Mark Suster keeps knocking the cover off the ball with his posts about the startup ecosystem. Here’s a key passage from his latest:
The fact is that most people lack the willingness, ability or nerve to start a company from the very beginning with just an idea or a desire to start a company. These same people will join you and your one other co-founder (maximum) 6 months later when you’ve established the company, done your Powerpoint deck, built a prototype or product and started fund raising discussions. They’ll happily join for 5% or less and they’ll have options and not stock. That’s the difference between a founder and a non-founder. You’re the one who gets paid extra rewards for taking the extra risk and more importantly taking the initiative.
As I’ve remarked before, being a founder generally adds an extra zero to your shareholdings. They key is your own risk perception and tolerance.
If you think starting a company from scratch is really hard, you’re unlikely to take the leap, regardless of the rewards. Thanks to a decade of experience as a founder, I view starting a company as a relatively low-risk process. Remember, focus on what’s easy for you, but hard for others. Either that, or I’m just pathologically optimistic (also a good possibility).
When I start a company, my internal calculation is as follows:
1) Going without salary for 6 months
2) Working A LOT
1) 10X as much stock
2) Getting to tell people that you’re a founder (sounds great at parties!)
Bottom line, if you have low expenses and you like to work, being a founder is a pretty compelling deal.*
* Note that I ignored my own advice to join PBworks. In that case, I saw a unique opportunity to work with old friends on both the management and VC side, and the chance to bringing in a number of other old friends to beef up the management team. Sometimes, the chance to have fun and work with great people (while tackling a billion-dollar idea in a hot space) is enough to override the usual considerations.