When to become an entrepreneur is a common quandary for many. For whatever reason, this issue has come up a great deal recently (recession-driven workforce dislocation?), so I thought I'd share a few thoughts that might help frame this critical decision.
I have concluded that being an entrepreneur is an irrational state of being. If human beings were purely rational, evaluative, value maximizing individuals (see HBS Prof Michael Jensen's paper on self-interest and human behavior (link PDF)), they would not start companies. If they sat down and did the expected value calculation by laying out the probability-weighted outcomes of being an entrepreneur as compared to taking a safe job, it would not pencil out.
Yet, entrepreneurship is not simply a rational journey. It is one that is defined by passion and personal satisfaction that transcends purely financial analysis. And, of course, there is always the hope for the big payout, no matter how long the odds.
Despite popular wisdom to the contrary, age is not a major factor in the decision to start a company. The Kauffman Foundation reports that the median age of founders is 39 - right at the midpoint of a typical professional career - and 69% are 35 or older. Another study by Washington University professors of 86,000 science and engineering graduates showed that age was not a significant predictor of becoming an entrepreneur.
So when should you become an entrepreneur. Here are the kinds of questions you should ask yourself:
Do you have an idea that no one can talk you out of? When you bounce your start-up idea off your spouse, friends and trusted advisors, are they able to raise enough objections that you begin to doubt whether the idea has merit. Getting honest, objective advice can be hard because the people you are likely to go to care about you and may be afraid to tell you what they really think for fear of offending you. Thus, you need to get feedback from objective parties (e.g., advisors, experts, prospective angel or VC investors with whom you don't have a deep personal relationship).
Do you have a partner you trust with complimentary skills? Starting a company is a lonely adventure. Having a partner that you can trust and whose skillset and experience is complimentary to yours can be a huge functional and emotional benefit.
Are you prepared to endure with modest or no salary for a few years? Founding a company often means making personal sacrifices and below-market cash compensation. All the talk about "lean start-ups" (which I'm a big fan of) sometimes obscures the practical reality of what it means to eat through your personal savings.
Are you bored with your current work environment/life situation? There is nothing boring about being an entrepreneur. More apt adjectves might include stimulating, engrossing, obsessive, exhilarating, nerve-racking - but not boring. If you are tired of viewing your work as a chore and if every day is a bit of a grind, then entrepreneurship is for you. I find that the intrinsic motivation behind an aspiring entrepreneur is sometimes the simplest - because it's fun. Seeking fun can transcend all other factors.
Do you perform best in the absence of structure? In my book, Mastering the VC Game, I describe a metaphor for the three stages of a start-up: the jungle, the dirt road and the highway. In the earliest stages of a venture - the jungle - there are no clear paths available and the skills required are to thrive in the midst of the chaos. For those who possess that makeup, being a start-up executive is an excellent fit. But for those that like clear paths with little uncertainty and a great deal of structure - the highway - an early-stage venture will feel like a very uncomfortable environment.
Reflecting on these questions, I find it intriguing to reflect on what kind of environment - either from the perspective of parents raising their children or policy makers thinking about encouraging entrepreneurial ecosystems - can be created to foster more entrepreneurship? HBS Professor Noam Wasserman is writing a book called Founding Dilemmas which is coming out later this year (I've read early drafts and believe it will be a must-read for entrepreneurs). In it, he quotes career guru Dr. Tim Butler who points out that signals from parents, mentors and local leaders have a large influence on whether people chose to become entrepreneurs. "We receive very powerful messages [from those around us] about what's important, what success is, what failure is, what counts for achievement and what doesn't. "
Celebrating entrepreneurial success stories in our culture and putting folks like Steve Jobs, Bill Gates, Larry Page (the new Google CEO!) and even more accessible, local heroes on magazine covers and in front of audiences is obviously a huge factor. Every college kid in America looks at Mark Zuckerburg and thinks, "Why not me?" Why not, indeed?
Jeff Bussgang is a general partner at Flybridge Capital and an Entrepreneur in Residence at Harvard Business School. He is author of the book, Mastering the VC Game.This post originally appeared on Jeff's blog, Seeing Both Sides
Wednesday, January 26, 2011
The Best Cover Letter I Ever Received by David Silverman
In my last post I talked about how to make your résumé more likely to catch the attention of a hiring manager. As a follow up, I'd like to discuss cover letters. Here's my basic philosophy on them: don't bother.
That's because the cover letters I see usually fall into one of three categories:
The recap: The résumé in prose form. It's redundant, harder to read than the résumé, and provides no additional insight.
The form letter: This says, essentially, "Dear Sir or Madam: I saw your ad in the paper and thought you might like me." And it's clearly a form letter where maybe they got my name and company right. If they're lucky, I will still take the time to read their résumé after being insulted with a form letter.
