It's an investment--yours and perhaps others'. When you start thinking that way, you'll have made a crucial shift.
Great start-up entrepreneurs are self-absorbed, heavy-ego machines. For some serious period of time, they have sat either by themselves or with one or two similarly focused co-founders in their office (read: bedroom), a Starbucks, or a borrowed corner of some other entrepreneurs’ office (perhaps not a bedroom), where they have done nothing but think about their idea. At this point in their company’s evolution, it’s a me-me-me proposition.
As it should be. At this stage, an entrepreneurs’ motivation has to be about self. There is nothing else. No money. No customers. No partnerships. All of the validation has to come from within you and/or your fellow team members. How else do you get through those early days?
But then comes the shift. Pay attention--this is really important. And I am always surprised when start-up founders miss it.
The shift happens when you meet a particular milestone--you acquire a critical mass of customers, or establish an early key partnership, or take investment dollars from your first non-friends-and-family investors.
And the shift itself? It’s the switch from “It’s All About Me” to “It’s All About the Company.” If you can’t make this change in attitude, it’s unlikely your company will mature. Investors invest in an entity made up of people. Customers pay to use the product or service of a company. The contract says so.
Founders sometimes miss this, the fact that they are now working for the company. They now exist as employees and thus to serve the company. The company has become more important than them. After X months of staring at one another and juicing one another’s egos, they now need to subjugate those feelings.
That can be difficult. Before you hit that milestone, that marker, it was all about your idea, your product, your sales ability, etc. I sold this to you. I convinced you to invest your money. I am the company. You just told me that, didn’t you?
We did. But things have changed.
One way this manifests is in the distribution of stock options. Most early-stage investors require founders to vest the stock they already own as a means of protecting against potential executive changes, be they naturally occurring or forced. (How this works: the founders return their shares to the company, and get them back over the course of three or four years.) In the Triangle Startup Factory program, we have at least one long, drawn-out conversation per season with a founder trying to convince us that this is not necessary.
That founder has not made the shift. The company does not know if you will be involved in the future. Your owning a significant equity position in the company you left two years ago does not work.
Now, some of you don’t expect to need outside investment. That’s great. But you still need to make the shift. Your company is not you. It is definitely not your “baby.” It’s an investment you’ve made. Are you going to take care of that investment?
Chris Heivly: is a managing director at The Startup Factory, a seed-level investment fund making 10 to 14 new investments per year. In addition to TSF, Chris is the founder of the Big Top Job Fair and a national writer and speaker about start-ups and start-up communities. @chrisheivly