… and what I learned from the experience.
UPDATE: Please note that this is not intended to be an anti-entrepreneurship manifesto , as some have taken it. I fully support entrepreneurship, my current job with a very small company is entrepreneurial in nature, I have several entrepreneurial projects on the side, and I intend to return to entrepreneurship in the future. These are just some things I learned that you need to think about, to determine if the entrepreneurial path is the right one for you. It is intended to make you aware of things that some people don't think about before they take the leap.
I. Why I Took a Job
It has been more than two years since I left my last full-time corporate position. In that span I've started a small business, written a chapter for a book, taught a few college courses, been paid to blog, and launched a few web projects. I've loved it, but it is time to do something more financially rewarding for awhile.
Several people encouraged me to write, to expand this blog and do some other things but after much thought I realized that I'm not ready for that. I love writing about business, but at the same time I don't just want to write about business, I want to do it. Why? To learn. I'm 29, and even though I don't equate age with knowledge or skill, I know I'm not ready for what I want my future to be. Learning is so much more intense when it has tangible consequences. I can write about what companies should do, and I can be wrong (as I often am) but I don't learn from that the way I learn when I make a mistake such as losing a sale, losing a key employee, botching a presentation, miscalculating a strategic move, etc.
I've had to take a hard look at my long-term goals (start and run an artificial intelligence company) and decide what things I need to do today to get there. Sure, I could start and run my own business just for the sake of running my own business, but that isn't what I want. I want to do something I love.
It's hard to find a job after doing your own thing, but I managed to get several great offers. Four of the five were with very young companies, two pre-funding startups, two older startups with some funding, and a rapidly growing corporate spinoff. I ended up with a young company that does wireless software (bluetooth, WLAN, UWB, etc.) with a focus on embedded platforms. They have asked not to be mentioned on this blog. I only ask that if you know me well enough to know them, please don't blog about it. I'm one of three people on the "business" side, and I get to have a role in defining my tasks and job scope, which is cool. I also get to see lots of great technology that is coming down the road, as our primary customers are companies developing new products.
I still intend to go back to entrepreneurship someday, but honestly, this job has all the fun and excitement plus a steady paycheck, so I don't really feel like I'm in the big company grind. I'm very satisfied with helping drive this company to the next level.
II. What I"ve Learned
Entrepreneurship is difficult. No matter how smart you are, how well you plan, or how hard you work, there is still lots of luck and timing involved. If you ever consider making the jump, here are some things to think about.
Money Matters – Lots of people will say you don't need money to start a business. That's true, for some businesses you don't. But it helps… A LOT! I've met plenty of angels, VCs, and entrepreneurs over the last two years, and I've learned that more than anything else, money gets you a chance to play the startup game. My plan coming out of college was that I would get involved in the local entrepreneurial community while a worked full-time, and impress enough people that I would be picked up on a startup team. In some ways, that happened. I had some nice equity offers, and I do get called by some local people who are looking for help with ideas, new team members, etc. But startups typically don't need business talent. Ummm, wait… actually they usually do need business talent. I should rephrase that as "startups typically don't think they need business talent. Which leads me to my next lesson learned.
Nobody cares that you are smart or knowledgeable (and you need to know if you really are) – Why not? Because everyone thinks they are smart and knowledgeable. Everyone is convinced they are good at business. Everyone thinks they can hire a talented team. Everyone thinks they can sell. Everyone thinks there is something special and different about them that will make them successful. But accurate self-evaluation skills are critical to entrepreneurial success. You have to know what you are good at, what you aren't good at but can learn, and what you will probably never be good at. I think this is a major reason businesses fail.
Think about the intangibles – I will never run a business that regularly deals with the immediate needs of customers past 5pm. Why? Because it's one thing to put in an extra 5 or 6 hours a day when you are playing catchup – it's another to have a 14 hour day dealing with customers. I like long-term projects not immediate customer needs, so that if I stay past 5 it's because I am getting extra work done. If you own a restaurant or some similar business that is open 70 hours a week, you are going to be there 70 hours a week just to complete basic tasks. I never thought of that before.
