When I was doing my MBA, I took a class with Harry Kraemer, the former CEO of Baxter International. One of our assignments was a short essay on where we wanted to be in ten years, and for some wild reason I said that I wanted to be one step away from the C-Suite at a Fortune 500 company.
He wrote six words on my paper: “Is that really what you want?”
Given our interactions, he had gotten insight into something that took me a few more years to figure out. He knew that while I might have enjoyed the recognition and influence that comes with a senior job at a big firm, I would probably detest the role itself — not to mention everything required to get there.
But that, of course, doesn’t mean it’s easy to walk away. There are a lot of great perks that come with senior management jobs: the pay, the top-tier team, the stability, the infrastructure, the recognition, and of course, business class travel.
On the other hand, being an entrepreneur is a lot less romantic than culture and the media make it out to be. It’s incredibly difficult to be an execepreneur.
The question is, are you ready for the realities?
Reality #1: You will miss the cash flow
We often don’t realize just how many benefits we get from our corporate jobs until we leave them. Aside from a salary, your firm is also probably paying for your health insurance and covers travel, office space, lunches, and other perks. For someone earning $250,000 per year, company benefits can amount to 30% of salary, coming to $325,000 per year in total financial benefit.
You can obviously make do with far less. I know that the idea of “freedom” was more exciting to me than a nice office could ever be. But don’t take the costs too lightly either: my COBRA coverage ran $2,000 a month when I first left Bridgewater (the hedge fund I was at prior to starting my consulting company), and even now we pay a monthly $1,400 for all-in health insurance. Conferences, business dinners, trade shows — these are all things you’ll be paying for as a business owner, and sometimes you’ll have to make choices between what you put into the business and what you can take out of the business.
Making those trade-offs can take its toll. There are times you won’t know where your revenue will come from, and the instability can make clear-headed decision-making a challenge. Most times, the toll can extend to your family. Once you’ve gotten used to a certain standard of living, it can be extremely difficult to give it up. Your family may be supportive, but you all are at a loss as to how to drastically cut spending; or you might want to shield them as much as you can from the impact of your career change. It’s a constant struggle.
The way I tried to address this issue was to save as much as I could before taking the plunge. We talk about figuring out your number here.
Reality #2: You will miss knowing what to do
When I was at HSBC working on branch strategy, our task was relatively straightforward. We asked ourselves a number of key questions about a region’s potential market size, demographics, and fit with our origination model, and based on the answers we could give a “yes” or “no” answer to the question of whether that market could support a branch. The rest of the process — building the actual branch, hiring the talent, developing the marketing, running the compliance — was left to others in the organization.
This kind of singularity of focus does not exist when you start your own firm.
Even if you have co-founders, advisors, or early employees who can take on responsibility, you are still going to be involved in making decisions about everything important. Everything.
You will not only have an overflowing plate, you’ll often be confused about how to handle it. Does this lucrative contract that takes you away from your core competencies make sense? How should you generate more leads? Should you be doing Facebook, LinkedIn or PPC ads? If you’re a service company, is now the right time to start building your own products?
While for many of us it’s precisely that excitement for the unknown and the desire to truly test ourselves that makes entrepreneurship so attractive, the risks and impacts of the decision are sobering.
There are countless decisions to make, each with numerous options, relatively few constraints, and limited thought partnership. It’s a very different experience than the clear job description and performance goals of a corporate gig — and the reality is that you can oftentimes feel confused as to your next steps.
So, if you are deciding on whether to become an execepreneur, you’ll need to get comfortable with being uncertain about any number of variables all at the same time. While we often took decisive action under uncertainty in our corporate roles, entrepreneurship presents a much wider scope of potential decisions with seemingly less data.
As someone that has been skiing for some time, I like to think of entrepreneurship as the experience of learning to snowboard. I’m comfortable on the snow and had mastered certain skiing skills — reminiscent of my corporate life. When it came to snowboarding, however, I needed to get comfortable with crashing and falling many times before I could get going, while the friends I was just skiing with wondered why I would putting myself through this as they blaze down the slopes.
Reality #3: You will miss the support
In senior leadership roles in a corporate environment, you may have far-reaching responsibilities, but you are not the butt on the line for everything across the business. You have General Counsel, the CFO, the Head of Sales – all have a responsibility to own certain parts of the business, from the strategic to the tactical.
