Articles

Vision and Blindspots

In my experience operating a start-up and talking with other founders, typically one person on the founder team is the visionary and has the most attachment to the big idea behind the business.

Vision and passion are essential aspects of any start-up. Start-ups need an evangelist that can excite people about the work. This vision is what you are selling to prospective customers, employees, investors, and partners. It tells them why would they want to be involved with your business. Vision is a requirement necessary to drive your business forward.

There is a downside to be aware of too. This attachment can be a source of blindness when there’s a need to pivot. If a founder is too invested in a singular path to realize the vision, that becomes a business risk. That’s when the co-Founders, mentors, advisors, or employees must challenge the visionary, to help prevent the start-up from missing opportunities or red flags.

The vision provides a framework, but it has to be flexible like a business plan. Things are always changing. Successful founders are guided by their vision and plan as they consider their responses to the external forces that influence their business.

So founders, when challenged, ask yourself if your reaction is guided by the operating realities, or if you are missing important inputs because they’re in your blindspot. Don’t just rely on the mirrors, turn your head and make sure with your own eyes that there is nothing obscuring your view.

Co-Founders

The truth about partners

I don’t want to burst anyone’s bubble, but things are not going to turn out as you expect. Whether you’ve known your co-Founder a long time, or whether you are relatively new acquaintances, having a business is going to put you and your partner(s) in unexpected situations. These new and unanticipated realities will mean you’re going to be surprised by how someone behaves. You will even surprise yourself! All you can do is be as prepared as possible to mitigate some potentially problematic situations.

Did you come up with the idea on your own? One of the most important decisions you’re going to make early in the venture is whether or not to have co-Founders and partners. 

It is possible that original concept may have been dreamed up by two or more people. If that’s the case, you will have to address questions related to ownership and responsibilities, as you will if you decide to bring someone into the business to work on your idea as a co-founder. 

There are advantages to having partners in your business: but there are also challenges. 

First, let’s discuss the positives:

  • Co-founders or partners can share the burden, work and stress. Having a start-up is can be lonely. Partners can support one another when things are tough.
  • Having people to discuss ideas, plans and approaches with is a good thing. Other people can offer perspectives that force you to challenge your own assumptions and build ideas.
  • As mentioned on the funding page, if you’re going the investor route, the “team” is one of the key decision-making considerations.

The biggest risk is in any partnership is conflict, which can be bad for you, bad for your partners and bad for the business. (A bit of healthy conflict can be good, but in this case, I’m referring to the destructive kind.) Conflict can result from different personalities, work habits, personal and professional objectives, expectations, poor communication.

Based on my personal experience, I can share some learnings:

  • Before going into business with someone, think carefully about your strengths and weaknesses, as well as those of your perspective partners. Optimally, but not necessarily, you want to create a team with complementary skills. 
  • How well do you know your perspective partners? Be really honest when you ask yourself if they share your:
    • Commitment – is this business the most important thing everyone is doing or is it a side-hustle? What other professional obligations do you have? What about personal priorities? Co-Founders should have roughly the same level of commitment to avoid conflict. 
    • Work ethic – do you know whether your partner(s) are willing to work as hard you work on their responsibilities within the business. This can become a serious source of friction if there’s a misalignment in this important aspect of the business. It is possible to share a work ethic and have totally different styles. You might be someone who logs a lot of hours in the office, while your co-founder does their best thinking in a coffee shop. The question to ask yourself is knowing that they have the same work ethic whether you can feel confident, over time, being tied to someone who works differently than you. 
    • Vision for the business – maybe you imagine becoming a billion dollar global business, but your co-founder is happy running a regional operation. Talk about your vision, short, medium and long term goals and make sure there’s alignment before moving forward. This includes the type and timing of any potential exit.
    • Financial situation – this can be uncomfortable to discuss, but personal finances need be part of the conversation between prospective co-founders. Are you expecting salaries? When? How much? We all want to be optimistic when we think about our business, but 9 times out of 10 it’s going to take a lot of time and patience to generate revenue. How long can you manage within getting paid your “fair market value”? If there’s a disparity between co-Founder’s ability to thrive during the bootstrapping phase, this is something that needs to be understood and mitigated.
  • Be clear up front about what each person is bringing to the business and what each person’s responsibilities will be. Are you bringing the idea and your co-Founder is offering technical expertise or networks or cash? Are you responsible for overseeing manufacturing and your partner is doing sales? Is everyone willing to invest “sweat equity” or are some looking to be paid? Any combination is fine as long as everyone is clear about each person’s responsibilities and agrees about the value of the contributions. 

