After hosting 1 year’s worth of entrepreneur networking events, here are our the observations of the misconceptions of the trade
“Entrepreneurs — the only people that are willing to work 80 hours a week, to avoid working 40 hours a week for someone else.” — Lori Greiner
Entrepreneurship: it’s a big buzz word getting a lot of hype and publicity these days. And with the deca-billionaire darlings of Silicon Valley working on feats like keeping us alive forever and moving to Mars, it’s no surprise that they’ve become the heroes of the 21st century economy. But what the media doesn’t seem to cover, is what it took them to get there, the sacrifices, the stress, and the financial pressure. So here, we plan to shine a light on some of the ugly truths that are far from the glamour and fame that you’ve probably heard about.
At our company, Sapio, we focus on driving economic mobility through learning hacks to personal growth. Entrepreneurship being a core topic, we polled our community of hungry young people as to what motivated them to pursue the path of a startup entrepreneur. And this is what we received:
Why Do YOU Want to Become and Entrepreneur?
1. I want to be my own boss!
Technically, yes, you will be your own boss — but that doesn’t mean you don’t have to answer to anyone. And while you may get to rock into your beach-side office at 2pm in your flip flips, it’s not quite as freeing as you may think. You’ll quickly become accountable to customers, creditors and suppliers, and are inheriting responsibility for the livelihoods and growth of your staff. If you have cofounders, you have to establish a balanced pecking order that doesn’t always make nice. And if you take on VC money, you now even have investors to report to, who can keep you on your toes far more than your middle-management boss; they aren’t just paying your salary, they’ve handed you a chunk of their money to burn through, and they want to play-by-plays of how you’re not screwing that up!
In addition to the myriad of stakeholders you’re now reporting to, you’re also going to inherit a team of employees. To be successful, you need to know the ins and outs of every position in the company. How can you manage people and sell to customers if you don’t know what they do and what they want? You can really only be in charge of the jobs you can do yourself. Which for most new entrepreneurs coming from a structured corporate career, this means learning a lot from the ground up. So yes, you’re free to flounder for yourself, but the that “freedom” of being your own boss is often massively misconstrued.
2. I want financial freedom!
We read about all of these new ventures that get start-up financing from venture capitalists. Yes, you might bank a few million from investors, but be careful not to confuse that check with one going into your personal account. This not your money to play with. You’re not chartering private jets and hosting yacht parties just yet — there’s been a few too many reckless startup founders who have been ousted from their own companies for these antics. You’re now a marionette, working at the behest of your investors, often beholden to their financial priorities.
Sure, there’s a chance of exiting through M&A activity. We read about this every day. But did you know that less than 1% of ventures started make it to this stage, with most cutting their losses with no gains realized by founders at all? Sure, the outsized returns are exciting, but the chances of failure are much much greater.
And don’t think that just because you aren’t looking to scale your lifestyle business, or that you’re not planning to raise capital that you will be totally free either. SME entrepreneurs carry even more risk; most new entrepreneurs borrow money from their own bank account, their parents, their 401(k) plans and anyone else they know. Banks don’t generally finance start-ups, and if they do, the loans are well collateralized. That means that if you fail, you lose the money in the form of your house, your partner’s assets, or your family’s. You’re in fact, quite the opposite of financially free!
3. I want to make my passion my career!
Yes, it’s a romantic idea that you should do what you love — it’s true might actually be a much happier person. The first question to ask here is: would this still be your passion if you had to do it every day for a living? Is this passion related to a skill you have, or just something you enjoy doing? Is it based on something that’s needed or wanted in the market? And can you actually earn money from it? But just because you love practicing tarot reading or Samurai sword collecting doesn’t mean that you need to create a business around it. You need to identify an unmet need or demand in the market, or people won’t find value in paying for it.
Consider this: if Steve Jobs followed his lifelong passion, he would have become a professional painter, and Apple would never have been born.
4. I want to set my own hours!
I’m sure that there are some business owners out there who have succeeded at working any hours they like. I know Tim Ferris is an advocate of the 4-hour-workweek, which is an admirable quest, and if you’re seeking a source of passive income, you should study that book as your gospel. But most business owners and entrepreneurs are not spending their days in the tango world championships because they’re busy nurturing their company. As an entrepreneur, your business is like a newborn infant. You are the only chance that it has of surviving, and it is a needy, attention-seeking, dependent child. If you don’t do the work, the work won’t get done, and there’s simply no opportunity to hide behind your computer shopping online, nursing a hungover over a long lunch, or ducking out early for holiday weekends. You are the engine driving this thing, and without you, it’s not moving forward.
5. I want a low stress life!
It must be nonstop fun having your own business, right? No boss. Make your own hours. Working in your pajamas. Well I’ve got news for you, entrepreneurs carry the weight of many worlds on their shoulders, all the time. Every decision that an entrepreneur makes not only directly impacts the well-being of his employees, but also the entire community of stakeholders in the business. Entrepreneurship is a marathon, not a sprint, and a marathon pulling a cart full of dependents at that!
SO WHY SHOULD YOU BE AN ENTREPRENEUR?
1. You have something to sell
A wise mentor of mine once told me that in order to start a successful business, “you must do what you know, not know what you’re doing”. Think of it this way — is there something that you are uniquely capable of? Something that you’re already proficient in that someone else might need? Learn how to monetize your skills rather than attempting to compete in an unfamiliar arena.
2. You have a specific problem that needs to be solved
Behind every big problem is a big solution.
This is the easiest way to start a business — and it’s often the most successful. If you experience a pain point in your life because a product or service has not yet been created, you’re probably not unique here. This is where a lot of brilliantly revolutionary and disruptive companies have been borne from — Uber, Airbnb, PayPal — you name it. These guys were all acting in their own self-interest to entrepreneurially create a solution to their own problems. You want to create a painkiller, not a vitamin.
3. You know there’s a market need
You might think that your idea is brilliant, and that everyone’s needs are just like yours. But 42% of startups fail because they do not meet a market need. And even bigger, learn to recognize a high-growth opportunity with sustainable growth — no matter how good your product, if people don’t need the solution, or don’t have money to pay for it, you will be guaranteed to fail. So do your homework, test this market, and always do it for free first — see if people will come without paying first to establish demand and identify a need before flipping off your boss and committing your life savings!
