Common startup and entrepreneurship misconception
The startup and entrepreneur world has been wrongly glamourized. As a consequence, many people want to launch a startup unaware of what it really entails.
I try to give more raw data and a different point of view to see the matter in a new light: at the end of the article you may still want to launch a startup, or you may change your mind.
Many misconception has been scattered around, some ideas I made up through the years:
Power has been detained mostly by investors, while founders have lost most of their contractual force. Incubators themselves are cloud sources for investors while the Lean Startup Model is great for investors indeed, but not so much for startups.
The acqui-hiring phenomenon has raised, making incubators similar to new alternatives to getting a business degree or an MBA. Therefore hackers (techie guys) have became more like mercenaries for big corporations.
While we wait to see how the world economy asset will manage to absorb the global internet service era, let’s tackle some entrepreneurship commonplaces that are widespread nowadays.
1. The Fast Wealth Myth
A good entrepreneur would probably earn more if he was an employe of a big company. It is highly improbable for a random entrepreneur to become the next Facebook and even less the next Google or the next Apple.
Most people think they can kickstart a startup and be finished within two to three years. Instead a realistic prospect would be ten years to several decades. Most people are not willing to invest such a big a slice of their lives.
A 2–3 years prospect is a possible outcome if you aim at being acqui-hired, but then this would be just a faster road to get a good job. Nothing inherently bad about it — and I’d probably take it, but this would be far from being a full-fledged entrepreneur.
Statistically speaking, and from a monetary standpoint, a gifted individual should chose to get a steady, safe and high wage instead of bungeejumping into the overcrowded world of startups . Here risks are too high and stakes are too low, while probability and statistics would be working against him whereas they should work for him.
For the self-employed, initial earnings are lower and earning growth significantly slower than for those engaged in paid employment. …All told, entrepreneurs earned 35% less over a 10-year period than they could have in a “paid job”.
- The Founder’s Dilemmas, Noam Wasserman
But there is a caveaut. If you compute also personal happiness levels, it turns out it could be worth it: given equal earnings, self-employed people are 2.5 happier than employees (I’m sorry but I cannot find the article nor the study about this data that I read many months ago, if you know it, please forward it to me, I’d like to include it in this brief article).
So let’s set apart a mere computation of earnings, and let’s add some term to the equation. To consider the idea of being an entrepreneur, I’d need to earn enough to sustain my current lifestyle and at least what I would earn through my best alternative divided by 2.5.
This wouldn’t be conclusive at all, because I’d probably need many more hours of work if compared to an employee’s work hours. Working 40 hours a week isn’t the same of working 120 hours a week. Knowing myself, I would probably knock myself out due to work, if I had to run a big business without the correct control points. This could be avoidable with a good team and a correct work division, so I’d need also trushworthy people to work with — the hardest material to source in my experience.
Keep in mind that if you are a founder, a realistic expectation of how many share of your startup you will own at the end of the funding rounds is roughly 10%, much less than what people generally expect. This isn’t enough to mantain the control of your startup, but it is enough to make you rich if everything goes smooth, but how often everything does go smooth?
In the end many entrepreneur finds themselves as investors’ employees, with also the responsibilities of their own employees. Through this frame of thought it isn’t so surprising that many founders suffer of acute depression.
2. The failing fairy tale
Failing has being regarded as a favorable outcome. While failing must not be condemned, it is foolish to deem it as something positive. Surely you can learn from it, surely you won’t stop at it, but let’s face the ugly truth: you failed, you’d be better off if you didn’t fail, and you would have got more experience from succeding. In fact it looks like that experience about succeding scarcely build up on failing experience:
Failure is not a prerequisite for success. A Harvard Business School study found already-successful entrepreneurs are far more likely to succeed again (the success rate for their future companies is 34 percent). But entrepreneurs whose companies failed the first time had almost the same follow-on success rate as people starting a company for the first time: just 23 percent. People who failed before have the same amount of success as people who have never tried at all.
— Rework, Jason Fried
Keep failing and you’ll be just playing lottery with your time as stake and an unfavorable probability of success. Fail fast would be a good strategy at this game. If you invest 5–10 years on each startup, you’d need 70 years forefront to have mathematical hope to win. Personally I wouldn’t stake my lifetime on such a bet.
3. The 9–5 sucks commonplace
Very few people like working and even less people like their work (according to stats, two-thirds of the workers are unhappy with their jobs and 15% even hate their work). Only 27% of college grads end up in a career related to their jobs. I wonder if then they are satisfied or if the real problem is that they don’t know precisely what they like and what they want to do. It’s not a simple problem at all — expecially if you consider that you change during your life.
Changing between a topic to another one resembles the behaving of a bored person. We spend time on something, it stops being interesting, we pass onto another one. A lifetime has only so many years and such a choice is harder to be made, but its true essence is awfully similar to channel surfing.
We should try to figure out the kind of lifestyle we desire, little by little, instead of living by imitation of other people like sheeps, afraid to break boundaries and in a religious deference of the status quo.
For someone every 9–5 job could suck, for others every entrepreneurship path could suck, maybe for most people there are some 9–5 jobs they can enjoy and others they cannot, maybe for these same people there are entrepreneurship road they could like and be succesfull into, maybe there is some overlapping between these groups, maybe some persons are not destined to work a 9–5 jobs for all their life, but only interim or for some year, or for some decade; maybe there are other important elements to consider like the city where you are working, how much you are earning, how many hours do you work, which kind of people you work with, your interest in the industrial sector, and so on.
9–5 jobs don’t suck for everybody. This is an overt generalization that many persons like to repeat to complain about their lives and then proceed doing nothing to change them. People love to complain, but as long as they don’t align their action to their words I wouldn’t give too much weight to what they say.
(Maybe complaining has some sort of bouding power: hardship forges strong boundaries and relationships. Thus, perhaps people use complaining to do so, unconsciously)
If you were rich and you had nothing to do during your day what would you do? How would you live? Most people think they’d enjoy being on holidays for their whole lives, but I don’t believe their theory would hold the test when put into practice. There are many rich people who are as dissatisfied, if not more dissatisfied than poorer people. Richness is not an end to all problems, it’s merely a mean. If do not know how to deploy it, which kind of life you want to lead, it is worthless, as it is jumping from a 9–5 job to entrepreneurship, if not with a self-discovery purpose, which I don’t think is enough to endure such an hassle. I conclude with the immortal words of Nieztsche:
Free, do you call yourself? Then I would hear your ruling thought, and not merely that you have escaped from a yoke. Are you one of those who had the right to escape from a yoke? Many a one has cast away his last worth when he has cast away his servitude.
Free from what? What does that matter to Zarathustra! But your fiery eyes should tell me: free for what?
— Thus spoke Zarathustra, Friedrich Nieztsche
These two are the articles which stuck me the most between the many information I read. I think you may find them interesting too. Keep in mind that the second one is 5 years old, therefore its predictions for the future may need to make many adjustments.
