Best Way to Learn to Be an Entrepreneur?
As an Inc.com columnist it's my job to take a position. (Columnists who don't have opinions also don't have readers.) The result, though, is a one-sided conversation where the natural exchange of ideas between people gets lost.
Sometimes I'm right. Sometimes I'm wrong.
Mostly I'm a combination of the two, because in business for every rule there's an entrepreneur who proves the exception to that rule. My way is not your way, and neither is the right way... until we prove it works for us, as individuals.
So I'm trying something new: I'll pick a topic, pick someone smart--as you'll soon see, in this case smarter than me--and we'll trade emails.
The first is the email exchange between me and Dave Lavinsky. Dave is the founder of Growthink, a business-planning firm and investment bank that has helped over 500,000 entrepreneurs start and grow their businesses.
The premise: I think the average would-be entrepreneur should spend a few years working for a big company.
Jeff: Maybe it's only because my first post-college job was with a Fortune 500 company, so that's all I know, but starting and running a business would have been way harder without the skill and experience I gained working in a corporate environment.
Would I want to work there today? Oh hell no.
But am I glad I once worked there? Absolutely.
Dave: Sure, you can learn some things from big companies--mainly how to run a big company. You'll learn the type of corporate structures that are needed and the key departments, etc. But most of that doesn't help you when you first start a company. For that, you need to think very differently. You need to think and act like an entrepreneur, which is the art and science of accomplishing more with less (less money, less human resources, less time, etc.)
Big companies are not great at accomplishing more with less, nor are they great innovators. So it's very easy to pick up bad habits that actually make it harder to start your own business. I, too, started my career at a big company.
The main lesson I learned? Do things very differently than they did.
If Not Big-Company Experience, Then What?
Jeff: I hear you, but there are still some basics that go begging. Say you're the archetypal college student genius who develops, I don't know, a smartphone battery that recharges itself through the normal movement of the phone. (Like a Rolex only a lot less expensive.)
Now what? You're incredibly innovative, but on the business side you have no way to know what to do next... and no way to evaluate the skills of the people you decide to do whatever's next with.
In your case you learned what to do differently. That's really valuable... instead of paying for your mistakes you got paid to learn some mistakes to avoid.
Dave: I agree that the college student genius is often ill suited to immediately start a business since they have no experience. But it would take years working at a larger company to gain the business skills you need. And as I mentioned before, many of these business skills you acquire aren't suited for a start-up.
Jeff, think back to your first job at the Fortune 500 company. Were they really letting you be a jack-of-all-trades and try new things like a start-up entrepreneur needs to do? Or did they give you one very defined role that you just performed over and over again?
My guess would be the latter, in which case you learned one or just a few key skills, which would not be nearly enough to use to launch a company.
And if you do work for the larger company for too long you will probably develop too comfortable a lifestyle. You start bringing in money. You get married. You buy a house. You have kids. And now your risk profile has changed dramatically, and starting your own company may not be a viable option.
But, back to the issue of experience... while I don't think the young graduate should work for the large company, I also don't think a young graduate should start a company alone.
Here are some options to consider; and note that these are not mutually exclusive. One option is to find a slightly older co-founder who has more managerial experience. Another option is to form a Board of Advisors consisting of several experienced entrepreneurs who lend guidance and advise. Another option is to raise funding and use it to hire several seasoned managers to help guide you.
Learning From the Best
Jeff: Crap. You're killing me. Let me whip out a (hopefully) big gun. You're right, when I started I did have one (oh my gosh was it extremely) defined role. But I did get exposed to other stuff: Evaluation processes, HR stuff, team meetings, supervisors (both good and bad ones)... so I did get at least a sense of the right way to treat people, organize processes, focus on key deliverables, etc. That at least gave me a framework, one I didn't get in college.
On the flip side I know reasonably successful entrepreneurs who were the worst example of how to run a business. Somehow they succeeded in spite of themselves, at least for a while, and some of the people who worked for them thought that was how a business should be run and worse was how people should be treated.
