Ever wondered if you could be an aspiring entrepreneur and still be active as an investor/trader in the stock market? Ever thought of going the entrepreneur’s way while also making money as an investor at the same time? I have, and here’s what I have to say about it.
I think investing by analysing the stock market performance of a listed organisation is a good way of understanding a few good superficial factors that affect its business. But running a successful start-up requires sound knowledge of various domains such as the right sector, its people and its business culture, the capital that is required from our side and the risk, legalities involved, it also can be exhausting especially if it is the first one, but hey, at least you are investing in yourself, in your idea.
But what if one can’t stay away from the excitement and easy money options in stock markets and is also determined to succeed as an entrepreneur by making use of the profits earned from the sold equities, one will say run your business as a primary thing and keep investing in equities as a part-time thing but gambling is a different thing and has its own risks. This can be done by investing in stocks or commodities of a company you trust after a detailed analysis of its operations and performance, in which case you’ll be a stock investor, a mere spectator with little or no say over the company’s operations although you’ll own a little amount of the company’s assets and earnings.
People who seem to understand businesses and the nature of its products at times are employed as paid evangelists for a company like Guy Kawasaki has been for Mercedes Benz. I think the best way to learn something is by getting hands on experience, therefore one good way to learn about business is by starting and/or running a business, being the CEO of your company in which case you’ll be the master of your company’s fate, you’ll be an entrepreneur.
That’s easy said than done, because most entrepreneurship projects will take up everything more than once before yielding any result and on the other hand stock market investing requires a comprehensive and regular analysis which will require time with the added fear of going broke before having learnt to stand up financially on your own.
That’s why I think it might not be a good idea to do both things simultaneously, however it can be done as you always have to hire a stock-broker before investing in equities, so might as well hire one that you trust and will take advice from. They might be able to provide you a good trading ground and recommend your purchases without you having to go through regular analysis of stocks although where’s the fun in that.
I can think of enough reasons to why investing in equities and running a business as an entrepreneur can be a totally opposite thing. First of all, it’s about commitment – it’ll be a long (hopefully) and dedicated relationship with your idea if you implement it as an enterprise and you’ll be fully committed with your brainchild till the day someone decides to buy your baby company but that’s another story.
HBO TV Show Silicon Valley (Picture credits: www.businessinsider.in)
On the other hand if you invest in publicly traded stocks then you have no say in its operations, you can stay as long as it’s fattening your wallet and leave without any remorse once you think you’re done. So entrepreneurship is kind of like marriage while merely investing in equities is like dating in some sense. So how will both go hand in hand if you need both of them more than your peace of mind?
It’s not something which has not been done before, all you have to do is just figure out how can you do one thing in a form of the other, for example this may sound like running a business that buys and sells stocks or helps other people do it. This is what a brokerage firm does, it buys and sells stocks and other publicly traded commodities through the stock exchange window between buyers and sellers and charges some service fee.
That sounds like a combination incorporating entrepreneurship and stock marketing. This is what Nithin Kamath, a young yet successful stock broker and an Internet entrepreneur did. He started trading in stock markets from 1996 by managing his father’s trading account, gained experience as a broker and finally founded India’s first “Discount Brokerage Firm”- Zerodha for which he won the Emerging Entrepreneur Award (2013 Confederation of Indian Industry (CII)) for innovating the discount broking model in Indian Markets.
Gradually, the Firm Zerodha launched several other Internet start-ups that assist companies and investors in the financial services sectors. Nithin Kamath also founded the Bengaluru based start-up called Rainmatter that builds financial software products and also acts as an incubator by providing consultation and funding to start-ups. Being a successful entrepreneur in the field of investing and trading he could be an inspiration towards what entrepreneurs in the public financial sector want to achieve.
Yet we should not lay all our eggs in one basket even if the basket looks as safe as the Pentagon. The ability to adapt to various uncertainties, to know when things are not working and quickly moving on should be the key. Also, I am sure there are other ways of making these two things work for us perhaps in a better way, a way that has not been explored or thought before, maybe with a lot of changes too thereby keeping the real essence of the start-up culture alive.
(The writer is a beginner and has minimal real world experience with either of the two terms discussed)