The Challenges of Entrepreneurship Versus the Challenges of a Corporate Job
Last week I spoke with my friend and fellow Darden graduate John Reyes. John started his own company prior to Darden and now works in a corporation. I talked about the challenges I am facing as the Founder of 10Thoughts and the struggles of entrepreneurship. John talked about his big corporate job and his corresponding challenges. Then John said that he finds corporate life more challenging than entrepreneurship. I was absolutely shocked.
But John’s comments really challenged my thought process. At the end of the day every job is extremely challenging for different reasons. Why is everyone warned that starting a company is leaps and bounds more challenging than working in an existing company? Aren’t smart, driven individuals pushing to achieve extraordinary, difficult goals in every job?
John and I decided it would be fun to flesh out both sides of the argument. I am going to present the “why entrepreneurship is more challenging” argument and John will present the “why is working at a corporation more challenging” argument. To put structure around our thinking, we picked six categories to discuss: (1) salary; (2) resources; (3) stress level; (4) creativity and innovation; (5) decision-making authority; and (6) one wild card (topic of each of our choice).
For an entrepreneur, the sky is the limit. It is the height of capitalism. Build a company with extraordinary value and cash in! This is the glorification of entrepreneurship, the idea that you can start a company and “get rich.”
However, even start-ups that succeed face a long, long road from the time they start to the time they cash in. Most founders need to operate without a salary at first. When you can finally pay yourself a salary it is small, a mere fraction of what you can make in a corporation. The big score, if it ever happens, comes way down the line after years of grinding.
When, or if, money will come is a question mark. How much money will come is a question mark. There is no consistency or certainty. All you know is how long you can last with what is already in the bank.
Corporations can hire individuals with expertise and experience in particular functions. These individuals focus entirely on their function. In an early stage start-up, the entrepreneur must fill every role. Many needs go unfilled because resources are scarce, forcing entrepreneurs to distinguish between what is “absolutely necessary” and what is only “really necessary.”
Corporations can pay for consultants, systems, software and information. Start-ups can afford none of this.
How I “felt” day to day in the corporate world obviously varied, but compared to start-up life it varied within a much smaller range. In the start-up world the highs and lows are more drastic, frequent, and volatile. There is no team to rely on, there is no “rest of the company” — it is all on your shoulders every single day. There are times you are convinced the company is done. There are times you are convinced the company will be a huge success. There are days you are convinced of both during the same day.
When a new challenge meets the company you need to step up and figure it out. It does not matter if it falls in your skill set, if you cannot overcome it your company dies. When the company is struggling you need to solve the problem. It never leaves your mind. If you cannot solve it, the company dies. There are no other resources to help, no money to help, and certainly, no experts to help.
You are always up against a clock. Your company can survive for X amount of time unless you sell more or raise more money. Mentally you can never take your foot off the gas — ever. You are always in survival mode and operating at a level pretty close to desperation. You start a company with the hopes of making a ton of money and you realize quickly that your focus is really on surviving. You focus on surviving long enough to keep learning, keep trying things, and hopefully, eventually you hit it and figure it out. But this “time to figure it out” comes with a clock that counts down fast.
Creativity and Innovation
Entrepreneurs are fundamentally trying to disrupt the status quo by creating products that are better than the existing alternative by an order of magnitude that convinces customers to pay. When you are early stage and looking for an early adopter client base you cannot point to the success of your product in similar organizations. To be an early adopter means customers need the creativity to envision a world where your product is successful in their organization. They need to be eager (or at least willing) to innovate and disrupt the status quo in their company. Existing businesses often like the status quo, it works for them, and it is the “way things have always been done.” Changing the status quo is risky, it is easier for companies to wait and see how your product plays out in other organizations before committing.
It is tremendously difficult to sell when your product is new, your company is new and there is no existing track record for you as an entrepreneur. It is a catch-22, clients want to see success with another client first and you need a client before you can demonstrate that success. You need to grind until you find a customer that: (1) badly needs a solution to whatever problem your product solves — badly enough that they are willing to take a chance on you; (2) has decision making authority or influence in their organization; and (3) is creative to see your product for what it can be.
(Editor’s Note: Jack is addressing these challenges from the perspective of an entrepreneurial business reliant on B2B (business to business) sales rather than B2C (business to consumer) sales.)
