December 23, 2010
This post started in the sane confines of my office but was completed on a holiday cruise with my family (I am sitting on the sun deck near Barbados right now). Emotional references abound! Happy Holidays!
My wife and I recently celebrated our 12th anniversary. Certainly not a massive milestone for many, but those 12 years represent my entire adult life. I guess something is working – to the surprise of everybody who judges us from a distance.
If we were a start-up team, we wouldn’t be able to raise a dime. Match.com wouldn’t even keep us in the same database. My wife is the type of person who draws an entire room to her at a party. I am the type that is glad that the room is gone. We share no hobbies. She has never worked at a company with less than 10,000 employees; I am a start-up guy. I am a tech geek; she a political activist – and our eyes both glaze over at the mention of each other’s fields. Her origin is Haitian, mine is German – two cultures that couldn’t be further apart (inviting friends for 7pm requires specifying “German time” or “Haitian time” with a solid 3 hour gap in between).
Our environment seems equally unpromising. We both have very demanding careers and studied in parallel to working. We spent the first seven years of our relationship in different provinces, racking up countless air miles on the weekends. In fact, even our starting point seems insane: We were in the same city for 24 hours, met at a Halloween party in full disguise, parted ways to different provinces at the end of the evening and my very first email was a statement of intent to spent our lives together (and yes, that was quickly analysed as “psycho” by her entire circle of friends). We met again a couple of weeks later at an airport, saw each other for the first time, and the rest is history (in the making at least).
So what does any of this have to do with entrepreneurship? Has the Caribbean sun finally fried my brains? Hopefully not!
The connection lies in the underlying mechanics that make all this work. Finding co-founders, investment partners and early employees for your start-up is a bit like entering into a marriage, though usually with a clearly defined pre-nuptial agreement and the intent to use it. As with a marriage, I believe that there are three fundamental components to such a relationship: Values, Tolerance and Respect.
The concept of values is easy to articulate but hard to implement. In essence, values are the foundation of your decision making. We are rarely in the possession of all facts necessary to make decisions and in their absence we use our values to guide us. My wife and I share a very similar set of core values, though for the life of me I couldn’t articulate what exactly those are. I could of course list trite words such as ethics, honesty and so forth, but those are mostly empty containers. Each human being fills them with subtle definitions and those shades of grey make all the difference. I consider honesty one of my core values, but of course I lie. We all do, if only to maintain our sanity. The question is where your personal definition of “lie” sits on the spectrum between “Your dress looks nice” and “I am Bernie and have a great investment for you”.
I also don’t believe that there is a “right” set of values, especially in the context of building a great business. Steve Jobs and Bill Gates seem to have fairly different value sets but they both managed to create great companies. The key isn’t to find the “right” values, but rather to find alignment between key stakeholders in the venture. And the good news is that this is a lot easier than actually defining those values with precision.
It’s often easiest to define your common value system when you step close to the borders. Try to explore the corner points of your new relationship early on: What are the visions for an exit of the company? How do we deal with employees who perform but don’t fit? What about the opposite? What are the scenarios where some people lose out on rewards and how do we deal with those? The list is long, but worth exploring earlier rather than later (don’t be concerned if it feels strange to contemplate the end of your venture on its first day – it’s the right thing to do).
On this platform of shared values you can now calibrate the interplay between tolerance and respect. Values are basically static, hardcoded into us through biology and long term social influences. The latter two concepts are a lot more dynamic and will govern the day-to-day evolution of your relationship.
Tolerance means that you allow your partner(s) to do anything they want to do and cheerfully support them in the process.
Respect means that you don’t do anything that would cause your partner(s) harm, grief or misfortune.
Taken individually, these principles result in complete insanity, but together they reach an equilibrium state where both partners have the best opportunity consistent with the opportunities of the other. Less philosophically, it means that your company achieves maximum leverage of each stakeholder’s talent and drive while keeping everybody on the same overall path.
In practice this isn’t the easiest set of rules to implement, but it provides a great platform for your decision making. Even better, it’s a great way to find out if somebody on your team doesn’t share this balance (if that happens, part ways as soon as you can – people really don’t change).
In my experience, very little beyond these three factors seems to matter. In the same way that my marriage prospers without a lot of common ground on the surface, so did my entrepreneurial relationship. My ventures and I benefitted greatly from those co-founders, investors, advisors and key employees who had matching values and a similar level of respect and tolerance. In many cases we had absolutely nothing else in common. On the other hand, I have had a few business relationships that turned into nightmares despite a lot of surface level similarities but no common foundation.
So when you find yourself in those all-important early days of a new entrepreneurial venture, think about what it takes to build a founding team with a strong foundation. Consider values as well as the interpretation of respect and tolerance in your team. Create alignment early and protect it ferociously. Resist the temptation to write code or fiddling with your website – no matter how en vogue the “hacker founder” has become in the last few years. In the long run your venture will succeed on the strength of the team that you built and getting that part right is the job of the CEO or founder (and arguably the only one that really matters).