PPESA Seminar: Why Start a Business?

Desis in Silicon Valley

FORTUNE magazine has published a series of articles on success of Desis in Silicon Valley. Worth reading.

http://www.fortune.com/fortune/2000/05/15/ind2.html

These responses are from memory and on occasion approximate, as were the questions.

1. Why should one leave a highly paid job in a large corporation to start a business?

Besides financial independence, to realize your potential i.e. self-actualization, to control your life, to be free to decide how you would like to make a difference.

2. Should one juggle a job and business at the same time?

Absolutely not! In response to this question Mr. Haq further elaborated ``In the very beginning I juggled my job and business and regretted it.``


3. What are the elements of making the P&L statement of a start-up?

Projections should be conservative. Overstatement is an absolute No! Be realistic and don`t fool yourself by painting a rosy picture. Make your bank a friend rather than an adversary.

4. What should one look for in a partner?

Compatibility and complementary skill set.

5. What should one do if they have an idea for launching a business and are still working in a company?

Think it through and quit your job if all the elements are in place. Don`t juggle a job and business.


6. Is it necessary to have 2 years worth of expenses before starting out?

It is the safest approach. These two years of finances are primarily for expenses to support and maintain ones family. Usually a good business will start generating revenue within a year and by the end of two years the revenue stream should be fairly stable.

7. What is teamwork in a start-up?

Mutual respect. Appreciation of each other`s commitment and effort. Mr. Haq cited the example of a partner who preferred to work from 6:00 AM to 3:00 PM whereas everyone else worked till 7 or 8 PM. He described this situation as something which should be evaluated objectively without assuming it to be a negative contribution.

8. How does a start-up compete with larger companies in making a sale?

First and foremost by the quality of the product. A start-up business should be aware of these challenges and must have a differentiated product. There is little to fight about if the product cannot sell itself. Good salesmanship on a bad product can only go a certain distance. Eventually the product must stand on its own merit.

9. How much work does it really take?

80 Hour week, easily. At least 12 to 14 hours per working day, another 8 to 10 over the weekends.

10. Where does ambition turn to greed?

It is different for everyone. In principle, don`t grudge the million someone else is making if you are making multiple millions.

11. Is the only reason to start a business the hope of getting rich quick?

No. Besides financial independence there is the authority and control one enjoys. There is the satisfaction of being responsible of your employees and their families. There are many other reasons. Not to forget, there is the freedom to be monk on a mountain if you have accomplished your objectives.

12. What are the mistakes that start-ups make, and how to avoid them?

Try for too much too soon. Lack of a roadmap. Bad product definition. Bad market evaluation. Don`t get legal advice. Penny wise pounds foolish, so they don`t` hire a good attorney. Don`t reinvest - up to 25% should be re-invested for next generation product development. There are others as well.

13. Why is an attorney important?

A couple of hours of advice at $300 to $500 per hour in the start-up stage can ensure that your company structure and agreements are in order. Quite often in saving those precious Dollars one ends up making mistakes that can be very costly in the long run. Good legal advice in the start-up phase is akin to the foundation of a structure. A bad foundation will always be at risk.

14. How important is business school in grooming an entrepreneur?

Mr. Haq cited an article Forbes Magazine, ``over 80% of businesses started by business school graduates fail.`` Even higher than the number of failed businesses started by Ph.D.`s! He also mentioned that there might be truth to the saying that ``entrepreneurs are born not made.``


15. What is the difference in the clout one has by being a high powered executive in corporate America and an owner of a small business?

A rather philosophical question but important. Mr. Haq`s opinion was that businesses give you enormous freedom to make a positive difference, assuming that is what one needs clout for…

OK. So I am waiting for the full presentation.

And I strongly disapprove of Step 5. Without it no human being would (should?) trade in reading and writing and listening to music and little children, for 14 hours a day on a PC until Carpal Tunnel Syn. sets in.

Here is Step 8: Ignore steps 5 and 6 until successful. Ignore 7 until asked to speak to a bunch of greedy guys.

How easy you make it sound!