The idea of bringing on a "Superstar Advisor" is usually a total sham.
This isn't because the advisors themselves are a sham (they may be), but more so because our expectations of what these superstar advisors can do are way out of line.
The cost to this notion is giving away valuable equity or creating lob-sided revenue deals without really thinking through what these folks can realistically contribute. It's so easy for Advisors to make bold claims about what's possible, but like the rest of us, it's incredibly hard to back them up consistently.
But again, this normally isn't the fault of the advisors — it's our fault. We lull ourselves into expectations of these heroes that are totally unrealistic, and in many cases, not even what these ...
Every kid should become a startup Founder, even if they never want to start a business.
Years ago, I started teaching entrepreneurship at my kid's Middle and High schools. What I thought might be an exercise in futility wound up being an incredibly eye-opening experience. As it turns out, kids are freakishly good at being Startup Founders!
When I was a kid, no one told me I could forge my own path. We sort of were handed a dozen careers, and you got to pick one. It was basically our guidance counselor telling us "Oh, you're good at math? You'll be an accountant." Never mind that we never really wanted to be accountants.
Instead of shoe-horning kids into some prescribed path, entrepreneurship leverages their gre...
An S Corporation is a type of business corporation.
An S Corp passes all their finances — corporate income, losses, deductions, and credits — through their shareholders. Because S Corp shareholders report the income and losses of the company on their own personal tax returns, the company isn’t subject to double taxation.
The shareholders of an S corp are the owners. They’re the ones who “hold” shares of stock.
Depending on how much stock they own, they have varying degrees of influence on the corporation — but they don’t make the decisions or run the day-to-day. Instead, they elect the company’s directors, who take care of all of that. They also vote to remove directors, when it seems like ...
The conventional wisdom in the startup community these days is that to create a successful startup, you need to move at breakneck speed in everything you do.
And, to facilitate this, you should consume as much money as you can get your hands on along the way to make sure you’re removing all obstacles from getting to market. The perception is that if you move too slowly at the beginning, you’ll miss the market and, even worse, you won’t get funding.
But, is this correct?
While we completely support the idea that getting a great product to market as quickly as possible is a cornerstone of startup success, we just don’t buy that frenetic speed is the best way to do it. It’s not what has worked for us, nor for any of the successful startups we’...
Growing up broke was one of the most valuable assets to shape me as a startup Founder. At the time it didn't feel too valuable (it sucked) but I'd come to learn later that it burned specific traits into my behavior that served me insanely well in building startups from scratch.
Many of us have had the same challenges, coming from disadvantaged upbringings that felt like a setback at the time but also became crucibles of learning and adaptation that actually made us far more capable when our skills were put to the test later on.
When we're broke, we can't afford to pay anyone to do anything. Plumbing breaks? We become a plumber. Car won't start? We become a mechanic. We just don't have a choice, so it forces us...
A limited partnership (LP) is a type of business partnership that has two types of partners — general and limited — and there are different liabilities for the two.
In order to qualify as an LP, a business has to have at least one general partner and one limited partner.
General partners in an LP are personally liable for the business. Because the general partner of a business can be a person or entity, many people choose to set up an LLC to act as the general partner, thereby avoiding personal liability. General partners are also involved the actual running of the business.
Limited partners, on the other hand, aren’t personally liable. Limited partners can’t contribute to the day-to-day operation of the busi...
One of the most common questions we get asked is, "Should I raise capital for my business?" _What they’re really asking is, “Can you tell me how to raise money and where to find it?”_
And our stock answer is simply "No".
That tends to mess with people — because they typically aren’t expecting pushback. But the reality is that there are actually very few reasons that a startup absolutely has to raise capital. Every startup could use it. But does every startup absolutely have to raise?
Nope.
Having answered this question about a billion times, it seemed like the right time to list what the decision tree for startup Founders should be when determining they must raise capital so we can distinguish the difference between "I need it" and "I have...
Now that we know there is an opportunity in the market for our startup idea, we want to get some expert advice on how to approach that problem, target market, and industry.
Think of this phase as asking your college professor what the answers to the idea validation test are before you ever start the course.
In almost every case there are experts out there that know many of the answers you're looking for and are willing to share that information with you.
The challenge is to find the right experts and present them with very specific questions about your business idea, and in return get highly specific feedback.
Their feedback can help shortcut the market validation process, market research, ev...
We're all building the wrong product — we just don't know it yet.
Every great product is really just a bunch of bad assumptions that get shaped into the right ones. The idea that we could define exactly what our customer wants with all the perfect features is mostly a myth (unless we got lucky!)
What's tricky as Founders is that we have a very short window to get this right, and let's face it, our livelihoods often depend on that window. We don't have countless months and years to "tinker" — we have to get this thing right really fast.
So we end up beating our heads against the wall, trying to compress time and get the perfect product to the market so we can build and scale a successful company. But what if the time we're trying to compress...
Can a startup apply for a small business loan? Are you sure? Usually when startup founders think about funding, we think about venture capital or accelerator programs. That’s because those funding sources offer potentially big payouts, oftentimes with no obligation to pay back the money if the startup fails.
But, there’s another source of funding that’s more traditional — and potentially riskier: the small business loan.
Small business loans are a more traditional way of getting financing, which means they may be easier for some startups to get than venture capital, which can be a long and arduous process.
They’re a great option for startups that already have some momentum and — even better — some income coming in. That’s because while ven...