by Ahmed Humayun
Conventional wisdom has it that if you don't like your job or want to pursue your passion or just have a great idea, you should just go ahead and launch a startup, because the barriers to launching a for-profit company or social venture are lower today than they have ever been.
People will cite different reasons to bolster this claim, but the revolutionary impact of the Internet on connectivity is a big one. The Internet makes it easier to identify, access, and sell to potential customers or users. This has all kind of effects, such as increasing the pace of product iteration and the potential to scale quickly. Increased access to local or global labor, and a robust culture and infrastructure of venture capital investment, especially in technology centers such as Silicon Valley, are other reasons cited by those who encourage people to launch companies.
I don't know if it is a good idea for some or even most people to launch a startup- it is easy to get sucked into the hype while significantly understating the risks, effort, skills, and time involved in constructing a successful organization with a working, scalable business model from scratch. This true of any organization, let alone the multi-million or billion dollar entity we all might fantasize about retiring on. It can take many years to build a successful business – some estimates are, perhaps a decade. It all depends on the level of your interest and commitment (Do you really care about an idea?), personal goals (Do you want to build the next Amazon or a company you can sell after a few years?), skills (Do you have the wherewithal to realize your vision, or identify and attract people who do?), your appetite and ability to incur risk, and so on.
Peter Thiel, the co-founder of Silicon Valley juggernauts such as PayPal and Palantir, and venture capitalist, says in his book Zero to One, that even if you excel in what you do, it could be much better to join a great, fast growing company than launching one yourself. There is a vast disparity in returns between the tiny minority of the most successful, fast growing companies and the rest of the lot. This matters because:
'differences between companies will dwarf the differences in roles inside companies. You could have 100% of the equity if you fully find your own venture but if you fail you'll have 100% of nothing. Owning just 0.01% of Google, by contrast, is incredibly valuable.' [1]
There are rare circumstances, in other words, that it would make sense for most people to choose an alternative to early-stage Google.
Read more »