July 14, 2024

Jul 11
Become an entrepreneur. Be as successful as Elon Musk.
It is a dream many people in the startup community share.
So hooray, once you have an idea, go found a startup.
Advice that I often hear in the Startup community.
Hooray, we have an idea. Let’s change the world. Let’s quit our jobs. In the end, only entrepreneurs become happy.
All others are damned to boring office life from 9–5.
There should be an entrepreneurship graveyard with a tombstone for every failed entrepreneur who quit his 9 to 5 job before product-market fit.
Every new wannabe entrepreneur should take a walk over the graveyard of good hopes and intentions before quitting their 9 to 5.
I believe it saves one or the other from emotional pain, suffering, and misery.
9 out of 10 startups fail, not for no reason. I believe the failure rate is higher when people quit college and start a venture in their twenties.
Yes, there are people like Steve Jobs, Bill Gates, or Mark Zuckerberg. But these are rare outliers—the majority experience failure.
Failure, after failure, after failure.
So what is the best way to create success in business?
My favorite case study is the Indian investor Mohnish Pabrai. After selling his first company, he turned investor and created fame by simply copying Warren Buffett’s approach.
He says about himself that he has no original ideas. He looks for what works and copies it.
Since this article is not about investing like Mohnish, let’s look at the beginning of his career.
He graduated from a university and landed his first job. Three years in the rat race, he had an idea for a company.
Do you think he had a hooray moment and quit right away?
No, wrong!!!!
He cut back his time on the job to 40–50 hours per week. Since a week has 168 hours, there is enough time left in the evenings and weekends to work on startup ideas.
Like Essa Saulat said in one of my podcasts:
“Don’t get overly excited when you have a startup idea. 99% of ideas don’t ever make it into a company. Those who make it to inception, have a 90% failure rate”.
Do you have an idea for a startup?
Don’t quit your job.
But hey, wait, why?
Did you ever go on a fundraising spree with nothing more than a pitch deck?
You better be friends with investors who are already convinced that you are the greatest entrepreneur on the planet. Even better than Elon Musk.
Other than that:
Why do you think anybody should invest in your idea?
Early-stage investors are usually business angels with an entrepreneurship background. They have plenty of startup ideas themselves but know already the harsh startup truth:
99% of ideas suck, and of those that don’t suck, 90% fail as a startup
And their desks are typically full of pitch decks.
On top of that, they have learned to navigate the public markets and can easily make positive returns on the stock market.
And they know the risk of investing in startups. 90% will be a failure.
What is your strategy to convince business angels to become part of your story?
Why does investing in your idea rather than an S&P 500 ETF or their business ideas make more sense?
The best way to get business angels on board is when you can demonstrate a kind of success.
A few steps forward, motivating someone to invest in your idea becomes much easier. It is promising data from an animal trial in Pharma that convinces business angels to take a stake in your patents. Or a significant corporate client for service businesses demonstrates that people are willing to pay.
What is the role of a 9 to 5 job?
A 9 to 5 job provides you with the initial seed funding. It doesn’t need millions to get started. Most ideas begin with a business plan in a presentation.
An income can give you the security of paying your bills and having some capital to invest in your idea.
Mohnish Pabrai’s idea was that he could use all evenings and weekends to work on his startup idea.
Since it was a service business, he could invest his time in landing clients. Once the clients produced sufficient cash streams.
There is no definite answer to the question — when is the right time to quit.
My personal opinion is — never.
When you start your first venture and create your first cash streams from revenues, keep them growing and hire people to get the job done.
Unless your employer fires you, I wouldn’t recommend being a quitter.
Having a risky venture in the making, and running out of cash, means coming close to bankruptcy. It isn’t a great selling position to be in.
Avoid that.
It is slightly different with deep tech business ideas. Deep Tech has a scientific background and a longer time to market circles.
New therapies in the pharmaceutical industry usually need 8–15 years until market entry. Even when I look at the out-licensing options in the b2b environment, we are talking about 4–6 years until the technology reaches a point at which Pharma gets interested.
When is the right time to quit?
When investors provide sufficient funding, that compensates your salary. Otherwise, I wouldn’t go all-in on an idea that has a success chance of 10%
Yes, there is this “skin in the game” proverb. And some people I met believe that startup founders need to bet all their life savings and time on one idea.
The truth is:
Nobody does that. Nobody. No investor goes all-in on one asset.
A broke founder doesn’t help anybody. It is up to your judgment how much risk you can take.
At the end of the day, a business should put more money into your pocket than you need to invest into it.
The time to go all-in is either:
Other than that …
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