There are so many problems with the world. History will no doubt look back at the last half-decade and talk about how awful it was. Just a few of the ills include: high unemployment, collapsing home prices, violence across the world, and political gridlock that never seems to end.
Young Americans with recent college degrees are particularly exposed to the problems that their parents’ generation created. The unemployment rate for people aged 20 to 24 is nearly 13 percent. This is roughly double the unemployment rate for people 25 and over. No wonder their debt is also exploding.
But there is one group who seems immune to this all: engineers.
Engineers are doing great, and are making massive salaries with or without an expensive college degree and all the debt that comes with it.
So why do so many of these engineers feel that the esteem in which they are held, their high salaries, and the fact that every employer kisses their ass and delivers them amazing work perks… Well, it just doesn’t seem to be enough for them.
They want to be founders and CEO’s as well.
I believe in a free market, and I believe that people should do whatever they want. If investors want to fund these Engineers-turned-founders into oblivion, then so be it. But here are some things to consider…
Building and running a business is very hard, and doing it well is an act of craftsmanship no less sophisticated than engineering.
Being an engineer requires a set of hard skills that can’t be faked. Being a doctor or attorney requires certifications that can’t be forged. Being a businessperson has zero barriers to entry, which is why so many people think that it is either easy or soft.
It’s also the reason why people mock MBAs and think they’re useless.
But, as it turns out, being a great business person is incredibly hard, and — more so than any other job — it requires a particular set of skills that are so disparate that they are almost impossible to pull together.
A great businessperson must be highly quantitative and analytical. He or she must be attentive to data and proficient in Microsoft Excel. He or she must know how to weave ideas and theories into numbers and benchmarks. A person who is not strong with numbers will be handicapped in running a great business.
A great businessperson must be tremendously inter-personal, and they must be great communicators across all departments in their business. They must be one of the 26 percent of Americans who don’t fear public speaking. These skills have nothing to do with the skills mentioned in the paragraph above, and to possess both is a powerful coincidence.
A great businessperson must be an outstanding judge of talent and character. Hiring is the “alpha and omega” skill of running a business. It will make you thrive or fail. And CEOs must take accountability for every hire in their company. This skill has nothing to do with the two sets of skills mentioned above it, and to possess all three is a rare hat trick.
A great businessperson must be creative and have vision. They must know why their product is different from every other product on the market, and they must stay insanely focused on making it as great as it is different. And they have to know how to elucidate this vision to investors or else it will never see the light of day. This skill has nothing to do with the three mentioned above it, and to possess all four is an insane coincidence.
There are many other skills that I could add to this list, but I think that those four are a great start. And the point is that no CEO can build and run a great company unless they possess these highly uncorrelated skills.
And it’s entirely possible that an engineer possesses all of the above skills. Jack Dorsey can do all those things, plus he is an amazingly fashionable dresser who sails boats. And being a great engineer means that you possess exactly one of the ten things that makes Jack Dorsey who he is — so get moving on the other nine.
Engineers are no less likely to develop the skills of a great businessman, but they are no more likely either. They have the same one in a gazillion shot as anyone else. And the fact that they are able to raise $500,000 in angel capital speaks more to easy money than it does to their actual credibility in building a company.
Which brings me to point No. 2…
Did you just raise $500,000 in angel money? Great, you are now a pinch hitter in the minor leagues.
Raising a half million dollars isn’t shit, and you should not be proud or excited, and you probably won’t get any more. You are nobody… Alright, that was harsh. But I needed to be harsh in order to make you listen. Plus, it’s okay to be nobody.
Jason Calacanis points out that five times as many companies are now able to raise angel rounds…which is creating the illusion that the perennially-difficult task of raising real money is somehow harder than before. And that’s because it is hard to raise real money. Like $3-4 million. Because investors are scared to lose that much money. Moreover, the engineer who just closed an angel round has no idea what kind of trap he is walking into for a real Series A.
An engineer is used to getting a $150,000 commitment from SV Angel, based on one meeting, only to see a bunch of rich people pile onto the round once it has the blessing of an expert like David Lee.
What no person, engineer or otherwise, can anticipate is the deep — no, insane — level of diligence that an institutional VC will put them through a year later. He cannot anticipate the horribleness of having one VC call him back to Menlo Park five different times before passing…or being constantly manipulated because he’s 23 years old. He’s not used to VCs prying to find out who else might invest, and using that information against him. He is not used to getting only one “yes,” only to find it bundled with an impossibly messy term sheet that he probably shouldn’t sign.
Negotiating a real fundraise is insanely complex, and cannot be done properly the first one, two, or three times that it happens. This is why experienced founders and CEOs are — gasp — useful. That is why my own company hired an extremely experienced businessman to be our CEO once it became time to raise eight-figure venture rounds and pursue a nine-figure exit.
Anybody who thinks that writing great Ruby is harder than negotiating a Series A or powering through the due diligence of a Series C has no idea how hard (and different) those things are. Most people, and therefore most engineers, will find this process damn near impossible to navigate. And — like most of us — they should not be running companies.
Engineers have no idea how much “inexplicable, nonsensical bullshit” they will encounter running a business.
The thesis of my article has been that an engineer is no more and no less likely to be a great businessperson. And that is true for quite some time. But, after someone does engineering for a long time, I believe that he or she could become disadvantaged relative to the average human.
This is the most empirical — and therefore most open to criticism — point that I can make. But I have seen it happen a lot of times. Engineers spend most of their lives surrounded by a reality that is antipodal to the one that a businessperson must endure. And the business person’s reality is far more frustrating, a pain for which one must spend years building a tolerance.
For example, engineers are largely insulated from the maddening world of government bureaucracy. Everything from 409a valuations to various HR laws. Investors also provide lots of bureaucracy — audits, requests for updates, ill-timed dinner parties, etc.
Engineers are accustomed to a reality where they can leave an uncomfortable work environment and have a new job waiting for them. This is not possible when you raise millions in capital and are therefore “stuck” to your business for years to come.
Engineers are not used to being unwanted or having to put up with horrible conditions/terms in order to get a semblance of what they want. This happens to Founders and CEOs all the time, when bad terms are crammed down their throats, or investors hit them with the dreaded “oh, one more thing…” line. It can happen with hiring — finding that perfect candidate only to have him demand compensation that will never fit in the budget.
I’ve met many engineers who think that a half-hour standing meeting that occurs weekly is “the biggest waste of time ever,” when they have no idea what it’s like to swim through the Olympic-sized pool of bullshit that their founder and CEO must endure.
Have they ever had to fly to New York to sit through a meeting where they will not utter a single word? Have they ever had to take two or three pointless “courtesy meetings” with some VC’s portfolio companies in order to maybe get an investment done? Have they ever endured having a big-money client who says or does things that make one’s skin crawl?
Honestly, being an engineer is a wonderful thing.
[Illustration by Hallie Bateman]