The value of nothing | Why it doesn’t matter who owns what on building a startup.
Obsession with the distribution of shares is a common problem for first-time founders. You find people spending too much time discussing the value of nothing. Negotiating who should own what on something that doesn’t exist. The obsession with shares and company ownership by numbers is what breaks most of the startup teams and limit their growth. There are multiple potential outcomes from running a successful startup; receiving investment, getting acquired or even generating massive revenue but still, this is business money and not your money. Focus on building a successful business that can generate more money instead of fighting for what exists.
Great startup founders dream big hence spend most of their time searching for that 20 percent of a big business rather than 80 percent of nothing. Personally, the only time I see the value of shares before going big is helping with the decision-making process. And still, the decisions based on ranks of company ownership rather than facts and strategies can kill a startup in a blink of an eye. Having more shares has nothing to do with the quality of feedback or idea you brought to the table at least at this early stage.
On retaining key employees, the best advice I can give to startup founders is, get ready to let go of your shares to new talented people to build a company with you. Startups with strategic collective ownership have a good chance to succeed compared to startups owned by one or two founders obsessed with company shares.
Equal shares simply means no decision can be made. As a startup founder you don’t want to find yourself in that situation. There is no such a thing as 50/50 distribution of shares. Someone has to make the decision.
Allowing people to own your business helps you to distribute the pain, the risks and the burden of building a business alone. It also allows you to grow and stay focus on your own organization. Great people to work with will help you to grow. Owning 75 percent of your idea won’t take you anywhere, especially when the company is broke when you are just getting started. You will just get frustrated running a broke company with no plan, clear strategy to scale and no team.
Things get worse on your low days when there is no one to talk to and you feel you have hit the wall.
Spend time to build a strong startup team. They have to be okay and enjoying working with you. They have to fill they are building their own company because they actually own the company. Always remember the founder reports to everyone. Don’t confuse who is in charge. You will be in charge of nothing when the company runs broke. Grow with them, as the company grows you also grow, they grow and everybody goes home happy.
- Appreciation | My Co-founders at Sahara Ventures.
- Appreciation | Learning from my first business.