Nov 24, 2006

Entepreneur to Employer

The transition from Entrepreneur to Employer may not seem a big deal but here is what was heard yesterday in a speech from one of the founders of one of the most successful startup ventures out of India - Infosys, at Pune.

"..We went through lot of sacrifices, turmoil, etc in the initial years. Of course now it is NOT expected from any one of you to go through the same pains.. but this is what we felt".

Well an employer does not expect entry level staff to go through tough times, which is very natural. By the same token the employer also does not expect the employee to gain the same rewards as does the employer. The employer essentially continues to reap the entrepreneurial success of the seeds he/she had sown years ago while the poor employee gets a measly salary in exchange for assuaging his 'fear of job insecurity' (as Robert Kiyosaki would put it).

The inflection point at which the employee 'loses' the opportunity for a significant share of the pot of gold can be one of many: When the company gets listed and goes public, when its products/services go real mainstream etc. More the risk, more the reward.

5 comments:

SB said...

Good observation. Every co. was started by an entrepreneur. Every co. needs employees. Every employer does what is required :-).

Ram said...

The CEO of Infosys had this to say in another artcile on Cyber India Online (Read http://www.ciol.com/content/news/2006/106102703.asp)

Nilekani contends that the attributes of an entrepreneur are great in the beginning but not sufficient to build a large company. "When you have entrepreneurs also playing a leadership role like us, you have to change with the times, otherwise you become obsolete."

These changes include the conscious steps taken in the early nineties: best practices in budgeting, financial visibility, education and training, and processes besides building world-class campuses. “We built a system for scaling up and made sure the right people occupied the right spots to scale up."

Nag said...

Yo Ram!

your piece does offer some food for thought. BTW, I did not exactly understand the last paragraph.

I don't, however, agree that the employees are getting measly salaries in contemporary India. When you compare the risk Vs reward equation for an employee and an enterpreneur, I do belive that the employee (especially in middle mgmt level and above) is better placed than an enterpreneur.

Ram said...

Nag, well said. But it is not just the risk vs reward equation. An entrepreneur as an owner of a corporation enjoys benefits that the employee doesn't have. For one, the corporation spends first and payes taxes next; with the employee it is the opposite. Income from dividends that the owner takes home are all tax-free!

So once the entrepreneur transitions to an owner of a legal corporation he is much better off than the regular employee. It is not just the absolute salary that matters but also the extent of financial options that one has.

Rahul said...

Ram,
Good one! Wanted to add to Robert Kiyosaki's 'fear of job insecurity' -
Apparently, the Bell Curve distribution is used to categorize people with fear of change/insecurity/risk etc. Most people reside in this region of the graph. The careless and uncommitted on one extreme end and the passionate and change drivers at the other end. So more than 70% lie in the center!
~ Rahul.