I’m a huge fan of movie Ocean’s Eleven. In fact, I watch this movie every time it comes on TV. For those who don’t know about this movie, in short it is a heist film where George Clooney along with 10 other folks rob three Las Vegas casinos in one night. If you have not seen this movie only thing I can say is – Watch It!!! It is an extremely stylish movie and loads of fun.
When I look at this movie from entrepreneurship point of view, I see what they did in the movie as a startup (and by that I don’t mean to encourage you to drop everything and plan to rob a casino or two :)). Essentially George Clooney comes up with an idea of robbing three casinos (the venture) so in context of a startup, he can be thought of as Founder/CEO. Then he shares his idea with Brad Pitt (and he’s the 1st one to come on board) so he could be thought of as Co-Founder/COO. Now to rob the casinos (or in other words, get their venture going), they need some money which was provided by a guy named Reuben so he could be thought of as Angel Investor/Venture Capitalist. Then they gather a team of 8 more people (including Matt Damon, Don Cheadle and more) to carry out the operation so they can be thought of as early employees (or founding team members if you like).
Some of the things they did in the movie appealed to me as a startup founder and I will share those in this post. So here they are (in no particular order):
Greed Is “Not” Good!
Despite what Gordon Gekko said, greed is not good at least when starting out and this was evident from the movie. Basically in the movie the amount they robbed was over $150 million and George Clooney decides that the amount would be equally divided. Imagine the conversation where George Clooney and Brad Pitt (Founder and Co-Founder) opted for an equity model keeping a major portion of the loot for themselves and then dividing the rest amongst others – We get to keep 80% of the loot because we came up with the idea and the rest will be divided amongst rest:).
I think there’s an important lesson here. When you (as Founders/Co-Founders) are starting out, realize that your founding team members would lose the same as you do so keeping a major chunk for you is not right IMHO. Besides I have always believed that “Ideas don’t matter, what matters is how you execute them” and it takes a complete team’s efforts to execute upon the idea and what’s more appropriate than treating founding team members at par with you. In fact, if we look around we would find many examples where early employees have been burned badly because of this.
Some stories related to this I want to share here.
Story 1:
Long time back I had built a survey authoring system which was actually pretty neat (I never release it but that’s another story). So I had this application and I showed it to a friend of mine who I know is a great marketer (the guy could sell just about anything!!). He liked the product and the idea and wanted to come on board. He suggested that we each go with 50% equity. God bless my ignorance and greed :), but I was actually shocked when he proposed that. My thoughts were “I came up with the idea, built the product and did all the hard work (and will do all the hard work of working on the product going forward) and this guy is asking for 50% equity just for selling. How could he???”. Needless to say, I said no to his proposal. As it turned out I was not able to sell the product on my own and that was one of the reasons I had to stop working on that (there were other reasons too). Sometimes I wonder what would have happened if I had said yes to him at that time.
Story 2:
Next story I want to share is about another friend of mine who joined a startup as an early stage member. The founder offered him some equity (which was not 50% or even close) and no salary. Over a period of time, more team members/investors were brought in and as a result of that his equity kept on diluting. He gave his best to the venture but in the end his equity was not worth the time he had put in the venture. He would have been better off working for another company as an employee where they paid him his fair market value.
Now I am not saying that it should apply to everybody who joins your startup but at least it should be the case with your founding team members. Yes, as startup founders we want to make a dent in the universe but let’s face it – at the end of the day we want to make money from our startup and so does our founding team members so let’s not be greedy and make all the money for ourselves!
Long story short, if you want your founding team members believe in your vision and you want their skin in the game, what’s more appropriate than treating them at par with you and the best way to do it is by offering equity either equal or very similar to yours. If equity is dear to you, make sure you pay them their fair market salary.
It’s All About The Team!
May be it is preaching to the choir, but it’s all about the team. Nobody’s perfect and that includes you as a Founder. You definitely bring some qualities to the table but then there are so many things that you may not be good at. You have to find the team members who are good at the things where you suck. This becomes more important when you’re starting out. Get the team which can get the job done. This is what happened in the movie. Danny Ocean (character played by George Clooney) had a vision (though I must admit a sinister one but nonetheless it was a vision) and to fulfill that vision, he needed guys with different skill set and he gets them. Imagine him doing all the things by himself and then pulling off the heist successfully. Yeah right!
So get the right team in place with aligned motivation and right incentive and you will be able to accomplish what you want to accomplish with your venture.
Listen To Your Team!
There’s this scene in the movie where George Clooney and Brad Pitt are sitting in a bar after having recruited 7 people. George Clooney says “Saul makes it 10. 10 oughta do it?”. Brad Pitt doesn’t say anything but he just gives him a look. George Clooney then says “You think we need one more? You think we need one more. All right, we’ll get one more.” and then he goes to Chicago and hires Matt Damon and makes him the 11th person of the team (thus Ocean’s 11). As a CEO, he could have stuck to his point that 10 people should be fine to do the job but instead he listened to his COO. Even before that, he consulted Brad Pitt to build up his team. As founders of startups (and in general), we need to listen to the team. Believe it or not, they will have something useful to say. I myself have been guilty of ignoring what my team members said, only to repent later that I should have heard them out and acted on it.
Play The Game Like You Got Nothing To Lose!
Here’s another important lesson – play the game like you got nothing to lose. As startup founders, we think too much. We worry about the problems that may or may not arise right from the beginning. A few months ago I met a startup founder who asked me that should he even think about his application being used by hundred thousand people (this is before the product was even launched). My response to him was that he was over thinking. It would be a good problem to solve when his application gets this many users but not to worry about it now when you don’t even have a product out in the market.
It is definitely ok to think but don’t overdo on thinking part. Just go ahead and do it!
Summary
That’s it for this post. I would love to hear your thoughts on this. Please feel free to share your thoughts by providing comments below.
