Big Red Car here on a sunny SXSW Tuesday in the ATX. On Earth as it is in Texas. No sign of snow, but it’s early.
So, the world is divided into three basic camps:
1. Entrepreneurs and founders — consumers of capital
2. Funders of all kinds — angel investors, venture capitalists, friends & family
3. Ballerinas & poets — folks who are not in the startup world and are gloriously happier in their ignorance of it
Each understandably has a unique point of view depending which role they undertake. Forget about the ballerinas & poets for this discussion.
Entrepreneurs, founders, CEOs — point of view
Entrepreneurs have an idea which they desire to build into a company of unicorn proportions, take it public, buy a G-IV and an island in the Caribbean, marry a legal immigrant super-model, get their pictures on the cover of Fortune and Forbes, and live happily ever after wallowing in their fortune.
[Guys with legal immigrant, super-model wives have been striking some good blows recently. Thank you, Melania and Giselle.]
Lucky long-haired, collar-pinned, pocket-hanky chap with a legal immigrant wife. Plus, she has a decent income in her own right. Winners. Winning never gets old.
In the course of doing this, the entrepreneur will solve a huge pain problem for the world or create an insanely powerful new idea. As an example, where would politics be today without ….. Twitter?
OMG, Twitter? President Trump thinks I look “hot.” Can I go back to France? Please. [Obligatory negative reference to President Donald J Trump.]
Entrepreneurs are typically zealots and fairly high strung. Take a look at the maniac running Uber to get an idea of how their headspace and timing are set.
[For the uninitiated, “headspace and timing” is an adjustment one makes to fifty caliber machine guns to ensure they fire at the promised rate. You screw this up and the gun stops firing, which will piss off a lot of people on your team and buoy the shitheads on the other end of the barrel. It is a manly, military reference that harkens back to the days when the Big Red Car actually taught folks how to set their headspace and timing. Machine gunners, not entrepreneurs.]
Funders — point of view
Funders are using OPM (other people’s money) to fund the entrepreneurs with an eye toward acquiring all the freely floating currency in North America. They are wedded to making money while keeping a pittance for themselves.
[Disclaimer: Yes, Virginia, there are some altruistic angels named “Uncle Mortie” who just love their favorite nephew, “Alex.” That is true.]
Funders want to control things, since after all we are talking money here.
They are the kind of folks who punch (“mash” if you are from the South) the elevator button twice even when the floor light is lit and the elevator is moving. Control is a big deal to them.
This shows up in the amount of runway they think you need — six months, so you come back on a short leash to sit up and beg for more, while a Big Red Car says you need twenty-four months, so you can run amok and survive a setback or two and, maybe, pivot at an inflection point.
It also shows up in things like the structure and composition of a board of directors.
The collision
The conflict occurs when the funders want a disproportionate amount of control. [No story is any good unless there is some conflict. Houston, we have a conflict.]
What entrepreneurs need to do is say, “My beloved funder, I am prepared to give you control of such things as a fledgling board of directors in direct proportion to your ownership. Not a seat more.”
If the funders own twenty percent, then they get twenty percent of the board seats.
[Pro tip to entrepreneurs only: Stack the rest of the board with the guys who introduced you to your wife, a classmate with whom you did things so wicked that the repercussions can still be felt to this day, and Army buddies you have seen both drunk and naked in foreign locales. Trust me on this one. Do not put people on your board who have been “recommended” by your funders. Remember, these are the folks who will one day fire you. Do not weave the rope for them. Let them do their own heavy lifting.]
Skepticism
The world needs a bit more skepticism.
Not cynicism, which appears to be enjoying a bumper crop these days, just plain old fashioned skepticism.
When a funder says, “I am just going to assist you a bit here, entrepreneurial gentleperson,” beware. Be skeptical. Be cautious.
Advice
The world is alive with advice. Some of it, a very tiny portion indeed, is actually good. There is a tsunami of bad advice and some of it is expensive. Be wary of taking advice on flying airplanes from people whose core credential is a million miles flown in first class.
Seek and take advice from people who have actually been CEOs. Small, but important, point.
But, hey, what the Hell do I really know anyway? I’m just a Big Red Car. Do not come complaining to me when the board fires your ass because you lost control. Get some vitamin D today.
