You’ve thought about it over & over. You’ve spoken to family, friends & colleagues, and everyone’s been supportive. You’ve got great potential and have displayed it in some way or the other in academics or job. People who matter believe in you. You’re much better than most so-called founders these days. If they could do well, you’ll do great.
Media says this is the golden era of startups. Cost of starting a tech company is very little now. And of course, those who take no risk get no rewards.
Everything points to only one fact – ‘The time has come to bet on yourself. You should start your own company’.
Right there. Stop.
If you’re at this place in life where you’re almost going to take the entrepreneurial plunge, or have just recently taken it, this post is for you.
There are multiple reasons to start a company, but some of them are ill-fated. Take a moment to think through the primary reason you want to become an entrepreneur. Be honest. Now if it’s any of the ones discussed below or a mix of them, you might face an internal struggle soon that will make you question your decision. And since it’s one of the biggest professional decisions you’ll ever take, do not take the plunge if you’re primarily looking to:
1. To become your own boss
A lot of people have a stressful job, and want to eventually escape it. They want to get control over their work schedule and hours. Many do not like their bosses or their organizations. A natural solution that comes to mind is to quit and have one’s own company. They assume that if they became their own bosses, they’ll have high control and hence better work life.
The hard truth is that startups consume most founders. The boundary between work and personal life completely disappears. You feel guilty when you take time off. The feeling today when you go on a vacation that you’ve ‘earned it’, it vanishes as a founder. Moreover, you end up having multiple bosses – your early customers, your investors, your co-founders, your key employees – you have to dance to each of their tunes at some point or the other. When things go wrong or are moving slow, no one else will turn things around for you. It’s just you.
At best, this stress is one of the cons of running a startup while other things go well.
Running a startup is not like having a job or being a student, because it never stops. This is so foreign to most people’s experience that they don’t get it till it happens.
~ Paul Graham in What Startups Are Really Like
At worst, it can totally consume you and push you into depression. Sounds implausible? A lot of well-known people in startup world have suffered:
I’ve struggled with serious bouts of depression three times in my life. I’m not talking about a series of miserable days or struggling through the pressure and stress of a failing company. I’m talking about months of feeling emotionally drained. The joy went out of everything.
~ Brad Feld in Entrepreneurial Life Shouldn’t Be This Way
Read more here – The Psychological Price of Entrepreneurship.
Therefore, if having better control over your life or becoming your own boss are your primary reasons for becoming a startup founder, think again. Think hard. Only jump into a startup if you’re willing to continue your stressful life, and take more.
2. To get rich or to become famous quickly
When startups succeed, the founders achieve hero status. And they make a lot of money. We idolize people like Elon Musk and Steve Jobs. Everyone wants to be in their shoes. It’s a natural conclusion that someone in a job would take more time to reach the same point. Some people might never get rich or famous given their trajectories or starting points. Therefore, being a founder seems like a shorter path to fame, money & glory.
While this may be true for those who succeed, it is important to know the odds. Most startups fail and founders go back into another job and to the longer path. As per Mattermark’s data, of all the startups that raise a Seed round, only around 10% raise Series C, and further only about 1-2% raise Series E rounds. This is a very high death rate!
Also, it might be fair to assume that only an exit around Series B or later (acquisition or IPO) could give founders a multi-million dollar check. This means at the very best only 10% founders can become millionaires through startups. In reality, it could be as low as 1%.
By the way, this high failure rate is not for the want of smarts, hard work, integrity or resourcefulness. Market externalities and luck play a huge role in startup success. So if you’re aiming to replicate the success of that stupid but successful founder, remember – Stupidity can be replicated, luck can’t.
In short, if you’re hoping to turn a millionaire soon or become a very well-known person in a jiffy, the chances are really slim. Moreover, it might take much longer even if you’re doing well. So if quick money & fame are the reasons to start up, you might get frustrated pretty soon. To add insult to injury, you might not even be able to take a salary as a founder, depleting your wealth instead!
Therefore, only if you are fine with how the odds are stacked against you, and are willing to live in further financial constraints for a few years, and are okay with ending up with less wealth than what you started with – go for it.
3. To have a good time with friends
One of the primary drivers of a startup is a team coming together. Two or more friends, who all have similar goals, form a team and attack a problem worth solving.
But if you don’t care much for the problem being solved or the domain, and are jumping on the startup bandwagon because you enjoy being with your buddies, you might be in for a rude shock. Co-founder relationships going sour is a very common phenomenon in startups.
Co-founder disputes have historically been one of the top reasons startups fail at the earliest possible stage. Most that do fail do so because conflict (either too much or too little) is left unresolved for too long. I had known my co-founder for more than eight years, and we had been friends since college. We had history, but we learned history is not enough — you’ve got to maintain it like any relationship. It isn’t enough that you’ve been friends for years. It matters what your relationship is like now.
~ Garry Tan in Co-founder Conflict
Many entrepreneurs believe that one of the things they had to work hard on most in the startup was to maintain the relationship with their co-founders.
So if your friendship is far too important for you, you should think well whether it will stand the test of conflicts in a startup. And if the friendship is the only thing pulling you into the startup, you have everything to lose. Don’t do it for friendship alone.
4. To look cool or under peer pressure
Lastly, don’t get into startup mode to look cool or because everyone else is doing it. The cool factor will last only a few months, before you realize being a founder is not glamorous at all.
Many founders, especially fresh from or out of college, drink the startup kool aid early. As soon as your product is in the market, startup publications might feature you and write glorified pieces on how you could change the world. As soon as you are in the radar of startup data trackers, you’ll get pings from associates at multiple VC firms. Many founders take this as an indicator that they’re hot, while it’s just the VC firms ensuring they’re tracking all new activity in the sector (and at worst fishing for data to do a competitor deal).
The reality hits a few months after your launch, when you realize no one cares whether you’re dead or alive. With no news meaning bad news for startups, your initial cool factor in your network wears off. People expect you to show signs of continued success, else the usual assumption is that you’re struggling. The journey from then on is lonely and hard. And you’ll find it incredibly tough to go on if your motivation was only the coolness of it all.
So those were the key reasons not to start up. While the post’s tone has been negative, the idea is not to scare you off from taking the entrepreneurial plunge. It is merely to ensure you have all the information to make the right decision. If despite all these warnings, you’re raring to jump in, congrats – you have shown the first signs of resilience that a founder must have!
Are there other wrong reasons to start up? What are the right reasons in your view?