Thanks for this post, Ben!
I love this utilitarian framework you offer us. The best part is that if you buy into the general thesis, this will also guide your actions in the reverse case — where your investors are friends and family with a ‘portfolio of 1’ whom you bummed for seed money and your employees have easily transferrable skills and the type of risk tolerance that led them to work at a startup in the first place.
Where I struggle is in the repeat case. As much as I wish it were otherwise, it seems that founders who treat their employees particularly well, but perhaps don’t consider their (well-diversified) investors as the top priority when closing up shop, are less likely to get repeat investors. What do you think about that case?
Thanks for sharing your insights, Julisa! I’m fascinated by the different journeys that fellow classmates are taking in entrepreneurship. I also appreciate how your lessons focus on the relationship you and Sarah have cultivated with one major (but frequently overlooked) stakeholder — your employees.
What are lessons that you’ve learned from selling to and gaining the trust of customers in your two-sided platform? In the description of your first lesson, it seems that pivoted your business model in response to customer feedback, however there was no way to do it without hurting the relationship you had built with some early employees. How did you make that choice? Is there a generalizable lesson for others building two-sided platforms here? Do you think that the preferences of the paying side of the platform will always win the strategy fight when there’s a conflict of interests? Or does it have more to do with which side of the platform is the more scarce resource?
Well written post, Charles — I love the relevant example you brought in. Your suggestions make a lot of sense, though what struck me was how much emotions could distort the logical process you’ve laid out.
I can imagine that working out the separation agreement AFTER it’s clear a co-founder needs to leave can be highly charged. On the other hand, drafting one ‘just in case’ in the style of a prenuptial agreement BEFORE actually founding the company seems to dim the romance of those first heady days together.
However, given how much the legal industry thrives on creating new contracts, I feel confident that the separation agreement will soon be just another standard form that all founders sign before legally incorporating a company. Maybe that will save all of us an awkward conversation one day.