January 09, 2004

In a wide-ranging essay, I write,

No one lives in more of a fog than an entrepreneur. Almost by definition, you are the only one who believes that your business idea makes any sense. Nine times out of ten, the skeptics are right...

Technological progress has many sources of fog. We do not exactly know which scientific studies will lead to interesting results. When something important is discovered, we do not necessarily know which are the most promising applications. We do not know which promising applications will actually be successful in the market. Thomas Edison thought that a phonograph would be used by business executives to record and ship speeches to workers.

December 02, 2003

A reader emailed this query:

Hello, I am a college senior that has heard that work experience is useful and necessary before starting your own company. I am wondering, two things:

1. What is the bare minimum experience necessary to have your own company?

2. Although some things can be learned in the corporate world before starting a company, are there any psychological differences between being a corporate employee and being an entrepreneur?
Are they in any ways psychologically opposite in terms of traits required or involving different risk reward profiles?

My view is that the best experience for starting your own company is starting your own company. A kid who has his or her own newspaper route or lawn mowing service can learn about sales, operations, receivables, key person dependency, capital-labor substitution, etc.

What you learn from working in large organizations is how large organizations behave. This is extremely valuable knowledge if you want to start a business that sells to large organizations. Otherwise, it may not be the most useful.

Psychologically, the differences between working in a large organization and being an entrepreneur are large. You are much more responsible for your own success or failure as an entrepreneur. That can be stressful but also exhilarating.

I don't think that today's college students should think in terms of spending their entire careers working for large organizations. You probably will have to be on your own for at least a portion of your working life. So if you're ready for the entrepreneurial experience now, it's probably a good idea.

My one caution would be to go for a simple, standard business. Rather than trying to be the next Bill Gates or Michael Dell, I would recommend starting a company that uses a proven business model to meet an established need.

My $.02