1. Context

Quick excursus on top-down learning

I really like the Top-down learning thing where instead of just learning via bottom-up internalisation of the essentials (Bottom-up learning, which I of course also really like), you first write up what you currently know, to make it very clear where your knowledge gaps are most egregious
- (The reason you also need bottom-up IMO is because of the “Concept-Shaped Holes Can Be Impossible To Notice” thing (Slate Star Codex post) - you also need to go to the well rather than trying to invent everything from scratch)
- An example here is like, I just now searched for a tutorial on how to rotoscope in DaVinci Resolve. Of course, if I didn’t know the term “rotoscope”, I wouldn’t know to search this. I might ask Claude about it without knowing the terminology (“hey, how do I extract myself from a video, removing the background? Is there a name for this?“)

I know that I barely know anything
But I guess:
1. I might turn out to know more than I think
2. I might surface really egregious missing things
3. At the very least, it’ll be a good document to look back on (“oh man yeah, remember when all I knew was xyz”)

Note that I might say various incorrect things here! Really I’m writing down claims that I’ll want to investigate later

Businesses are like, a thing. Often they exist as LLCs, which (I got this from Sapiens) were invented to exist as these entities that exist separately from the business owner. Before this, if a business owner ran out of money, you could attack his personal money in order to get your money back, or whatever. But LLCs, it’s in the name, “limited liability corporations” - they limit the liability. My LLC can go bankrupt, but my personal savings will be safe (?)

Note - I’m not 100% confident on this, of course!

If that’s the LL, then I wonder what the “corporation” actually means. Is it from the root of like, “corporeal form”, like, it’s an entity, a Being, that kind of thing. To have “incorporated” is akin to saying like, “I have instantiated a corporeal form”, something like that? And the thing of like, “his corporeal form walks the halls at night”, or something like that, something something ghosts (lol)

There are different kinds of businesses, for sure for sure. I guess you have like, worker’s cooperatives, vs the more classic business that has shareholders. And now you have a profit incentive and must keep growing. Vs I guess, a small business like a barber’s shop, they’re not going to have shareholders, they’ll presumably often just have a single owner, who raised enough capital to set it up…
Businesses can sell goods or services. E.g., the service of a haircut, or the tangible good of a croissant

Useful thing to spot immediately - I don’t actually know what the definition of this is, or the root of the word, etc. Can imagine that’d be really empowering, turning it from this lofty and mysterious thing to like “oh duh, I can do that” (or even like “oh duh, I’ve done that)
Why be an entrepreneur, rather than have a job?
- It’s riskier! I guess the risk-reward ratio is skewed such that you take on more risk but the reward is potentially higher. A job typically leads to another job, etc. Jobs are relatively secure, but your ceiling is relatively low. Vs if you get VC funding for your business, or you sell a bunch of digital goods, you could make millions.

I imagine I have a pretty skewed idea of entrepreneurship and business because of course the stuff you hear about most is like, Silicon Valley, Apple, Amazon, etc. Apps, Uber, stuff like that. Vs I wonder what % of businesses are actually small businesses (I also wonder what the definition of a “small business” is.) There’s something here about like, “the noisy minority bias” or something. Everyone knows about Jeff Bezos and Bill Gates and Elon Musk etc, and then it’s like, “oh man, clearly I could never be an entrepreneur, I’m nothing like those guys, they’re on a whole different level entirely”. But of course there must be a whole class of entrepreneurs who are making good money but aren’t famous

I actually did set up an LLC when I worked at the biotech startup, so this doesn’t feel that daunting (of course, a very simple business-of-one, but still). And that’s a key message here I think: it seems daunting, until you do it
Pay an accountant to incorporate an LLC
Get clients
Create a contract
Create invoices for your services, e.g. after a month of work
Invoice clients
They pay to business account
You pay yourself, plausibly whatever accountant says (e.g. “pay yourself this lowest amount because it’s most tax advantageous”, or whatever)
- Leave aside n% for taxes!!

From my 2 day economics sprint, I learned the thing from Adam Smith about the division of labour. His thing of, 10 people in a pin factory could make maybe 20 pins in a day if they all made entire pins themselves, vs they could make 48,000 in a day if each person had a specific role
So, it makes a lot of sense to hire people for your business. If you’re a solopreneur, very advantageous to hire another person (of course, cash-flow or funding-allowing.)
And, another concept I learned: comparative vs absolute advantage. Even if the founder is better at the new second person at every single thing (that is, they have an absolute advantage in every skill/workstream), it can still make sense to hire someone else, because their opportunity cost is lower (they’re sacrificing less). The surgeon-who-is-the-fastest-touch-typer-who-should-still-hire-a-secretary thing

I think maybe a business is treated as an atomic entity in microeconomics, akin to a household and maybe a person, idk?
On that, is there a difference between a business vs a firm vs a corporation? Are they synonyms, or meaningfully different?

If a business is an atomic unit, you can zoom out, see all the other businesses they interact with, etc. And how do they interact? Do they trade services? Do they compete? Etc etc

That’s 30 minutes of writing.
This has highlighted some key questions, like ontology and definitions, that I imagine my textbook will get into!