(Editor’s note: Ali Davar is the CEO of Worio, a Vancouver-based startup. He submitted this column to VentureBeat.)
Two years ago, I was a young lawyer living in Barbados – my workweeks short, salary high, and life blissful. However, a part-time project I’d started years before with researchers at the University of British Columbia was gathering steam. A large grant from the Canadian government had just come through, the technology prototype was showing promise and the development team was starting to gel. I was confronted with a decision: Should I leave my day job and become an entrepreneur?
As you might have guessed, I did – but it was no easy task translating my business idea into a full-time venture. As entrepreneurs often find, the pieces are rarely in place: You have minimal funding, there are holes in your team and the business has shown little or no traction. Reaching stable ground requires a full-time investment of your intellectual capital and everything else you have to offer.
If you’re thinking of making the leap, here are some key factors to consider.
First – and perhaps most importantly – beware of the following myths:
Myth: You are your own boss. Board members, shareholders, customers – even employees – are now all constituents you must answer to. You work for them because your ability to run the business depends on their confidence. Answering their concerns and making their interests your own ensures they will stick with you through the hard times, which every business inevitably experiences.
Myth: You pick your own hours. True, no one will give you a hard time if you’re late to work in the morning, but the reason for that is likely because you were working into the morning hours. An entrepreneur is never “off the clock” – everything you do, even in rest, serves your business in one way or another.
Myth: It’s a path to quick riches. Divide your salary by the number of hours you put in and you’re likely to find you’re grossly underpaid. This is for good reason: an entrepreneur’s future and that of their business should be inextricably linked by way of equity/options. How can you expect investors to take a risk on your business if you yourself have nothing to lose? Avoid staking your financial expectations on quick exits, such as YouTube. That’s akin to planning your financial future based on the experience of lottery winners.
Focus, instead, on external check, such as:
Does your idea attract smart people? We’re not talking about people you think are smart, but those who actually hold lead positions at cutting edge companies or are being recruited for such. You can’t afford these people – they can generally make more money elsewhere. But they are sometimes willing to forgo more stable offers for a chance to work at a promising start-up. This not only says a lot about your idea but also has a significant impact on your chances of success.
Does your idea attract smart capital? Often the decision to start rests solely on an entrepreneur’s ability to raise seed capital. But not all money is created equal – at least insofar as measuring your readiness to begin. Seeding money from experienced investors in your space is more indicative of your readiness than that from friends and family. Plus, any money from an outside source is preferable to your own money because, while it is indicative of your willingness to put your own skin in the game, self-financing robs you of this very important external check.
Does your idea have traction? Traction, however little, is the ultimate measure that your idea has promise. Perhaps the greatest skill an entrepreneur can possess is the ability to reduce the scope of their idea until they can prove it with early users/customers. This sometimes means limiting yourself to a smaller initial idea/set of features, or piggybacking on another product that customers already use, or taking on a vertical or specialized domain before attacking the wider mass market. The strategies will vary depending on your business, but the goal is always the same: to attain some small measure of validation that someone, somewhere, wants what you are building.
The odds of a new business surviving are never that promising: 50 to 80 percent of venture-backed startups currently in operation will shut down or go on life support (i.e., three to four people working on them) within the next 18 months. The wise entrepreneur must simultaneously take heed of this fact and ignore it.
Entrepreneurship may be something that is inevitable for you, something written in your DNA, but the more you focus on validating your business with external checks before turning it into a full-time endeavor, the better chance you’ll have of avoiding misspent time and effort.
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