Follow the Podcast on iTunes and Spotify
Excerpt
Sean: Question from Gab. Hi Sean, I’m a young entrepreneur who put up a marketing startup where I have six other co-founding members. Wow. That’s a lot of co-founding members. What do you think are the advantages and disadvantages of being seven partners in a service industry business? Do you think it’s going to be profitable in the long run?
Well, Gab, congratulations. Usually, when you start entrepreneurship young, that’s a good thing because you have a lot less to lose. You can take a lot more risks. That’s a good thing about it.
You have six other co-founding members, in my opinion, that’s a lot. When someone wants to start a new venture with me, what I usually say is, I would either be a silent partner where they can ask for my advice, but my decision is, it doesn’t matter if I decide something or not. So only a slight silent partner. Either I’m a silent partner where I can just give advice or I’m the majority. Anything in between, I don’t want to do that because I really don’t like having conflict with other people who are invested monetarily or industrially in the business.
So I’m either of two extremes, personally, that’s how I do it. Either I’m the majority owner where I make the decisions, or I’m a silent partner where you guys make the decisions, but if you want my advice, I would give it. Why do I do it that way? Because it’s hard when you have a lot of heads making decisions. If there are a lot of heads, we can no longer call that a human. That’s called a monster.
Applying that in a business where you have a lot of heads butting against each other when you have disagreements in decision-making, you’re already fighting against each other internally, and then, there are competitors out there who also want to kill your business or get more of your business, you’re fighting fires inside and outside, that’s not healthy for a startup. I think if you guys are seven partners, that’s tough. That’s what I can say. It’s going to be tough. When you’re starting out, it would be fun. It would be fun because there are many of you. You will help each other, there are many of you, and that could be fun.
But long term, problems are going to crop up. You have to systematize things. You have to scale it up. You may have to have other rounds of funding in there. It’s going to be tough. That’s what I can say. You have a lot of decisions to be made, and every time you have decisions, you have to wait for your co-founder’s votes. I think it’s just tough doing it that way. Unless you have your departments to run. Each of you already has your departments you decide on who gets a veto vote.
Like for example, the president, if you appoint, one gets a veto vote where his vote is always the one followed because he’s the most invested in the company and he’s the most knowledgeable. He makes really good decisions or she makes really good decisions. Or you just trust her a lot, then you give her the veto vote. So whatever the decision he or she makes, that’s it. Then I think that would work better. If you don’t have anything like that and you’ll always have to wait for everyone to vote, it’s going to slow your startup down.