In corporate, I never had to worry about all of the details in a legal contract, the intricacies of the general ledger, the wittiness of our social media posts, choosing new CRM software and so on.
When you have your own business, everything changes. There’s simply far more to running a business than you can feasibly be expected to know about at the outset, and at the end of the day you’re responsible for all of it. While you can hire or contract help, you will still have to be involved in a major way — which means a steep learning curve in any number of departments.
For me, the top three things I now need to do myself that were much easier in corporate:
- Recruiting: In particular candidate flow. When you work for a large brand-name firm, it’s easier to have your pick of pre-screened and compelling candidates provided to you by recruiters.
- Marketing: My employers always had a solid department in place which generated buzz around new products and managed our advertising campaigns.
- Financials: Even though I’ve outsourced bookkeeping and payroll, it’s critical that I pay close to attention to many aspects of the financials and ensure that even tactical tasks are done well.
Having to take responsibility for all of these roles was a tough transition for me. Setting direction and letting talented people drive the results was one of my favorite parts about being in senior leadership, and I set out with the idea that I could simply outsource and play an oversight role when I started my own firm.
In reality, I learned that for inside-the-bell-curve new businesses — those that are bootstrapped or self-funded lifestyle businesses or startups, as opposed to venture-funded ones — this is rarely possible. It’s more likely you’ll be intimately involved in a deep way in everything from sales to bookkeeping.
This includes managing the “product” of your firm. With Northshore, my consulting firm, I was leading most client engagements for the first 18 months of our existence — and oftentimes I still need to. The advice that you should work on your business rather than for your business is nice, but it’s not something you can always have right away, and there are certain realities that will always make you a key person in your business. For us, it’s the important clients and the complicated projects. For other businesses, it might be something else.
The various issues you’ll be facing and tackling as a new business owner will all pull at you, and you won’t have the support structure in place to take it off your plate. Not until you fund it and build it from the ground up.
Reality #4: You might be lonely
I’m not just talking about the day-to-day office camaraderie and having people to talk to about the weather. I’m talking about the intellectual and moral support that comes with going through a tough time with someone who shares the risks and responsibilities you’re facing.
I think many of us execepreneurs even look back with a bit of nostalgia for those late nights in corporate trying to finish a project or solve a big problem. I still remember the days at Microsoft where we would do midnight Taco Bell runs while preparing a big release of Media Center. Nothing builds mutual respect, loyalty and friendship like being in a group of peers building something great.
When you set out on your own, you’re getting through those tough times largely on your own. This might seem counterintuitive – again, aren’t you building something great with another group of talented people? If you’re a well-funded startup that can hire a bunch of top talent out of the gate, perhaps. But in most cases, as the leader, it can be an isolating place of holding people accountable and missing the experience of having other talented leaders in the trenches with you.
About 18 months into building Northshore, we had about ten people spread across several different projects, and I really started to feel like we were losing control of our quality. There was a lot of chaos because I hadn’t set up the proper rigor around each project that I should have. I was strong at Product Management, but I hadn’t yet put a “turn the crank, are the trains on time” project manager into place. I also didn’t have the time or the talent around me to address the problem and fix it properly. I’ll never forget the feeling of just wanting someone to be “in it” with me at that time.
The Bonus: Family
So, being an execepreneur is hard. In fact, it’s probably the most difficult thing I’ve ever done.
But there are huge bonuses — building something of your own, seeing what you’re made of, etc. For me , the biggest bonus is family. I recognize this aspect of entrepreneurship is different for everyone depending on career and the type of business being built. Some of us traveled a lot in our corporate roles or worked very long hours, and now have a virtual team that enables them to work from home. Others leave more relaxed companies and end up working 90 hour weeks on a pre-revenue startup.
In other words, your mileage may vary.
But I have to say that I don’t buy into the bullshit that you have to say goodbye to your family when you start a company. Building a business inside the bell curve is a marathon. You need to stick with it for years before you get your break, and if you’re not taking the time to take care of what’s truly important to you, then it won’t be worth it in the end. Sure, you might reach your destination, but without time and attention to the people who matter – you won’t have anyone with you to enjoy the view.
Spending time with my family is a non-negotiable for me and is a top-line goal, just like any other important goal I have related to my business. Sure, it can be tough — I still have to travel and I still work long hours — but I’m able to ensure that I can make it for martial arts and plan my schedule around gymnastics. That’s the kind of bonus that no amount of business class travel can buy.