This is a question I try to ask all startups that hire me at the very beginning. And while some startups know right away why they’re doing what they’re doing, a few struggle to answer.
Having seen hundreds of startups in their birthing stages, I think the answer to this question drives the answers to all the other questions that affect the birth, growth, and further legal development of the business.
Where do you want to go? What do you want out of starting a business?
• Are you looking for flexibility?
• Are you looking for independence?
• Are you looking to get rich?
• Are you looking to create something amazing?
Not every business is the next Facebook. Nor is it the next Twitter. Or even SendGrid or FullContact, to name a couple of local examples. Those are all amazing companies, and they should be commended for their success. But each business is more likely to succeed if its founders create a company that reflects the personality, dreams, and strengths of the founders. Trying to imitate someone else’s path is a recipe for failure.
The startup community isn’t a monolith, nor should it be. The startup community lauds those who raise large amounts of capital. And if your goal is to create something world-beating that competes with Google, Apple, and Facebook, and to create wealth for yourself, then marshaling large amounts of resources through your business is a likely key step. But if your true goal is to live an independent lifestyle and create flexibility for yourself, then raising capital will likely have the opposite effect. But while many startup founders start their own businesses, at least in theory, to create a flexible lifestyle for themselves, nearly all startups run around clamoring to raise as much capital as possible. Perhaps many don’t see this as a contradiction, but it most assuredly is.
The startup community, including most attorneys, will do nothing to dissuade you from raising as much capital as you can. But before you do, make sure you understand exactly the kind of lifestyle you’re looking to create for yourself. And then ask yourself if that path makes sense for you.
If you don’t, there’s a good chance you’re going to end up running someone else’s startup, rather than your own.