Cynical advice to entrepreneurs:
Believe it or not, a lot of people want to be involved with a start up. Of those, most people don’t want to take any of the risk. Of course, they still want to take all of the credit for success and that creates a problem for you. You will find many people, generally middle-aged men, who want to help out.
Free labor – awesome! Not so fast. You’re idea may be cool but you have to keep the perspective that if they could have done a start up, they would have. I think the expression goes “success has many fathers, failure is an orphan.” In other words, people want to be associated with something cool but will only want the upside.
Okay, so the worse case scenario is that people help you only when times are good. That’s not so bad, is it? Well, when times are good, sure. But dependable people are incredibly valuable to a company and especially an early stage venture. You, as the CEO, need to know whom you can count on. When people do not have a vested interested in your success beyond bragging rights (which they are going to claim regardless of their effort) they do not have the proper incentive to work as hard as you do. The net effect is exactly what happens at the Salvation Army – they have way too many volunteers, but only on Christmas and Easter. The rest of the time they are understaffed.
And there is a darker side to this equation. Some people do want to take an equity stake in your business in return for their work. Be careful here. I encountered many people who were more than happy to help me come up with a “fundraising strategy” where their payment was in a percentage of the cash and an equity stake. Oddly, they still wanted a ton of cash (on top of the percentage) for me to fly them out to California and were even reluctant to help me pitch. Needless to say, I didn’t engage people like that.
But sadly, it does get worse. I found another group of eager people who were happy to help you with your business. This group of people was generally made up of has-been traders from third tier shops looking for any work they could find. These people tried to sell me on their “industry experience” and their ability to raise money. Of course, they wanted a huge equity stake for their token efforts and provided little real value.
Making matters even worse – when someone has an equity stake, no matter how small, they feel entitled to exert significant pressure in how you run your business. (As an aside – if they have options, they technically have zero say until they exercise them.)
So, we have three groups of people:
- People who want to say they helped
- People who want to help but take no risk
- People who want to take advantage of a young and dumb entrepreneur
Okay, so take the population of people who want to help and filter these three groups out. Who is left? Well fuck. Pretty much no one.
Don’t misunderstand me – there is value in having someone help you with fundraising or to give you advice as a new entrepreneur but be careful who you choose.
So how do you pick your first few founding members? Try this exercise – go on a car trip with them. In my case, that is a drive from Ithaca, NY to NYC. It is about 4 hours and I can guarantee that within the first 20 minutes you will know if you can work with this person.
LIFE IS TOO SHORT TO WORK WITH PEOPLE YOU DON’T LIKE
What to look for in your first few employees
- Do you like them?
- Are they do-ers or delegate-ers?
- Would you trust them to watch your house?
Seriously. That is the primary criteria that I would use to find a short list of potential co-founders. The people in the first group were automatically weeded out by the very nature of their person and the three questions above.
Technical ability or business is important, but they are worthless if the above three criteria are not met. You can correct a poor corporate structure. You can recover from poor product decisions. You cannot recover if your team splits.
The reality is that you probably already know your co-founders. You probably have someone in mind.
My (bad) Advice:
If you have a great idea but you cannot execute it by yourself and you don’t trust your team – DON’T DO IT.
In a previous post I talked about the perils of outsourced software development. I mentioned that in one case we worked with a development team who took an equity stake in our company and they were, for all intents and purposes, co-founders. And, I hated their founder from day one. I actually got in a large argument with my to other “real” co-founders and adamantly stated that I would rather not start Rovrr than to work with this firm. In the end, I was convinced to use them (primarily because of the lack of other options) and all I have to show for it is a few wasted years of my life and an ulcer named ******* *****.
Founding a company is like a marriage. If you don’t think the partners are going to get along, don’t do it.