From MBA to Startup

A long overdue update. Over the past year, I have been working on a number of interesting projects - with both startups and startup incubators. I’ve meet tech people, entrepreneurs, business people, and investors in the community. It has been so exciting; I love the passion in this community. One of the things I noticed was that many newcomers have the same questions and could save a lot of time if they just had a basic orientation. Originally, my plan was to post this step-by-step “orientation” using this blog, but I decided to take it one step further and put it all together in an interactive startup guide. The idea was to bring together best practices and resources for anyone new to the startup community. You can see the fruits of my labor here as well as some other resources I’ve put together here:

http://www.gonystartup.com/guide

As always, feedback welcome.

Today, I’m going to talk about what I’ve learned about reaching out to startups. As MBAs, we are well trained in the recruiting process at traditional firms, which goes something like this: attend a networking event and speak with individuals within a target firm, setup “informational” interviews with said individuals, submit a resume and cover letter, interview, and (hopefully) get an offer. One of the first things I learned when reaching out to startups was that I had to take my MBA recruiting “hat” off and put my startup recruiting hat on. This typically means a few key differences:

1) Ditch the Suit and Tie - while suits were perfectly appropriate for many of the traditional companies I interviewed with, I found that this was much too formal for meeting with startups. My new uniform: nice jeans, collared shirt, and a sweater.

2) Be Bold - I found that most startups and even their founders, although very busy, are very open to meeting and speaking with people. In traditional companies, it may be poor form to send the CEO a message about your interest in their company. However, with startups, particularly early-stage startups, I’ve found that the founders are more than willing to meet with people who are passionate about what they’re working on, provided that you are clear about what you have to offer.

3) Don’t Send “Canned” Resume/Cover Letter - Although it is important to customize your information when reaching out to any company, this is especially true of startups. In reaching out to startups, I found it helpful to really take the time to think about what the needs of the startup were at that point in time and how my specific skills could help address those needs. I then crafted a concise and to the point message mentioning how passionate I was about the startup and some ideas I had and requested a meeting.

4) Don’t Expect a Salary or Firm Commitments up Front - Startups operate in a very uncertain environment. This means that they cannot always afford to pay or make firm commitments of employment. You may have to do an unpaid “internship” with a startup for many months with no guarantee of any sort of monetary return. Of course, if a startup is funded and a bit further along, then one can expect close to market-rate salaries (depending on your role), but this is not the case for a pre-funded startup. Be prepared to work for little or no pay; if you do end up taking this route, then it would be appropriate to discuss getting some equity in the company in lieu of a salary.

Do you have other learnings to share? Send me your thoughts and I’ll post them on this blog.

After deciding to try the entrepreneurial route, the next logical question was, now what? How do I begin?

Something I’ve learned over the years is that one way to push through the unknown is simply to take one step forward, no matter how small. In this case, I had a million questions flying around in my head, so I decided to sit down and come up with a plan of how I would proceed. The simple act of even formulating a plan and writing down my goals helped me feel better. It gave some structure to how I would proceed and helped me organize my thoughts, whereas previously there had been a lot of confusion in my head.

In any case, I then proceeded to take one small step to further the goals on my list; I submitted an application to do a consulting project with a startup through one of the clubs at school. I decided this would be helpful to get some more hands-on experience and begin to immerse myself in the NYC startup world. During the spring semester of my second year at business school, I worked on a couple of consulting projects, continued attending events (I highly recommend the NYC Tech Meetup for those who haven’t been), and actually began reaching out to startups for informal conversations. I was trying to get a better sense of the startup landscape and determine whether I should join an existing startup or if I could arrive at a compelling startup idea of my own.

Here’s a couple of resources that I found helpful as I was beginning to immerse myself in the startup world:

For, high quality startup events in NYC, use:

• http://www.garysguide.com/events?region=newyork

And if you’re looking for a list of new startups coming down the pipeline, try the link below (warning: not for those who are easily frightened by the sheer number of new startups that are posted here every day!):

• http://startupli.st

I’ll provide a more detailed list of resources in a future post, but the two above should be more than enough to get you started. In my next post, I will discuss how to reach out to startups; it’s a very different world and mindset than what many of us are accustomed to in business school.

