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Don't Quit Your Day Job

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A common piece of advice dispensed by startup advisors is "focus". For entrepreneurs who are working, this generally translates to quitting their day job. The big question is when, and lines like "jump out of the airplane, you'll be surprised what you can build on the way down" are cited to encourage entrepreneurs to put pressure on themselves to make something happen sooner rather than later.

However, let me take the opposite side: DON'T QUIT YOUR DAY JOB! Here's four reasons why:

First, starting a company takes more time and money than you expect. The Startup Genome project (http://blog.startupcompass.co/pages/startup-genome-report-1) found that VC funded companies with larger exits pivoted (changed their idea) one to two times, and took an average of 19 months for product-centric startups like Dropbox and Mint to 70 months for enterprise-centric startups such as Oracle and Yammer to reach scale stage. That's a lot of living expense, especially for a few people.

Second, the risk of failure is much higher than the odds of success. A recent Business Insider article (http://www.businessinsider.com/startup-odds-of-success-2013-5) posited that fewer than .4% of companies that applied to Y-Combinator sold for more than $40M, while as many as half went out of business. Another article said that 12% of first time entrepreneurs are successful, 20% of second time entrepreneurs are successful, and 30% of third time entrepreneurs achieve success. That means 70% of experienced entrepreneurs do not.

Third, once you leave the world of employment, it can be difficult to re-enter the labor market- similar to the phenomenon seen by women leaving mid-career to raise children. The tendency of companies to seek to fill positions with employed applicants, the desire to bring in employees who can bring customers and insider knowledge, and concerns over whether an entrepreneurial foray belies an inability to "work for" someone can lead to difficulties re-entering the work force.

And lastly, there are advantages to staying within the industry as you're thinking through your idea. Regulations change, technology changes, the players change, and it can be easier to stay in the loop in an industry leading firm. There are also advantages to having travel budgets, office space, and other resources.

Bill Gates quitting Harvard, Jeff Bezos leaving his job as a hedge fund VP, and a host of other tech titans leaving school are often cited, but Bill Gates got his first paying computer gig at 15 and has said it was a mistake to quit Harvard, Jeff Bezos started working on the online bookselling idea as an employee of D.A. Shaw and went on his own when Shaw decided to pursue free email instead of online bookselling, and many tech titans like Larry Ellison actually quit school to work for someone else first.

This is not to say you should never quit your day job. In fact, your goal needs to be to do so. And there are risks with trying to juggle two jobs: getting fired, having your employer claim your IP (take this seriously), wasting effort, and being late to market (especially as a fast-follower). Not to mention burnout.

But you should quit when you're confident your new venture is poised to succeed, after you've validated the idea and found customers ready to pay for what you're selling, figuring out how to scale, and who's interested in funding you when you do go full time. Entrepreneurs created the innovation and competition that allowed a country with 5% of global population to produce and consume 25% of global goods and services. As one, you deserve the highest probabilities of success.

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