The Math Is Against You
Moskovitz: Only 1% of seed-funded tech companies get all the way through the funding funnel. To get there you have to have a truly great idea — unique, defensible, going after a large market. You have to execute extremely well. And you have to be really, really lucky.
It's actually getting harder over time. More people starting companies, more expensive to operate, investors have higher expectations, and incumbents aren't the slow-moving giants they were 10 or 20 years ago.
The 100th Engineer at Facebook
Moskovitz: Say you found a company, it does well, you sell it for $100 million. After dilution, your equity might be 10%. You walk away with $10 million. Great outcome — but extremely rare. Most likely you end up with nothing.
Another way to make a similar amount: join a later-stage company and help them scale from $500 million to $20 billion. Even straight out of college you can do really well financially. The 100th engineer at Facebook had a way better financial outcome than the vast majority of entrepreneurs.
And if you join an established company, you can work there a couple years, see if it's growing. If not, leave and try again. You can work for several in the same 10-year period.
The 100th engineer at Facebook had a way better financial outcome than the vast majority of entrepreneurs.
The Reality of the Lifestyle
Moskovitz: Your team is relying on you. They're betting some of their best years on a story you've told them. Recruiters ping them constantly. You're always worried you're going to lose them.
Each round of fundraising feels like life and death. Your competitors are actually trying to kill you. You always feel stretched — it's hard to make time for the company, your significant other, your family, and yourself.
Entrepreneurs are like ducks. Calm on the surface but paddling like hell underneath.
Entrepreneurs are like ducks. Calm on the surface but paddling like hell underneath.
The Only Good Reason
Moskovitz: The best reason for starting a company is that you can't not do it. First is passion — you're going to need it to power through. You also need it to recruit great people to follow you.
Second — you're the right person to make this happen. If you fail to do it, you're depriving the world of something great. At Facebook, we had cognitive dissonance for an embarrassingly long time that we could just be students with this little side project. But eventually it pulled us out because we couldn't bear the idea of it not living up to its full potential.
The best reason for starting a company is that you can't not do it.