Partner Or Employee With Extra Steps?

This morning I saw a post by Paul O’Brien titled “A VC is asking 6% for acting as an advisor…” – My first thought, that is some b******t – O’Brien agreed. His post is well worth reading, and it lead me down another thought pathway. When you give out a lot of equity, you are handing away control! You can give someone so much equity, that they should be a partner and should behave like a partner. But sometimes they just end up as an employee who is very hard to fire. I’ve had this problem a few times in my businesses, and have seen it happen even in true startups. Let me explain, by “true startup”, I mean, a company that has funding from VC’s, has a board, is expected to trade at a multiple of revenue – not EBITDA – and is creating a product. Those bootstrapping, and starting service companies are entrepreneurs too, But I’m using this, limited definition to make a point. I’ve never been the founder of a true startup. I have been part of successful (and unsuccessful) investor pitches. I’ve done product design for failed startups, held marketing jobs at successful ones, been on teams who made VC’s “good”, and in running a digital ad agency I’ve worked with all sorts of startup companies. But, I’ve never been the founder of something that had a board of five, where two members are investors, two members are founders and all parties agreed on the swing…Partner Or Employee With Extra Steps?

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