There Is Only One Reason to Start a Startup
A few months ago, I was invited to share my journey with a group of over 30 new founders. One question they asked was why to start a company. I flipped the question back to hear why they wanted to. I was blown away by how disconnected from reality their answers were.
In this blog post, I want to share why those reasons are not the right ones and the only reason to start a company.
Why to not start a company
- Make money. The chance that founders have a positive financial outcome from a startup is probably 1%. Statistically, you’re better off finding a stable job. As a startup founder and CEO, you make the least money in the company for the first few years. Your initial salary is 25–50% of what you could make in the market. And in the first few months to years (before you raise money), you don’t even take a salary. Now, what about your equity? On average, it takes ten years to go public and get to a liquidation event. At times, investors allow founders to sell some of their shares in a secondary market as part of a B or C round, but your likelihood of getting there is extremely low and takes years as well. I haven’t met anyone who started a company because they were looking to make more money.
- Be your own boss. Nothing is further from the truth. As a founder and CEO, you have many bosses and you spend much of your time managing them and keeping them aligned. Those bosses can be your board, which includes two to four investors, your team, your customers, your partners, and every employee in the company. In addition, as the company grows and you start hiring senior people, you give them context and follow their direction, not the other way around.
- Make your own hours. Startups and work-life balance do not mix. The startup grind is very real. No one should go into a startup or scale-up company if they want a predictable and manageable workload. Starting a company is all-consuming. Every second you’re not working, you’re thinking about the company. Being present with your family when you’re “not working” is a real challenge. As a founder and CEO, you can never take a real vacation and disconnect for days. Working every weekend and 80–100 hours every week in the early days will be your new norm. If you’re in B2B, expect to travel nonstop in the early days. I used to spend over 50% of my time on planes for the first two years. It’s almost impossible to create a successful company, and it will take everything you have to get it done.
Why start a company
The answer is simple: You read all of the above and, despite everything, you still want to do it. Maybe you’re passionate about solving a significant problem. Perhaps you feel a burning drive to realize a vision and make something the world has never seen. Whatever the reason, it’s bigger than you and exerts an inescapable gravitational pull. Only do it if you just can’t say no.
