Adam, thank you for your post. Overall, I agree with your perspective on transparency. It is very important to be transparent to investors 100% of the time but it is harder to make this decision when it comes to employees. There are several things that need to be considered before making sensitive information available to the whole company and as Haruumi mentioned, you want to avoid creating a chaotic situation that won’t help at all.
But then, the question is, how do you draw the line? If we are leaving it up to the entrepreneur’s moral compass and decision making process, how do we make sure that he or she is making the right call? How do we know he is not simply using this as a pretext to avoid sharing crucial information with others in the company?
I think that, in the end, the one thing we can all control as entrepreneurs is how we face our investors and employees from day 1. If we are realistic, and we make sure we are not misleading people when they jump into our ship, at least we are sure that they know what they are getting themselves into. After that, we can rely in our personal judgement to decide if disclosing an issue will be helpful or detrimental for the organization without risking having employees feel like they have been blindsided.
Hi Karthik, thank you for your post. I generally agree with you and I believe that entrepreneurs should be as prepared and possible and try to plan ahead in order to avoid failure. However, I was struck by our guest’s (David) comment on how it is difficult to plan ahead for everything since companies go through different stages. He mentioned how you might need a certain type of employees in the first stage (ie: generalists) but then you might need to turn to a more specialized team in the second stage, and so on.
I wonder if we should “plan ahead” for each of these stages (which sounds a bit too complex), or if we should approach this as a “these are the few rules I must follow at all times” and then try to adapt as things change.
Having some ground rules to guide us is helpful and necessary, but is it enough to get us through the different stages of our business?
Great post, Charles! I had never heard of Peter Best before and I guess that’s a good thing for the Beatles, right? I assume that they had a contract in place or fair severance terms that prevented this from becoming a huge problem for the band.
As you mentioned, having the right team is key to the success of a business but one cannot predict if the co-founders will be able to grow with the company and fully take on the responsibilities of their roles throughout the different cycles the startup will go through.
I agree with the three steps you mention a founder should take when starting a business but I wonder how realistic it is to expect founders to have these tough conversations especially when most entrepreneurs tend to start businesses with friends and family. You mention that entrepreneurs should seek legal advice in step 3 and I couldn’t agree more with you, but I wonder if it would be even more useful to seek such advice in step 1. The downside would be that a potentially cash-strapped startup would have to spend money in legal fees but I think seeking this advice early on can actually help avoid tough conversations and prolonged firing processes since the “rules” will already be in place, thus saving the company time and money and making it a good investment. I feel that getting experts involved from the beginning can truly benefit all parties involved.
This is a great post, Upasana. As an aspiring entrepreneur who doesn’t feel quite ready yet to found her own business and who is slowly but surely approaching her thirties, I found this post very appealing.
I actually think that Paul is pretty on point. In my opinion, what he is trying to say is that when you are young you can afford to make mistakes and even lose it all because the consequences will affect mostly yourself. When you grow older and other people start depending on you it is harder to take that risk. But as you mentioned in your post, that doesn’t mean is not doable or that it is the “wrong time/way” of doing it.
Let’s be honest, the perfect time might never come. Today it could be a student loan that’s stopping us, tomorrow it could be a child that we need to support. If we wait to have financial security before we take the plunge, it might never happen. So I think that it is necessary to be ready to make a move even in less than ideal circumstances.
On another note, some entrepreneurs feel the need to learn more about the ins and outs of running a business before they start their own and they do so by working for other companies. Others are comfortable taking the plunge and seeing how it goes. I’m more in the first group of people and that’s okay. I think that one thing people like me can do to prepare is to carefully choose the types of companies we work for, the roles we take, and more importantly, the mentors we follow. There is an interesting interview with Jack Ma, founder of Alibaba, in which he gives advice to students and tells them to spend their 20s learning “how to do lots of things at one time” and their 30s figuring out if they really want to be an entrepreneur. I thought that timeline was curious since it is longer than what is usually out in the media, but I thought it was definitely an interesting perspective and one that I probably will end up following.
Here is the link to the interview in case the hyperlink doesn’t work: http://www.liftupideas.com/advice-to-young-entrepreneurs-by-alibabas-founder/
I really enjoyed reading your post. I am also interested in family businesses and thinking through what it takes to make sure they are as successful as any other businesses can be.
I think that these steps you provide are great to keep in mind and be aware of but I also believe that it is extremely hard to implement some of them.
I grew up watching my parents run their business and I have to admit that sometimes it was hard to watch. It was virtually impossible for them to leave behind a problem they had at work before coming home and I honestly can’t blame them for that. There is no ON/OFF switch on people and that’s just how it is. This is why I also struggle with step 1. You mention how important it is to give candid feedback to avoid problems from getting out of hand. Although I also believe that feedback is necessary in any work environment, I also think that it can be hard to be on the receiving end especially when this “candid feedback” is coming from a loved one. Feelings can get hurt and egos can be bruised and that sometimes is irreparable. Is it worth going through that with your spouse? Could you avoid being in that situation in the first place by implementing steps 2 and 3? The truth is that there is no one right answer. It will vary from family to family, but it is great to have these steps on the back of our minds to at least try to shape our own experiences in a way that can avoid these big pitfalls.