A nice post by my Cole Valley neighbor Mark Pincus who groans about the lack of leverage entrepreneurs have. VCs and other investors can make several large bets among various companies in different market segments, hedge fund managers are pretty much guaranteed a year in year out solid return, but entrepreneurs must make one concentrated bet and wait years to see if there’s a payoff. To obtain the same leverage as the aforementioned, entrepreneurs must start multiple companies, start an incubator, or join a VC fund.
In my view the most successful entrepreneurs are those who immerse themselves 24/7 in their company, their market. Trying to stay on top of the latest thing to come around on the technology wheel is simply not possible. So from a “staying on the cutting edge” perspective, it is risky. If you are like me, life is a chocolate store with a million different interesting things pulling you in different directions. This urge needs to be balanced with extraordinary focus, and this is a differentiator among good and great entrepreneurs. But with this focus you are placing all your financial eggs in one basket.
The last thing Mark touches on is the day-to-day grime of the entrepreneurial life style. This is simply a reality of being a business entrepreneur. On top of the lack of diverse intellectual stimulation and significant financial risk, there’s also a massive time commitment, endless meetings, planes, pitches, and cold pizza.
My bottom line is that if you need the kind of “leverage” that the other people get in order to be fulfilled and happy or if you need a fat check annually, then the start-up entrepreneur in the typical sense is not the profession for you.
This is a tough one. If you assume a useful entrepreneurial work life of about 30 years, and you need to spend 5 years per startup, that’s a total of six bets you get to place in a lifetime.
And if the odds on a startup succeeding are 1/10 (something you often hear about VC investments), you still have a 53% chance that one of your ventures will ever succeed.
But if your desire to be an entrepreneur depends on on the likelihood that you’ll get rich quick, you’re in the wrong profession.
Entrepreneurs, like writers, do it because they have to. They wouldn’t have it any other way.
On the other hand, I’ve always taken the view that while focus is essential, tunnel vision is counterproductive.
interesting comments. i’m reading Ralph Warner’s how to run a thriving business. He is the founder of Nolo Press. He has a different view — he believe the really successful entrepreneurs are the ones who can get work done in 35-40 hrs per week. Not the ones documented by the popular media. any thoughts?
Bill – I agree completely. A sustainable lifestyle is not 80 hour weeks. That said, an entrepreneur needs to be able to work within funny time limits (not 8-5 M-F) and probably more than the typical businessperson.