Sandbox

From the Sandbox: Jumping off the Cliff

June 11th, 2010 by Katrin Winiarski

Every day, our community manager Katrin Winiarski, reads through her feed of all Sandboxers’ blog posts. Every Thursday, she chooses the most inspiring, funny or brilliant one and reposts it on this blog. This post has been written by Sandboxer Marcus Kuhn. The original version can be found here.

I have done it, instead of seeking regular employment with a consulting agency, an MNE or even a startup I have decided to go at it on my own. I will try my luck with connex.io which has the goal to automate the management of your address book. I jumped of the cliff! But what does this mean?

Quite some monetary costs are associated with trying to establish your own company. First of all there is the direct cost of scraping together the capital needed to fund at least the early stages of your own company. Then there are the indirect opportunity costs of the salary you give up by choosing to work for yourself. And finally there are other, non monetary, “costs” such as a reduced standard of living because of the salary one gives up etc. In my case, I didn’t need a lot of funding but the loss of salary is quite substantial. This means I have to minimize my costs of living. [...]

Besides the costs there are risks associated with the decision of trying it on your own. Only one or two out of ten startups become a monetary success, four just scrape by and neither make nor lose any substantial amounts of money. Such startups often are called the “living dead”, they just keep on existing because founders are not willing to admit that it would be much more productive to move on and tackle another project. The remaining four or five startups seize to exist rather fast. All in all this means that in my decision to go at it on my own I face the risk of failure and the consequences of failure. And I also need to avoid to get stuck in a “living dead” scenario.

To counterbalance the costs and risks I just described, there obviously needs to be strong benefits. The most important benefit is that I can do what I really like. Now, I work at the intersection between technology and business which is what I really wanted. But there are benefits beyond that: I don’t have to work in a large corporation or sell myself and my values out to some corporate overlord [...]. By taking the risk of failure I also get rewarded with a potentially higher payout.

Therefore the decision basically boiled down to a simple question: Are the costs and the risk of failure outweighed by the actual and potential benefits? [...] Without any serious commitments and having just finished my studies, [...] my current situation mitigated the costs and risks.

Since two weeks I am now working around the clock to make my dream of making address book management an automated task happen. So far it feels good. But what happens if I fail? Many companies on this planet are looking for entrepreneurial people so I’ll be able to value my experience. Failing is no big deal: I will have learned just as much as if connex.io is successful. And if I really like the startup game, I will probably just try again and again.

Marcus Kuhn is a young swiss entrepreneur who recently graduated from a double degree master program at University St. Gallen and Nanyang Technological University in Singapore. Previous to founding connex.io, Marcus worked at Accenture, Namics and as an independant online consultant.