most validation and the easiest method of distribution to reach potential customers?

• What size/scale do you want to achieve? Would you be fulfilled with one storefront that serves your city, or are you trying to create the next Airbnb?

• Do you have the necessary expertise? What expertise do you still need to gain?

• How much time can you give to the project? How much time do you want to give?

• Most importantly: What are your life goals? What do you actually care about? What project would allow you to impact people and the world in the way you most want to? On what project would you be prepared to be the most gritty? What would you be ready to work on for one full year? Five years? Ten years? 

Your responses will likely pull you in the direction of one category or project over others, at least to begin with.

But I should note: I’ve talked to successful entrepreneurs in each of the categories; they all say their path was, and is, hard. There is, after all, no easy success. Often, founders point to some other category of entrepreneurship that they’re not in and say, “Oh, I should have done that.” The grass is greener on the other side. The owner of the sports academy wonders if they should’ve done a scalable tech startup. The tech founder wishes they’d started a neighborhood coffeeshop. And so on. 

It’s all hard. Anything worth doing is hard. So just choose your hard. Choose wisely, considering what idea or vision is so compelling to you that you’ll keep on keeping on, even when the going gets tough—when your long-term customer is furious one day and writes a scathing review, when the 56th VC you’ve talked to this month passes on your idea, or when your family asks when you’re going to get “a real job.”

I wish you much luck in this decision. And if it ends up being a VC-backed tech startup based out of SF or Stanford, I certainly won’t hold it against you. I’ll be cheering you on. :)

…

Earlier this year, I published on LinkedIn an introductory essay on entrepreneurship, titled “So you want to be an entrepreneur?”. It’s a prequel of sorts to the essay you’ve just read. Here’s the link:

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I have another newsletter you might be interested in: Narasimhan’s Persimmons, my Substack on life design, personal development, high performance (in the midst of the daily chaos we all experience), and all things life (beyond work). There, I’ll explore a range of personal blueprints, from meditation to building community in a new city to finding the best teahouses in the world. Please consider subscribing there as well; I’d love to have you as a reader.

RECOMMENDATIONS

Movers and shakers: before you move and shake, learn to be still. One evening last month, I glided through Pico Iyer’s The Art of Stillness: Adventures in Going Nowhere, a 74-pager that can be taken in quietly and contemplatively in one sitting. Pico, the eminent travel writer who divides his time among Japan, California, and the rest of the globe, is serious and literary, and brings you on journeys not only in the outer world but into the heart of the inner. He is simply my favorite writer, and I’m savoring my way through all his books. (His philosophy and voice have been constant companions over the years, and you might be hearing a lot more from me about Pico’s works in the months to come).

In The Art of Stillness, Pico cites Gandhi and Thomas Merton, Matthieu Ricard and Emily Dickinson, to explore what we gain (even in our work) from stillness, silence, meditation, and retreating from the incessant movement and bombardments of modern life. I’ve read many a book on similar topics, but this was something different; the reading itself, as is often the case with Pico’s literature, was a meditation.

The opening lines alone will have you mesmerized:

“The sun was scattering diamonds across the ocean…” (“The language just shimmers,” Obama once said of a book—and what better description than that for Pico’s writing as well!). Reading Pico’s opening, I’m reminded of another Californian scene I see often but am nonetheless struck by every time: the chiaroscuro painted by the twilight sun on the waters of the Bay as I look out the window seat, my flight alternating between motivated forward-pushes and quiet, gentle bobbing on its descending path toward the final touchdown at SFO.

I’ll leave you now to sit in stillness with the rest of Pico’s book. You’ll return to your work, and the hums of the world, refreshed.

Best wishes,

Madhu

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DISCLAIMERS

Madhu Narasimhan’s content has been prepared for general informational purposes only, and does not constitute legal, financial, medical/healthcare, or other professional advice. No attorney/client relationship is formed. The use of information contained in Madhu Narasimhan’s content, or materials linked in his content, is at the user’s own risk. His content is not intended to be, and should not be relied on, as a substitute for professional legal, financial, or medical/healthcare services or other such guidance.