This is Part 2 of my post detailing how I decided to pursue a more entrepreneurial path. In my previous post, I discussed that the first step was assessing my strengths and passions to determine whether the startup path was right for me. In this post, I will talk about how I answered the question, “Is now the right time?”

In economics, there is a concept known as loss aversion, which basically suggests that psychologically people have a strong preference for avoiding losses more than acquiring gains (so a $100 loss “hurts” more than a $100 gain feels good). When considering entrepreneurial ventures, I find that many people (myself included) tend to disproportionately fixate on the risk of loss without adequately considering the potential gains.

In considering whether it was the right time to start a startup, I tried get to the root of my fears and understand whether they were rational or irrational. As it turns out, virtually all of my concerns regarding starting my own company (whether pertaining to family, financial, experience, etc.) could be boiled down to the following two concerns: (1) a fear of failure and a (2) fear of financial instability/loss.

Fear of Failure: What if my startup crashes and burns and I lose credibility and can never find a job again? This is the dire scenario that haunts many potential entrepreneurs and prevents them from taking a risk. It certainly crossed my mind, but as I thought more about it, I realized that it was likely an irrational fear. I knew that most startups fail, but what would be the real impact in that case? Even if I were to fail, I could (hopefully) still count on the experience I had built up over the years and the contacts I had made through my MBA to find work. And I thought of people I knew who had taken a year off to travel or had been laid off or stepped away from the work force. I could not think of a single example of an individual who was not able to bounce back. I’m not saying that failure is not a risk or that it’s easy to find a job, I’m saying people are resilient and resourceful, and the outcome is usually not as dire as it is in our own minds. Ironically, nowadays in the startup world, failure is often valued as a rite of passage to success. Thus, I felt this risk could be largely mitigated.

Fear of Financial Instability/Loss: This was another risk that I carefully considered. A startup obviously requires capital. As someone who is self-reliant, I wanted to ensure that I clearly understood the financial implications before taking the leap. What’s interesting is that the risk of losing capital at the outset of an entrepreneurial venture - whether as a direct investment in the venture or the opportunity cost of not having a regular salary - is virtually 100%. However, I relied on two things to help think through this. First, I calculated a “Startup” budget to fully understand the capital requirements. Second, I conducted research and found a number of different funding options  for those in the startup world (I will discuss these options in a future post). And finally, I gave myself a limited timeframe to explore the entrepreneurial route. In this way, I could put a cap on the potential losses and limit the overall financial risk of the venture.

And so, I realized that while the risks of pursuing an entrepreneurial venture were real, they were also manageable. I weighed those risks against the potential rewards. While the probability of starting a hugely successful venture was small (based purely on the odds), at the very least I would get to work on something I was truly passionate about that had the potential to make a large impact. And I really felt that if I didn’t try this now, I would always regret it later.

The final “Aha!” moment for me in making my decision came when I considered the following: there was never going to be a perfect time to take a risk. Even if I waited 10 or 15 years to acquire additional experience, who knows what other factors - whether supporting a family or moving forward in my existing career - could prevent me from taking a risk at that point. I realized that in many ways now was the ideal time for me to take a risk. I had the drive and motivation, I was healthy, I didn’t have other people or children to support, and the New York startup scene seemed primed for growth. And so, after considering all of these factors, I decided that now was the best time for me to do this!

My decision was a very personal one. After speaking with many people along the way, I realized that there is no one “right” path. Some people choose to start something in their 20s or 30s, others wait till later in life; each person has to weigh the risks and rewards and come to a conclusion. Hopefully, people can take something away from the process I followed to come to a decision that makes sense for them.

