Five Tips For Corporate Professionals Moving Into Entrepreneurship
This article was co-written with Tarig El-Sheikh, co-founder, Beneple.
A few weeks ago, two close friends in high-power corporate roles were given notices from their employers on the very same day. Both were told similar versions of the same thing: no hard feelings, but the company wasn't doing great given the recent economic situation, and the company (one was an investment bank, and the other, a private equity firm) simply couldn't keep them on the payroll. Their predicament got me thinking. Are we at a point in history where the promise of a regular monthly paycheck -a construct that has formed the backbone of the post-WWII economy for the last 70 years- is about to disappear?
But what followed next was more interesting. These two, the two most "corporate" people I know, struggled to reconcile their need for a job to sustain their affluent lifestyles, with a deeper yearning to be free of the corporate life forever. However, their true motivations were deeper. Why should they continue to use their carefully honed skillsets to create value for a company whose interests served their own and not their employees, especially when the alternatives have never been as compelling as they are right now. Their next move? Entrepreneurship, of course.
But moving from the corporate life to the startup life is not an easy task. The issue is that entrepreneurship is a wholly different beast than the corporate world, for the reason that startups are not simply smaller versions of large companies. Startups are actually "experiments" in search of a repeatable and scalable business model, and the approach to success in startups has more in common with the science lab than the corporate boardroom. For that reason, corporate skill sets don't necessarily guarantee success in the startup world. Here are five tips we believe are critical for corporate professionals looking to make the transition to entrepreneurship:
1. Embrace your inner rebel
That naughty kid in the back row questioning everything the teacher said might have made him an annoying subordinate to a boss in a corporate setting, where HR managers often misdiagnose entrepreneurial tendencies as insolence or contempt for authority. However, when properly channeled and incentivized, the curiosity to see things from a different perspective and challenging established norms is a critical skill as an intrapreneur (an entrepreneur working within an organization to serve the best interests of a company), as well as an entrepreneur (working to serve their own interests, in their own company).
The mind shift is realizing that there is nothing wrong with you, or the workplace; it's simply that some people are simply not hardwired to have a boss. On a side note: this should serve as a warning to parents. Be careful when punishing your disobedient kids for the above reasons- their contempt for the status quo might produce a breakthrough that, if cleverly cultivated and channeled, could fund your retirement!
2. The ego of academia (and why you should never stop learning)
The path to startup success is fraught with pitfalls. Corporate professionals that successfully navigate the transition to entrepreneurship realize that they never stop learning, and this should be ideally from mentors who have transitioned this same path before them.
The three most important commodities in an entrepreneur's arsenal are time, money and mental energy. Anything that makes more efficient use of these keeps the ship sailing for longer, which gives it a better chance of finally discovering treasure.
University graduates, particularly MBAs, have two big problems. The first is ego ("I already learnt this at B-school"), which is understandable given the justification required for the price tag. The second is less obvious, but more important: the fear of failure. A business MBA is thought to be the epitome in preparation of business success. For the same reason that a senior executive is never fired for having hired McKinsey –regardless of the outcome– the MBA has the added pressure of failing in their venture given how much has been invested into their education. The "sunk cost" fallacy of academic education can be a dangerous trap.
The fundamental difference between a startup and an established business bears repeating, given that the startup venture has more in common with the science lab than the corporate boardroom, one of the biggest ironies of entrepreneurship is that a background in the hard sciences is probably a far better (and arguably, cheaper) preparation for success in a startup than a business degree.
3. Don't calculate success; calculate your risk
Three important facts to consider regarding startup success:
- 90% of startups won't live to see their third birthday.
- 42% of startups were successful simply because they were launched at the "right time."
- A lack of "product-market fit" has been cited as the reason for 36% of startup failures.
We humans have a habit of fetishizing success. We raise successful entrepreneurs on pedestals and ask what they did to be successful, not realizing that about half of their success can be statistically attributed to launching at the right time- or in other words, luck. So, instead of concentrating our efforts on what makes successful companies successful, given the three facts above, isn't it far more informative to consider instead why the other 90% of companies weren't successful?
Whilst it might seem counterintuitive to manage failure rather than success, consider that as failure is the far more likely outcome, the real strategy for any startup is to minimize their downside and maximize their upsides. The "lean" startup movement is really nothing more than a philosophy that emerged out of this idea: stay in the startup game for long enough to finally stumble upon the right time or the right business model that will succeed.
Related: The Truth About Entrepreneurship
4. Iterate furiously
Following on from the above point, most business models rarely succeed in their first iteration. Beneple, a HR platform and recent success story in the UAE, recently exited through an acqui-hire only eight months after beginning its operations in January of 2015. A lesser-known fact is that they iterated their business model many dozens of times based entirely on insights and learning from their client's own needs. Had they continued with their original business model, they would most certainly have failed.
Many entrepreneurs, particularly those in the creative space, tend to fall in love with their own creations. This is understandable, given how deeply they are involved in the process. But just as parents can't imagine others not finding their own children cute, entrepreneurs too have a tendency to reject feedback from paying customers.
The advice here: listen to customer feedback and lose the ego about the product. Customers really are always right, because without them, there is no product and no business.
5. Rediscover your hustle muscle
This is arguably the most important point of all. Entrepreneurial hustle requires taking measured risks; ones where the downside is small, but the upside could potentially be very large. Learning to "beg, borrow and steal" (metaphorically, not literally) is a skillset we often lose when we enter the corporate workplace. Relearning these skills and exercising your "hustle muscle" are key ingredients in developing resilience, a central quality of all successful entrepreneurs.
Dr. Petar Stejanov and Tarig El-Sheikh, in association with Astrolabs, MENA's Google Tech Hub, will be conducting a two-day workshop entitled "From Idea to Startup" at the Astrolabs offices in JLT Cluster R in Dubai on the weekend of Friday May 27th – Saturday May 28th from 10:00am to 4:00pm. For more details on the event, click here.