Entrepreneurship is risk free: Heads I win, tails I don’t lose much

http://sameer.madhouse.in/entrepreneurship-is-risk-free-heads-i-win-tails-i-don%e2%80%99t-lose-much/

by guglanisam • 17 years ago

29 15 17 years ago

sameer.madhouse.in

huangm• 17 years ago

While I am sympathetic to the author's thesis, the discussion is pretty meaningless unless you acknowledge that there is opportunity cost to doing a startup. Sure, you learn a lot and set up good contacts even if your startup fails - but the risk is in what other opportunities you might be missing. It's not sufficient to just be better off than when you started.

sdsdsd• 17 years ago

something is missing here, who is paying you when you starting your venture? your saving, angel fund?

Alex3917• 17 years ago

What this doesn't take into account is the fact that 90+% of kids out of college who decide to become entrepreneurs don't get traction, don't network with other CEOs, and aren't getting the respect of people even if they fail. It's like only looking at the failures among companies that have been YC funded, and not looking at all the companies that failed after not even getting funded.

Andys• 17 years ago

Its quite possible a kid leaving college not only fails at the startup, but fails at networking and building contacts, and also fails at learning anything at all.

rama_vadakattu• 17 years ago

Kids who are interested in learning only become entrepreneurs.The kid is interested in networking but he don't know the way to network.

nostrademons• 17 years ago

This is a pretty rosy "worst case" scenario. madhouse was acquired; most people would consider that a success. The vast majority of failed startup founders do not get a VP position at their next job.

I suspect that for the vast majority of failed startups, the cost is mostly pride and the lost wages of having a steady job for that 2-3 years. The benefit is whatever experience you gain from that time period - people will judge you based on your skill level and what you've learned.

There's also a much-worse case where people take on $100ks of debt, lose their friends, lose their home, get divorced, and waste 10 years of their life on a venture that was doomed from the start. This outcome is fairly easily avoided by keeping perspective and constantly re-evaluating whether the potential upside merits the risks you're taking, but it does happen to some people.

rythie• 17 years ago

If you get traction and press attention particularly, then doors and options open up to you. Also if you have a chance to speak at a conference you get a lot of respect, often from people who didn't know who you were previously.

However, getting traction and press attention are the hardest bits. Also, how much of your own money do you lose before quitting?

That said, even if you fail, if you had a job before, the chances are you could at least do the same thing again after.

steveplace• 17 years ago

That's very simple to say after the fact.

tptacek2• 17 years ago

The title of this article contradicts itself and doesn't match the content of the article, which contains an awful lot of "if's" to sustain the words "risk free".

I almost stopped reading after inferring that he believes being the CEO of a startup that your interviewer has never heard of, and for which "traction" probably can't be defined in less than 10 minutes of conversation, is a credential that will improve your chances at another company.

Selling a company is an accomplishment. Usually. (Sometimes that "sale" is a marketing fiction, but, whatever). Most entrepreneurs --- in fact, most of the entrepreneuers that get traction --- don't manage to sell their companies.

drusenko2• 17 years ago

I disagree completely, at least for young entrepreneurs.

I started a hosted email company in high-school, and while it never really went anywhere, it was the single greatest thing on my resume.

It made me stand far above most other applicants, proved that I could start and complete something interesting, and gave me a lot of real-world experiences to talk about in an interview, as opposed to the standard "In this database class I took..."

tptacek2• 17 years ago

By all means start a company instead of playing World of Warcraft, hanging out at Denny's, and going to Fall Out Boy concerts. You're right. Starting a company is basically risk-free when you're in high school (though note that it's not risk free when you're in college; getting a degree would be an incredible pain in the ass for me now, and I traded that opportunity for a startup win in the '90s).

coffeemug• 17 years ago

When your son started this venture he auto promoted himself from SW engineer to the CEO / CXO - A level he may have never achieved or achieved after a very long time period in a regular career with big SW companies

There is an astronomical difference between being a CEO of a 2-5 man company that barely has any clients (if that much) and a CEO of a large company with a massive number of clients, employees, and large revenues. It's like comparing a "lead" accountant for a 5 person non-profit with a lead accountant that took Google to IPO. To quote Jules from Pulp Fiction, "ain't in the same f#$% ballpark, it ain't the same league, it ain't even the same f#$% sport."

blrgeek• 17 years ago

In the Indian context, this article makes much more sense!

Note for instance the opening, "Recently I met with parents of the founder of one of our portfolio companies." :) How many times would PG have met with the parents of a YC founder?

Money during bootstrap phase would be from parents -> A middle-class kid fresh out of college, could be easily supported by his parents for 3-5 years, staying at home, with no additional expenses. Given many parents support grad school, supporting their kids while they're working on a startup would not be a stretch (if they agree with this article or see the fire in their kids).

If the startup goes anywhere but dead, (in a year or so) the founders would have got a reasonable amount of independent mgmt experience, ability to startup and deliver, and exposure to industry far greater than their peers.

Now in India there is a severe lack of middle management capable of independent decision making, project level leadership, and delivery. There is also a shortage of folks who can think at a product and market level, as opposed to a customer/service level. A guy coming out of a startup (even failed) who can demonstrate these skills would be quite better than his peers who may have far more experience in sw development.

If the startup fails within a few months or years, worst case, an MBA may be in store, although it would certainly not be as exciting :)

Many of the guys who are doing this would probably be of upper-class, or upper-middle class, whose families would certainly encourage such risk taking.

justliving• 17 years ago

nicely written article.

Still it should be considered that the author is a VC. Hence it's in his utmost interest to portray entrepreneurship as quasi risk-free. The more people decide to start a company, the bigger his choice while selecting a company for funding. Reminds me a bit of 37signals who is kind of doing the same thing, in order to promote their applications.

Entrepreneurship is risk free: Heads I win, tails I don’t lose much

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