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Is Founding Selfish?

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Founding is all the rage these days. Is it deeply selfish, or the right decision for you?

Mountain

Founding is all the rage these days.

My dad recently said my wife and I were the only 20-somethings he knew who weren’t CEOs. He wasn’t really joking. I’ve seen countless friends migrate from Analyst at JP Morgan to Founder/CEO.  I’m no different.

But it does make you wonder, why found? Is this herd mentality?

In Founders’ Dilemmas at Harvard Business School, Professor Ghosh described that our chances of A) successfully selling a company we found + B) having a successful financial result for ourselves and our families was… 10%.  That’s tiny.  Especially considering the average startup takes around 4 years to fail.

Additionally, many MBA Leadership Training Programs advertise that MBAs can manage a billion dollar business within 5-7 years, so why not just try that?

Through our Founders’ Dilemmas cases, we’ve learned how hard it is to successfully found a business.  Founders work incredibly hard, putting tremendous emotional and financial stress on those closest to them. We celebrate people like Hamdi Ulukaya who slept for years on his dairy plant floor before churning Chobani into a billion dollar success, but financial ruin and divorce are far more common.  So why found?  Is founding deeply selfish?  An entrepreneur (and his or her family) risk so much, with a tiny risk-adjusted anticipated return.  As someone considering founding, I had a discussion with Professor Ghosh I would like to build on:

1) Operating a small/growth stage company is fundamentally different than a larger company.  At a small company, you’re highly resource constrained, and forced to move quickly. You’ll wear many hats…transitioning from legal challenges, to investor meetings, to sales calls, to customer complaints, to product, etc.. You won’t go as deep in marketing as you would as a marketer in a Fortune 500, but you will get breadth, speed, and incredible challenges to overcome.

2) Even if your company fails, all is not lost. Instead, if you were working in data analytics, think about leveraging the domain expertise you built and work for the competitor that beat you!  It may not be your baby, but you will still be in an exciting growth environment.

3) It isn’t that risky.  Yes, your chance of failure is high, but if you join/create the right founding team you can nurture a culture where you can successfully balance family and company responsibilities.  Additionally, if you have some financial backing, you can take a salary that, while it won’t make your friends in finance jealous, will allow you to pay the bills.

In closing, founding, just as finance, isn’t for everyone.  I would posit that what’s most important is not jumping into founding because others are.  Or avoiding founding because you think it’s a trend that will pass.  Instead, I hope the above has provided the beginnings of a framework to help you decide if founding fits your priorities, and those of your family.

Good luck!

2 thoughts on “Is Founding Selfish?

  1. David, great post and a question I have also been struggling with—mostly because I don’t think you have to be mutually exclusive in answering the two parts of your question, “Is it deeply selfish, or the right decision for you?”

    In fact, I think this question becomes most difficult when the answer to both parts is “yes.”

    I’m starting to believe that in order to be a successful entrepreneur you have to be selfish in many, it not all, parts of your life. Most of the time, it seems that you have to be willing to choose your business above all else—sleep, vacations, time with partners and family, savings, a stable career, etc. You have to throw yourself completely into what you are doing, especially early on, and I don’t think that leaves mental, emotional, or physical space for much more…

    At the same time, your insights are encouraging, and I appreciate being reminded how much we can learn, even from failing. Let’s always remind each other of how fulfilling this path can

    I think a key part to answering the question of selfishness is how do those closest to you feel about you pursuing this path. To me, selfishness is a matter of perspective and is only as bad as the extent to which it affects others. However, that is often difficult to gauge. Perhaps we can ask ourselves questions like: Is my spouse and family fully bought into the idea? Are my friends people who will be honest with me and not let frustrations and concerns fester until it’s too late? Will loved ones X, Y and Z understand when they are no longer always your first priority? Am I comfortable setting aside those people and relationships, even if they seem to be ok with it? The list goes on and on, and only becomes more overwhelming.

    In the end, I don’t have much more clarity than you at this point. But if the answers to both “Is it deeply selfish?” and “Is it the right decision for you?” are “yes,” I expect there is a third question we should ask: “Should you do it?” And like so many other questions in this class, the answer is probably “It depends…”

  2. David, great post. While I agree with Lynn that the answer to your original question is most likely “it depends”, I found your points around the benefits of founding a company, even after failure, to be quite interesting. Though there are many Founders who don’t focus enough on the risks inherent in starting a business, there are also many would-be Founders who don’t take the plunge for fear of what happens if things don’t end up working out. Though I believe there is some element of pride that may make it difficult for a “failed Founder” to knock on the door of a more successful competitor, I also think this is an extremely compelling exit option. You will bring a very relevant (and perhaps very rare) skill set/industry insight/relationships to that competitor, who would most likely be eager to have you on board. If you truly believe in the product or service you were trying to bring to life and someone else has figured out a way to do it better, your original passion for the concept should be enough to help you overcome that pride. Though having these exit options may not make the decision to found a company less selfish, it does make the risks feel less frightening!

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