Friday, December 30, 2005

First, Kick Ass

First, Kick Ass

I give advice to a lot of entrepreneurs. This probably doesn't have much to do with any special wisdom, but more to my approach.

You see, I never ask entrepreneurs to sign any agreements or make any firm commitments up front. When I was starting my first company, a lot of people tried to get me to sign agreements granting them shares in exchange for providing advice, as a down payment on raising money, and any number of other things.

I did a lot of dumb things back then, but one of the smart things I did was to not sign any of those agreements.

Maybe they could have helped me. But I managed to start the company and raise $6 million on my own without them.

The reason that they missed out was that they forgot the cardinal rule of startups: First, kick ass.

Actually, you could also say, "First, create value," but that wouldn't be quite so punchy.

First kick ass. Then figure out how to claim the value you've created.

If you contribute to a successful company, there will be plenty of money and accolades to go around--in the Valley, success is usually binary--either you do or you don't. There isn't a lot of in between.

So what I tell people is, "I'll help you because I like you and I think your company has promise. And when we've been working together for a while, we'll figure out a way for me to be rewarded if you succeed."

Things have a way of working out.


William Grosso said...

Not sure I agree with this one. Demonstrating your value and allowing people to focus on the mission-urgent stuff is fine.

But you should also nail things down. Once it's clear that you add value and your role is somewhat clear, it's very important to make it specfic.

Why? Two reasons.

(1) So no ball gets dropped. If too many people have part-time and informal roles, there's a huge probability that something important will either not be handled or

(2) Over time, memories of contributions (and relative weighting of contributions) changes as well. Even if everyone remembers how much you contributed (unlikely), they'll value it less (recent events tend to loom larger in people's memories, and in their sense of emotional commitment)

So not getting things nailed down to some degree is a recipe for (1) stressing everyone out as something important is missed and (2) not getting the full value of your contribution.

Chris said...

Good points Bill. I was probably a little sloppy in my post.

You absolutely have to lock things down and get written contracts at some point, otherwise both parties will end up in a world of hurt.

But if the time to do so isn't after the work is done, it also isn't up front before the respective parties know how valuable each person's contribution will be.

Venture investing is replete with such examples, like the way that Vinod Khosla convinced the Excite guys to move away from an equal split between all of the founders to reward those who brought the most to the table.