How I Became a “Chicken” Entrepreneur

Fahri Diner and Xiang-Dong Cao were sitting around after work having a few beers (I’m 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.” “You’re 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 a handful willing to work for them in exchange for stock. And, with this meager core, 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. And in a few short months, they were on their way to becoming billionaires as the founders of Qtera.

That, basically, is the same way that I became an entrepreneur . . . a “chicken” entrepreneur. When I was about 16 years old, I had a summer job as a house painter’s assistant in swank Hewlett Bay Harbor, a 20-minute drive from my home (a ramshackle house literally on the other side of the tracks). One day, 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.

Armando’s routine was to drop us off at the work site at 7 a.m. and disappear until 5 or 6 in the evening. We were left to do the work, with virtually no experience and only Armando’s 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.) “I’m 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 what’s good for you, you’ll be here Monday morning. I’ll pay you an extra dollar an hour to finish this job properly.”

Some other time, I’ll 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 — don’t have the brass for it. I didn’t. 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, I’d guess. Even most. Because spinning off of an existing enterprise gets you past two of the three biggest new-venture hurdles: knowledge and contacts (vendors, marketers, consultants, etc.).

The great thing about starting a business you’re 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 those 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. And two years later, their company, Qtera, was acquired by Canadian optical giant Nortel Networks for $3.25 billion in stock.