Start-Up or Corporate Job?

Youth Spirit
Today every second student from the world’s best universities want to be an entrepreneur. Press and online media are discussing start-up stories over and over again. Beginners ask about valid ideas and how rich they would be at the end.

New Economy
The New Economy and the internet evolution changed every business sector and every market. Finance, energy, telecommunication, transport and medicine are affected. Every director who ignores this, will lose in the long run. Thereby, everybody needs to learn how business works on the internet.

Greed for Money
This development does not mean that every student is capable of starting a new enterprise. Particular, if the motivation lies not within an entrepreneurial vision, but in the greed for money. All the impressing stories about Facebook, Whatsapp, Instagam or Rocket Internet feed the fantasy of the students, but also the number of applications of that companies and their stock valuations. However, the New Economy is a demanding field with the „Winner Takes it All“ principle. In the statistical average more than 90% of start-ups fail.

Why Nearly all Start-ups Fail?
Establishing a new company is one of the toughest tasks on earth. Successful founders need nerves of steel, a condition and motivation as a fortunate racehorse. Especially capital acquisition can be troublesome. Most start-ups need a sustainable growing capital flow for expansion and marketing. Workloads of about 80 hours per week are usual, but without the comfort of a corporate job (like limousines, secretaries or paid vacations). Without any private capital and business expertise this path is even more venturesome.

More Risks
Furthermore, there are barriers to breakthrough until the smiling millions. Financial crisis can run dry the venture capital sources, competitors can headhunt key employees, patents can be bypassed with constructions around, lawsuits can lead to standstill, …

More Personal Requirements
But mostly matters: The team, the founder and their persistence. In fact, a good founder is a critical thinking fearless prudent tradesman. Either his mind is aware of his fear and he accepts it, or he even uses it for self-motivation. Starting a company requires a good mindset: No limiting beliefs about money and life. Money is valuable and desirable, it represents the counter-value of work. It can enable you to do what you really want to do in life. And, life is hard in reality, but can be beautiful by managing the emotional state in the most important situations. Persistence can then even change failure into superior achievement.

Nobody Makes Real Money Until the Exit
An exit does not always lead to financial independence. In agreements of venture capitalists (VC) usually bad leaver and liquidation preference clauses are written. Plus, partly unachievable milestones for every capital transaction. In the case of an emergency, the VC transfers shares away from the founder (bad leaver) and usually the VC becomes the capital lending and rates first (liquidation preference). Sounds great, if a firm gets 10 Mio.€ out of an exit. But if the same firm got 1 Mio.€ from a VC they have to pay back this plus interest rates first. Since most start-ups fail, VC usually expect a return on investment of 10(!) after five years. On top, the average probability of such an exit lies far below 1% of all start-ups. Even then, it can be a zero-sum game for the founder.

Corporate Job Income
A well-paid investment banker, private equity manager, public accountant or a large-scale company C-Suite manager, can earn approximately the same amount of money on a lower level of insecurity and with more life comfort.

Benefits
Live as an entrepreneur goes along with an extraordinary and intense time. Make a game-changing market revolution, build something from scratch and stand upon one’s defense against the established structures. Working with smart and motivated people. That can be more fulfilling and interesting than clicking presentations in anonymous buildings with people who do not enhance your potential. It can be a path towards the exit of the traditional mediocrity of middle-class. In addition, you can take the lead for your own responsibility and get a chance to become rich by all means.

Summary
A real founder should start his company out of a vision. He will have an intense time with many insecurities. Only with the right motivation and attitude this can be done successful. At the end of the road, there is a chance to create a part of something new and earn a lot of money.

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