'Startuping' - Most gut-wrenching lessons learned in the first 100 days pt.14
14th startup blog post, about the brutal lessons learned
12th November 2023 was the day this journey officially began, so far I am not regretting my decision but it would be disingenuous of me not to admit that I made some major errors. In this post I would talk about all of the gut-wrenching lessons I have learned so far & hopefully provide some guidance on how you can avoid doing the same.
In no particular order, here are my major screw-ups. But before we begin please do subscribe and also share this with friends who would benefit from these lessons.
No.1 Giving equity too quickly
As mentioned in my previous post, me and my co-founder had to separate. I had to buy him out. We had a 50/50 split which looking back was a mistake. The reason for this mistake was that I was hooked on the idea that to incentivize someone to work hard, they should be given equity.
Although the idea is good in theory, human motivation does not magically increase because of equity. If someone does not have intrinsic motivation to go above and beyond — to give it their all — no amount of equity or compensation will solve that.
Also, motivation changes over time, when things are easy, motivation is also easy to come by but when things start to get rough, motivation goes out the window for most people. In a startup, especially one started by a first-time founder you can bet that things will become rough sooner or later. That is the time when your partnerships are truly tested. I can understand why most people will lose out, quit, or try to passive-aggressively sabotage the business when this happens.
I must add is that in my case I was very forthcoming on giving equity and because it was ‘easy’ to come by, I think my co-founder did not value it. I would strongly advise that make the person work for their share in equity. Otherwise, they won't value it.
What I would do differently?
During these 100 days, I also started working for a startup part-time as a way to earn some money & to learn from people much more experienced. The startup did not directly hire me but instead gave me a short assignment. The purpose of the assignment was to gauge my work ethic and general fit for their company. Once, they tested me out they offered a much more long term engagement.
Similarly, I should have engaged my potential co-founder on a short-term paid assignment that could be turned into a long-term co-founder relationship. This way both of us could have tested the waters, and have known how each of us operates. If you see someone working hard on short-term assignments, they would likely operate in the same way given a long-term opportunity. Interestingly this exact approach is recommended by Sam Altman in Y-combinator startup lecture series. Unfortunately, I found this video after I gave up equity.
No.2 Incorporating too quickly
Depending on what line of business you’re in, you would have to incorporate sooner or later. In my case, I needed some payment & affiliate accounts which required a legal entity. These accounts were essential for the business to operate.