Should you be an entrepreneur when you’re young?

Employee: Earning Potential vs Intellectual Growth

In Silicon Valley, people often claim that you should only be an entrepreneur for the right reasons e.g. changing the world. Because the valley has now seen its third and fourth generation of technology entrepreneurs and its stellar record of companies turning into global conglomerates, aspiring upstarts would (and should) buy into that idea that they can change the world.

With Facebook’s recent Initial Public Offering (IPO) and US$1 billion acquisition of one of the world’s most beloved photo sharing application, Instagram: its easy for people to venture into entrepreneurship for the wrong reasons.

Personally, I’ve got into entrepreneurship to learn (beyond my means) and make an impact and solve a problem in the creative industries (not to change the world). While my peers are spending the best years of their life in college (or university): I’ve spent the larger part of it working in advertising/events and the rest developing a scalable and sustainable new business. Now that many of my peers are graduating or are about to graduate, I’m beginning to see many of them start their first jobs and easing into their new roles.

Some have asked me, should I be an entrepreneur?

How optimistic are you?

So here’s the reality, every single one of my peers who’s holding a full-time job, earns more than me. Even the part-time staff I hired, earns more than me. That’s fine, because you don’t earn much when you’re young anyway. Instead of thinking how much money do I have in my bank account this year or am I earning more than my peers; the right questions to ask are, “What’s my earning potential?” & “How far do I want to push my intellectual growth?”

Right above is a diagram that plots Time on the X-axis and Growth on the Y-axis. For the average person, your salary growth takes the shape of a bell curve and your earning potential peaks in your prime (typically mid 30s to 40s). On the contrary, your intellectual growth typically spikes when you go to school, eases a little as you try to match your knowledge and skills in the real world and spikes again as you’re exposed to more responsibilities.

If you’re lucky, by the time you’re 50, your intellectual growth is stagnant and you’re probably a thought leader in your field. If you’re unlucky, your industry and specialisation would have been phased out, disrupted or automated by then and you would need to realign your experience with skills that are contextually relevant to the economy then (alas textile manufacturing).

The key concept to understand from this graph is the risk you bear by choosing the path of entrepreneurship at each stage. Taking all factors into consideration (nil experience), you bear more risk if you start late as an entrepreneur. And the reason why experience is excluded is because we don’t know how much of that experience is relevant to your new venture. Hence, you’ll find a struggle between balancing current market opportunities in high-growth areas and the experience you’ve gained. However, if you did pick the right industry and skills to specialise, early in your career, you should fare better in your venture as compared to an inexperienced entrepreneur.

Using the same axis, the diagram above plots the intellectual and financial growth of a young entrepreneur in a business that grows over the years. Shaped like a hockey stick, their intellectual growth multiplies due to overcoming a steep learning curve. Their financial growth varies depending on the scalability of the business. In a operationally sound business, it generally trends upwards once they’ve establish enough brand reputation or economies of scale in core and complementary verticals.

With that, it makes sense to continuously start companies throughout your entire working life in order to built upon what you’ve learnt. But then again, how many entrepreneurs can continue with that grind and momentum till they’re 50?

Should you fail and decide to switch to a full-time job when you’re 30, the economy (and prospective employer) will question how much of that experience you’ve gained as an entrepreneur is relevant? And the answer is: it doesn’t matter, because most of your peers took several years to figure out what they’re good at and what they’re passionate about. The ones who have figured that out early and worked their careers with unrelenting focus do deserve to be earning more than the majority.

Perhaps in time, when you feel your intellectual growth is peaking, you’ll ask yourself if you should be an entrepreneur?

Except this time, you’re starting a venture for the right reasons.

  • http://bosslee.co/ Bryan Lee

    Why is there a dip in intellectual at 30? :D

  • http://twitter.com/daylonsoh Daylon Soh

    It’s not so much a dip in intellectual capabilities but rather an employee will be trying to match the knowledge they learnt in school with their new jobs. They are usually also given smaller responsibilities, hence they will not be learning as much as they did in school.

  • http://www.designsojourn.com/ Brian

    Interesting post. However where did you get your data from and how did you build your graph? Is it validated with anything as it looks rather arbitrary to me especially the dips and top of your bell curve.

    The only thing that goes down hill after 30 is the belly!

  • http://www.playwithideas.net/ Daylon Soh

    Hi Brian. I guess the graph data is open for refuting but its mainly based on observation of different age groups of friends and family members. Sample size comes from Singapore.

    The first graph generally explains why experienced professionals over 50 find it hard to get employed and that people between 20 to 30 generally need some time to match what they learnt to their jobs. Some call this period the age of odyssey where young adults are figuring out what they want to do. Second graph just means the money only comes after years of delivering results.

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