Do physics graduates make good entrepreneurs? by Steve Morris (University College, 1986)

4 February 2014 by Valeria Crowder

Do physics graduates make good entrepreneurs?

About the author: Steve Morris writes for technology review website S21 and blogs about science in his spare time. He read Physics at University College, Oxford, graduating in 1989 with first class honours and then spent ten years working for the UK Atomic Energy Authority at Harwell, Oxfordshire, before starting his own internet company.

What kinds of career paths do physicists follow when they finish university? Common jobs for people with a physics degree include academic research, teaching, working in industry, finance and accountancy. As the Institute of Physics careers page notes, physicists tend to be highly numerate, analytical and logical, and are frequently also creative thinkers, excellent at problem solving and meticulous. So these are good, safe jobs for physicists.

But there’s a job that’s well suited to the physicist that most never even think of pursuing. The entrepreneur.

What is an entrepreneur? Someone who creates a business out of nothing. In other words, someone who understands either implicitly or explicitly that wealth is not a conserved quantity.

Physicists have two key advantages over someone with an MBA or a Business Studies degree. They are primarily interested in things that can be measured and modelled, and when faced with an unfamiliar kind of quantity, their first question is “how many orders of magnitude is it?”

People with a business background worry about targets and objectives and incremental improvements. Physicists ask, “what is the underlying model here and how can I increase performance by an order of magnitude?”

In short, physicists think big. They understand scale. And they are ideally placed to spearhead innovations that disrupt entire industries.

Think about two of the biggest companies in the technology sector – Google and Apple. What does Apple do? It creates tech products that consumers want to buy, and it ruthlessly extracts the maximum profit from every device it sells by slashing production costs and pushing selling prices to the limit. Despite its “cool” reputation, it’s a totally conventional company, focussed on sales, profit margins and incremental improvements. Now what does Google do? It creates markets that previously didn’t exist.

Larry Page, co-founder of Google may not be a physicist (he studied Computer Science at Stanford) but he epitomises the way of thinking I’ve been talking about. Page’s business philosophy has been nicknamed 10x thinking. Whenever Page approaches a product, he asks how it can be improved tenfold. He’s an orders of magnitude kind of guy, and that’s why Google has not only built the world’s most successful search engine, but also the world’s biggest online advertising agency, the Android mobile operating system, smart glasses, self-driving cars and now a spin-off company, Calico, that aims to radically increase global life expectancy.

Elon Musk is a physics graduate who’s now the CEO of SpaceX, a company that designs, manufactures and launches advanced rockets and spacecraft, and also Tesla, a company making electric cars. He started his business career with Zip2, a company providing online-publishing software before moving on to found internet giant PayPal. When asked how physics helped his career, Musk replied, “I think physics gives you a mental framework for problem solving. It also teaches you to be willing to admit you're wrong.”

Geordie Rose, founder of D-Wave holds a PhD in Theoretical Physics. D-Wave is the company that built the world’s first commercial quantum computer. D-Wave has a great slogan, “We have a problem with impossible,” which perhaps encapsulates the thinking of both physicists and entrepreneurs in one. The company certainly thinks big. Its mission statement is to “solve humanity’s most challenging problems.”

These are three extreme examples of innovative companies, but as all physicists know, studying limiting cases is often a good way to understand how things really work.

In general, a physics degree teaches skills that are extremely valuable to anyone contemplating a start-up:

• Quantitative skills and an instinct to see the world in terms of things that can be measured.
• The ability to model complex systems with simple models that provide insight.
• An instinct to test hypotheses by conducting experiments.

The last of these is particularly important for start-ups. Many companies fail in the early years because their business model is invalid and they can’t adapt. That’s like continuing to believe in a theoretical model that’s been discredited experimentally, or failing to come up with an alternative model. In this case, fast and flexible thinking is the key to survival. In my own company, I tried five different business models before I hit on one that really worked!

A recent survey of physics PhD holders by the American Institute of Physics found that nearly one in eight of the responders had founded their own company. That’s an astonishingly high number. Most of the companies founded were physics-based, including electronics, medical devices and instruments. But many are not related to physics at all.

My own company, founded 15 years ago after throwing away a “safe” career path, isn’t a match for Google or SpaceX. But it’s been personally hugely rewarding and fun, and has enabled me to do things that I previously only dreamed about. I believe that the key reasons for my success have been my ability to think explicitly in terms of modelling the underlying business processes at work in my industry, and to think in terms of orders of magnitude improvement rather than the percentages that “business people” usually talk about.

Of course, being an entrepreneur is a risky occupation. It’s not for everyone. If the knowledge that 3 out of 4 start-ups fail puts you off trying, then it’s probably not the right career path for you. But I would argue that a physicist is better placed than many to make a success of it. That’s because you can guarantee one thing about entrepreneurs – if they don’t think big, they are certain to fail.

This article was written by Steve Morris. Statements and opinions expressed in articles, reviews and other materials herein are those of the authors; not of the Department of Physics.
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