This post is based off of a talk I gave in an entrepreneurship conference at the Technion (The Israeli Institute of Technology). The talk was given to undergraduate/graduate students who wish to someday start a company. The full presentation can be found here. It is written as a lecture – I basically pasted my notes. I hope it helps someone find the courage to take their first step.
Update: read the Technion BEC's blog about the talk here (Hebrew)
Over the past couple of years, I've met with countless aspiring entrepreneurs. Over time I've noticed the same questions come up over and over again – Why should I start a company? When is the right time to quit my job? How do I start? Is my idea good enough?
I call these the WH-Questions of starting up, and I'll do my best to give the tools to answer these questions.
I'll start with a quick introduction to Augury and share a bit of our story.
Augury was founded three years ago. One bright day in August 2011, Saar and Gal quit their jobs and decided to work full-time on Augury. Our intention was to get to technological validation and market validation on our own funding, so we bootstrapped the company for two years before seeking outside funding.
Augury develops a system that automatically diagnoses machines based on the noises that they make. By listening to a motor or a pump, we can tell if it’s working properly, if it has a malfunction, and even what type of malfunction it has. For example, sometimes when you drive your car, you can hear the fan belt is squeaking, and you know that it is loose and you need to replace it or tighten it. Now, it doesn’t even matter if you’re driving a Mercedes or a Toyota – a fan belt sounds like a fan belt. That’s because specific failures have unique patterns that we hear and recognize.
What we do is connect vibration and ultrasonic sensors to a smartphone and pair them with Machine Learning Algorithms.
So you can say that we’re like Shazam – but for machines.
Our technology can be used across the board, from factories all the way to our homes, where you have the dishwasher, refrigerator, washing machine, and air conditioner. And that’s where we want to be – inside everything that has moving parts. We are building the mechanical diagnostics platform of the Internet of Things.
Before we dive in, I'd like to start with a disclaimer. Like every piece of advice you will ever receive, I am also guilty of bias. Every person looks at the world through his own set of glasses that paint the world based on his past experience, good and bad. Without noticing, we implant our experiences into the advice we give, sometimes hurting the person in front of us.
The first and most important advice I can give is to be fully aware of this, and learn how to read between the lines. There are no right/wrong answers, as much as everyone would like to believe there are. For every suggestion I give here, I personally know a founder that did the exact opposite, and succeeded nevertheless.
The easiest question for me to answer is, "Where should I start building my company?" Of course, this varies based on the type of product you are developing, but in general I'd stay away from the largest startup hubs and go for the second-largest. In the U.S. it would be NYC vs. SF, and in Israel it's Haifa vs. Tel-Aviv.
There is something amazing about second place – everyone is fighting collectively to prove that it's as good as number one. This gives an amazing vibe in the smaller, more intimate community – everyone is helping each other instead of being in a cut-throat competition. It's also easier to become a thought leader and to find great talent. We found our piece of heaven in downtown Haifa for our R&D center, and NYC for our headquarters.
Why should I risk my career, quit my job and become an entrepreneur?
For starters, you're reading this post, so I'm guessing you’re either tremendously bored, or you have the inner drive to build something and make an impact.
The way I see it, the real question is, why not?
The most-given answer is that startups are a bet – you have a 1/100 chance of raising money, 1/1,000 chance of succeeding, etc. And they are probably right – your startup will probably fail, but that's beside the point.
There's an analogy I like that compares career building to investing in the stock market. When you invest (wisely) in the stock market, you combine high-risk investments (like stocks, options) with low-risk investments (bonds). The same is true for your career – you need to balance some high-risk, high-reward jobs with low-risk, stable workplaces. When you look at it this way, building a company isn't a bet – it's a calculated risk. An investment.
If you are fresh out of university, your annual salary is probably $80K–$100K. Now, what will happen when you forfeit this income and invest two years of no-salary work? You're basically "investing" $150K–$200K of future income, which is analogous to the cost of an MBA in a top-rated school. Assuming you dedicate this time to learning and building, I assure you that even if after two years, your startup fails and you don't see one dime out of it, you're in a much better place than you would have been if you stayed at your current workplace. You've gained experience, you've made connections and you look differently at problem-solving and risk management.
When you feel ready.
When I finished my engineering degree, I didn't feel ready. I knew I was going to open a company in two years, but didn’t know the best path that would help me gain the right tools for building a company.
- Should I stay for a graduate degree (MSc)?
- Should I join a medium-sized startup to familiarize with the different key roles and flows?
- Or should I stay at Intel, where I worked at the time as an intern?
I spent a number of months with this dilemma and decided to seek help. I went out and asked some very smart people, all successful entrepreneurs, from different backgrounds. One had a PhD; one came from a large company (IBM); and one dropped out of his bachelor’s studies to start his company.
The answer was surprisingly unanimous: you should start at a large, established company in order to learn the foundations of a company – the corporate culture; the product development cycle; the different groups and flows. Only then will you know what to aim at when you build your own company. On top of this, it will give you more time to learn and develop as an entrepreneur – you'll read books and blogs, go to meetups and conferences, and slowly, you'll feel more confident to take the next step.
We are big believers of the Lean Startup movement (/Customer Development). I admit that today it has become so over-hyped that it is frequently used in a negative context. Truth is, only 50 percent of founders that say they "do lean startup" really understand the essence. I urge you to take your time and immerse yourself in the infinite amount of content available on the web.
One very hard point to wrap your mind around is that your technology is not interesting (especially if you're an engineer). It's what you can do with it that matters. They say that technology is nothing but a bridge between the present and the future.
The real questions you should be able to answer are:
- What am I selling?
- Who is going to buy it?
- Why will they pay me?
Now ask yourself, what's the fastest way to answer these questions? I'll give you a hint – go and talk to potential users and customers. Before you feel that you have the answers to these questions. there is no justification to write even one line of code.
Is my idea good? Do you think I will succeed?
I found out that I am a very bad judge of ideas. In fact, no one cares what I think. Or what you think. The only questions that matter are the ones we stated above.
There are three types of entrepreneurs:
- Someone that came from the problem – they encountered it in their workplace, or at home. They know the problem that they are solving; in fact, they are the main target user. Usually they already hacked together a solution for themselves to use and they are taking it out to the public.
- Someone that comes from the academy – two graduate students wrote an algorithm to index the Internet, called it Google and ran with it.
- The third type is the builder – they have an inexplicable drive to build something, to change the world and are looking for an idea.
The good news is that the idea is only 10 percent of the way – all the rest is hard work. And if you are putting in a lot of hard work, make sure you're pedaling in the right direction.
In the meantime, open your eyes, be curious and talk to a lot of interesting people. I suggest you select a market that you care deeply about and you are willing to spend 4–5 years in. Then talk to everyone you can in that market – understand their daily routine, what bothers them, what can change with new methods and technology. Everywhere you look there is huge potential for disruption – you just need to find it and run with it.