There’s a business saying that goes “100% of nothing is nothing.” Although it may sound so simple that it almost sounds stupid, it’s all a matter of putting things into perspective. To put it another way, I heard a similar phrase since I first started writing this post: “do you want to have a slice of the watermelon or the entire grape?” Make more sense now?
I hate to break it to you, but when your company first starts out, it’s not worth very much. You must understand that. You may have a million dollar idea in mind, but executing on that idea is what separates the professionals from the amateurs.
The overwhelming majority of the time, first-time entrepreneurs start thinking of keeping the entire pie to themselves upon formulating their idea. It’s only when you start talking the idea out with others does the reality of the journey ahead begin to sink in. You’ll find out rather quickly that you should consider bringing others in on an equity level if you really want to accelerate the development with others that believe in your startup’s future.
Are You Going to Fight on Your Own?
As a startup entrepreneur, you’re bound to have some great days (the ones that give you the chills!) and some bad days alike. If not for anything else, you need a team around you for support when those rough stretches come along. Always remember a startup can be an exciting journey, and it’s always great to share it with others. Enjoy your time in the trenches!
You Have Certain Strengths…and Weaknesses
Nobody is perfect. As the poet/rapper Jay-Z explains in Bonnie & Clyde, “no, I ain’t perfect, nobody walking this earth’s surface is. But girlfriend, work with the kid.” The quicker you identify your skill-set, both strengths and weaknesses, the better suited you’ll be to fill in the pieces around you.
It is essential to the progress & success of your startup that you put together a team full of complimentary pieces. You should spend the majority of your time focusing on the things you do the best, and do your best to find others that can handle the areas that you are lacking. For those of you business majors, that’s what I would call a team’s Internal Rate of Return (IRR). It’s a collective effort, and you need to be in it together!
Don’t be Greedy
You may have come up with the greatest, most revolutionary idea ever, but that’s not even a quarter of the battle. As I mentioned in my last post, I haven’t met anybody who’s business turned out exactly the way they envisioned when they first touched pen-to-paper. The idea will evolve over time and it will undoubtedly look different than what you formulated in your mind originally.
Have you ever heard CD Baby founder, Derek Sivers, and his theory on “ideas are just a multiplier of execution?“ If you haven’t, it’s a MUST read. Once again, it doesn’t take a genius to figure out Derek’s math, but it usually takes a second to process the impact of what he’s trying to convey to all of us aspiring entrepreneurs.
There’s a number of factors that should play into percentage shares for each team member in a startup, and you’ll find different advice from almost every person you speak with. I’m not saying I know how to appropriately break down the equity shares, but I will say that equity interest can go a long way. Besides, it’s not the pieces of the pie, but rather the size of the pie that matters the most!
Photo cred: petervanallen
