Evaluating Pros & Cons of Entrepreneurship
Technologies Mature and Innovator’s Discontent Grows
Discontent, in moderation, can be a powerful motivator for entrepreneurial spirit. I have been continuously employed for 15 years at 3 different Fortune-500 technology companies. All three companies have excellent benefits such as stock grants, stock options, stock purchase plans, profit sharing and bonuses, 401k matching, quality health insurance, and paid vacations. These benefits are very tough to walk away from. In general, I am very content with my benefits and somewhat content with my salary.
My level of satisfaction with the job itself has fluctuated widely over time. The most satisfying times are when I have made lasting changes to how CPUs are designed. Most of these improvements are smaller than the round-off error in the multi-billion dollar corporate balance sheet. However, at least one innovation I worked on, that was part of a small team effort, will likely be large enough to measurably boost the company’s bottom line. The company was insightful enough to give an award to our team for this accomplishment.
Unfortunately, most of the work my coworkers and I do is simply about getting things done (aka execution). Much of my work is not technically challenging — the key challenge is managing the shear volume of work. This is a change from 15 years ago, when there were many new and interesting technical problems to be solved.
Today, we computer design engineers, have become at least 10X more productive than we were 10-15 years ago. We each deliver millions of transistors in less time than we would have delivered tens or occasionally hundreds of thousands of transistors a decade ago.
Ten years ago I was providing unique contributions to the companies I worked for on a fairly regular basis — about 5-6 times a year. Today, I am making unique contributions about once per year on average. This is not due to a lack of ideas; it is simply due to a lack of time. Unlike the “old days”, I seldom get permission to work on innovation. And when I do, it is in the realm of “focused innovation”, which is all-too-often an oxymoron.
Discontent Leads to Change, Sometimes to Entrepreneurship
My doctor is a former electrical engineer. He experienced his company rapidly outsourcing engineering work to India and other low-wage countries, and decided to go to medical school. He now works for a medical group, and thus I don’t see his career change as entrepreneurial.
My story is different than my doctor’s. I saw the similar writing on the wall that he saw, but I interpreted it a bit differently. I saw a future of wage stagnation rather than unemployment. I saw that I must climb the electrical engineering food chain to what many consider the top — CPU Hardware Design. And I changed companies to make that climb. Simultaneously I took grad school classes to boost my knowledge in electrical and computer engineering as well as in finance.
Why study finance? 1) I have passion for finance 2) After studying electrical engineering, the math is easy. 3) Finance is a field that does not compete with my employer. 4) To understand technology and money is to better understand what “makes the world go ’round.” 5) To become a better, or at least more knowledgeable, investor. 6) As a backup career option. 7) To become a financial entrepreneur.
Serial Entrepreneur Considers Leaving the Corporate Cocoon
It could be argued that I have been an entrepreneur since I managed a paper route at the age of 12. I sold subscriptions door-to-door, I collected money for subscriptions, and I delivered papers. In high school I had did high-tech work for a print and publishing company. I telecommuted at age 16, using a 2400 baud modem to receive raw data and send back publication-ready charts and graphs. I even turned the college scholarship effort into an entrepreneurial enterprise: submitting over 50 applications and being awarded over $100,000 in merit-based scholarships.
I won’t bore you with the details of my intervening entrepreneurial efforts, other than to say that I was trading and auctioning products in 1995 on the internet (and Usenet), the same year that eBay was founded.
My fiancée has been a successful entrepreneur for 3 and 1/2 years. Her company’s revenue and earnings growth has been explosive (and the trend continues), while my salary growth over 7 years has not even kept pace with inflation. I have little doubt I could literally walk across the street and get a similar-paying job at 2 different tech companies… tech companies that are not nearly as financially secure as my present company. I could probably even get a 10%-15% pay bump. However, I have connections at these companies who, in aggregate, tell me that work there is simply less rewarding relative to the work at my present employer. Simply put, I work on one of the best projects for one of the best companies in the industry. My coworkers are likeable and extremely talented. Why would I consider giving this up?
I can answer this question with a question: “Do you want to change the world (for the better)?” My answer is a resounding “YES!” Do I see that happening in my corporate job? Sadly, it seems very unlikely, a least not in any profound way.
I am young enough that I can take a multi-year stab at full-time entrepreneurship. I have saved enough, and positioned myself financially so that I can live for 3-5 years without any earned income. And, if my venture should not succeed, I believe I can re-enter the corporate electrical engineering, software development, or financial services job markets.
Caution and Calculated Risk in the Mind of an Entrepreneur
My heart wants to put in my two-weeks notice tomorrow and dive straight into making Sigma1 portfolio-optimization software into the premier financial software in the world. My rational side has a very different perspective; Sigma1 must generate sufficient revenue (or meet other financial criteria) to justify a radical career change. Scenario #1 involves achieving revenue equal to my current total compensation for present job… as a strictly self-financed undertaking. Scenario #2 envisions a large (>$1M) external capital investment out of which I retain significant equity ownership (at least 50.1% non-dilutable) and a 3-year salary contract for $100,000. per year. Scenario #3 entails a very large external capital investment (>$2.5M), a longer and/or larger salary and benefits guarantee, non-dilutable equity retention of at least 20%, a voting seat on the board for 3+ years, and a 5+ year contact to control software development with the title of CTO.
Obviously, I don’t know what the future holds. My employer should not have any immediate concerns. I fully intend to be model employee — out of personal responsibility and because if my ventures don’t work out, I want a chance to return in a few years on good terms.
Balhiser Financial 