Decision Making Authority
Decision making authority in a start-up is awesome! As young professionals, we are still layers removed from the big decision-making power in established organizations.
But in a start-up, the responsibility is challenging. In corporations, the leaders are experts in their fields with years of experience. They are leaders because they overcame significant challenges on the way up the ladder. In my prior work, I was confident our teams would not fail because of these experienced leaders. I was confident because I worked for companies with decades of experience and a history of success. The beauty of a start-up is you can be a CEO well before your time, but you are under-qualified. You learn how challenging it is to make big decisions. It is easy to announce an opinion when you are not responsible for the decision — I was excellent at this in all of my previous jobs. We are all excellent at this in classrooms. In the real world, when you actually make the final call there is always self-doubt and a nagging fear that you are in over your head. I never doubted my qualifications to perform my responsibilities in my previous jobs. In this role, as CEO of 10Thoughts, I know I am under-qualified. It is very humbling and challenging, but it ultimately makes starting a company fun.
Wild Card — Credibility
As an entrepreneur starting a company, you try to borrow credibility from wherever you can — partnerships, clients, investors, even your school. But at the end of the day you have little to no credibility. When you go out into the market there is no reputation or track record. It is difficult to even speak with decision makers. It is a long, slow grind.
When you work in a corporation, you have the credibility of the company and the function you perform within the company. You are generally able to schedule the meetings you need to do your job. Your customers either: (1) already do business with your company; or (2) know your company, brand, and reputation. Your customers will listen to your new ideas and offerings. Your customers will take the time to explain their pain points so you can design products to meet their most pressing needs. You can even work with your customers to figure out how to solve a problem together that your customers are willing to pay for.
Starting a company there are none of these luxuries. The market makes you earn your credibility. The more credibility, the easier it is to get in front of decision makers. As an entrepreneur, just getting to a decision maker, is a full-time job.
In another life, I started two companies and then ran an undergraduate entrepreneurship center — the number one entrepreneurship center in the US, might I add. Then somewhere in there I began to turn to the dark side. I went to law school then business school for my MBA.
Now, I am a corporate warrior. I make my way into a building each day that is absolutely gargantuan. It is the largest building I have ever spent an extended period of time in and I am joined under its roof by 20,000 other people working to keep a 20 billion dollar business running and growing.
I agreed to do this blog with Jack because I hoped that it would provide folks the information and perspective to make the best decision for their lives in the future when faced with the decision between pursuing entrepreneurship and going the corporate route. And without further ado, here is my opinion on how corporate life and entrepreneurial life compare.
Without fail, every other Thursday, money — and not a small sum of money — almost magically appears in my bank account. The process is so automatic, so completely dependable that neither I nor likely many of the other 20,000 even entertain the thought that it might not happen. We don’t think about how it’s only possible on the massive scale that it occurs because each of those 20,000 are doing their jobs day after day. It would require massive failures on such an incredibly grand scale to throw that whole process off that you forget just how fragile and spectacular the whole process is.
Together, that whole machine breeds an incredible amount of trust. Concepts like financial safety and security become real instead of words on a page. That security, safety, and trust create a level of comfort I have never experienced before in my life. Now that I have felt this very unique comfort I finally understand the popular statement that it is hard for people to leave their comfort zone and go out on the limb of entrepreneurship.
But even more now, I understand golden handcuffs. As a student, and before then as an entrepreneur, I could be exceptionally agile. I could flirt with and flit from one idea to another. Now, I come home at 5pm and free time to explore a new idea is in short supply. When I do have the time to entertain an idea, I am reminded that to act on that idea in a full-time capacity would require me to pay back my moving allowance, signing bonus, and who knows what else is buried in the various forms and papers I signed when I joined the company. (I know you might be thinking, “…and this guy is a lawyer?!”) But now, I am in a situation where an idea has to be homerun and prove itself to be such financially before I can consider giving it my full attention. Which, in my experience, means that actually starting anything new isn’t likely at all.
