A few days ago, I participated in a panel on entrepreneurship in the beautiful but small city of Göttingen, Germany. While a university town, it isn’t exactly the Silicon Valley either, much like my current home town of Erlangen.
Thus, on the panel, I ran into the usual German morals on what makes a good entrepreneur, respectively, how to treat one:
- According to one panelist, you can only be a good entrepreneur, if you have experienced loss of sleep. If you aren’t waking up in the middle of the night worrying about whether you can pay your employees next month, you are not doing it right.
- According to another panelist, we should not be looking towards the Silicon Valley, but rather grow our companies deliberately, trying to become profitable as soon as possible so that you don’t have to deal with those pesky venture capitalists.
- Unrelated to this panel, but well in line with the arguments, I have met and worked with business angels who believe that a founder of a company should not take home a real pay-check, but rather be underpaid in order to keep him or her nimble.
Needless to say, these arguments are bull, or more specifically, simplify the situation significantly. In more detail:
- There is no reason I can think of why not sleeping well makes a better entrepreneur. It is likely to happen, sure, but if you can avoid it, more power to you! What is the point of this machismo, that only if you are suffering, you are a true entrepreneur? This is just a phantasy or simply envy by those who had to suffer towards those who were luckier or smarter.
- It depends on your product and market when you should turn profitable. If you are facing a huge opportunity, it would be stupid to focus on profitability rather than growth. It is true that you probably can’t do a successful high-growth high-tech startup in Erlangen or Göttingen, but when faced with the opportunity, you should move and not lose it.
- Finally, entpreneurial talent is worth any penny in salary it can get. It makes no sense to underpay founders. I’m not saying you should overpay either, only that there is no point in making life extra miserable. As a business angel, you may get away with low salaries for your founders in places like Erlangen or Göttingen, but elsewhere they’ll simply move on.
Alright, that’s it. Check out the slides from my Startupinformatik talk on how to create startups from a computer science Master’s program!