I've seen six people ride around in a van with the owner and his new girlfriend for hours so she could shop... a young lady that had to drive six hours to pick up a tux for an event the owner was going to attend... employees that had to play caterer's helpers at the employer's home (think "Coming to America") for an event because "customers will be there so it's work-related"... Some percentage of entrepreneurs follow the golden rule of "he who hath the gold maketh the rules," and if that's your first real job and that's who you learn from... ugh. Extreme example, sure, but I see it happen a fair bit.
As for your point about golden handcuffs, that's definitely an issue. It's a lot easier to risk everything when everything is an old car and a little furniture.
I like your point about not going it alone, but how does someone with little experience decide whom to lean on? When I was 25 I would have had no clue how to evaluate the skills, experience, and suitability of a partner or of people to fill leadership roles...
Dave: Nice points. Agreed that if you work for a startup, you're not necessarily going to learn from the best--and note to self; stop having employees pick up my tuxedos. (Kidding.)
In that regard, I would strongly support a young or first-time entrepreneur working for a VC-funded start-up. Most VCs are very good about only investing in start-ups with great founders and solid management teams. Clearly bigger companies generally have better managers than start-ups, but the VC-backed start-up is unique, so I like that option a lot: You learn from great people, wear many hats, and learn about the start-up environment.
Case in point: All three of YouTube's founders had previously worked at PayPal when it was a start-up.
With regards to how someone with little experience can decide who to lean on, this is the same hiring challenge that business owners and/or managers face (even though they might have more experience under the belts). My two biggest tips in this regard are as follows: First, rely on referrals. Tap whatever network you have (friends, family members, professors, etc.) and ask who they know who might be a great fit. This is the best way to find reliable people.
Secondly, look at each candidate's prior results in detail. It doesn't matter that they have a fancy education or gained employment at good firms in the past. What they accomplished at those past firms is what's important. Make sure they have a track record of achieving great results, including always checking their references.
Getting Sales Experience
Jeff: Can't argue. Since you're on a roll, how does a would-be entrepreneur gain a skill like sales skills?
That's definitely a downside to working for a big company. When I was in manufacturing, sales seemed to happen by magic. Work just showed up and we ran it. In fact, we used to complain about salespeople not selling the "right" kind of work. We only cared about productivity--since that's how we were measured--and not profitability, so we hated any jobs that made us less productive.
Dave: Teaching sales skills is often challenging. However, I think that if you are passionate about anything, you generally can harness good sales skills.
Like my kids; they have no formal sales training, but if we drive by an ice cream store and they really want ice cream they'll give me a pretty compelling sales pitch as to why I should stop.
So I think that entrepreneurs who are passionate about their company will have some innate sales skills when it comes to selling their company and products/services to advisors, employees, customers, investors, etc. However, like other skills, sales skills must be honed and improved. Fortunately there are lots of sales training programs out there, that, when combined with actual day-to-day selling can greatly improve sales ability. Plus I revert back to getting advisors and/or hiring employees with great sales skills; the more you can interact with and learn from great sales people, the more you will learn this important skill.
Final Words of Advice
Jeff: So looking back, what would you have done differently?
In my case I definitely worked for a big company for too long. I can argue that every year I learned a little more, but after a while what I gained was incremental compared to the first years. Since I started so low on the totem pole--any lower and I would have been underground--it took years for me to get promoted into positions where I learned a lot that helped me later... but even so I would have left years sooner than I did.
And more importantly I would have always had a plan in mind: For too long my plan was only how I could be a better employee... not how I could be a better employee and prepare myself for someday starting my own business.
Dave: Done differently, I would have started my career at a VC-backed start-up (it would have been nice to know what "venture capital" even was back then). I think I would have learned a ton, and within one year, I would have gotten great experience and gained a good sense as to whether the start-up was poised for success.
If so, I may have stayed longer. If not, I might have joined another VC-backed start-up and gained great experience there.
If I felt my business idea at the time was both fantastic and time-specific (i.e. the window of opportunity to launch it was fairly small) then I would have entertained the option of starting my own venture from the get-go.
If I did that, (with my knowledge now) I would have found and surrounded myself with great advisors--other entrepreneurs who have "been there, done that" and could have helped guide and educate me as I embarked on an entrepreneurial endeavor... which no doubt would have presented me with numerous obstacles that I otherwise would have been ill-prepared to face.