Perspective on Opportunity Cost
Today I had two phone calls with budding entrepreneurs. They are both emerging from university degrees and both are contemplating the opportunity costs of chasing their entrepreneurial ambitions.
Opportunity costs are impossible to reconcile. The kind of people that make great startup founders are a subset of those that can fetch high salaries in BigCos. You can’t reconcile foregoing a $100k+ salary to skip paying yourself for some time, or to scrimp by on a $20k salary.
In order to take the entrepreneurial plunge, you have to wholesale not worry about opportunity cost. Personally, my breakthrough moment was when I realized that I would not be happier with an extra $100k+ salary each year. My happiness is not tied to that. It simply would have meant I could have had some nicer things.
Another way to combat concerns over opportunity costs is to realize that every moment working on your startup is actually leading to two forms of remuneration: 1) any salary you draw, 2) the value of the company that you’re building. If you have a job at a BigCo, you only have #1. When you stop working, you have nothing more.
Concerns about opportunity costs can be tricky to overcome mentally.
How have you overcome opportunity costs in your mind to start a company?