Ten Commandments for Early Stage Founders

Are you looking for sage advice from a previous founder about the pitfalls to avoid when launching a company? Well, then you’ve come to the wrong place. Or perhaps, the right place.

We are three MBA students taking a class titled “Founder’s Journey.” While we haven’t gone through the ups and downs of starting our own company — at least not yet — we have gleaned a few key insights after reading over a dozen cases about former and current founders, their journey to success (or failure), and the lessons they learned along the way. We’ve boiled these down to ten key commandments you should remember as you dive into the world of entrepreneurship.

1. Thou shall define what success (and failure) looks like from the outset.

Success is a funny thing — the yardstick you use to measure it will continue to move as you continue to achieve. A $5M exit opportunity –a value once unimaginably enormous –might suddenly seem paltry when you get your next term sheet that values your equity at $50M.

While it is okay to raise the bar upward, be conscious of your choices and the implications on you, your loved ones, and on your employees.

Will the business you began to simply sustain a meaningful lifestyle suddenly consume your life? In the realm of possible problems, these are great ones to have, but they will also cause you undue pain if you fail to anticipate them.

This same philosophy applies to failure: define from the outset when it is time to pack up and close up shop. Are you willing to max out your credit cards, take out a second mortgage, and pour your personal savings into your venture if things go south? You may have a different answer to this question on Day 1 of your venture when you are well slept and have no employees than on Day 1001 when you are running on fumes and feel indebted to the 13 employees that have given up their lives to realize your dream. Define your red lines and hold your future self to them.

2. Thou shall maintain a laser focus on your product and customer.

As a founder, you will find yourself pulled in many directions: hiring, firing, fundraising, public speaking, building marketing campaigns, managing a workforce. Your most important job during this time is to ensure that you and your team maintain a laser focus on the customer and build a product that meets a core customer need.

How many well-funded startups have we seen run into the ground because the team hasn’t found product-market fit? Simply put, you need to make a product worth paying for. Nothing matters more until then. The closer you can get to understanding your customer and building for your customer's needs, the closer you’ll get to a successful endeavor. Period.

3. Thou shall focus primarily on building the equity pie rather than greedily slicing it up.

Never forget that owning 100% of a company worth zero is…zero! Building a successful company is really hard and you probably won’t do it without the blood, sweat, tears, and first-born child of your co-founders and early employees.

Building trust and relationships is absolutely critical to growing your venture, and nothing destroys trust faster than feelings of unfairness or resentment, especially around equity allocation.

So, focus on building trust and take a reasonable serving size of the equity pie — if you are too greedy, you may end up with a company in shambles and a big, fat slice of …zero.

4. Thou shall not believe that venture capital is the only way to resource your business.

Many founders believe that the only two ways to resource their business are:

1. Bootstrapping
2. Raising money from VCs.

Wrong. There is an entire ecosystem built around resourcing startups, spanning the gamut of risk/reward outcomes. While you can bootstrap or raise capital from VCs, don’t forget about angel investors, accelerators, corporate venture capital, incubators, or even intrapreneurship. There are likely dozen more hybrid models that provide some combination of capital, talent, or other advice.

You owe it to yourself (and everyone else involved with your company) to do proper due diligence before deciding who you choose as partners/investors.

5. Thou shall build a personal board of advisors.

Throughout your journey, you will be pulled in many different directions by people with varying needs. As a founder, the final decision will often lie with you, but other times, you’ll have to lead through influence. During these trying times, the last thing you want to do is to be alone stumbling through to find the right answer.

Assemble a “personal board of advisors” of four to five people who don’t have a personal or financial stake in your business and can provide unbiased and informed perspectives. These should be people who know you deeply, who you trust, respect and/or have relevant work experience with (startup, VC, etc). The key should be that they are genuinely interested in helping you. They are in only your corner and can lead you through trying times.

6. Thou shall use references during the hiring process.

Hiring someone solely based on an interview and resume is like buying something purely based on an advertisement. Would you rather interview an NBA player or watch film of his past performance? People take comfort in the fact that an interviewer can ask whatever question and could potentially catch the interviewee off guard, somehow exposing their “true self.”

However, even if we do catch interviewees off guard, the skills and capabilities required to master an interview are rarely correlated with the ability to excel on the job. Just as you read product reviews before buying something, spend more time on reference checks…you’ll thank yourself later.

7. Thou shall address conflict swiftly and effectively.

Unfortunately, studies show that people remember negative experiences far more frequently and vividly than positive ones. This doesn’t mean you avoid conflict. In fact, it reinforces the need to address conflict head-on in a swift and effective manner because swiping conflicts under the rug only allows them to simmer and come out more strongly later.

Most fights are actually about the failure to connect emotionally rather than over substantive issues. In challenging situations, turn towards the person with an attempt to connect. State your perspective. Share your understanding of the other person’s’ perspective. Avoid blaming the other person. Take responsibility for your part in the situation. Finally, share the impact the situation has had on you and your feelings. Remember never to escalate your criticism to contempt.

8. Thou shall be inspiring.

The journey of an early-stage startup is full of uncertainty and challenges. To build a resilient team, be ready to build a company in spite of the financial, organizational or technical challenges. You need to inspire your team, your investors, and your customers.

To inspire your team in times of difficulty, you need to do two things. First, show your stakeholders that you’re in the trenches with them. Share the tolls that this is taking on you personally or financially, whether it means less time with your family or that you’ve racked up person debt. Second, you want to show unwavering belief in your team and your future. Show that you have a plan for progress and tie everyone’s hard work into the broader vision.

9. Thou shall be an authentic leader.

Looking at the history of entrepreneurship teaches us two things:

1. While it is really hard to build a successful company, its even harder to build a company while the founder tries to fit into an artificial mold.
2. Every success and every successful entrepreneur are different. There is no predetermined recipe for success.

Being authentic gives you the best chance for success and earning the trust of others. Do not try to be someone you are not. Also, do not mistake this advice for an excuse to remain stagnant. You should always be striving to learn new “soft” skills from communication style to management abilities. Our goal should always be to become the best version of ourselves.

10. Thou shall be intentional about building organizational culture.

Organizational culture is not set by exposing a list of values. It’s formed by the actions of you and, most prominently, your founding team because at its core, an organizational culture is a set of guidelines that can help employees make key decisions and tradeoffs.

Therefore, as you begin to make decisions from the day you bring on Employee #2, be thoughtful about the implications of that decision on the values you are prioritizing. Do you state you value “autonomy” but then review and approve every decision?

Be intentional the values you are engraining into your company with the actions you take. Make sure you are considering business context in addition to your personal value because ultimately a culture should be designed to provide the right guidance that benefits the business in the long run.

Written by Sana Mohammed, Ethan Li, Zander Sebenius (Harvard Business School, Class of 2019)