What are the factors that lead individuals to become entrepreneurs? originally appeared on Quora - the place to gain and share knowledge, empowering people to learn from others and better understand the world.
There are several things that can push someone to become an entrepreneur:
- Losing a job: Although this isn't an ideal way to start, some people do start their business after being "pushed out of the nest" when downsized or laid off - particularly if they received a severance or buyout. Once the stability of a full time career job is gone, you can either start over with a new employer (which has its own set of risks) or take the plunge and start your own firm. It's helpful if the planning groundwork for the startup was already in place before the layoff, rather than launching a business ad-hoc.
- Fed up with corporate culture and realizing your current company is run by idiots: Industry knowledge is a powerful thing, and there are many dysfunctional companies that are somehow profitable despite themselves. As Jim Collins points out in his book Good to Great, many firms fall into the trap of "if it's not broke, don't fix it" and outright avoid plans to innovate or change their existing practices for fear of "messing with success." These firms won't change their practices until they are facing death, and even then they still resist. Many smart people with an entrepreneurial drive have left their former employers to start a competing firm across town, often recruiting and hiring the best talent from their old firm.
- Seeing an opportunity: Every time there is a major shift in technology, there is an opportunity to disrupt an industry where established players are slow to change. Many businesses never think "if I were to restart this company today, what would I do differently?" Instead, they still rely on their business model from 20-30 years ago. On more than a few occasions, someone working for a billion dollar Fortune 500 company has come across a business idea that's worth $100 million annually but the opportunity is "too small" for their current employer. I've also seen an example where a sales executive identified and was about to close a multi-million dollar services opportunity when their firm passed on the lucrative deal because of "a change in strategic direction". He approached a few industry colleagues, and they started their own firm based on the deal his employer turned down.
In some cases, all three elements are at work. After Oracle orchestrated a hostile takeover of PeopleSoft in 2005, its former CEO David Duffield and Chief Strategist Aneel Bhursi left and started WorkDay - a competing HR software firm that uses a Cloud based software as a service (SaaS) subscription model instead of on premise servers. Today, Workday is a major competitor of PeopleSoft with over 1.6 Billion in annual revenue.
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