Stop me if you’ve heard this story before.
A brilliant university student gets a big idea. He (in the story, it’s usually a he) drops out of school, starts a business, works 18-hour days, wows an angel investor or two — and before too long, finds himself leading the next billion-dollar startup.
Now, you may take this story as gospel. After all, Bill Gates, Mark Zuckerberg, Elon Musk, Sergey Brin, and Larry Page — five of the wealthiest, most accomplished entrepreneurs in history — all got their start at an early age. (Musk, Brin, and Page did graduate from university but founded their first companies shortly thereafter.)
If you want to follow in their footsteps, then you should do the same — right?
Not so fast. Trouble is, the story of the young, genius founder is largely a modern-day myth.
Yeah, some of the biggest companies in the world were founded by dropouts or fresh grads. But that’s an incredibly uncommon route to entrepreneurial success. The reason we all know the Microsoft or Facebook origin stories is because the beginnings of those companies were so unusual.
For a more realistic example, let’s look at Jeff Bezos (that’s a sentence you won’t read every day). After graduating from Princeton University in 1986, he spent almost a decade working for several different firms, including a fintech startup and a hedge fund.
It wasn’t until 1994, after he turned 30, that he left the corporate world and struck out on his own to found Amazon.
The truth is that most successful entrepreneurs have followed a similar pattern. Per an exhaustive study conducted by DCVC partner Ali Tamaseb, the average founder of a company valued at over $1 billion started their business at 34 years old.
Additional research, meanwhile, indicates that founders of the top .01 per cent of startups tend to be even older — with an average age of 45.
Despite what we may think, becoming a successful entrepreneur is not actually a game for the (very) young. Unless you have a world-beater of an idea and a devilish degree of luck, you’re probably going to be better off launching your own company after you have some work experience under your belt.
Here’s why.
Let’s start with some advice that every ambitious young person is dying to hear: you don’t know what you don’t know.
But seriously, you don’t.
And that’s okay! Successful entrepreneurs aren’t smarter than you are. They may not even know more than you do — a big chunk of the wisdom that comes from experience is actually being able to admit how little you do know.
But they’ve been around the block enough times to have a sense of what key problems in their sectors need solving. And for any startup to have a shot at succeeding, it needs to solve a key problem.
Experienced founders know that. They take the time to identify a problem, figure out a solution, and only then build a company that can deliver that solution.
Plus, they understand how to navigate the business world. And they have enough self-awareness to see where they need to ask for help along the way.
Now, getting comfortable with all of those things takes time. But the good news is, you can get paid while you do that!
By taking a graduate job, even if only for a couple of years, you’ll be giving yourself an invaluable education. You’ll be able to make lots of mistakes, learn the ropes, and develop a working knowledge of your sector.
Most importantly, you’ll be able to see more problems more clearly — which means you’ll have a better shot at seeing the next big opportunity, too.
One reason many startups fail is that they simply run out of time or money (which in business, are usually the same thing).
Here’s another common story that is (sadly) not a myth. A founder builds a company around meeting a genuine need, puts together a good team — and then goes bankrupt because she can’t refine the business model enough to become profitable before the company bank account runs dry.
Or maybe she has what seems like a brilliant idea for a product that just doesn’t quite pan out when exposed to the market. She pivots in a new direction, but before she can get some real momentum going, her investors get squeamish and pull their money.
Now, this can happen to anyone — even a seasoned, experienced entrepreneur. But you can reduce your risk by treating your startup as a side project — at first.
Doing this can actually save you both time and money in the long run.
First, if you begin testing your startup idea while you’re still working your graduate job, you’ll be giving yourself more time to get it right. You’ll be able to learn, innovate, and evolve until you know you’ve got something that works.
Now, until recently, the startup-as-side-project was less of an option because you had to devote most of your waking hours to your business idea in order to get it off the ground. But today, the costs of creating a minimum viable product (or MVP) are lower than ever.
Say you’re looking to develop something in the app space. You may not even need much in the way of coding skills anymore (thanks to the rise of apps designed to make it simple for non-coders to build more apps).
If you’re focusing on a service field — say, marketing — you could start by taking on just a few clients that you can work with in the evenings or on the weekends. No risk, and plenty of time to hone your craft while your primary job is paying your bills.
Even if you’re interested in making a physical product, you’ll have more flexibility than you used to. Cheap overseas manufacturing and 3D printing have reduced barriers to entry, especially if you’re not trying to create something too technical or complex.
In other words, you can usually start slow and build your business carefully and patiently. And you won’t have to burn through much of your startup capital until you know you’ve got a minimum viable product with some real appeal.
Second (and even better, perhaps) if you develop your offering while you’re still gainfully employed, you may be able to limit or even eliminate the need for outside investors.
Founding a company without any major external funding is called bootstrapping — and can be incredibly lucrative if you succeed. After all, if you’re not giving a VC firm a big chunk of your equity right out of the gate, you’ll be able to retain a much higher percentage yourself.
The financial payoff there is obvious. Say you’re able to keep a 60 per cent stake in your business instead of giving half of that away over the course of your series A, B, and C funding rounds. You’ll earn twice the reward if your company ever takes off.
But all that extra equity also gives you a ton of maneuvering room. You’ll have additional shares to offer top employees or job candidates, making you more competitive in the hiring market and better able to retain talent.
Plus, you’ll have more authority over the long-term direction of your company. From a founder’s perspective, that’s a good thing (although the spectacular collapse of founder-led firms like Theranos is a reminder that a little humility and willingness to seek outside input is always in order).
Finally, here’s one more thing to consider. If your startup does fail, having a few years of experience working a graduate job will give you more options to fall back on.
Now, failure is an inevitable part of business (and life, for that matter). If you’re not failing, you’re probably not trying hard enough and you’re certainly not taking the kind of risks you’ll need to take in order to become an entrepreneur.
Indeed, when you do launch your business, you should expect to fail often, in ways large and small. That’s a good thing! Those failures will teach you how to grow.
But if your business itself fails — and the truth is, 90 per cent of startups eventually fail — then you may not be in a position to just go launch another company and try again. Unless you’ve got a pile of money socked away, you’ll need some way to pay your bills — and all of a sudden, your successful stint working for Canva or Optiver is going to come in handy.
Finding a new job may be as simple as calling your old manager and asking if they’ve got an opening. Most anyone would respect the risk you took in leaving to start your own company and would want to help you if they could.
And even if your former firm doesn’t have a position for you, the contacts you made during your years in the workforce may prove invaluable in securing a new opportunity.
Consider, too, the extra peace of mind that could come from establishing yourself in the professional world before launching your own business. Once you’ve done that, you’ll be able to branch out on your own knowing that you’ve got a plan B.
If anything, that may help you to better embrace taking risks and saying yes to failure — which will make the success of your own business more likely in the long run.
Now, don’t take any of what we’re saying as a lack of support for the entrepreneurial spirit. At Prosple Australia, we’re huge fans of startups — after all, we’re a startup ourselves!
If you have the drive, passion, and energy to strike out on your own as an entrepreneur, we encourage you to do so. But we suggest that you first take the time to get grounded in the larger business world.
Figure out what problems need solving. Learn your chosen sector. Make connections. Explore your ideas while someone else is still signing your paycheck.
Even better, make mistakes. Fail. Once, twice, again and again. Then go start your company.
In business and in life, if you’re willing to be patient, you’ll often reap the rewards.
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