Issues with technology startup
Last summer when teaching in Asia, I heard several students complained about the startup workshops that they paid to attend. I know many students want to be entrepreneurs and start their company, but I cautioned them about some “startups training” that are spreading rapidly in many Asian countries.
I advised: “ I am glad that many of you dream to start your company, but your dream could become a nightmare if you are not careful. There are good startup training and many bad ones too. Some people who teach “startup” make it look so easy to get rich because they are getting rich on your money. They create training classes that build on your enthusiasm and emotion; they make you feel that you can do that with some encouragements but the fact is startup is not that simple. If it is easy, then the world could have millions of startups and thousands of “Bill Gates.” The truth is NOT everybody can become an entrepreneur. If you do not have strong technology skills, you will not succeed. Be able to write codes does not qualify you to start a company. Be able to build a website does not mean your startup will become the next Amazon or Alibaba. In the 1990s, many people believed that all they need was technology skills then they can start a “dot com company” and make a lot of money. Many borrowed money from parents to build their dream, but their dream became a nightmare when the “dot-com” crashed, and their money went up in smoke. Today, technology is changing fast and getting more complicated; you need strong technical knowledge to create “breakthrough” technology. My advice is to stay in school and learn as much as you can. You are young, do not hurry to quit school to be “Bill Gates” or “Steve Jobs.” In today’s competitive market, your startup must create “breakthrough” technology that could take your company to the next level, but you cannot do that if your technical skills are not good enough.”
“I believe a good college education is an essential foundation for entrepreneurship because, without it, you will not go far. Do not look at the exception like Zuckerberg, Jobs, and Gates and think you could be like them. They were successful because they had many highly skilled people worked for them, and they were very lucky. Do not look at the exception and think you could do the same; that is foolish. The important thing you need now is to learn both technology AND business. Before even start anything, you must know how to make money. There is no reason to start a company and lose money. You need to know who could be your customers. If you are not sure who they are then how do you make money? Even you can identify the customers but do you know what do they want? What problem that they need to solve and can you solve it? Only if you know what they want and provide it to them, not for a few, but a lot of customers, then you could start a company.”
“When starting a company, you need to know who the customers are and how much they are willing to pay for your product? You must estimate how much money you can make each week, each month and each year. Your startup will have costs too, from renting an office, buying equipment, to paying salaries to people who work for you. To be profitable, you need to make enough money to cover all your costs, else you lose money. To make money is the most important factor of startup, not the idea or the product. Do not listen to people who tell you that your idea is fantastic. The idea does not make money, but the product does, and you must have a product that customers are willing to pay. Before selling a product you need money to produce it. Even it is a software product; you still need time and efforts to develop it and time is money too. For that reason, you must calculate how much time you need to build the product. The issue is your choice between starting a company and working for a company. If it takes one year to develop a product, how much could you make in one year by working for a company?”
“When it comes to entrepreneurship, there is another factor that is more important than time and effort: It is risk. If you understand that over 90% of startup failed would you still want to take that chance? When people know about all the risks, how many are still wanting to do that? Is it much safer to work for a company than starting a company? I do not want to convince you NOT to do a startup, but I want you to know that unless you are willing to take the risks, you should NOT start a company. Do not let anyone convince you that startup is an easy way to get rich. Do not let anyone convince you that your enthusiasm will make a difference. Do not let anyone to convince you that with some training you can be an entrepreneur. Let us be realistic: Startup requires a lot of skills, determination, effort, and luck. AND you must think carefully before entering into this adventure. My advice: Finish school first, get a good job, save money then do startup whenever you can answer above questions. Remember that startup can wait but your education cannot.”
Sources
- Blogs of Prof. John Vu, Carnegie Mellon University
