How I founded a horizontal startup

Or how to build a super team without a dollar.

It was the top floor of a building in one of the most luxurious neighborhoods in São Paulo. From the meeting room, it was possible to see almost all of the city. It was a magnificent view.

But in front of me all I could see were six investors. They were there to evaluate my startup.

I needed the money. I needed it so much. I had been working for 18 months without earning one single dollar. My money had finished, the company’s cash was almost down to zero. And I hadn’t found an investor.

That meeting was crucial.

And on the other side of the table, there were six guys sizing my partner and myself. They were analysing our idea, our capacity to create a startup.

The meeting finished, and I left with a strange feeling inside me.

I had a sensation that this was not making any sense.

Who were those guys? Where did that money come from? Did I really need that money? Could I find another way? What did they want from me? What would happen to me, if I went for a deal?

A couple of weeks passed by and, fortunately, they were not interested.

Why fortunately?

I started to rethink my life. I started to review what I was pursuing. I started to review my beliefs. I let my intuition guide me through it all. I faced my fears and I was becoming free of them. I was accessing new information while I was writing my book.

And then I started to deconstruct the model.

Why does an entrepreneur need an investor?

He needs investment to have cash to put together a good team to build a company. He needs that money to hire good employees and different people doing what they do best.

If you decide to go on an endeavor by yourself, without investor’s money, it’s possible that you have to do everything in your company yourself. Play in all positions.

So basically I needed the money to hire people.

No investor wanted to give me the money while I had no team and I couldn’t build a team because I didn’t have the money. I was stuck.

Then I started to think different and deconstruct the model:

What if instead of hiring people to work with me for a salary, they could all be my partners?

But what would their equity be and what would be mine?

I had invested a lot of money. They would start without investing anything. It was fair enough that I had a higher percentage, right?

But 50% of zero is zero. 100% of zero is zero. 80% of zero is zero.

Every entrepreneur knows that valuation is one of the most ridiculous things. There is no parameter that makes real sense. It’s all assumption. And there is always someone taking advantage over the other. And there is always someone complaining.

If I kept looking for a formula to share equity, I would not go anywhere.

Then I realized that everyone should have the same equity. The company would be horizontal, and everyone would earn the same. Every hour would have the same value. No one would have more stocks than the other.

I started to invite the professionals I wanted to have on my team. I knew those people alerady personally or professionally. I had dreamt of working with them.

In the beginning, I thought that everyone would say I was crazy and that it was a utopian model.

I called a designer, a developer, a filmmaker, a nutritionist and a business development guy.

To my surprise, everyone accepted the model and trusted the justice of creating a horizontal company. They all believed in the idea that it was possible to create a freer model. Each one could choose how to work, where to work from and the number of hours.

Together we started to draw the outlines of this model.

We would create only one unique deal to make things fair. Those who dedicated more hours, would earn more than those who dedicated less.

More than 30 hours per week: earns salary cap.

Between 15 and 30 hours: gets 50% of salary cap.

Less than 15 hours: earns 25% of the salary cap.

And since then, we started to work on the creation of our content startup sharing info on how to live a simple and balanced life, mixing nutrition, fitness, gastronomy, and nature. We are launching it in a few weeks in Brazil.

We started to grow our team. In three months, we built a team of 18 people. Back end developers, front-end developers, UX/UI designer, branding designer, business guys, social entrepreneur, content curator, nutritionists, chef, physical educator, social media person, horticulturist/permaculturist, producer, filmmaker, director, and video editor.

When you create a horizontal model, the negotiation may last less than 5 minutes. You present the concept and the business idea and say:

“You are going to earn the same as everybody here. You can work for the time you want to devote to this, and you can choose how you want to get involved.”

Ready. Enough.

You don’t need to think too much, evaluate too much, weighing pros and cons, talking with parents, husband, wife.

It’s a simple choice. It’s fair. And everybody wins.

With 18 people, our field of possibilities opened absurdly. We realized that we could create more than one business.

And with this team we are creating four startups at the same time.

The speed we work with is amazing. We have no bureaucracy. We have the expertise to set up any business.

How much would those people cost me? How much money should I raise with investors?

We didn’t invest one single dollar in setting up this team. Everyone is donating their own time.

Obviously we have many challenges. We are going to learn a lot from our mistakes. We will face problems that we cannot even predict. And problems will definitely occur. But we are going to adjust and overcome, evolving every day. It is a constant process, very much like life isWe need to adjust and adapt every day. There is no end and no middle. Everything is the beginning. Every day is a day to get started.

What is going to happen when we face misunderstandings? What will happen when one person wants to earn more than the others? And when someone works less? And when someone is working poorly?

If you start thinking about everything that can go wrong, you do nothing. Perhaps none of this will happen. Or maybe it will. And then when it happens we will find a way to solve it. Like everything in life.

The basic principle of our organisation is trust. If I can’t rely upon those who are with me, if I distrust, none of this makes sense.

If I can’t trust in humanity, in goodness, common sense, and people’s justice, I prefer to quit living. It’s what I believe, and this is what I live for.

Why am I sharing this? Is it a success case?

What is success? If success is money, so this is not a success case. We haven’t launched the startups yet, and we are not making any money.

I’m sharing this because I want to show that anything is possible when there is union, collaboration and no separation. We are all the same. We created an insane model as a society. This idea of “every man for himself” or “one being better than the other”.

So Gustavo, is this the best model that exists? Should I do the same?

No. There are thousands of others entrepreneurs in Brazil and around the world, creating different models. And that is the beauty of creation. There is no formula. There is no one single truth. There are only the things that you believe.

If you join your friends, people you trust and together you create a fair model where everyone is equal, you can turn your dreams into reality

Your dream is probably someone else’s dream. You only need to connect.

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This post was originally written in Portuguese. If you find any mistakes in the translation, please help me with it. Feel free to mark and point the mistakes. :)