I recently began reading “The Founder’s Dilemmas” by Noam Wasserman. It reads like a textbook, but the content is solid. Even though I’m only finished with parts 1 & 2, I felt the content so far deserved some reflection.
It is today that I am exactly in the middle of The Founder’s Dilemmas, both in reading and in operation of instin. I am going to recap the big ideas of the first two parts of the book and reflect on how we did.
Part 1: Career Dilemmas and Deciding to Found
Long before last January, I had decided that I wanted to work on more than just my day job. In tinkering with small things like Google App Engine or github at home, at first, it was a great complement to my day job. But slowly, I found my desire to drive my own decisions and work on things of my choosing making me increasingly unsatisfied at my corporate job. After the failure of nyroo, last January we founded instin with a goal to make money and leave our jobs. It wasn’t just another side project.
How strong are the handcuffs of a successful career, a fast growing company with skyrocketing stock, and a family of three kids with a stay at home wife? It’s hard to say exactly, but at some point the risk-reward ratio turned. With the success of myHomework, my conservative nature and savings, research into our future ideas and “worst-case” scenarios, I just couldn’t see how I could live the rest of my life having the “What if”s.
The more time I spent looking at my personal situation and trying to prove I shouldn’t jump. The easier it became to jump. Explaining to my wife where we were and what might happen made her my biggest ally.
The more time I spent investigating instin’s business and the chances we would have to succeed if I could be full time vs stayed at my job, the more confidence I grew that we could really do it.
The handcuffs got loose enough and I jumped. In hindsight, I wish I’d done it six months sooner.
Part 2: Founding Team Dilemmas
At the end of 2005, I first read Napoleon Hill’s “Think and Grow Rich.” While the whole notion of “thinking” all the time is something that was just put inside of me, I took one major thing away from this book and it was that truly successful people surround themselves with other great people. From then on, I began paying attention.
Who around me would I want to work with? Is this somebody who makes me better or worse at what I do? Do I trust this person to do xyz and do they trust me? This kind of thinking made founding with coworkers natural.
It was years later before I met my co-founder Ryan. After only a few short weeks of working together and helping to begin a massive change in development mantra for an organization, we met after work one night and discussed trying something out. We kicked around some ideas, decided on one, put together an LLC and equally kicked in some cash for some Amazon servers. Nyroo was fun. We got to work with ec2, facebook, twitter, MongoDB and a ton of stuff we never got to experiment with in cubicle land. Unfortunately, making lists about things you’re interested in was an idea that someone else executed much better than we did. About a year after launching and too many mistakes to count, we were searching for our next thing.
I didn’t meet Rodrigo until about 6 months after we had started nyroo. Rigo was always working on iOS apps at home and he was killing it doing web dev for our team. When a high profile project came up, me, Ryan, and Rigo were the engineering team to go get it done. We worked great together and delivered in a high expectations, high stress environment. A month later I was talking with Rigo about whether he would want to work on something outside of work and he brought up myHomework. He really wanted to resurrect myHomework and make it the best homework organizer app out there.
We all met in my basement a few weeks later and verbally agreed to a plan that we’re still mostly aligned with to date. A couple weeks into the work, we incorporated.
Splitting Equity and Roles
On filing for an LLC, we knew very little about what we were doing. Are we member managed or manager managed? Who knows? We checked the boxes, made each other equal equity holders and started working.
It wasn’t until leaving our jobs became closer to reality that we had some more serious discussions. We hired a lawyer to help us talk and work through our company agreement. Although we formed our team based on complementary skills and role breakdown, we didn’t formally discuss whether the equity split was right and what our titles would eventually become until we had to put it in a legally binding contract.
For titles, I would be CEO and became the acting manager, Ryan and Rigo would likely fall into CTO/CPO at some point. But we also figured a company of three people had no need for titles so early on. Our business cards all say cofounder and our decision making has been mostly unanimous.
For equity, we revisited the topic but agreed to keep the equal split. From everybody’s perspective, we had all participated fairly equally since inception and we all had plenty to contribute moving forward. We now had a contract that protected our interests if somebody didn’t keep up their end of the bargain.
The first part of this book helped me to reflect on where we are and what to pay attention to in order keep our team fully functioning in the future. Roles, Relationships, and Rewards can become out of balance and we need to plan in advance for more regular communication on the topic.
It felt like the one place where we could have done better was on discussing our equity split in more detail, but I’m really happy that we’re well aligned and poised for success.
I hope the second part of this book will teach me a lot about the decisions which are coming quickly in the near future for our business: investors, growing a team, and more.