OnStartups

Startup Founders: The Involved vs. The Committed

Posted by Dharmesh Shah on February 19, 2007 in startups startup founders 24 Comments

I’m going to refrain from starting this off with the story about the chicken and the pig (there’s something about the former being involved and the latter being committed).  I’m vegetarian so this particular folksy tale doesn’t have a resonance with me.

In the startup world, the phrase that is often bounced around, is to have “skin in the game”.  This is a short-hand for saying that a given individual has some incentive to see the company succeed.  One of the most common examples is:  “Susan just wrote our startup a $100,000 check – she has skin in the game.”

I’m going to argue that there are multiple levels at which parties can be involved in a startup.  Certainly, writing a check is one way to align interests, but that is an over-simplification.

The reason people like to see “skin in the game” is that it motivates the right kind of behavior on the part of the individuals with the skin.  Interests are (supposedly) aligned and those with skin in the game are expected to do the right thing more often than not for the company.

But, there’s a big difference between the degree to which interests are aligned and more importantly the degree to which an individual really has skin in the game.  

On one end of the spectrum, you have those that are lightly (or heavily) “involved” in the startup.  These can be advisors, could be passive angel investors could be members of the management team working for reduced salary – and of course, could even be one of the founders.  Yes indeed, you can have involved (but not committed) founders.  And, on the other end, you have those that are committed.

Here’s the litmus test for how I try to distinguish between the two:  If your startup dies next week, what will be the actual impact on a given individual?  

The point here is that just because someone quits their day job, just because they write a relatively large check, just because they take the founder title – none of these necessarily means that they’re committed.  It’s possible that in all of these cases, the actual impact on the individual is relatively minor.  They find another day job or they mourn the loss of their investment for a week or a month.  What I consider “real” co-founders are those that are financially and emotionally committed to the startup.  For the founders to be committed, if the startup dies tomorrow, it will forever change their life.  They can’t just wake up the next day and have it be life as usual (yes, they’ll recover – but the failure will have a lasting impact).  

In the startups that I’ve kicked off, much to my dismay (and my wife’s dismay), I’m always committed.  And I’m particularly emotionally committed.  Sure, I make substantial investments in the startup, but I really get emotionally committed.  My identity becomes tied to the company.  I meet great people, I experiment with new ideas, I (hopefully) build great products.  But, what really reels me in is that everyone I know, knows that I’m working on a new startup.  Sure, I might fail, but it will not be a quiet, subdued failure.  It will be (in my own way) – spectacular.  Just as everyone I know will know I started, everyone I know will also know it didn’t work out.  

For my current startup, HubSpot, it took me some time to “draw in” my co-founder, Brian Halligan.  I didn’t have to find him (we already knew each other pretty well, and he was already involved in the company for over a year – but he wasn’t committed).  This past summer, he joined full-time as co-founder, but I still wasn’t absolutely sure he was committed until an important thing happened:  He started talking to his friends, family and colleagues about HubSpot.  He told them why he was doing it, and how great the company was.  Now, for good or for bad, he is in.  If by mistake or misfortune, HubSpot does not go in the direction we hope, I do not think he will be able to walk away untouched.  He is committed, as I am.  And that’s what you want in a co-founder.

How about you?  Have you had a hard-time getting people to shift from the “involved” stage to the “committed” stage?  Would love to hear about your experiences.  Please leave a comment.