Tuesday, February 10, 2009

Outlier: Entrepreneurship

I had the opportunity to attend an entrepreneurship panel this week, and it was fascinating. They had three current MBA students on the panel, who had all started one or more successful businesses.

One started a hedge fund and managed a billion dollar portfolio by age 25, and then he got tired of that, sold it, and started a company in Brazil doing the same kind of thing these guys do, although that's not his company. They give out paper hangers for free to dry cleaning companies, paid for by advertising on the hangers. It's green, saves the dry cleaners money, and the advertisers know the item will be looked at in the person's closet for weeks.

The other guy started a resale consumer goods company in the UK selling through eBay and Amazon and his own website. Then he got tired of that, and started something else, I've forgotten what.

The last guy started his first company while he was in college, trying to make beer money. He and his friends bought domain names in English that translated to common things in India, then resold them. Domain squatting, I think that's called. It worked when he did it because the Internet and globalization was new, but he got out of that because, well, there are only so many domain names. So then he started flipping houses in Chicago, and morphed into real estate.

And all these guys are still in their 20s! It's quite humbling. I liked hearing their life stories, although I was a little disappointed none of the businesses they started were technical in nature. It's a bit different to start a technology/engineering type company than to start selling things on eBay. But in the end, hey, if it makes you money what does it matter.

My favorite part was the questions and the answers. A lot of the things they said, I already knew.
1) It takes incredible dedication and focus to start a company - it's a high risk, high reward proposition, not for the weak of heart or mind.
2) You have to be really cheap. Nickel and dime every expense to minimize absolutely every cost. The only thing which you should not skimp on is people - if you have partners, pay them what they are worth. Pay them more than what they think they are worth, even. It's worth it to have good people who won't walk out on you.
3) It's not the idea that matters. Ideas are easy, every person who thinks can come up with ten company ideas a day. It's picking the right one that matters, and the execution. Someone asked the panel how they protect their ideas, and if they worry about someone stealing it. One reply particularly struck me: don't worry, somebody already has your idea, and you probably stole it from someone else. There are very few things nobody has thought of. And if they can execute it better than you can, then they are the ones who should be doing it, not you. And if you can execute better, then you shouldn't be worried.
4 5) It takes a certain kind of person to be an entrepreneur. It runs in the blood, you might say. These kind of people have the ability to focus to the exclusion of all else, a drive to be creative and innovate. They can't stand the idea of an industry job. Some just love the process of starting the company, and will work in any field. Some are motivated by the idea and could care less about the process. But all of them are passionate.

This entrepreneurship thing runs in my blood, for better or worse. I kind of knew this in college, but it has really solidified in grad school. I am one of those people who thinks of company ideas by the handful. I can't think of a single person I'd rather work for than myself. I don't mind not having job security in the form of a company salary. I know my mind, my skills and my ideas are security enough - I know I'm good enough to make a living, if not a fortune under the right circumstances.

I say all this because I know it isn't the typical direction a grad student takes. Most engineering students I knew in undergrad took jobs in industry after completion of the bachelor's. A small percentage went to grad school, like I did. Of the few people I know personally who went to grad school, a master's is all they were going for. Either an MBA to help to get a job in engineering management, or rarely an M.S. to get a better salary in an industry job. Only one person I know from undergrad is going for a PhD - and he only decided that because his industry job went away with the economy.

So here I am, going for the PhD. Why? I know it's strange to complete a PhD and not be interested in academia. I stayed for a PhD because it is exciting to me to work on a problem that nobody has solved. In classes, you solve problems, but they are problems with known solutions. How much more valuable to find an interesting, relevant area of research and make a significant contribution. Also, having a PhD from here will give me superb credentials - I can essentially prove myself by just writing my name.

So, surprise, surprise, I'm an outlier in my career path. I want to start my own company. Someday soon, before I leave this school. My favorite part of being here at World's Best School is that I am surrounded by brilliant people in all different fields, the cliche melting pots of minds, ideas, and money. Standing at the front end of an intractable problem is a scary place to be for most, but I do it every day in research. Not so different than standing at the front end of a company that isn't reality yet.

For some outliers like me, it's not scary - it's inspiring.


  1. When I first started reading your blog I thought, "hmm...has my little sister started blogging?", until I saw that you're going for your PhD (she's going for her MS in mechanical engineering)...this post just reminded me of how alike the two of you seem as she was just talking last weekend about wanting to start her own company...weird.

    I thought #3 was interesting, especially this sentiment: And if they can execute it better than you can, then they are the ones who should be doing it, not you. And if you can execute better, then you shouldn't be worried.
    I wish that more people would have that attitude in general...

    also, sorry to be an ass, but was there a #4?

  2. Oh, whoops! No #4.

    I'm the oldest in my family, so you can stop wondering. But tell your little sister go for it and good luck!

  3. Let me know if you ever want to *do something together* along these lines. I'd like nothing more than to be involved in a technical startup with people whose writing I dig.