Monthly Archives: April 2012

Life in the Entrepreneurial Fast Lane

Greatly enjoyed IST’s week hosting fabulous alumni currently pursuing innovation dreams.  Now might be a good time to review reasons for and against becoming an entrepreneur.

One reason against becoming an entrepreneur is the goal to be fabulously wealthy.  I do not know the exact statistics, but I suspect they are similar to becoming wealthy as a professional athlete or entertainer (i.e., slim).  If wealth is the only motivation, I recommend instead reading Stanley and Danko’s Millionaire Next Door.   This research suggests true wealth is attainable with a “good job” (i.e., a regular, albeit modest, paycheck), frugality (i.e., no regular Starbucks), and avoidance of advertising traps encouraging ostentatious expenditures.

On the other hand, one reason for becoming an entrepreneur is the freedom to pursue a dream.  If you enjoy hard work and have pride in your abilities, then you might want to consider becoming an entrepreneur.  Startups require a broad range of abilities, and each participant wears several hats.  Note that technical ability is necessary, but not sufficient.  Other important abilities include communications, organization, networking, financial, and legal, just to name a few.

As the speakers mentioned, you will also need persistence and a willingness to initiate action.  The path to create “faster, better, cheaper” disruption includes surviving failures.  Thomas Edison viewed failure elimination as a necessary path toward success discovery.  For example, Col. Sanders endured over 1,000 rejections on his path to Kentucky Fried Chicken success.

For those fortunate, the new enterprise will eventually generate revenue.  This will be accompanied with pressure to make payroll.  However, this is not a bad thing.  In fact, I would argue that only the most successful entrepreneurs get this experience!

Some of the entrepreneurship allure stems from the headline grabbing “flip.”  This is where a new venture is acquired, or experiences a successful public sale (i.e., an IPO, or “initial public offering”).  The current news example is Facebook’s purchase of photo sharing app Instagr.Am.  Although publicized flips can generate tremendous wealth for startup pioneers, they are not representative of the more common, and frugal, investments that focus on business value.

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@NickBilton uses the Instagr.Am case to describe the disruptive force of entrepreneurs to create value, first described by Harvard’s Clayton Christensen (disruptive innovation).  He notes that established companies, such as Polaroid or Kodak, could not create the Instragr.Am app, nor did more recent powerhouses, such as Facebook, Apple or Google.  Disruptive innovation is the reason society needs to encourage entrepreneurs, while established organizations need to simultaneously recruit intrapreneurs.