It is an exciting time to be an entrepreneur in America. It seems like everyday I meet a new person or reconnect with an old friend who is bucking the gravity of a conformist career path for the liberation of a freelance lifestyle. One friend I’ve played in a few bands with just sold one of his songs to Toyota Motors for a web commercial. Another is starting a New York themed wine bar in Buenos Aires. One friend is starting a spa-inspired hearing aide retail store. Another friend combined art and motion detection algorithms to create an interactive display at a children’s hospital in New Jersey.
Not to mention the other Y-Combinator companies. The Y-Combinator teams are creating businesses around revolutionary perspectives on old businesses and youthful insight into future markets. As I’ve mentioned before, this is one smart group of people. As each Y-Combinator funded team officially releases, we will dedicate a blog post to their ideas, business plan, and the people bringing the two together.
After recognizing that more and more of my friends are skirting the corporate lifestyle, I started to think about the motivations and circumstances that have led them on this less traveled path. I can think of four.
- Two standard deviations above the mean
A common perspective among young entrepreneurs is that we are undervalued by mainstream industry. We are dollar-cost averaged down. Our contribution to the company’s success is averaged together with coworkers balancing a wife, two kids and a mortgage.
At this age, working for someone else does not make sense. Our effort is two standard deviations above the mean. The average employee wants to work eight hours a day; we are happy to work 15. The average employee takes a one-hour lunch; we eat at our desk for 15 minutes, reading Reddit. Large companies expect average effort. Why work there until you want to give average effort?
- Where is the incentive?
There is another reason that motivated college graduates skirt mainstream industry. When working for large companies, they are not vested in the success of the company. Nowhere was this more evident for me than at NASA. If I create an image processing algorithm that reduces the computational demand of a particular Mars rover by a factor of two, I do not see any boost to my career path.
You can guess what pay grade someone is in simply by knowing the number of years they have been working. Why go above and beyond?
Maybe if NASA could find a way to incentivize and attract young smart employees the United States could put matter into space for less than $10,000 per pound. Given China’s newly announced space ambitions, hopefully the competition will drive our government to establish effective incentive systems.
- Freedom to innovate
Starting your own company is liberating. We are in charge of our own destiny. No big company’s compensation package can compete with that motivator.
Our greatest motivation is the freedom to innovate. We don’t have the burden of legacy code. We don’t have the overhead of a physical plant. Decisions in our company don’t climb a bureaucratic ladder.
We were originally calling our first product Xobni Statistics. It sounds boring in retrospect. One night I told Adam and Drew that I liked Google Analytic’s user interface. Drew commented, “I like the interface and the name.” Adam and I looked at each other and within five seconds our company’s first product became Xobni Analytics. The change would never have been as smooth, or even possible in a big company. They would have held a couple of meetings as the suggestion got passed up the chain of command. And even then, one of the middle managers might have killed it, because someone in the marketing department said they had already printed the brochure.
- America’s acceptance of failure.
Nowhere in the world does there exist a fertile entrepreneurial environment like that of America. Our friend Paul Graham wrote a popular article about why Silicon Valley is in America.
Along a similar line of thought, Guy Kawasaki wrote a blog post which compared the American entrepreneurial environment to that of Japan. What struck me most was the cultural stigma surrounding failure in Japan. Failing once can taint your name and dim your future career options. I am glad that America does not treat failure this way.
One of the greatest failures of my college career was coming up 2% short of victory in the undergraduate student government vice-presidential elections. At Penn State, a school of over 40,000 students, this is a prestigious position: face time with university policy makers, interactions with state government officials, full tuition stipend, and the responsibility of a hefty student activities fund. Had I grown up in Japan, I might not have risked repeated failure for fear of tainting my future prospects.
I mark the failed campaign as one of my greatest learning experiences. I learned how to speak in front of large audiences, form a terse argument, garner publicity, manage a large team, and it was my introduction to guerilla marketing. Our society’s acceptance of failure encourages people to take risks and learn from their mistakes.
It will be interesting to see how all these friends fare over the next few years. Some will stumble and retreat to the consistency of corporate America. Others will succeed and grow their companies to the size of a company none of us would want to work for. Then we can quit and start new companies again.