I'm almost ashamed to admit that I still held some of the ideas mentioned in this post. But this blog isn't about making me look good. It's about my authentic views on business, be they right or wrong, good or bad, wise or idiotic. So bear with my stupidity below
I was having coffee with my friend Deborah last week (who has proven to be an endless source of inspiration for blogging ideas) and I told her that I had finally written off my old views of entreprenuership. You see, I was in b-school in 1998 and 1999, so I was indoctrinated with certain ideas that weren't necessarily true. For instance, I thought GE and Proctor and Gamble would soon be washed up has-beens. I thought everybody would soon do everything via the web. And when it came to entrepreneurship, I thought that you had an idea, or invented some new thing in your spare time, wrote a business plan, and VCs gave you money. I told Deborah that I didn't believe that anymore – that so much "convential wisdom" about entrepreneurship was a lie. It just isn't what people think.
"So you're not drinking the kool-aid?" she asked. I just laughed. "Not anymore."
She's right. Entrepreneurship is sometimes glorified like some weird cult, but the truth is that most companies don't start the way people think they do. There is only one way to get money for an idea. If you have successfully built and sold a good sized company, and have an idea in a similar field that you are putting some of your own money into, you may be able to get some funding based on your past success. But barring that, here are the "real" ways companies get started. I've problemably forgotten some, so feel free to add your own thoughts in the comments.
1. The PhD – Government funded research leads to some new breakthrough. The PhD that worked on it partners with a few people and finds a little bit of money to commercialize the technology.
2. The corporate spinoff – A company develops a technology that it doesn't want or need. A few employees spinoff with the technology and a bit of cash from the corporation and try to commercialize it.
3. The necessity – A guy runs a small business of some sort, and has an unmet need. He figures out a new widget (or software maybe) to meet his need. Eventually, someone asks about the widget because they could use one too. Guy markets widget and does well.
4. The consultant expansion – A small consultant shop with just a few people tackles and solves an interesting problem. Realizing that their solution has other applications, they seek funding and market it.
5. The hobby – A guy has a hobby, maybe woodworking, for example. Over time he becomes very very good at it, and people start asking him to make them things. He launches a business around it.
6. The part-timer – This is, in my experience, the most popular and one of the best ways to move towards entrepreneurship because it allows you to transition. You start something small, working mainly evenings and weekends while keeping your day job. You have a few excited customers that you use to help figure out the future of your business. You grow to the point where you are stressed out from working two jobs. You work out a plan, and transition full-time to the new venture.
7. The small business – You start something simple and cheap. It never makes it to the "big leagues," but so what? Most entpreneurs never do. Michael Dell is a rare breed.
I bring these up to highlight a key point – you don't get investment for just an idea. It's extremely rare. If you want to be an entrepreneur, stop believing that ideas matter. That isn't what entrepreneurship is about. Entrepreneurs aren't idea people, everybody and their brother has ideas. Entrepreneurs are people that exploit ideas by matching them to market needs, executing them despite scarce resources and designing a business model that makes the idea profitable.
If you want to be an entrepreneur, stop waiting. Start doing something. That is how you learn. Make entrepreneurship your hobby, until you can make it your career. And stop reading garbage about these companies that go from idea to a billion dollar valuation in two years. That requires as much luck and timing as it does vision and execution. You will have much more success if you get these crazy ideas out of your head, and if you put the kool-aid down.