I woke up and could not stop smiling. Seriously… I could not. stop. smiling. This was my first day working full-time for my startup, and it felt so great to not go to work that day. In fact, it almost felt like I was playing hooky. Now came the million dollar question: what do I do now?
Before we talk about that part, let’s talk about getting your startup to the greatest potential for success early on. From the day you start your business you have a burn rate. Your burn rate is the amount of money you “burn” each month. In the beginning it will feel – and likely be – negligible. But it is what you do prior to walking out the office of your full-time job for the last time that really sets your company up for success.
First thing you need to consider is your team. In the startup world, it seems people really love statistics, so I’ll just quote people smarter than me on this subject: The most common reason early startups fail is because of founder issues. But wait, you say. We will be different. Alright, well ask yourself this question. Are you starting the company with a friend of yours? Possibly a family member? Then you’re even more likely to fail.
This is because of two reasons: (1) You don’t want to hurt their feelings, and (2) You don’t expect them to hurt yours. However, you have some serious hurdles to get through that will make it difficult to come out completely unscathed. If you are starting to get worried, don’t be. Just be prepared to handle these situations. I’ve so far been on both the prepared and unprepared side of the table and here is what I have learned:
Use the Ultimate Airport Test Here: In consulting, there is what is called the airport test. Essentially, if you were stuck in an airport because of a plane delay, would you mind being with this person? We here tons of idolatries of leaders who weren’t very personable, but the truth is that if you are doing your startup right, you will see this person more than any other person in your life. And at least in the beginning, you will have equal say. So make sure this is a person you can really get along with.
- Find Founders with Passion: In case I haven’t mentioned this before, startups are hard. You are determined to do something that will definitely pay you less, offer you less benefits, and require more of your time than working for someone else (if you’re doing it right). There is one thing that gets you through that – passion. If you or your co-founders feel as if you deserve something simply because you quit your job or started the company, you are already on the wrong foot. Seriously, change the attitude or change the founder.
- Decide the Equity Split Early: Don’t delay on this point, and please don’t say you are splitting down the middle. If you do hit an impasse, try this site. It’s fun and you can blame a third party for arguing what you should get. Remember you are essentially marrying this person, so if you have the upper hand, screwing your partners this early on will lead to bad blood or at least hurt feelings later down the road.
- Choose Titles When You Need to Choose Titles: In the very beginning, it is very easy to get swept up into the title game. In the beginning however, there are so many more important things. You really aren’t a company yet. You are a living set of experiments trying to find a niche and eventually become a company. Until you find that fit, just use “co-founder”. Now, once you find your fit, you need to very quickly determine who will be doing what within the company, so beware not to delay the conversation too long.
One final note: It is always good to have a skilled developer on the team. However, all of us aren’t quite that lucky. There are plenty of ways to get around that, as I will share in future post.