Fahri Diner and Xiang-Dong Cao were sitting around after work having a few beers (Im making up the details) and complaining about their employer, Siemens Information and Communication Networks in Boca Raton, Florida. Cao was saying that they were not properly appreciated, when Diner said, Hell, we should start our own business.
Youre damn right, Cao replied.
Several months later, they said goodbye to Siemens and moved into a dusty warehouse. They telephoned former colleagues until they found two willing to work for them for stock. And, with this meager core of four, they started their own fiber optics transmission company, doing essentially the same thing they were doing at Siemens but with a few of their own improvements.
In a few short months, they had gone from wage-earning employees to brave new entrepreneurs.
How I Became an Entrepreneur
My first real job was backseat wiper man at the Rockville Center Car Wash on Long Island. I was 14 and happy with the $1.25 they paid me. A couple years later, when I was working as a house painters assistant in swank Hewlett Bay Harbor, a 20-minute drive from my home (a ramshackle house literally on the other side of the tracks), I became an entrepreneur. Well . . . a chicken entrepreneur.
What happened was this. My friend Peter and I were scraping the shingles of a big yellow mansion I can still remember the details when the lady of the house, a Mrs. Bernstein, came out asking for Armando, our boss. Armandos routine was to drop us off at the work site at 7:00 a.m. and disappear until 5 or 6 in the evening.
We were left to do the work, with virtually no experience and only Armandos advice on watering down paint and dry rolling the second coat to guide us. (In case you are about to get your house painted . . . dry rolling is when your painters pretend to be giving you a second coat when in fact the rollers are dry. This allows them to get the job done twice as fast and save a bundle on the cost of paint.)
Im on to your boss, Mrs. Bernstein said. How much does that cheap bastard pay you? We told her. She harrumphed and disappeared inside. When she came out a half-hour later, she announced, I just fired that good-for-nothing. And if you know whats good for you, youll be here Monday morning. Ill pay you an extra dollar an hour to finish this job properly.
Some other time, Ill tell you what happened when Armando discovered our duplicity. But the point of this little memoir is to illustrate how I accidentally started working for myself and to highlight an important principle of wealth building.
Starting your own business is a scary process. You give up a steady income and go without any assurances for an unknown period of time. You risk embarrassment and failure. Most people and I mean 99 out of 100 dont have the brass for it.
I didnt. But I was lucky. Mrs. Bernstein gave me the impetus I needed. Had it not been for her, I might be a college teacher today, earning a modest living and complaining about the administration.
I wonder how many new businesses start this way as new shoots from an existing vine. Many, Id guess. Even most.
Spinning Off of an Existing Enterprise Gets You Past Two of the Three Biggest New-Venture Hurdles: Knowledge and Contacts
Having the right contacts vendors, marketers, and consultants is equally as important as having knowledge.
The great thing about starting a business youre already in is that you can gain the knowledge and make the contacts while you are still an employee. Start by promoting yourself. Do the job you want, not the job you have. Learn everything about it. Find out what makes your business grow, how your sales are made, and what, if anything, makes your product or service special.
Also very important:
1. Figure out what is less than perfect about the business you are in.
2. Get friendly with the key suppliers, bankers, and consultants your business uses.
After doing these things, you are only one decision away from going off on your own.
This is basically what Diner and Cao did. Within days after jumping ship, they had an ongoing business competing with their former employer.
Now their company, Qtera, which develops high-speed fiber optics transmission equipment, is said to be the takeover target of optical giant Nortel Networks of Ontario. According to The New York Times, Nortel is offering $2.5 billion to $3.5 billion in stock for Qtera.
5 Steps to Knocking Off the Business You Work For
No, you dont have to be a self-starter to have your own business. You can start as a wage coolie, just as Diner and Cao did, and take advantage of what you have to create an opportunity for yourself later. Interested? Heres what you need to do. (And what better time than now?)
1. Learn everything you can about your business, especially how sales are made and what; if anything, is unique about the product or service you provide.
2. Become known as a can-do employee. You will attract good people, individuals you may want to team up with later.
3. Figure out how to make your companys products or services better. This will become the key to your eventual success. When you go out on your own, you want what MBAs call a competitive advantage, something you do better than your former employer can.
4. Start saving. You are going to need a bank account to get you by, even if you find a venture-capital partner. Try to stash at least 10% of your take-home pay. 20% would be better. If this is not possible, consider seriously a weekend or evening job.
5. Read about business. Take seminars. Educate yourself. Most of all, keep reading these Early to Rise messages.
When you get your first billion-dollar offer, I want a cut.