Your goal when starting a business should be to create the best outcome for yourself.
Don’t get distracted by shiny objects and bad advice.
Focus on what matters.
Don’t give away your company to investors, co-founders, and employees.
Be default greedy.
Your goals should be to:
Own and retain control of as near to 100% of your company as you can.
Found the company yourself. Don't split equity with co-founders.
Fund the company yourself. Don't raise venture capital.
Run the company with as few employees as possible.
Look first to automate with AI before hiring. Hire globally when you need people - Hello Latin America!
The law of mathematics demands it.
Default Solo Founder
You should try to keep 100% of the equity for yourself.
Sharing ownership requires building a much larger company for the same outcome.
Three equal co-founders means you need at least a business three times the size.
And you lose many of the benefits of solo ownership like writing off more of your business / life expenses.
Hire your co-founders. Pay experts in marketing, sales, operations, etc. to join your mission and run aspects of the business. Cash is lot cheaper than equity in the long term.
Pay your team generously. Give huge bonuses. Just keep the equity for yourself.
Default Bootstrap
Raising money is selling off your company.
Venture capitalists are great marketers. Don’t fall for their trap.
Each round is generally giving up 20% of your company. Don’t take this route lightly.
Your window of success will shrink dramatically with each raise.
VCs incentives are not your incentives. They want a home run. You want to get rich.
Most good and great businesses are not a fit for venture capital.
Many founders build great businesses and lost them after raising too much money.
Their equity and profits sit under a preference stack. Many never see a dime.
They end up as venture orphans that get sold off for pennies or taken over by the debt holders.
The boards can also fire you at any time.
Taking money comes with strings attached. Avoid getting caught up in the strings.
Say no to cap tables, VC drama, and anyone that can fire you from your company.
Default Leverage
Lots of employees and fancy offices used to be a sign of prestige.
Now it just shows waste and inefficiency.
The default question should be how can I automate this away or have an AI to do it.
Otherwise hire super talented and hard working remote employees globally.
In Latin America you can find amazing employees for about 70% less. Build your whole team there.
No super-expensive office leases or entitled employees are required to build an empire anymore.
Hire the best no matter where they are from.
Use leverage. Run as lean as possible. And sprint past your old competition with bloated cost structures.
Default Profits
The future is uncertain. Profits are forever.
Take cash out of the business as often as you can. It forces discipline and focus.
Many companies reinvest indefinitely and if something bad happens, they have nothing to show for it.
Profit buys you time and flexibility. If you can cover your operations and pay yourself, you can survive indefinitely.
If you aren’t profitable, you are dependent on someone else’s goodwill to survive. That is no way to live.
Freedom is the ultimate flex.
Valuations and exits aren’t guaranteed. Anything can happen.
You can’t buy a beer with valuations. Most never materialize.
Profit distributions are real. They are like a continuous exit where you get to keep the company.
The goal isn’t to build the biggest company.
The goal is to build the most profitable one.
Enjoy the ride!