Graduating from College: Starting your own business or joining an established company?
May 19, 2008
I often get asked by college students whether they should start their own businesses right out of college or whether they should join an established company. The reality is that at that stage in your life and career, there are no wrong choices. No matter what you choose, you are going to learn a lot and get valuable experience.
I will relate how I made my choice. By my junior year of Princeton, I knew that my computer export company would not be a long term sustainable play. Moreover, with the IPO of Netscape during the summer of 1995, it was clear that the Internet frenzy was underway. I was at the right time and the right place and had deep computer experience which should have provided a comparative advantage in running an Internet company. I was sorely tempted to start a company then. However, I felt that I lacked two fundamental things:
- A good idea:
Like today, I was not particularly creative then. None of the “obvious” ideas came to me, especially since I did not understand the underlying business structure of various markets and could not evaluate which ones might be suitable for the Internet.
It crossed my mind to copy some of the early adopters, but not having a business background, I did not know how to go about choosing amongst the various ideas.
I had run a small business, but I had never managed anyone. Moreover, I did not know how to raise money, communicate my ideas clearly and write effective presentations. I felt that I would not be taken seriously as CEO of company and that my inexperience was most likely going to lead to failure.
I reluctantly concluded that I might miss the Internet wave, but that I had to get more experience before becoming an entrepreneur.
I had read about McKinsey in an article in Fortune called “The McKinsey Mystique” during my freshman year and was fascinated by the company. The intellectual elitist in me had to know what it would be like to work with what Fortune described as some of the smartest people in the world.
My positive impression continued during the recruiting process as I was impressed by everyone I met. And so, I decided to join the McKinsey New York office in September 1996. For the first time in my life, I was truly humbled. All of my fellow analysts were so incredibly smart, coming from such diverse backgrounds with so many different skills and interests!
While the work eventually got repetitive, I learned a lot in terms of business analysis, oral and written communication skills and interactions with others. I really took advantage of all McKinsey had to offer in terms of workshops and opportunities to hone your public speaking skills. I vividly remember an oral communications workshop where they video tape you and provide intense constructive criticism.
After two years, I felt I was ready. I knew before joining McKinsey that my goal in life was not to write the perfect Powerpoint presentation (shocking I know :), but rather to be an entrepreneur and I felt I had learned what I needed to learn. McKinsey had essentially been business school for me, except they had paid me.
I also left McKinsey with something invaluable: lifelong friendships. I met most of my dearest and closest friends at McKinsey. It’s hard to relate how much I care about them and how much they mean to me. All I can say is that they are and will always be my best friends despite the fact that many of them live all around the world (Boston, Israel, San Francisco, China) and I am grateful that many of them are in New York.
I was lucky that in 1998, despite having spent two years at McKinsey, the Internet bubble was still inflating. This time, I was at the right time at the right place with the right skills. I came up with the 9 business selection criteria. Rapidly evaluated all the US ideas especially Amazon, eTrade, Expedia and Priceline – and chose to copy eBay. Aucland was born.
I want to reemphasize that there are no fundamentally wrong paths out of college. You can create your company. Fail or succeed, you will learn a lot. You can go into management consulting. Another alternative I did not discuss is to join a startup, especially an early stage startup. In startups there is so much work, that if you step up to the plate you will be given opportunities you might never have in a larger company despite your youth and inexperience. It’s a great way to learn hands on execution, which is something I did not learn at McKinsey. McKinsey taught me strategic and analytical thinking, but not operating or Internet experience. As a result, I made countless execution and tactical mistakes which partly explain why Aucland failed.
The one notion I want to dispel is that opportunities are disappearing and that as a result you have to go after whichever opportunity is available now. I truly believed that when I went to McKinsey I might miss out on the Internet bubble. I also believed that after Aucland, it was going to be hard to find new ideas because everything had been done. I was wrong. Some ideas are time sensitive and if you don’t go after them someone else will, but the reality is that new opportunities keep appearing all the time, especially in dynamic and competitive industries like the Internet. In a previous post (Internet: we are still at the beginning!), I analyzed the top 50 sites by attention in August 2001 versus August 2007. Only 5 sites increased their market share, with Google increasing the most. Many have completely fallen off the map and the most successful sites of the past few years did not even exist in August 2001: MySpace, Facebook, Youtube…
Conclusion: Do whatever feels right, you can do no wrong!