The "I'm crazy": This one's rare, and it expands on the résumé of experience with some personal insights. Examples range from the merely batty ("I find batik as an art form has taught me to become both a better person and project manager.") to the truly terrifying ("I cast a pentagram hex and the central line pointed towards your job listing. I know you will find this as comforting as I do.")
There are really only a few times to use a cover letter:
1. When you know the name of the person hiring
2. When you know something about the job requirement
3. When you've been personally referred (which might include 1 and 2)
Under those conditions, you can help your cause by doing some of the résumé analysis for your potential new boss. To illustrate, here's the best cover letter I ever received:
Dear David:
I am writing in response to the opening for xxxx, which I believe may report to you.
I can offer you seven years of experience managing communications for top-tier xxxx firms, excellent project-management skills, and a great eye for detail, all of which should make me an ideal candidate for this opening.
I have attached my résumé for your review and would welcome the chance to speak with you sometime.
Best regards,
Xxxx Xxxx
Here's what I like about this cover letter: It's short. It sums up the résumé as it relates to the job. It asks for the job.
The writer of this letter took the time to think through what would be relevant to me. Instead of scattering lots of facts in hopes that one was relevant, the candidate offered up an opinion as to which experiences I should focus on.
And that means the writer isn't just showing me skills related to the job, he's showing me he'll be the kind of employee who offers up solutions — instead of just laying problems on my desk.
What do you think? Have you ever secured a job thanks to a cover letter? What's your view on the value — or lack thereof — of cover letters?
David Silverman has been an entrepreneur, an executive, and a business writing teacher. His latest book is Typo: The Last American Typesetter or How I Made and Lost 4 Million Dollars.
That's because the cover letters I see usually fall into one of three categories:
The recap: The résumé in prose form. It's redundant, harder to read than the résumé, and provides no additional insight.
The form letter: This says, essentially, "Dear Sir or Madam: I saw your ad in the paper and thought you might like me." And it's clearly a form letter where maybe they got my name and company right. If they're lucky, I will still take the time to read their résumé after being insulted with a form letter.
The "I'm crazy": This one's rare, and it expands on the résumé of experience with some personal insights. Examples range from the merely batty ("I find batik as an art form has taught me to become both a better person and project manager.") to the truly terrifying ("I cast a pentagram hex and the central line pointed towards your job listing. I know you will find this as comforting as I do.")
There are really only a few times to use a cover letter:
1. When you know the name of the person hiring
2. When you know something about the job requirement
3. When you've been personally referred (which might include 1 and 2)
Under those conditions, you can help your cause by doing some of the résumé analysis for your potential new boss. To illustrate, here's the best cover letter I ever received:
Dear David:
I am writing in response to the opening for xxxx, which I believe may report to you.
I can offer you seven years of experience managing communications for top-tier xxxx firms, excellent project-management skills, and a great eye for detail, all of which should make me an ideal candidate for this opening.
I have attached my résumé for your review and would welcome the chance to speak with you sometime.
Best regards,
Xxxx Xxxx
Here's what I like about this cover letter: It's short. It sums up the résumé as it relates to the job. It asks for the job.
The writer of this letter took the time to think through what would be relevant to me. Instead of scattering lots of facts in hopes that one was relevant, the candidate offered up an opinion as to which experiences I should focus on.
And that means the writer isn't just showing me skills related to the job, he's showing me he'll be the kind of employee who offers up solutions — instead of just laying problems on my desk.
What do you think? Have you ever secured a job thanks to a cover letter? What's your view on the value — or lack thereof — of cover letters?
David Silverman has been an entrepreneur, an executive, and a business writing teacher. His latest book is Typo: The Last American Typesetter or How I Made and Lost 4 Million Dollars.
Can a Big Company Innovate Like a Start-Up?
When Google announced that co-founder Larry Page was replacing Eric Schmidt as CEO, the official reason was to "streamline decision making" at the top. Instead of a triumvirate, there would be one person clearly in charge. Speculation among Google-watchers, however, is that there were deeper underlying issues that triggered the change, including the fear that Google is losing its "start-up" edge. In an interview following the announcement, Page confirmed this concern by saying, "One of the primary goals I have is to get Google to be a big company that has the nimbleness and soul and passion and speed of a start-up."
But can a big company like Google really act like a start-up? After all, start-up employees have a totally different psychology and motivation than those in established firms. Joining (or founding) a start-up is an act of faith — the conviction that an idea eventually can become a sustained commercial success. To translate that belief into reality, start-up participants pitch in wherever it's needed, put in long hours, and forego financial security. In effect, they are rolling the dice in the hope of hitting the jackpot — but willing to take the slim odds because of their strong belief in the new venture, the adrenaline rush of living on the edge, or the potential size of the prize.
In contrast, employees of large established firms operate with a different sense of risk and reward, reassured by financial security and structure. They want the enterprise as a whole to be successful, but are more motivated by the challenges of their particular function and the ability to advance in their careers. Within this context, people in big companies tend to focus more on protecting and preserving their existing businesses than on breakthrough innovations that might cannibalize or destroy them.
