Business school students come out of their programs with a banquet of career options. You invest two years learning, training and exploring and come out hungry to start putting that investment to work and enjoying its dividends. It can be very exciting.
Yet some students aren’t quite sure what suits them best. There’s the lure of the lucrative careers, working in banking or consulting. Or there are the perquisites of working for a large corporation with a major brand. There are international opportunities, inspiring non-profits and countless other organizations that can benefit from better business practices.
Then there’s the entrepreneurship option.
That’s an attractive one for some students. They see successful entrepreneurs profiled in business magazines and think, “Hey, that looks good.” Or maybe they’re attracted to the idea of being their own boss and calling the shots. For some, it’s the challenge of entrepreneurship that draws them in.
Then, for a select few, there will be a genuine passion: they’ll know that they need to start a company to continue doing the thing they’re passionate about and make it work.
Passion in Perspective
There are many kinds of passion, but only one leads to entrepreneurial success.
There’s consuming passion, which is like an addiction. You focus on creating the thing you imagine to the exclusion of everything else. I’ve seen technologists roll up their sleeves and set to work on a problem and not come up for air until it was done to their satisfaction. They enjoy the challenge and work like crazy to see their vision transformed into a reality.
The problem with a consuming passion is two-fold. First, it can deafen you to what the market actually needs. You go about creating a product or service that you think is right and shut your ears to input from others. Second, a consuming passion blinds you to other opportunities. Twitter’s founders started out making a product for podcasting, but they had the good sense to drop it in favor of pursuing a short-message sharing service when that opportunity proved to be better.
There’s transitory passion, which feels more like a fling than a long-term relationship. Some people are naturally curious, and that curiosity leads them in a direction that seems very exciting. They read all that they can, look at all the products in the marketplace, come up with an idea, talk with potential customers and gush with excitement. But then that excitement dries up, and they find that they weren’t really that into it to begin with. Instead, there’s this new thing that they’re suddenly passionate about.
Entrepreneurs with transitory passion never see anything to completion. They’re constantly “pivoting” and trying new concepts rather than seeing one through to completion.
There’s interpersonal passion, when you respond to the charisma of a cofounder and project onto that person whatever characteristics you’re looking for in a business relationship. You feel that working with your cofounder is just the best, and your imagination comes up with reasons for why you think it’s great.
This is especially a problem for people who have yet to develop a keen sense of self-awareness or an appreciation for the give and take of long-term relationships. Disagreements between company founders sink startups. Usually that happens when the charisma wears off and co-founders start to see each other’s weaknesses.
But the only type of passion that successful entrepreneurs all share is sustained passion.
Sustained passion carries you through the difficult times and keeps you interested and engaged for years. Not one or two years, but for a decade or more.
It’s difficult to consider a timeline that long unless you’ve lived with a sustained passion already in your life. Few business school graduates have worked that long, let alone worked on the same problem or toward the same goal for that long. It’s the rare person who can maintain their focus for such an extended period. Yet entrepreneurs have to be in it for the long haul.
When I was writing Essentials of Venture Capital, I learned a fascinating statistic about venture-backed startups: median time to liquidity. This is a measure of the time it takes a startup to either get acquired or go public from the moment it receives its first formal venture capital investment. It’s a measure of how long it takes the venture capitalists to get their money back. But it’s also a measure of how long a company founder can expect to spend working on a startup.
Median time to liquidity goes up and down with the economic environment. During a boom, startups go public or get acquired more quickly than during a recession. But I learned that the median time to liquidity is typically between six years and nine years. Last year it was 7.4 years, according to data from Dow Jones. That means that from the moment a company gets a Series A investment, the founders can expect to be involved for at least three-quarters of a decade before they see a major payoff. And it’s important to remember that the median time to liquidity statistic only takes into account the years AFTER a company gets its first round of financing.
To plow through that time and to remain successful during it takes sustained passion.
This is the big difference between starting a company and applying for a job. You can have a new job every two or three years — many people do — but if you start a company, you have to be sure it’s something you feel you can remain passionate about for much longer.