A few days ago, I published an article and video comparing one former friend's behavior regarding entrepreneurship to another once dear friend's severe substance use disorder. The video is embedded below. Or you can read the article about entrepreneurial addiction here.

A fair amount of academic research supports the idea that entrepreneurship can seemingly be a form of behavioral addiction. More scholarly work supports the idea that many who gravitate to entrepreneurship are likely to trend towards both substance use disorders and behavioral addictions like gambling. 

It was a very personal story for me. Even knowing some research supported my perception, I expected my comparison to be a point of controversy. So far, knock on wood, it hasn't been. 

I have received a few questions about how I used the terms "breakeven" and "profit". These terms have different meanings depending on the context, and clearly, I didn't do a good job differentiating them. So here's my low jargon explanation.

If a business makes $1,000 per week but incurs costs of $1,000 per week, it's operationally at break even. That company is not losing or making money, only subsisting. If starting that business costs any money, no matter how many months the company breaks even, it will never pay back those startup costs. 

If the business costs $1,000 a week to operate but earns $1,100, it makes a profit. But if the startup costs were $5,500, it would have to turn an operating profit of $100 per week for 55 weeks before breaking even with the total capital deployed into the business. 

Most businesses take money to start and operate at a loss for some time, eventually turning low profits that ramp up. Some businesses, like software, can scale relatively easily, allowing for hockey stick growth. But the majority of companies have a clear upper limit for revenue, and scaling requires new locations, staff, equipment, and materials. 

When effortless growth isn't an option in the future, and it takes a very long time before a venture earns more money than it needs to start, it's financially unviable. The longer a business operates at a loss, the less economically viable continuing becomes. For many businesses, early bad management pushes the time before a company earns more than it has spent so far into the future that it cannot succeed. 

In part, what I called "entrepreneurial addiction" was the willingness to ignore the logistical realities of elapsed time and built-up costs. Watching someone push away anyone who points the logistics out or argues that the big break where explosive growth fixes all problems is just months away is painful. Having someone explain their financial model's plan for impossible growth feels like every argument with a gambler explaining their method.

For some in the tech startup where insane growth is possible, the gamblers sometimes win big. Companies masquerading as tech firms sometimes pay off for the founders. But often, these behaviors leave entrepreneurs depressed with fewer friends and less money than when they started.

Here's the video if you're interested.