Are Your Contracts with Startups Fundamentally Flawed? Tips for Getting it Right.
A contract is so much more than a legal document setting out terms and conditions. If you squint your eyes and hold them up to the light, you will see that something much more important is disguised within the clauses — the values of the people you will be working with.
You can learn many things about the parties in this different light; their preference for control over collaboration, their need for security rather than ambiguity, their sense of entitlement over fairness, and even their preference for process over outcomes.
The moral code within the contract was not deliberate. The job of the lines of detailed clauses setting out the whats and hows of the relationship are designed to protect the strongest party and create airtight defences against negative outcomes.
Startups read through them, fight the small voice in their heads that warn of danger, and sign anyway. They are just small players in a field of giants. What choice do they have? They need to take it on the chin. It’s a necessary evil to think this way about the relationship, isn’t it? It doesn’t mean anything, does it?
But it does. However much we ignore it, the emotional vibe of the contract can’t really be filed away with the documents. It leaves a taste in the mouth. It gets in the way of the work.
It’s time to change this negative paradigm.
Simon Sinek nails it when he says “the goal should not be to work with people that need work, the goal should be to work with people who believe what you believe. Because if you work with people just because they can do the job they’ll work for your money. But if you work with people that believe what you believe they will work with blood, sweat and tears.”
We have some big challenges to address in our future. Old style terms slow us down and hold startups back. Imagine a contract free of dos and do-nots, have and have-nots, and mine and yours. Imagine instead a contract that is full of the shared values you’ll work by, and results you’ll achieve together. Rather than being hypnotised by the small print we can be inspired by the bigger picture.
To get to this we need to start conversations with why we are here and what drives us. Then work out how we can collaborate. For it to work, though, we need to let go of our need to control everything. Control is not the most important factor of success. It seems safe, but control can be dangerous and stifling.
Most of the great things to happen in the startup world would not have happened if the environment had been heavily controlled. The startup sector thrives on open sharing and collaboration, not control.
So next time you sit down at the negotiating table with a startup, channel your inner Simon Sinek and ask each other WHY. What’s your purpose? What’s your cause? What’s your belief? Why does your organisation exist? Why do you get out of bed in the morning?
When you understand each other, figure out how you can work together. Release your grip, sign a different type of agreement and see what happens.