Finally, ask yourself how you would feel if your relationship with your co-Founder changed for the worse. This is more relevant if you have a long-term professional relationship or personal relationship.

With all of these considerations carefully thought through, you can then determine ownership based on the relative value of what everyone is bringing to the table. Setting up equal ownership may seem like a good idea when all you have is an idea, however, it is most likely not the best approach. 

Getting started with partners

  1. Consult a lawyer – this may seem like a big expense, but it will save you time and aggravation in the future. Most lawyers that work with start-ups will have templates of shareholder agreements, employment agreements, stock options, and other basic forms. Some have fixed fees for start-ups.
  2. Incorporate the business –  incorporation provides a structure and makes the business a legal entity, de-personalizing it from the founders. Again, it is an investment worth making in the early stages. Incorporation is an eligibility requirement of many funding programs and may be needed to open corporate a bank account.
  3. Have a shareholders agreement – this document formalizes the relationship between shareholders. It’s absolutely necessary.
  4. Write job descriptions with titles, even though these may change as the business evolves. Defining roles and responsibilities from the outset is a smart strategy. The titles may seem unimportant, but they can become a source of irritation.
  5. Develop a decision making structure and dispute resolution approach before there’s a problem.
  6. Define outcomes and associated timelines for the responsibilities everyone on the team is taking on. As co-founders you want to be focused on deliverables, not the steps to get there.

Yellow flags

Working in a start-up requires a high degree of flexibility. You can’t be good at just one thing. You also have to be ready to pitch in and do things you don’t enjoy with as much dedication and attention as you give to your passion projects. Obviously you should try to have people doing work that they’re capable of, but beware of anyone who is unwilling to work outside of a narrowly defined area as a start-up co-Founder.

There’s no room on a founder team for someone whose main skill is leading large teams and reviewing and commenting on the work of others. Founders need to be able to produce work to build the business. If there’s someone on your team who just wants to be the “boss”, that’s a yellow flag you should address before you incorporate. Perhaps they’d be better suited to an advisory role.

5 Facts for Founders

Welcome to “Upstarts”! A website community for founders and wannabes.

About one third of businesses fail within two years. Here are five questions you should know the answers to before starting a business. Thinking about these questions will increase your chances of success.

  1. Do you have supportive friends and family? In my opinion, this should be the number one consideration for anyone starting a business. Being a founder is hard and time-consuming. If you don’t have the backing of those people you are closest to, it will be a long, lonely road.
  2. Do you have a really good business idea, that solves a clearly defined problem? Did you take the time to validate your solution with your prospective customers before you make large investments? Talking to people will help you understand the strengths and weaknesses of your concept. You can also learn the key words that will help you audience connect with your idea.
  3. How do you answer the question why you are the right person (or team) to build this business? For example, is your business in a field you are already connected to? Your business will have more credibility if you have knowledge and expertise recognized by the industry you have targeted. And of course it is easier to get a meeting if you have relationships. A larger network also means a significantly larger extended network. Associates can make introductions, helping you get in front of the right people more quickly and giving you a better chance of being taken seriously.
  4. Are you expectations reasonable and realistic? In my business, we had to adjust our expectations related to time and so have most of the founders I’ve encountered. Time expectations include questions such as: how quickly can I develop my product or service, attract customers to generate revenue, or engage investors? Expectations also relate to how you define success for yourself. Are you looking to build a long-term career or hoping to build and sell? Not everyone wants or expects to become Mark Zuckerberg, but many founders start with unrealistic goals.
  5. Are you really committed? To be successful you have to demonstrate determination, tenacity and flexibility.  You can be committed to the idea or vision, but you need to be prepared to pivot and adapt as you learn. Read the article.

Is it easy? Absolutely not! But if you believe and work very hard, it might just be possible.

Until then, remember: you’re not alone!