One thing I notice very frequently in startups is how the business can be poorly structured from the outset. At scale of hundreds of people, I’ve experienced and observed how this breaks the company.
From what I can tell, this is a function of three things:
- A poor understanding of what a technology business, coupled to a company, coupled to the organizations looks like as it grows.
- A system and industry that has perpetuated this lack of understanding and has created an institutionalization.
- Misplaced Greed.
Point 1) The human asset of the business is not seen as a human + asset to the business, as a result the business is not structured well to truly capture and support the spirit of that human as an asset to the business. This is especially true in the context of organizational development.
Point 2) Lawyers and law firms are risk averse and believe they are acting in shareholder interest when they do the initial structuring. Venture capitalists play into this by pushing founders into dilution situations that ripple to the bottom of the company.
Point 3) Founders believe that to “get rich” they need to own the largest percentage of the company. In reality, the opposite is true.
All these things can be solved relatively easily with one simple thought:
At the end of the day, your business will be built, grown, and driven by not one, but many. At the end of the day, your business will be simply a company of people who are working together to add value to something. As a result: at the end of the day, your most valuable asset must always be your people. This can be difficult for those with a fiduciary obligation. Both to see the future shareholders, and connect + explain how working in the best interests of the future shareholders is very aligned with the current.
Here is one example of how we practise this technically at stae: Fuck The 90 Day Exercise Window. We convert vested ISOs to Non-qualified stock options and extend the exercise window from 90 days to 8 years.
This posts is to serve as a riff for a series on how I think about the three aforementioned points as we build.