In a lunch conversation yesterday with a startup founder, we had a good long talk about going “all in” from several different perspectives. It’s a very tough decision, one that future founders haven’t experienced yet and past founders often have regret over or glee that they made the decision at the right time. What goes into that decision?
- Family – If your spouse is not on board, don’t do it. I cannot emphasize this point enough. Do not let your business be the elephant in the room that you don’t share with your spouse. Do you have kids or kid(s) on the way? There are a handful of events that can cause extraordinary stress in life and in marriage. Babies, homes, jobs, businesses, weddings are all among those. It’s generally not a good idea to do more than 1 or 2 of any of these things in a given year.
- Finances – How much runway do you have? In other words, how long until you are completely broke, based on your monthly bills? Chances are you will not have your current salary from your startup for a while, but you still have bills to pay. Make sure you can pay them. You should assume that you will not have a salary until year three of your startup. And remember, when things get tough, your employees get paid first. You get what’s left, if anything.
- Investors – Sometimes investors will make an investment or not based on whether the founder(s) are full time or not. Would you invest in a part time CEO? If you’re raising money, you’ll likely have to be all in before they’ll write the check. On the other hand, early stage investors are investing in YOU (e.g., the jockey, not the horse), so part of the deal should be that they are investing so that you can go all in.
- Grit – Is this what you really want to do? What are you going to do when times get tough? There are glorious legends of founders doing crazy things to keep things going. Tom Noonan once shared that he had maxed out more than a dozen credit cards to keep ISS afloat before selling it to IBM for more than $1 billion.
- Hobby or Job? – Sometimes there won’t be all that pressure. If this is just a side-hustle or a hobby that you can do anytime, anywhere, regardless of what else you’re doing, then don’t quit that day job. But if you get to the point that you love doing that side cheese so much that you want to make it your full time income source, it changes things. Many times making money from something we love is very different than making money at work.
Making this jump is an incredibly hard and important decision. The decision itself often determines whether or not a person is cut out to be an entrepreneur or founder of his or her own company. If you start something, at some point you will have to make this decision. Knowing it’s coming can make it clearer. Not easier, but clearer.