The first time I heard the old joke (or truth, really) about investors, entrepreneurs, and breakfast, I laughed out loud: the chicken’s involved but the pig’s committed.
Well, I’ve been the pig since my first band: personally invested far beyond investors, my work life defined by one startup after another, dependent on singular outcomes, rather than the outcomes of a portfolio of startups like a venture fund has.
One way to diversify as a founder would be, with investor cooperation, is for venture funds to create a small pool of stock from each portfolio companies for their founders to trade into; you contribute a small amount of your personally held startup stock or options in exchange for a piece of the overall fund, just to spread your personal risk. I’d cap it at some low percentage like 5% of your stock.
The point is, when we’re all in, we’re really all in for quite some time, dependent on a single outcome. That’s startup life.
But what draws us over the line between merely interested to passionately committed?
- Intellectual interest in the project: it really has to motivate us intellectually in some way. It’s not the only thing, but if that component isn’t there it’s really not terribly fun.
- Working toward the greater good: this is motivating for me but it’s not for everyone, and it’s not necessarily a requirement for me. My current project will likely serve the greater good through the broad applications, but that’s not what’s pushed me forward; the near-term win is a major factor as well as the lack of weightiness of the pursuit. It’s fun and not a grind (yet!).
- Financial outcome: founders want to hit the home run for their own benefit, and I fall in that category.
- Team: the ability to work with smart people on challenging projects and have your own ideas come to life because of your creative work and practical implementation with talented, smart people, and to create something of significant value where everyone benefits.
My primary point is, you don’t want them involved in running the business beyond general advice and doing all they can to promote the company; they typically have no interest in operational involvement unless they see something going very wrong like missing projections by 50% a few months in a row, or internal conflict that spills out into board meetings. And they tend not to be particularly helpful in running startups, especially if they’re feeling desperate to turn your fortunes around on their own investors’ behalf (or is it behalves).
Coffee’s on, and it’s past my start time by 15 minutes. Time for breakfast, then back to building.