Over the last year, I’ve attended several events where San Francisco-based VCs have exhorted college students to drop out and start a companies. Every one of them mentioned both Bill Gates and Mark Zuckerberg to support their argument.
This advice strikes me as slightly misleading and extremely self-serving. The business of venture capital requires a steady stream of new ideas and companies. VCs invest in the most promising 5% knowing that 80% of those they invest in are going to fail.
Having a portfolio company fail after a few years is not a big deal for an experienced VC. It’s a very different experience when a 25-year old finds himself exhausted, broke and without a college degree. Some deal with the situation well, other don’t.
The truth is that your odds of winning a lottery are significantly higher than the odds of your startup idea resulting in the next Facebook or Microsoft.
Despite the long odds, however, I do agree that if a college student passionately believes that he or she is sitting on a billion dollar idea, leaving school to pursue it makes sense. But the idea and the passion needs to come first. Dropping out, moving to San Francisco, and then trying to figure what you want to do is likely a recipe for disaster.
Japan and the West have very different ideas of what constitutes failure.
When I sold Vanguard to Digital Garage in 2001, my Western friends called me up and told me
“I read about the acquisition. Congratulations! I know you have been working on it for a long time. Let’s get together and I’ll buy you a beer!”
However, without exception, my Japanese friends called me and said
“I read about the acquisition. I’m sorry to hear you lost control of your company. I know you have been working on it for a long time. Let’s get together and I’ll buy you a beer.”
I drank a lot of beer that month.