Obviously these broad generalizations don't apply to every start-up or established organization. But from my experience, they do represent stark differences that make it very difficult to turn a big company back into a start-up. For example, a number of years ago the CEO of GE Capital, Gary Wendt, was worried that rapid growth had reduced the sense of innovation that fueled the company's success in the first place. To get back that "start-up spirit," he offered one million dollars in seed money to any manager who could turn an idea into a new business. Across more than two dozen managerial teams, there were no more than one or two takers. Most managers felt that they could be more successful by continuing with their established business.
My point here is not that big organizations shouldn't try to be innovative and fast-moving like start-ups. Rather, with all due respect to Larry Page (who is clearly more successful than most people), trying to turn back the clock on a big organization and return it to its start-up days is probably not going to work. Instead, managers of large organizations should try to deploy other approaches that might be more effective, such as the following:
1. Set up a venture group that can fund internal (and external) entrepreneurs who want to start businesses that are related to or adjacent to your core. Obviously, criteria need to be established about types and sizes of investments, but if run like a real venture fund this kind of approach can attract people who have the right mentality and energy both from inside and outside the company.
2. Carve off skunk-works groups to tackle new opportunities that might be threatening to existing business units, or that will never get enough attention from them. However, treat these groups themselves like start-ups — with risks and incentives that match. Don't overfund them or they will become projects rather than start-ups; and put real rewards on the table so that start-up types of people will want to play.
3. Sponsor innovation contests to generate ideas for new businesses and innovations related to your company and its space. Put up enough money that it will attract internal or external entrepreneurs who will want to turn the idea into a start-up.
Let's face it: Big companies are not the same as start-ups, and never will be. But that doesn't mean that they can't be innovative and fast-moving like start-ups. They just have to do it differently.
What's your experience with big companies behaving like start-ups?
By Ron Ashkenas
Ron Ashkenas is a managing partner of Schaffer Consulting and a co-author of The GE Work-Out and The Boundaryless Organization. His latest book is Simply Effective.
But can a big company like Google really act like a start-up? After all, start-up employees have a totally different psychology and motivation than those in established firms. Joining (or founding) a start-up is an act of faith — the conviction that an idea eventually can become a sustained commercial success. To translate that belief into reality, start-up participants pitch in wherever it's needed, put in long hours, and forego financial security. In effect, they are rolling the dice in the hope of hitting the jackpot — but willing to take the slim odds because of their strong belief in the new venture, the adrenaline rush of living on the edge, or the potential size of the prize.
In contrast, employees of large established firms operate with a different sense of risk and reward, reassured by financial security and structure. They want the enterprise as a whole to be successful, but are more motivated by the challenges of their particular function and the ability to advance in their careers. Within this context, people in big companies tend to focus more on protecting and preserving their existing businesses than on breakthrough innovations that might cannibalize or destroy them.
Obviously these broad generalizations don't apply to every start-up or established organization. But from my experience, they do represent stark differences that make it very difficult to turn a big company back into a start-up. For example, a number of years ago the CEO of GE Capital, Gary Wendt, was worried that rapid growth had reduced the sense of innovation that fueled the company's success in the first place. To get back that "start-up spirit," he offered one million dollars in seed money to any manager who could turn an idea into a new business. Across more than two dozen managerial teams, there were no more than one or two takers. Most managers felt that they could be more successful by continuing with their established business.
My point here is not that big organizations shouldn't try to be innovative and fast-moving like start-ups. Rather, with all due respect to Larry Page (who is clearly more successful than most people), trying to turn back the clock on a big organization and return it to its start-up days is probably not going to work. Instead, managers of large organizations should try to deploy other approaches that might be more effective, such as the following:
1. Set up a venture group that can fund internal (and external) entrepreneurs who want to start businesses that are related to or adjacent to your core. Obviously, criteria need to be established about types and sizes of investments, but if run like a real venture fund this kind of approach can attract people who have the right mentality and energy both from inside and outside the company.
2. Carve off skunk-works groups to tackle new opportunities that might be threatening to existing business units, or that will never get enough attention from them. However, treat these groups themselves like start-ups — with risks and incentives that match. Don't overfund them or they will become projects rather than start-ups; and put real rewards on the table so that start-up types of people will want to play.
3. Sponsor innovation contests to generate ideas for new businesses and innovations related to your company and its space. Put up enough money that it will attract internal or external entrepreneurs who will want to turn the idea into a start-up.
Let's face it: Big companies are not the same as start-ups, and never will be. But that doesn't mean that they can't be innovative and fast-moving like start-ups. They just have to do it differently.
What's your experience with big companies behaving like start-ups?
By Ron Ashkenas
Ron Ashkenas is a managing partner of Schaffer Consulting and a co-author of The GE Work-Out and The Boundaryless Organization. His latest book is Simply Effective.
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