Consulting, VC, or a Startup? Best Career for an "Entrepreneur in Waiting?"

19 Aug

Entrepreneur in WaitingI am a part of the great swath of young professionals around the world who might be best described as “entrepreneurs in waiting.” We are people who aspire to one day start our own business, or partner up to create one.

We have in common the desire to be prepared to seize a new business opportunity when it comes our way, but many of us are currently working in other careers, waiting for the right moment to make our move. Jared Smith, a friend, former colleague, and junior partner at PICS (Pacific Industrial Contractor Screening) calls this “waiting for your pitch” — holding out for that great idea you can hit out of the ballpark.

Where, then, is the best place for me to wait for my pitch and optimize my chances of not only receiving the most pitches, but also knowing when I should swing and having the skill to hit the ball? How do I maximize my chances of meeting the right people, while also gaining the skills and experience that will make me an attractive business partner? What career will provide the most inspiration to dream up the big business idea I want to build my career upon?

The answer, obviously, depends very much upon the type of entrepreneur you want to be. Are you a developer or a business guy? How much do you have to lose if you leave your current career and mess up? I am writing today with the business-minded entrepreneur in mind; one who already has a good job and does not want to join just any startup, but the right one. I am, essentially, writing about myself.

Management Consulting [where I am today]:

Pros:

  • Build credible work experience and learn best practice
  • Develop important business skills in analysis, customer interaction, planning, and management
  • Cultivate a management mindset – consultants are trained to structure problems and think about how to grow businesses
  • Exceptionally diverse exposure to different industries and business problems, improving the chances of stumbling across new business ideas and innovative solutions to old business problems
  • Diverse exposure to different geographies and business environments, possibly giving insight into businesses which could be transplanted from one location to another
  • Relatively stable and low risk compensation [bonus based on a mix of personal and firm performance, not necessarily that of clients or a portfolio]

Cons:

  • Limited control over the industries, geographies, or business problems you face [i.e. You may be just as likely to be working for an “old economy” auto manufacturer in Detroit as a “new economy” biotechnology company in Silicon Valley]
  • Typically clients are fortune 500 businesses or governments, both of which operate very differently than startups, possibly limiting the applicability of some lessons learned
  • Limited networking opportunities with other entrepreneurs, for the same reason

Venture Capital:

Pros:

  • Exposure to diverse businesses and solutions within a narrow industry area (most firms focus on just two or three industries) – gain understanding of how different players are solving the same problems with different approaches
  • Gain an investor’s mindset, looking at businesses in terms of their relative ability to succeed, and understand a venture capitalist’s investment criteria
  • Network with entrepreneurs and venture capitalists, increasing the likelihood of running across a potential partner with a “big idea” you are excited about
  • Realistic possibility of moving from a position in VC to an operating role in a portfolio company
  • Relatively stable compensation, however bonus is tied to portfolio performance and forms a greater proportion of salary

Cons:

  • More time spent critiquing business models, management teams, and strategies than thinking about or learning first hand how to grow a business
  • Limited diversity of industries and geographies likely to be encountered
  • Limited opportunities to gain operating or management experience

Operating Role in a Startup:

Pros:

  • Network with other startup professionals in your industry niche and within your company, people who are likely to have very similar passions and might eventually make great business partners
  • Build deep knowledge of your industry, increasing the likelihood of identifying unmet needs which could be filled with a new product or service
  • Gain practical operating and management experience, improving your credibility as a potential partner
  • Understand the challenges faced by startups, and some common methods of overcoming them through personal experience
  • Spend part of your day worrying about how to keep things working (operating mindset) and part your day worrying about how to make them work better (growth mindset)

Cons:

  • Narrower networking opportunities – relatively less likely to meet potential partners in other industries or geographies, or think of solutions to problems that your company is not in the business of solving
  • Possibly reduced professional credibility if later attempting to rejoin the “corporate world”
  • More risky – compensation is highly correlated to business performance, which you may or may not have the ability to control

Of course, there are plethora options beyond consulting, VC, or working in a startup for any entrepreneur in waiting. I would love to know your thoughts. Are there other options which should be considered? Advantages and disadvantages of each that I have failed to consider?

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2 Responses to “Consulting, VC, or a Startup? Best Career for an "Entrepreneur in Waiting?"”

  1. Tony August 19, 2007 at 10:57 pm #

    You know what I’d say – but you missed the biggest pro. Working in a startup environment is great because you’re passionate about what you do and your company. So is everyone you’re working with. That’s something you won’t find anywhere else – and is the most important thing in a job (since you’ll spend 1/4 of your life working).

    I’d disagree strongly with the first con for joining a startup – that’s one of the big parts of working around here is making sure you know everyone in your industry. There’s a ton of networking events (Lunch 2.0, BarCamp, etc. etc.) that get you plugged in quickly & easily to the community as a whole.

    As for the second point, it depends. If you really care about moving to a stodgy Fortune-500 company, neither VC or a startup would help you. If you want to work for a new one (i.e. MSFT/GOOG), startup experience is the best you can have.

    For the 3rd con there, it’s more risky, yes. But as long as it’s not a seed-stage venture, you still get a fine salary, just with a huge payoff if it does well!

  2. Tony August 21, 2007 at 6:18 am #

    You ever check out some of your advertisers? I clicked on a couple so you’d get paid. You might want to see: http://www.partnerup.com/default.aspx?src=24&subtype=2

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