In my last post, I talked about how I made a decision to try a more entrepreneurial path following my MBA. But how do you know when it’s the right time to start something new? Obviously, the answer to this question is going to vary from person to person - you may be someone who has already made the decision to launch a startup and are simply waiting for the right time. Or perhaps, you’re someone who is not even sure that starting a company is the right path in the first place. I wrestled with this question for quite some time before I was able to get more clarity. In the next few posts, I am going to walk through my entire process - from determining my broader career direction to determining more specifically that now was the right time for me to do something entrepreneurial. Hopefully, you will find this information helpful to you as well.

As I was considering the issue of whether to start a startup, a million different questions raced through my head. I knew I had always had an inkling toward technology and the start-up world, but how could I even be sure that this was the right path for me? And if I started a start-up, what kind of company would it be? Was I ready to take this step? How would I pay the bills? What if I failed? What about my obligations to family and others? And what about the opportunity costs in terms of all the other things I could be doing with my time? As I thought more about these questions, I realized I needed to take a step back and first get clarity around my purpose and goals in a broader sense, to make sure the start-up path was the right one for me.

1) Identifying Strengths, Passions, Purpose, and Goals - I know some people consider this kind of internal reflection to be “fluff,” but I have found it to be invaluable in better understanding who I am and what impact I would like to make. I spent a considerable amount of time exploring these topics both before and during business school to better understand my past experiences, my purpose, and where I wanted to go. Here’s some resources I found helpful in learning more about my strengths, passions, purpose, and goals:

The Pathfinder - There are a number of books that are similar in nature, but I found The Pathfinder’s focus on tangible outcomes to be particularly helpful in sorting through the many conflicting considerations and career paths — but be prepared to do a lot of work!

True North - A book to help you discover your purpose and become a more authentic leader. The book has many helpful exercises and case studies to learn more about what motivates you as a leader and your strengths and weaknesses.

Using these books and other resources, I was able to get much greater clarity around my overarching goals and strengths and narrow down potential career paths. I used my time in business school - with its access to countless individuals and resources - to test out different paths I had identified. I attended marketing sessions at Stern and onsite at companies; I visited tech startups in Silicon Valley and media companies in Los Angeles; I participated in non-profit consulting projects and spent my summer internship working in consulting. Being able to test these different career options really helped me to get greater clarity and also reaffirmed my passion for entrepreneurship. I realize that I was afforded a unique opportunity to try out different paths because of business school, but there are always other ways to test out potential careers (through volunteer work, etc.), even if one is not in business school.

Some people might consider this process of “discovering” oneself to be a waste of time or overkill. I agree that it’s not for everyone; each individual has to figure out what works for him or her. If you already have clarity on what you want, that’s great. I have a lot of different interests and passions and so needed a more deliberate process to sort through my options. One important point, even though I have been immersed in the startup world for a relatively short period of time, I can say with certainty that this path is not for the faint of heart. Along with the joys and excitement, with every day comes doubts and fears and people questioning your decision. I am glad I was able to spend some time figuring out what I really wanted before taking the leap.

If you have gotten through this first step and realized the entrepreneurial path is not for you, congratulations on eliminating one option on your journey to finding your true passion. If, one the other hand, you still feel that this is the right path for you, stay tuned for my next post where I will delve into how I answered the question “Is now the right time?”

Taking a risk is never easy. A few months ago, as I was nearing completion of my MBA at NYU Stern, I was faced with a choice: should I take a traditional job in consulting or do something more entrepreneurial? I was torn between my head and my heart. After agonizing over the decision for some time and talking to many people, I decided to take the leap and try something more entrepreneurial. I’m using this summer to see whether I can land on a compelling startup idea that I feel passionate about.

I do not yet know how this decision will turn out or whether I even made the “right” choice. However, I have decided to use this blog to chronicle my journey and the lessons I have learned so far, as I navigate the start-up scene in new york city. Hopefully my experiences will be helpful to others considering the entrepreneurial route or to those who are simple interested in learning more about the tech startup world from the perspective of a “business guy.” In my next post, I will discuss in more detail the factors I considered in making my decision to try the entrepreneurial route versus the more traditional path, as my sense is that many others (particularly MBAs) are faced with a similar choice.