It seems that so many founders stumble upon their ideas by chance – a school project for Jessica Matthews, a workplace challenge for Lew Cirne, a shared interest in music for friends Tim Westergren and Jon Kraft. This is natural and expected — rarely would an entrepreneur decide first to start a business and then pick an idea.
At the same time, this breeds uncertainty or hesitation over the future of an idea that can bring about many of the pitfalls that ultimately destroy a young venture. Founders hastily split equity without thinking about future funding rounds and dilution — because who knows if the business will survive? They throw together founder’s agreements as they casually work part-time alongside friends that lock them into fairly predictable and terrible situations had they considered a 10-year horizon. They fail to anticipate where structure and guidelines are needed in the long run.
I’ve thought a lot about what could prevent these mishaps. All of these founders behaved in perfectly rational ways given their circumstances. Consensus-driven decision-making, equal equity splits — even hiring family members — seems like a relatively small deal when you’re sitting around your apartment with a few other people every day, looking each other in the eye.
It strikes me that, given the odds at stake, you pretty much have to be delusional to believe that you’ll be so successful as to obsify all that you hold to be true about your venture at present. But maybe that’s it — you have to be a little delusional. You have to believe in yourself SO much that even after the thousandth person delivers a verbal bitchslap dooming your idea to failure, you bounce right back with this idiotic smile on your face:
Only if you are certain of your success do you adequately plan for the future. Only if you are certain you will make millions does a 5% difference in equity or a co-founder’s partial commitment become worth that difficult conversation. Only if you know you will be responsible for hundreds, even thousands, of employees do you figure out who owns what decisions.
If you are serious about founding a company, you have to treat every decision as you would if you already owned a multi-million dollar venture. Because in effect, this is what you are promising to your investors, your customers, and your employees.
The danger of this approach when it comes to your business itself is that your self-aggrandizement shuts out the type of valuable feedback that is so crucial for identifying blind spots and market misfits in the early stages. For this reason, you need a devil’s advocate in your arsenal.
Be it a co-founder, an employee, or an advisor, you need your exact counterpart in strengths, background, and maybe even general worldview. Think of the person you must hate to argue with, and get them on your team. Ask them to question the fundamental assumptions on which you build your product, your business model, and your culture. Encourage them to be brutally honest, early and often.
This may be uncomfortable, even painful at times, but you need to saddle up. Even the harshest feedback from someone you trust will be easier to swallow than the bitter pill of failure, debt, or collapse.
There are so many other things to be said about starting, but as we’ve seen the “right” answers are so situationally dependent. When it comes to generalizable principles, these two are the most important.