Lesson #1: Shareholders
After a rather ‘fun’ Friday afternoon, I have decided that it would be interesting to pen down hiccups along this little experimental journey of mine.
I believe, one of the most important things to consider before or right at the start of working on your entrepreneurial idea, is to think about shareholder structure.
A lot of people put it off until the company actually generates some form of revenues/profits or is receiving funding soon.
This makes things extremely messy and complicated because what you once thought was valueless or worthless (e.g.: 50% worth of equity), instantly becomes something significant.
There are hundreds and thousands of articles, forums, quora discussions and more about how many co-founders is ideal, how much equity should be split between co-founders and early employees etc. But honestly, if you started it off, it is your decision to make. Articles can be taken into consideration, however, with contradictory articles with vastly different opinions, it is your call essentially.
Personally, working in the entrepreneurship space and seeing a fair share of complexities, this is really opened my eyes to a larger side of running a business that people don’t usually see.
- Shareholders trying to be funny
Startups don’t fail because of lack of funding or bad operations, those can be corrected. Many a times, failure stems from incompatible teams or incompetent teams, that lack the understanding of how businesses work, who are unable to see a bigger picture, who are so insistent and aggressive about their own ideas and own thoughts, that they forget, the reason for the existence of their products/service, and the reason why they get money, is because of customers.
Most financially successful companies are led by people who retained most of the control in the board and in decision making. When minority shareholders butt in, they have the financial incentive to act in different ways. Even if not so, when the company experiences roaring (or even growing) successes, minority shareholders will start playing punk and try to be funny.
All that happens is that you’ll go to court, spend unreasonable amounts of money to fight it off and let your product/service suffer. Why are you allowing internal factors to affect what was supposedly a great product/service that customers want?
I’ve seen this enough to know that it is an actual problem, and not something said for selfish reasons, like, ‘I don’t want someone else to tell me how to run my company’ and ‘I don’t trust others’. These thoughts are far shallower than what may eventually happen at a later stage and it is important for entrepreneurs to learn early than to regret later.
2. Lack of business sense
Personally, I also find it difficult to speak to those who have worked in big corporations for a long time and have a certain snob to how things ‘should’ be run and are not willing to compromise for
Honestly, I feel that some things are just not worth fighting for. How adamant and micro must you be to nitpick on things like colours when the company is far from a design or creative-related business. Essentially, I believe that numbers tell us what to do — sufficient AB testing to figure out which colours/words/design/pictures convert the best.
Anyway, that’s all from me today! More on what happens soon.