Entrepreneurship
Occasionally, you conceive an idea so brilliant that you hesitate to let anyone else handle its execution. This might stem from a breakthrough you uncovered during your dissertation research, or perhaps it’s a service you recognize has a gap in the market, one you are exceptionally equipped to fill. However, embarking on a new venture is often a complex and draining journey that many dive into without adequate preparation. Having a solid plan and an unwavering determination can be the critical factors that separate a thriving entrepreneur from someone who endures a costly and frustrating learning curve.
Entry Points
Launching a new business often means stepping into the dual role of CEO and entry-level employee. You're responsible for the most crucial decisions, yet you also tackle the most mundane tasks. Alternatively, you might have gathered a few co-founders who are often the co-creators of your product or idea and might even include your thesis advisor if they contributed to its development. Regardless of your situation, it's essential to clearly define ownership of the business and its assets early on. However, your official title holds little weight in the early stages. Until the business scales up enough to hire employees with defined roles, everyone will be involved in every aspect of the venture.
Application Process
You are effectively employing yourself since it’s your own enterprise. Therefore, the key question you should consider during the application process is, “Would I choose to hire myself to establish and manage this company?” If you have faith in your skills and are passionate about your product or ideas, dive in and don’t look back. Even if a venture fails, which can be costly and disheartening, it serves as a valuable learning opportunity and enhances your CV or resume significantly.
Career Progression
Advancement in academia often hinges on navigating departmental and university politics, but the primary determinants should be consistent output (as demonstrated through publication records) and effectiveness as an educator (as shown through student feedback). The initial milestone is tenure, the ultimate safeguard against job insecurity. Following this, promotions typically progress from associate professor to full professor, and in certain cases, to professor II. Exceptional productivity might even lead to an offer for an endowed chair position. The duration between promotions largely relies on your level of productivity, resulting in wide variability.
Work Hours
If you’re questioning it, you might not be ready for what’s to come. Starting a new venture can be an all-encompassing challenge, and you might find yourself feeling like you’re never truly “off the clock.” From building and managing the company to networking and obtaining venture capital, there's a constant demand for your attention, and ultimately, it all falls on your shoulders.
Compensation
Among all career paths, entrepreneurship stands out for its highly unpredictable and fluctuating compensation. In the nascent phases of a startup, particularly when it hasn’t begun generating revenue or hasn’t secured venture capital, founders often see little to no income and are mainly receiving equity in the business. This can be a critical consideration for those with family obligations such as children or mortgage payments.
For a startup that is profitable yet not venture-funded, the salary is contingent upon the profit margins and the founders' choice between reinvesting in the business or taking a salary. Many startups aim to attract venture capital to fuel significant growth, so it’s essential to note that prioritizing personal compensation over reinvestment can signal a lack of commitment to the business’s future. This perception can jeopardize your ability to persuade venture capitalists to invest.
Regarding specific compensation figures for venture-backed startups, in an interview with TechCrunch, Peter Thiel, a prominent entrepreneur and venture capitalist, estimated that the typical CEO salary ranges from $100,000 to $125,000. However, he neglected to provide an estimate for the average equity held by these CEOs. It's crucial to understand that ownership in your company, or equity, serves as a significant currency for attracting venture financing.
It is also important to know that the maturity of a startup as gauged by the number of rounds of venture financing can also be a variable to consider. A study by Ola Bengtsson at Lund University and John R.M. Hand at UNC Chapel Hill entitled “CEO Compensation in Private Venture-Backed Firms” indicated that the median compensation for CEOs during a company's initial venture financing round stands at $189,000, with them retaining 7% of the company's equity. In contrast, a CEO in a company’s seventh round of venture financing receives $277,000 while holding 5% of the equity. This indicates that your compensation is heavily influenced by your ability to secure funding, which is frequently linked to your company's performance and your capability to persuade venture capitalists of its growth potential.
Exit Options
If your company thrives, two primary scenarios can lead to a substantial financial windfall for you and your investors: your company goes public, meaning its shares are available on the open market, or it gets acquired by a larger corporation. Should you opt for an initial public offering, you might decide to remain as CEO to explore the full potential of your business growth. Conversely, if a larger company acquires yours, your journey may conclude, but not without a significant financial benefit.
For those who choose to move on from their enterprise, some become “serial entrepreneurs,” individuals who are so passionate about building companies that they turn it into their career. On the other hand, if you step away from entrepreneurship (regardless of past successes or failures) you may find that your familiarity with the venture capital sector leads you to the other side of the funding journey. Fortunately, your networking efforts and established credibility in understanding both the dos and don’ts of running a company will serve you well in landing a position within a venture capital firm.