Nobody will buy your better mousetrap if they don't know it exists.
First-time entrepreneurs are always wide-eyed with ambition (as they should and need to be). They believe that their idea is the idea — and it very well might be. They think, know, are beyond convinced, that everyone in the world will want what they are hawking.
Great. So how do you plan to get there?
When you ask new entrepreneurs this question, they jump to things like Marketing and Ad Budgets and things that, in all honesty, are more often a waste of time. Sure, you’ll get some traction (in some sense of the word), but are your efforts really moving you in the direction you want to go?
Better yet, what exactly are you building? Are your efforts actually helpful in achieving your goal? If your idea is to become the largest distributor of X, are Facebook ads really going to be the thing that gets you there? Probably not.
It takes a few laps around the race track to learn the importance of networking. And it sometimes takes years to learn that partnering with people can improve what you’re already doing.
Case in point: Would you rather own 100 percent of a $100,000 company, or 50 percent of a $1,000,000 company, or 10 percent of a $50,000,000 startup? Lots of entrepreneurs I know got caught up in the percentage owned part, not realizing that they get so much more by partnering with other valuable people.
It comes down to is this misleading notion that you’ve lost the startup game if you give up too much equity. Well, what is your definition of “winning?” If it’s more money, you can see above that less equity in a bigger pie equals more money. If that’s not it, then what is “winning” to you? Maybe it’s creative control. Whatever it is, it’s your job to define it for yourself — and then make decisions based on that.
A common problem among the young entrepreneurs I know is thinking of selling equity as “giving something away” instead of “adding to what you already have.” You need to think of equity as a resource, not a trophy. If you have 51 percent equity in your company, an extra 49 percent will benefit you nothing if you can’t make your company grow. In the largest companies, the majority holders rarely have more than 20 percent equity. Why? Because they realize the value of other people, their experience and ideas, far outweigh a couple thousand dollars of equity.
There is an overwhelming feeling in the startup world that “this is my idea.” Please, be protective. Fight for your idea. But don’t shut yourself out from opportunities. If you have a working idea and someone comes along with the resources and knowledge to make it better, don’t just say “no” for the sake of keeping your idea to yourself. If you keep doing that, you’ll protect your idea all the way into bankruptcy.
Don’t be afraid to let go.
I have managed my own digital marketing agency for the past ten years. When I first started the company at which I currently work, I thought I could do everything myself. In fact, I thought I had to. While most people wanted to help, and could do a lot of things better than me, I was overly protective. I was unwilling to share my ideas with non-paying clients, I was reluctant to share my best ideas with employees, all because I believed only I was capable of bringing them to life.
That was a quick road to burnout, and the company didn’t grow because it had to be centered around me, my schedule, and my production. There are only so many hours in the day for me to be involved with every decision for every client.
I finally learned, after ten years of doing everything myself, that letting go, and sharing ideas, production, and management actually compounds my creative ability.
Instead of spending my time on doing everything I can do well, I allow others to do them better. I focus on what I do best (ideas) and the work of everyone around me helps magnify their impact.
I don’t doubt that you’re a good manager. I think I am as well. But there are better managers out there, but managing is not what made you successful. I learned to surround myself with the best-in-class, let them do their jobs, while I focus on what made me who I am.
Remove your ego and make the best decision for your company.
The simple truth is that networking and investment are priceless and necessary for any entrepreneur. Whether or not it means giving away equity, having consignments for your idea from influential thought leaders is crucial. A page in a local publication or being highlighted on a high-traffic site because you know the editor is a quick route to growth and success.
As much as you spend time working on and refining your idea, don’t forget to nurture the relationships of the people around you. Nobody climbs to the top by themselves, somebody had to build the ladder.