Silicon Insider: So You Want to Be a Tech Entrepreneur?

Feb. 23, 2006 — -- Ever had dreams of starting your own high-tech company?

Well, historically the best time to be a tech entrepreneur is when venture capitalists are drowning in too much money, angel investors are back in the game, and the entire electronics industry is just at a cyclical peak and about to tip over into a brief downturn to give you cover as you ramp up to market.

In other words, right about now.

OK, but even if your timing is right, there is still the little matter of actually coming up with the right business idea -- not to mention the right executive team, the right market, the right first product, and, of course, the right investors.

Then, of course, if you pull all that off and actually get funded, there's still the hundred-hour work weeks, the race to market, the unexpected competitors, the fights in the hallway with the other founders, the divorce, etc. But, of course, if you fretted about all that minor stuff, you wouldn't be entrepreneuring in the first place. You think those worries hampered Bill Gates or Steve Jobs or Michael Dell?

So let's ignore all those peripheral matters and get down to the tough question: What should your new company do?

Well, there are two answers: build stuff or do stuff.

To build stuff, i.e., become a manufacturer, you need to have a very deep understanding of the technology involved. In other words, to design and build successful high-tech products you basically already have to be doing that for someone else. You need to know not only where the basic technology is at and where it is going next but also who is competing in that market, the established distribution and retail channels, current patents and intellectual capital, marketing strategies and pricing. And it never hurts to have an extraordinary understanding of the customers for this product.

In other words, if you are sitting in Enid, Okla., with an MFA in classical Greek and you have a clever idea for a new electronics gizmo, the reality is probably one of the following:

1. Somebody else has already invented it, patented and failed with it.
2. Nobody at a major company is going to respond to your pitch letter with anything but a lawyer-written full-release form (just in case you do have a great idea that they are also working on in some supersecret lab project).
3. VCs are going to put your idea in the dead-letter file because they know that a real "product" is less about the product itself and everything about the stuff around it. They are, contrary to the myth, in the business of building companies not handing out prizes for clever inventions.

Still, if you believe your gizmo is the greatest thing since the iPod, then build one, file for patents and show it to someone who has experience in the industry. If that person agrees with you, team up with that expert and a few others with similar resumes, and then go back to the venture capitalists. That's how even inexperienced people occasionally make a billion dollars. On the other hand, your odds may be better with Lotto.