Short-term thinking can kill your company – One of the things I harp about is how being a public company can tempt you into making short-term decisions at the expense of the long-term (gotta meet those quarterly earnings targets). It's even more true for startups. Sometimes you will accept a customer on which you will barely break even, just to get some money in the bank to meet payroll. All you do is push your problem off another month, in hopes you can find a solution, or that business picks up. It's hard to predict future cash flows, so it's hard to make decisions about where to spend your money. Will a big advertising campaign boost sales to make you profitable, or waste a good chunk of your money? You never know for sure. I think successful entrepreneurs know how to balance short and long term.
Don't max out your credit cards – You hear stories about people starting businesses this way, but I can tell you that I was glad to have plenty of credit once we were up and running. I put a ton of business expenses on my credit cards so as not to take precious cash out of the company.
Know how you make money. Ideas are great, and I'm all for doing cool things, but cash is still king. How do you get cash?
Your estimates are wrong – Yes, even your worst case estimates.
You aren't your own boss – Your customers are way more demanding than any corporate boss could ever be.
Industry contacts are important – I always thought I could just charge into any industry and be successful. But it's hard to get through the door to some customers, so if you have an inside track, it will be a huge benefit. That is one reason people leave their jobs to start something very similar – they already know potential clients. I didn't think about that early enough.
You don't have any free time – If you want to start a business for a certain lifestyle, save your money and buy your way into it. Otherwise, face the fact that it will be a long time before you can step away. I went a 6 month stretch where I had only one day that I didn't go into the office at all. At a corporate job, things can usually wait until tomorrow. At a startup, you are perpetually behind, so they can't.
Attack everything with enthusiasm – I used to be the kind of person that did a great job on things I liked, and did enough to get by on things I didn't like. When you own your own business, you have to do a lot of things you won't like. Learn to attack every task with enthusiasm. I've had to make up games and do other crazy stuff to force myself to tackle boring work. Procrastination is just too easy. If you can learn to knock out the work you don't like, it will make you more disciplined, which will make you more successful.
Acknowledge your mistakes – A startup is no place for silly issues of pride. When you do something wrong, and you will, admit it and fix it. It's much better than riding your decision into bankruptcy. If your team and/or investors have been through a startup before, they won't make a big deal about the mistakes anyway.
Keep your integrity – It's easy to be a good honest person when you have a steady paycheck. It's much more tempting to let it slide when a customer overpays and you need the money for rent. You have to stay honest, as hard as it may be. Honest failure is more noble than dishonest winning.
Deal with the possible consequences – If you fail, what will you do next? Can you deal with starting over? Many employers will pass over your resume because it doesn't fit the template. You may have to go back to your last corporate job. Or, try your luck with small companies – they usually appreciate people that can manage in chaos and wear several hats. Come to terms with what will happen if you fail.
Would I do it again? Absolutely. It probably took just as many years off of my life as if I had taken up smoking instead, but it was a blast. I learned much more than I would have had I done something "normal."
So what should you do if you want to start your own business?
1. Save your money. – If you can't cut back on your living expenses for a year or two to save for your business idea, then you aren't ready to be an entrepreneur. Plenty of company founders go through a period where they can't draw a salary.
2. Save your money, and become a financial partner. – I can't re-iterate this enough. It's easier for money to find ideas than for ideas to find money (although both are somewhat difficult). Become a small owner in a startup at an early stage. You will learn a lot from watching first hand what happens.
3. Start something on the side. – Play around with a small side business. ( There is a new blog all about this.) You can make some mistakes while you still have stable income. And you can test your determination. If you are a person that doesn't want to spend a few more hours working after you just spend a whole day at your regular job, you aren't ready for entrepreneurship.
4. Go it alone. – If you can start without a partner or investor, it will most likely save you some heartache. They will have different goals than you do.
5. Be ready to accept failure. It has a really bad stigma, but the bark is worse than the bite.
6. Make sure you enjoy it. You will spend a lot of time working, so don't do something you hate.
7. Train for it. Jeff Cornwall has written time and time again that entrepreneurs that are educated about entrepreneurship have a higher success rate. I believe it.
And finally, if you ever decide to take the plunge, have a blast and enjoy the ride. The good times will make the bad times worth it.