The startup buzz is growing. Whether it's a fad or the new norm, I'm starting to hear a lot of misconceptions from want-to-be entrepreneurs.
Most of what I hear scares me — a lot.
Here are the 3 biggest misconceptions about startup life, and subsequently the worst reasons for wanting to leave your I-don't-really-like-it-but-I-don't-hate-it corporate job.
Yes, you can create the next big thing and become a billionaire. It's not likely to happen though. It's a commonly known fact that 90% of startups fail. Even if you are able to get traction, generate revenue, and raise venture capital, the odds are still stacked against you; only 10% to 20% of venture-backed startups see substantial returns.
Fancy yourself a billion dollar company? Get in line for the "Unicorn Club" — there's only 39 companies, since 2003, that are valued over $1 billion. That's .07% of venture-backed startups.
Start a company because you are passionate about the idea or the space, not because you want to be rich. Odds are, you won't.
2. Better Hours
There's a very real benefit of having more flexible hours, but a lot of people assume that means less hours. With a startup you're going to be working more, not less.
Think about it this way, you're risking everything — your life, your savings, and your mental stability — to get this thing off the ground. All your eggs are in ones basket; you should be giving it your all.
When I'm out with friends, they hate — and it's understandable — when I'm on my phone dealing with customer emails. They don't get that it's different than a normal job. My actions directly correlate with the success or failure of my startup. Unlike normal jobs, there is no one else to deal with problems — the buck starts and stops with me.
If your startup doesn't consume you, it's probably a lifestyle business that isn't expected to grow extra-ordinarily. That's not to say that lifestyle businesses are worse than startups — it might even be better for your circumstances! — but it's key to understand the difference (especially since it affects the long-term strategy).
You'll have more flexible hours when you start your own company, but that might not mean fewer hours.
3. Silicon Valley = Success
This final point includes elements from the two above, but it warrants it's own section.
Success isn't guaranteed (or even necessarily increased) if you move to San Francisco or Silicon Valley!
There's this huge misconception that people will throw money at you, for any idea. Unless you have incredible traction, your idea means nothing. The only time that people will throw money at you for an idea is if you have a track record; either you've had wins before or they were a prior investor who wants to take another shot.
Many first-time entrepreneurs foolishly ask people they meet to sign NDA's — how do you not notice the snickering or wide-eye confusion? — thinking that their idea is what will get them funded. I hate to break it to you, but there are probably 10 other teams working on the same exact idea right now.
San Francisco / Silicon Valley is the place where dreams come true. If you have a great product or amazing traction, you'll get funding even though you're not generating revenue. However, if all you have is an idea for "the next big thing" and think investors will throw you millions... you're dreaming.
What do you think? Let me know on Twitter (@sebfung).
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