Founders ahoy - why do we do this?

Why did we start a company at all, we sometimes wonder.....

Marc Andreessen (who has done 3 ) has written a clearly heartfelt essay on the subject over here that touches on a lot of the stuff any founder will know.

First, and most importantly, realize that a startup puts you on an emotional rollercoaster unlike anything you have ever experienced.

You will flip rapidly from a day in which you are euphorically convinced you are going to own the world, to a day in which doom seems only weeks away and you feel completely ruined, and back again.

Over and over and over.

And I'm talking about what happens to stable entrepreneurs.

And thats the easy bit - financial risk, reputation risk, opportunity cost - all greatly magnified if you are more than a 20-something by the way and past it.

Take Financial Risk for example - the October edition of the Academy of Management Journal 2006 had the first good research we saw on the "Founders Discount", from Harvard assistant professor Noam Wasserman. Essentially as a Founder you typically make less money, for longer, than if you were a similar level employee of even your own company (typically a c $30k difference - c 15 to 20% - in the USA). As failure rates are so high, this is seldom made up in any equity benefit. What this means is that the risk / reward structure for the founder is very often badly skewed verses nearly everyone else involved with the enterprise. There are various reasons as shown, but at least when data is open like this the Founder understands the hidden games and can do something about them.

So, why bother.

I think Marc has some of it here:

Most fundamentally, the opportunity to be in control of your own destiny -- you get to succeed or fail on your own, and you don't have some bozo telling you what to do. For a certain kind of personality, this alone is reason enough to do a startup.

The opportunity to create something new -- the proverbial blank sheet of paper. You have the ability -- actually, the obligation -- to imagine a product that does not yet exist and bring it into existence, without any of the constraints normally faced by larger companies.

The opportunity to have an impact on the world -- to give people a new way to communicate, a new way to share information, a new way to work together, or anything else you can think of that would make the world a better place.

Amen to the bozo thing.....it can be a major issue as Guy Kawasaki notes here. (though having a great boss is also an amazing experience and not one to be discounted)

The money thing is nice if it happens, but looked at logically the probability is quite low, so the fun has to come from elsewhere.

For us it was simply - "hey, we want to do all this cool new stuff and no one else in big companies is doing it" (that was c 3 years ago). How do we do it? Dunno...but lets start anyway - bit of consulting, build some interesting services.....we know enough about startups to know that you seldom wind up where you thought you would at the beginning.

But another thing is to do it so as not to regret not doing it....we all believe we have a great novel or a startup in us, but its only when we try that we know just how hard it can be, how good when it goes well, how bad when the world seems against you.

I liken it to sailing in a small sailing boat in a large sea (another crazy interest of mine) - you are in control, with minimal power, of a frail thing at the mercy of larger forces that you have to navigate through - its full of ups and downs, very exhausting - but also exhilirating.

Postscript...article by Steve Rubel inferring that corporates are taking on more of a startup model....it will take a long time methinks, the internal dynamics are very different.

Post PostScript - Jerry Yang just can't keep away either - maybe Steve was right, corporates are the new startups