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

Recently I met with parents of the founder of one of our portfolio companies. They asked me about their son’s venture , how do I think its doing and what will be  the outcome etc. Here was my answer to them:

• Your son worked for 1 year as a SW engineer with a big company before starting his venture
• Now the venture is 4 months old and is already seeing some good traction
• Lets say he works on this venture for 2-3 years, at the end of it one of the two outcomes will be seen
• Good case outcome: He continues with the venture. It has become successful – not necessarily an IPO but at the minimum its growing steadily and makes enough money to sustain itself and pay him a salary
• Worst case outcome: The venture shuts down
• 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
• Since he is  CEO / CXO – he would need to work  & network  with CEOs / Founders / Owners / Senior management folks of other companies
• As a matter of fact this person I am talking about has already met CEOs / owners of more than 10 established / funded companies which are from the similar domain as his own company
• In case of shutdown of his venture it is certain that with the right efforts your son will:
• Find a senior management position – VP / AVP / Director / Head of department with a company in the same domain
• Get very good salary to go with these positions
• And he would have switched from writing code to a domain of his choice
• And if he has another venture in him, he can save enough to start it
• This will happen because 2-3 years as an entrepreneur will give the two things needed to get a senior position:
• Network of decision makers at good companies who have seen him run his own company
• 3 years of intense learning you get as as a start up founder, is worth more than 10 – 12 years in regular job
• These days people in the industry are very happy to hire X-entrepreneurs, since they know these guys can get work done
• Not all companies would be open to hiring him. But there are lot of funded, growing, young, dynamic companies who would be happy to consider him seriously
• Your son will be way ahead, both in salary and position, as compared to most of his classmates / colleagues who will never go out of the SW industry and become Senior SW engineer or at best a team lead in these 2-3 years. Some of these guys may have gone to top B-Schools to do MBAs and after 2 years will be doing entry level jobs in companies
• So if in the worst case spending two years passionately working on your startup can him chance to switch his job profile and domain, a very good jump in both and salary, and in good case he may be running a successful venture – doing a start up is a great investment in career, and not at all a risk
• They understood my point since it was quite logical, but still did not seem fully convinced . I don’t blame them. They are from a different generation

I also shared with them my personal example:

• In August 2004, when I left my job to start madhouse, I was Principal SW engineer in a telecom startup in California, two levels below a manager
• I started madhouse and promoted myself to be the CEO
• During my three years with madhouse I worked and networked with lot of other CEOs / VPs / Owners / Partners of other companies
• After three years madhouse was acquired by Seventymm and I joined as Vice President – Corporate Strategy
• So in three years I went from being two level below manager to the topmost layer of a well known company and with quite a good salary package
• Now while I was at Seventymm I had access to senior management jobs across domains like retail, consumer products, media. I had an offer to join as president of strategy at one of the leading public entertainment companies in India and the annual package was more than 50L
• But I turned that offer down and decided to start the next stint of entrepreneurship – MVP
• Other two founders of madhouse (Ankur and Nandini) saw a similar result as well. Nandini became AVP @ Seventymm and Ankur joined as VP @ Travelguru
• I am aware of many more similar cases

Business Ideas may fail, but Entrepreneurship is risk free

No opportunity comes with surety.  Even an MBA from a top B-School might not get the best returns. There are lots of bright ideas which never reap fruits. What is important is that you should be able to separate failure of your idea from your personal failure. Its very clear, if you choose to become an entrepreneur for the right reasons, have the right approach and are determined to give it your best shot for 2-3 years and create value in your venture, chances of failure are near zero. You will learn so much and get to know so many people that even in case of the worst outcome, you will come out way ahead and will be a much wanted resource.h

The journey of entrepreneurship is the real value add for the entrepreneur. The result is a by product.

So where is the risk in entrepreneurship?

Note: Thanks for Robin Moses, AshutoshUpadhyay, Ankit Maheswari, Nandini Hirianniah and Sunil for reviewing the post.