Entrepreneurship Incentives in Developed vs. Developing Nations
Iran: Entrepreneurship as Survival
My entrepreneurial journey began at the age of six, though I didn’t realize it at the time. While the neighbourhood kids played football outside, I was behind a makeshift counter of cardboard boxes, selling gums and candies that I’d purchased with my pocket money for a small profit.
Over the years, I had several businesses, both online and offline. However, I only became familiar with the term “entrepreneurship” about 14 years ago, at 20, when people started referring to my online crowdfunding platform as a “startup.”
between my first entrepreneurship experience and then, many things had changed, both in my personal life and in society. As a young adult, I started becoming responsible for my own life. Meanwhile, the political tensions between Iran’s government and the rest of the world weakened our economy daily, making basic necessities feel like distant dreams for many, including myself.
Back then, I was working for a web hosting company, and compared to my fellow friends, I was enjoying a decent salary. Yet, even that salary wasn’t enough to rent a small room to become independent from my parents, let alone fulfill the dreams of my youth.
I knew my only option was to start my own business. So, I started to work on an online business after my regular hours. A few months after launching it, I was invited into the first tech incubator in the country, Avatech. In this dim at the end of the tunnel, I saw the biggest hope to have the life I was dreaming about.
For months, I took night buses from my hometown (Shiraz) to Tehran and back to attend Avatech classes and activities. A thousand kilometres each way, 4 times a week.
When my first actual “startup” could see early traction, I permanently moved to Tehran to be closer to my support community. I lived at my aunt's place for the first few months and ate at their table. I’ve always been grateful for the care they gave me. Still, at heart, it was an uncomfortable feeling to depend on someone who was not obligated to support me.
To feel less miserable, I needed my business to succeed, and I needed it as quickly as possible. I worked 12+ hours a day, slept under my desk at Avatech many nights, and only ate when I could afford it. But I was tireless, as I was incentivized; my life depended on it.
Long story short, the company grew, and in six years, I moved twice, eventually to a home where I could barely use all the rooms. I bought a nice black SUV and leaned behind the wheel like it was a Bently. I was living the dream I had just a few years back. Money was not an issue anymore.
This journey taught me something: It’s possible. So I became more hungry. I wanted more.
Canada: The Challenging Comfort!
Five years ago, I moved to Canada with one goal: run my own company on a global scale, compete in a world-class field, and reach the dreams that I had forgotten for years, the dreams that now have become goals.
Initially in Canada, I felt like a vulnerable newcomer and needed a sense of safety before embracing new risks. I joined one of the largest tech incubators in the country, and thanks to my previous entrepreneurship experience, I could make my way up to a Program Manager role quicker than I expected. I did not know that feeling safe meant settling down, becoming conservative, and being content with what I had.
Now, five years into Canada, I still don’t have my own business. Despite my dedication and passion for my job, the entrepreneurial spark that once defined me feels dimmed, and it bothers me deeply.
Standing here and reflecting on my journey, I’m asking myself, what’s the difference between Mohi today and Mohi 14 years ago, who had the courage to risk it all and run his own business? The answer is clear: My life doesn’t depend on it (running my own business and making it successful) like it used to do.
Although I love entrepreneurship in my heart, my life doesn’t depend on it anymore. This is the problem. Not only for me but for many immigrant and local entrepreneurs (or yet to be entrepreneurs) in developed countries like Canada.
People like me, as settled immigrants, and Canadian locals who are, or want to become entrepreneurs, have something in common that disincentivizes us from pushing ourselves harder and further: a plan B!
We can get a job (or already have one) and still have a relatively comfortable life. We know that by contributing a few hundred to our pension plan, more or less, we won’t have to worry about our retirement.
If someone earns $150k from a 9-to-5 job, why should they risk becoming an entrepreneur? It would mean losing sleep, facing numerous challenges for years, living minimally, and potentially tripling their company’s earnings, only to take home the same $150k after dealing with corporate double taxation and all other costs of running a business.
You may say the difference is about the cap: 9-to-5 earnings are capped, but entrepreneurship isn’t. Agreed. But even if the company becomes successful and values millions of dollars (surpassing the 9-to-5 cap), it must pay the government two-thirds of it as a capital gain. Why should one choose entrepreneurship then?
Not only do we know that with or without a business of our own, we can still have a comfortable life, thanks to the quality of life provided by the government, but we also realize that the benefits of becoming an entrepreneur are not significantly more attractive. In simpler terms, we’re not incentivized anymore.
I believe today’s Canada and many other developed countries that are leaning towards socialism are losing their appeal for entrepreneurs. They’re built for the average public to be a cog in the wheel, to move the machines built years ago but not to create new machines.
While I truly appreciate and acknowledge the importance of elevating the quality of life—as not everyone is suited to be an entrepreneur— I don’t think it should happen at the cost of diminishing the incentives for those who choose another path (entrepreneurship).
Conclusion: The True Motivation Behind Entrepreneurship
Entrepreneurs are not in it to change the world. A better world is a byproduct. They are in it to win big. If their ultimate goal were to change the world, they might choose to become spiritual leaders, dedicating their lives to spreading wisdom. They’re in it to gain.
This is the same thing that shaped the gold rush in the 1800s, which laid some foundational aspects of our modern world, and later created Silicon Valley, known as a hub of world innovation and economic growth. None of those people aimed to change the world for the better. They wanted to change their own worlds, and eventually, the whole world changed as a result.
I recognize the importance of closing the gap between the rich and the poor for a healthy society, but is the simplest method — suppressing the ambitions of the wealthy or those aspiring to wealth — a sound strategy?
As today’s Canada is dealing with productivity decline, policy makers should fine solutions to tighten the financial gap in the society without taking the last breath of the most productive citizens, entrepreneurs.
The question remains: In our pursuit of a better quality of life for all, are we unintentionally stifling the entrepreneurial spirit that drives innovation and economic growth? If the quality of life for general public has tripled over the past decade, have the productivity of the workforce or gains for entrepreneurs seen a similar increase?
