There’s no doubt in my mind that today’s flood of wannabe entrepreneurs has been largely driven by all the media attention to the vast amounts of money garnered not only by founders but by early employees of not only unicorn companies – those valued over $1 billion – but of any successful startup. Way back in the 20th century when I was starting companies backed by VCs it was unthinkable that a founder would or could take money out of the company before a liquidity event. But as more startups stay private longer and longer pressure has mounted on investors to let founders and key employees cash in some of their stock – generally when a new series of investment is opened. Key employees get to sell their stock to new investors and put some cash in their pockets. In fact there now exist robust secondary markets for stock in private startups. To some extent I can understand this as a defensive move by investors and boards, as with the vicious competition for talent the risk of losing key execs and staff to yet another startup is high – enabling them to cash out some of their options before going IPO or being acquired can help keep them with the company. And on a purely pragmatic note even with the sky high salaries paid for engineers in Silicon Valley the cost of real estate has risen as fast or even faster, so cashing out some stock can make a difference between living more years in a cramped apartment or moving into a home of one’s own.
While I have nothing against founders who want to make money, I’m a firm believer that if that’s your primary motivation you will fail. Startups are just too hard. If money is your object go to Wall Street or join a big consulting firm. The odds are so small of making serious money on a startup that you might as well play the slots in Las Vegas as bet on attaining financial independence from founding a company.
As a kid I always started my morning by reading the sports page and I left the rest of the newspaper to my parents. These days I still start with the sports page before going on to the business section, but it’s surprising how many great lessons there are for founders in the world of sports. The story about Patriots receiver Danny Amendola in The Boston Globe by Mike Reiss Patriots gain $4.75 million in cap space with Danny Amendola pay cut is a great example. Amendola signed a pretty rich multi-year contract with the Patriots several years ago, but injuries and other factors have reduced his role, but he comes through big in the clutch, as witnessed by his great performance in the Patriots Super Bowl win. Despite that performance he certainly won’t be a starter this year. In fact he’s taken a pay cut yet again! Why?
This is the third straight year that Amendola has taken a pay reduction. When it happened two years ago, he had explained his thinking this way: “Was that a decision I would have made five years ago? I don’t know. I can’t say that it would be. … I’m my own business, and I’m competing with everyone else on the team and competing with the organization for me to get paid. At the same time, I’m a good teammate. I want to be there for my teammates. I want to be part of something great. …
“When it came down to it, it was also about playing good football. I’ve been on a 1-15 team. I’ve been on teams that never made it to the playoffs. It wasn’t fun playing meaningless football. When you’re playing meaningful football at the end of the season, and every play and every route that you run counts, every ball you catch counts, and it’s either win or go home, what I found in the sense of coming here is that’s the most rewarding thing.
“I understand it’s a business. Money wasn’t really something I was counting in that situation. … I feel like I want to be part of something good. I want to play good football, and my family is here. Those were really the three things that helped me with the decision.”
When you looking for co-founders, key employees or even staff for growing your venture, you want the Danny Amendolas of the world – the team players who are motivated more by winning than by money. They want to be “part of something great.” Because build something truly great, trust me, the money will take care of itself.