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Isn’t it quite emotionally painful to part with your life’s work?
It was not a lot of months since I started my first self-funded venture, I had to shut it down. And, I had few hard reasons why I chose to dissolve it. It took me 2 years to make the company successful, and another 2 years to get over the sadness of pulling down the shutter.
We always hate to lose what we love the most.
Be ready to part with it. Don’t have too much emotions, sentiments or attachments with your business. The more you start loving it, the harder it is to separate from yourselves.
Is your biz disposable?
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It takes blood, toil and tears to make your first sell-able product. And, once it is in go-live, startups start burning cash. The more faster you’d need it to scale, 10x the spend. For a while, your focus is more in generating greater relevance for your product’s context.
Always be closing
Few months, you may end up seeing a self-translation from being a developer to a sales person. There would be stages were you need to put on the sweat shirt & work like dog, at-times pull a cap and start working in door deliveries.
Cash starved, one may head to the Angels. Finding an exit is hard unless we grow 10x in the next 18 months. The pain grows 100x. The numbers matter. What boils down in the end of the term sheet would be your projected vs actual growth rates.
Each trade has its own ways.
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Everyone can curse or critique your financial decisions over booze on your tab. If your a$$ is on the firing line, don’t bother to make any hard decisions.
Parting Equity
One of the hardest things in life is parting with what you own. It is more like property. What’s yours today, would be someone else tomorrow. But, there is a small part in all of us which does not want to part with our first companies.
".. People don't buy because WHAT you do, because WHY you do it. The goal is not to do biz w/ everybody who needs WHAT you do."
Counting the chickens
If you are the founder, and all you aspire is a quick exit, we can only assume you have no attachments to your work! In the very early stages of your company, your equity has no paper value. For valuation, all you need are the #s. And, if you are consistent with it, in time you are successful to be either eaten alive or roasted dead. Acquisition or IPO are the 2 ways you exit.
As an employee working for sweat, don’t confuse equity for compensation. Equity is a golden ticket that can lose its sheen soon. Most startups can’t raise money to feed their employees in zillions. In any event of success, less than a percent would be returned to you. And, it all lies in your ability to churn 5x more juice from 1 piece of lemon.
Yes, equity is good for the company, provided you stick with them for too long. I’d rather put the context this way. Your work in life is the ultimate seduction. Whether you lose or gain money, your work you’d invested will be part of something more fruitful. In time you’d grow wise to understand, all it takes in us is another extra one feet of drilling — for the oil rush.
I will not deny the fact, there are a lot of inherent risk in taking equity as a part of compensation. No one has enough cash. The founder’s equity is a lot best kept for future. But don’t always love keeping too much w/ you. The more control you try persuade, the harder you’d find managing. At the same time, there are places where it is hard for tax purposes, we can’t give all our employees ESOPs. India is one classic example where most of the businesses have enough reasons to keep the equity with them for family and blood lines.
No VC is ever going to fund your startup if you will say you’d be happily taking a chunk of his money as salaries. No VCs are going to shell you money unless you affirm a commitment that you can still live off with the very same macaroni and cheese as a student, even after getting their funds. And remember, you have to show them 2–3x returns in the next 18 months. Yes, you need to put your blood on the line for them to make monies. And, doing the right way is definitely worth it.
In a way, we all are diggers. The art of parting with equity is more to sharing what you truly love. We can sometimes hit gold. And, sometimes even oil. The hard part is we should know where to dig?, how fast we can dig? and how much we can dig? A founder has to inspire his employees to take the plunge with him. And, it takes a lot of effort to make a team stick on the boat. Each industry has a lot of challenges. We are continuously trying to disrupt something. And, if we share that vision with our people we work, we are creating a new leaf.
Bother! These Boots
End of the day, everyone has to solve a boring problem. It takes consistent effort to achieve significant and sustainable results on any initiatives. Don’t stop digging. No one can predict success or failures. Learn it the hard way.
I can’t exactly recall how the story ends, but if you had read this original C.S. Lewis version, it would remind you why the pain of loving something is trully and epic of its own kind. A boy loved his boots so much, he wore them till it dawned him many years that it was the very shoes that slowed him. The pain grew on him, and he had to throw it away someday.
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