Corporate capital planning in an institution as large as this company is absolutely monolithic. Trying to fit how it all is happening into my mind literally makes my head hurt. Selling an idea to one level of the process — the only part that you ever really interact with and half-understand — is no guarantee that it will be able to survive and cascade its way to wherever it is it goes. If it does make it all the way up and get funded, chances are you will have enough money to pull off whatever it was that you dreamt of in the deepest most imaginative reaches of your mind. However, the politics that will go into spending that money and actually achieving the original vision is so very painful and confusing that when you see the project take life you likely might not even recognize it even if it was your idea. At least, as an entrepreneur I could sit and look at my capital committee in the eyes. Considering that “committee” was frequently composed of friends, family and any other person who had money and would give me the time to plead for cash. The distance between the decision maker, the money, the idea, and the entrepreneur who will bring the idea to life is so short that even a caveman could understand it.
Stress is a fact of life. Of course, certain experiences or situations are more stressful than others. I think the day to day of being in corporate life or in entrepreneurial life are pretty similar. As far as I can tell, it’s the same stress but just a different flavor. Instead of stressing about where the next dollar or sale was coming from now I stress about feeling completely out of control in this massive machine — just another tooth on one of the many gears of this incredible machine. Instead of stressing about whether I can make a dream come true and create a successful business now I stress about whether I can meet my leaders and my expectations of myself — can I be flexible enough to succeed with others in this huge company.
Creativity and Innovation
Everyone talks like corporations are these drab grey places filled with drab grey people who only know how to do more of the same completely devoid of any creativity and innovation. Corporations are slaves to the status quo and change is the most painful of all the corporate life experiences. It’s almost as if the world believes that creativity and innovation are within the exclusive domain of entrepreneurial firms.
Instead, I find that the complete opposite is true. The building is overflowing with ideas. In fact, there’s a saying around my company that in this building there are no new ideas — someone in here at some point in time already had that idea. Even more there is no shortage of problems demanding creative problem-solving and no shortage of business practices in need of innovation. The struggle is how to innovate, create, and execute in a system with so much inertia and so many legacy systems. If anything the big difference is that entrepreneurial firms have no legacy systems nor any inertia to overcome when a change is required. In fact, perhaps as one of God’s ironic twists, most entrepreneurial firms are desperately seeking that inertia for themselves — the inertia that leads to consistent reliable profits.
Decision Making Authority
Big projects and efforts carry with them many more decisions — big and small. In a huge company, there are tons of projects of various different sizes and levels of definition. The execution of these projects creates an insane number of decisions, so many decisions that senior executives and management can’t make them all. There are a great many decisions that have an incredible impact on the outcome of projects that you as a junior executive or young professional have freedom to make almost completely alone which feels a lot like being an entrepreneur.
It’s when you get to the big decisions that things really change. Bigger decisions require more consensus through an almost mind-numbing series of meetings that circle and circle those decisions like carrion birds over a fresh carcass. When I was entrepreneur, I could make those decisions alone or at least with a much smaller set of stakeholders. Thus, decision making moved faster and was able to be more directly and closely aligned with stakeholder needs. It’s the necessary compromises, in-fighting, politics, and end-arounds that come with being part of a huge company that are the most frustrating.
Wild Card — Life
The single biggest change from being an entrepreneur to now being a corporate drone is that I get a life. It’s so important that I am going to put it on its own line all by itself.
I have a life now.
As an entrepreneur, my mind was constantly on my company — eating, sleeping, working, working out, you name it — it was all about the company. I was boring at parties and social events. If we had a conversation, it was just about my company all the time. My identity was inextricably tied to my company. Now, when I leave work, I simply leave it. It’s gone. I can stop thinking about work. I can have a conversation when I purposefully ignore work. The semantics are revealing — my company versus the company I work at. Now, there is me, the person I am, and as one tiny facet of that me there is a company I work at. As an entrepreneur, that sort of separation was never an option.
Now, I can quit the company I work at. But when it was my company, I just couldn’t quit. To quit would mean, that: I was quitting on me, on the people who depended on me, and without me the company very likely wouldn’t continue to exist. It was my responsibility to always think about it and worry about it and obsess about it — failure to do so might mean the failure of my company.
Now, in this big company and corporate machine if I leave for greener pastures, a new challenge, or to start a company, then machine will replace me and continue to hum along as it sucks another person into its massive orbit to replace me.
And, strangely enough, that awareness is incredibly liberating.
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