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4 things to decide if you should start a business, and if you should stay on as leader of one.
The traits of successful entrepreneurs haven’t changed much in the digital age: You need more builders than branders, and it’s key to have a technologist as part of — or near — the founding team. As a professor, I study businesses, and as an entrepreneur, I’ve launched several. So, I’ve come up with 4 essential questions that you should ask yourself if you’re seriously considering going out on your own:
Question 1: Can you sign the front, and not the back, of checks?
I know people who have all the skills to build great businesses, but they’ll never do so. Why? Because they could never go to work — after putting in 80-hour weeks — and write their own firm a check instead of receiving a check for their efforts.
Unless you’ve previously built firms and shepherded them through to successful exits or you know you have access to seed capital, you’ll need to pay your own company for the right to work your ass off until you can raise money. And most startups never raise the necessary money. Most people can’t wrap their heads around the notion of working without getting paid — and 99+ percent will never risk their own capital for the sheer pleasure of … working.
Question 2: Are you comfortable with public failure?
Most failures are private: you decide law school isn’t for you (because you bombed the LSAT), you decide to spend more time with your kids (you were fired), or you decide to work on “projects” (you can’t get a job).
However, there’s no hiding your own business failure. It’s you, and if you’re so awesome, your business must succeed … right? Wrong. And when it doesn’t, it will feel like elementary school, where the marketplace is a 6th grader laughing at you because you’ve wet your pants … multiplied by 100.
Question 3: Do you like to sell?
The word “entrepreneur” is a synonym for “salesperson.” Selling people to join your firm, selling them to stay at your firm, selling investors, and, oh yeah, selling customers. It doesn’t matter if you’re running the corner store or Pinterest — you’d better be darn good at selling if you plan to start a business.
Selling is calling people who don’t want to hear from you, pretending to like them, getting treated poorly, and then calling them again. I likely won’t start another business because my ego is getting too big to sell. I, incorrectly, believe our collective genius at my current business, L2, should mean that the product sells itself. Sometimes, it does. Entrepreneurship is a sales job with negative commissions until you raise capital, become profitable, or go out of business — whichever comes first.
The good news: If you like to sell and you’re good at it, you’ll always make more money — relative to how hard you work — than any of your colleagues, and they’ll hate you for it.
Question 4: How risk aggressive are you?
Being successful in a big firm isn’t easy, and it requires a unique skill set. You have to play nice with others, suffer injustices and bulls–t at every turn, and be politically savvy to get noticed by key stakeholders and garner executive-level sponsorship. However, if you’re good at working at a big firm, then, on a risk-adjusted basis, you are better off doing just that — and not struggling against the long odds that small firms face. For me, entrepreneurship was a survival mechanism, as I didn’t have the skills to be successful in the greatest platforms for economic success in history: big US companies.
With the endless and well-publicized stories of billionaire college dropouts, we romanticize entrepreneurship. But before you step into the cage of chaos monkeys, ask yourself and some people you trust the preceding questions about your personality and skills.
Excerpted from The Algebra of Happiness: Notes on the Pursuit of Success, Love, and Meaning by Scott Galloway. Published by Portfolio, an imprint of Penguin Publishing Group, a division of Penguin Random House, LLC. © 2019 by Scott Galloway.
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