I have worked with Founders from a lot of varied backgrounds, pure academics, research scientists, and the very rare experienced business person, all have there own philosophy on how to start a business and run a business, I have an important statement "You do not know it all" and "your point of view is not the only correct one". I have sat around numerous meetings early mornings, late nights and long haul flight meetings and listened to them declare there point of view with a level of arrogance only Kings and Queens and the President of the USA should only be making, oops !!!I forgot to mention the venture capitalist as well, well you are spending his money to test your pet theory and fix your problems, so the £xx0m you have spent so far of his money can give him the right also.
I used to be in this camp my way is the only way, but I have learned that I usually hire smart people , who are better at some things than I am, and pay them a good salary , so let them be what you hired them to be, and listen to there input, weigh it and then implement what is the best solution not your solution, it maybe the same as your original thought, but you will have a consensus amongst the team who will be tasked to deliver, that will bring a permanent productivity boost you would never get handing out £10k salary increases.
I found an interesting article by Wil Schroter who is the Founder and CEO of the Go BIG Network , he tackles some of these issues in a refreshing manor, which may bring a smile to your day. I see a few faces pass before me when I read his opening remarks, Alex Mackie, Jock Holliman, Barak Maoz , Soren Hein, all solid VC's. Have a good read.
Your Equity Isn’t a Payment, it’s an IOU
Hello there young entrepreneur, I’m your investor. Remember me?
I’m the guy that sat in front of your heartfelt and emotional presentation to raise capital for your business. I listened closely to your entire plan, and made a few comments about what I didn’t think would work. You of course ignored my comments and assured me that with the right amount of my money, you’d be able to solve all of your problems.
I wrote you a check, you spent the money, and those problems haven’t gone away.
So aside from all of your promises of future riches, you haven’t paid me back. And, you know, the reason I wrote you that check was to create more money than I started with, which hasn’t happened.
You see – giving me equity in your company wasn’t a payment, it was an I.O.U.
Your Currency is Worthless
Giving up that equity may have felt like a payment. You may have felt like what you were giving up was an actual asset that had real value. We signed agreements and created a currency that was backed by your promises and intentions. I swapped my currency for yours. Now yours is losing its value - fast.
You may have thought those promises you made were going to be forgotten about or displaced by other promises. In fact they weren’t. Unlike the currency I gave you, I couldn’t spend your promises to hire my friends, find a fancy office or buy everyone new laptops. But you did.
Now I’m stuck holding the bag with the useless currency you gave me while you’re out trying to print new currency with even more promises. I’m sorry, I’m not buying it.
Remember these Guys?
Perhaps you may have forgotten about our arrangement, but maybe you’ll remember these guys – your employees. What? You don’t? Allow me to jog your memory.
You may recall an evening over more than a few beers when you convinced them to quit their existing jobs to go work for you. You told them that even though they would be giving up a steady income with an existing company, the money they would make from the stock options you gave them would far outweigh the risks.
They went back to their families and took your sales story with them. They convinced themselves and their loved ones that the opportunity you had for them was real. Soon thereafter they were missing family dinners, soccer games, and any time they ever had with their friends. They were pretty confident that you’d make good on that little I.O.U. you created after that last beer.
Just like me, they seem to be wondering what happened to all of those promises. They’re wondering how you expected to pay them back for all of the investments they have made in you. By now they’ve figured out that no return is going to pay them back for the time they’ve lost with their friends and family, but they sure would like to think a payout might help them create some more time in the future.
We’re Not Done Here
Maybe somewhere along the line you forgot the basic mechanics of an exchange, so let me re-educate you. When I hand you something of value, in order for the exchange to be equitable, you need to hand me something back something of equal or greater value. Unless we finish the exchange, which involves you giving me something of value, we’re not done here.
In fact, unless you give me something back at all, it’s not even an exchange. It’s probably not theft but it’s certainly not charity, and I’m not feeling like Santa Claus right now, so it ain’t a gift, that’s for sure.
In order for us to complete this transaction, and in order for you to make all of your debts right, I need you to fulfill your promises. I need you to dig down and find all of the energy, enthusiasm and focus you had when you accepted my check and think about getting that money back.
You’re not Alone
Although times are tough and you’re feeling the pressure, you may feel like you’re the one with everything to lose. Truthfully though, you’re not alone. You may be the most visible person in this transaction, but if you quit on us, we all lose.
It took all of us to start the exchange and write that IOU, and it’s going to take every one of us – your investors, your employees and even your customers – to make good on your big promise to us.
We realize that you need us as much as we need you, so we’re here to support you in any way you need us to. We just ask that you don’t forget about us, because we can absolutely assure you – we won’t forget about you