very nice. well put.
this is a long post but worth the read. james really hits the nail on the head with this observation. it reminds me of the quote i posted a few days ago.
part of me can’t help but wonder if all this entrepreneurial diversification is just a result of our internet-fueled-ADD lifestyles…either way, this sort of project-multitasking is a great thing to experience, and college is a great time to do it.
There have been many different posts about in whether or not a hacker should start a startup, and why.
Paul Graham is covered both sides, although his explanation for why to not not start a startup is my favorite.
The reasons to start a startup are simple and obvious:
- Autonomy.
- Potential for Massive Success
And the main reason to *not* start a startup is also very obvious:
- Most startups fail right away.
- Most other startups fail soon after.
And if you’re lucky? As Marc Andreessen writes,
“You will flip rapidly from a day in which you are euphorically convinced you are going to own the world, to a day in which doom seems only weeks away and you feel completely ruined, and back again.
Over and over and over.”
Sounds about right.
Matt Maroon digs a little deeper, in his description of why a startup might not be such a hot idea.
“Almost every startup-related article you read in Wired or The New York Times is about some guy who started a free dating service, worked 10 hours a week on it for a year, and now collects millions from Google ads, or some 14 year old trailer-dweller who grew her MySpace layouts website into a million page views a week…..
…There are a number of people floating around the Valley whose lives are a pretty sad story. Every startup they joined tanked, every one they passed on went public. They went without salary for years, and even when they had one, it was pretty low. They’re 50, which in the startup world, where the saying “never fund anyone over 30″ is a practically a way of life, is ancient, and they’ve got nothing to show for it.”
I agree with Matt on both counts - I can think of a few serial wantrepreneurs I’ve encountered who are clearly intelligent, skilled, and socially adept. And they still can’t make it over the hump
But both sides are missing the real takeaway, which is that you never how things will turn. Matt describes how when you’re working for Google, you’re secure in a job that will surely be there for you in a few years. And while I don’t doubt that GOOG will gain significant value over the next decade, remember that auto workers at GM and Ford would be laughing their asses off thirty years ago if you described how an Indian company called Tata Motors would be eating their pension, and drinking their milkshake.
Hackers are just as (or almost as) susceptible to psychological bias. We should compensate for that by betting against ourselves, whether or not we choose to start a startup.
This idea of betting ‘against yourself’ is the essence of hedging - an investment term that I’m increasingly using as a contextual framework for all kinds of things. My friend Shamas likes to say that hedging your investments is just as rational as getting health insurance. When you invest in both Pepsi and Coke, the loss to your potential gain is small, and you’re guaranteed a decent outcome.
Because the risks and rewards of starting a startup are large, there are a few guiding principles you can use to bet against yourself:
- Be agile. Of course, this has been covered ad-naueseum, but I’m still surprised when hacker friends who should know better are drafting up business plans before they’ve written a single line of code. In fact, I’d go as far as saying as never start a startup. Just work on projects, and if something seems to be sticking, pursue it as much as needed. There are exceptions, but in today’s environment agility is incredibly crucial. Because the playing field literally does change on a daily basis.
- Aim for a “mini-acquisiton”. I know a couple people who have been acquired by a company in the low six-figure range, although in both cases they have to remain at the purchasing company for shares to vest. I expect to see many, many more of these mini-acquisitions. And I’m not the first person to have dreamed this up.
Hedging allows you to gain leverage in situations, by having more available options. If you think of the job market like a used car lot, you need to be the buyer who can walk away. They should need you more than you need them.
Fred says, “companies are bought, not sold.” We can apply that to jobs as well - the best employees are bought, not sold. And I mean that literally.
