“I think the main reason I like the Bootstrappers Breakfast is because I have grown to respect the fact that I am not the only one facing a lot of the problems that I have. You come here and talk to other people and bounce ideas off of them and say to yourself ‘Geez, I never thought about solving the problem that way.’ It’s those unexpected insights that make it worthwhile.” Linc Jepson 74ze
Today, we had an interesting discussion on when the right time to draft a partnership agreement is and the amount of resources to allocate to it. We also discussed ways to meet potential co-founders.
Our members came up with different pieces of advice on forming partnership agreements.
•The agreement need not be stringent. Have something informal put on a piece of paper. It is better to have it at the start of your venture. Different partners have different energy levels and commitment towards the start-up.
•Always form a 49:51 partnership and give one person the authority to arrive at a final decision. Alternatively, you can have a 48:48:2 partnership with one person (owning the 2%) whom both parties trust as the tie breaker.
•Build some sort of checks and balances into your partnership. For instance, one person places purchase orders and the other signs the checks towards paying the orders.
Startup Spouses is for the spouse, significant other, life partner, or family member of a startup person (founder or early employees). Please join us to share support, wisdom, and life lessons from our startup journeys. We want to create a safe place to vent when needed and be comfortable talking about the stress of supporting a startup person.
I think it’s an interesting idea and I look forward to seeing it evolve. Spouses and significant others play a number of roles simultaneously to entrepreneurs bootstrapping a startup:
passenger in a race car: they bear much of the risk with little if any control on the outcome
investor / banker: often it’s their job that provides critical household income and medical insurance.
counselor / emotional support: bootstrapping something new is always a roller coaster ride, and the person an entrepreneur is most likely to turn to for help with the emotional fallout is a spouse or significant other.
These three roles interact in ways that both parties have to recognize and manage:
Risk identification and mitigation: it’s important to have a candid discussion about risks, loss limits, and when you will decide to give up or at least decommit in favor of finding gainful employment. It’s also a very good idea to write down a simple summary of metrics and limits so that you both can agree the current level of risk and what you can do to mitigate it. This kind of discussion is important not only before formally starting up but periodically throughout the lift of a startup.
Treat your spouse / significant other as a major investor, give them board level visibility and make sure they understand what’s happening in your business at a high level. This transparency doesn’t mean that they need to offer advice, but that if you ask for advice they have a clear idea of what the current situation is.
It’s important that you have other entrepreneurs you can commiserate with in addition to your spouse or SO, it can place too much stress on a relationship if you become completely dependent upon them for emotional support.
I can recall several times in the last year or two that entrepreneurs have had a husband or wife attend a Bootstrapper Breakfast. The primary purpose the entrepreneur wanted to accomplish in those cases was to demonstrate to their husband or wife that
yes, there were really other people who got up at 7am to make a 7:30am breakfast
there were other entrepreneurs prosecuting their own businesses in a deliberate fashion and they were not alone in wanting to create a new company
they were willing to put serious issues on the table and solicit feedback for how to address or improve a situation.
In none of the instances I can recall did we talk about the interpersonal relationship between an entrepreneur and their spouse. When the spouse is not there it’s not uncommon to point out the need to have a written understanding of the risks and the conditions that will trigger an exit from the business as well as the need to provide them with the same transparency you would any other significant investor.
I think Willis is wise to run this as a separate support group because I think they will cover different issues than we would see in a group of entrepreneurs, but I am interested in what he learns and what we can apply to Bootstrapper Breakfast meetings.
Update: Willis posted an editorial on Silicon Prairie News “Why Our Community Needs Startup Spouses” that provides some more insight into what led him to organize the group:
When I first started out on my entrepreneurial journey, it was almost impossible to find people to talk to. I spent three to five hours a night combing through Google search results for three consecutive weeks because I was determined to get connected with people that could understand what I was going through. At the end of my search, the only event that seemed like a good fit for me was KC Roundtable.
Dealing with the transition from the corporate world to the startup lifestyle is an emotional process on its own.
Anyone that has had to make this transition will tell you the stress on your significant other, spouse, life partner, girlfriend or boyfriend can be as bad if not worse than it is on the startup person. My wife is risk averse. She liked owning a house. She has had to place enormous faith in me to feel comfortable with where we are today, but some days it is really hard on her. I want her to have a place where she can get the same feeling that KC Roundtable gave to me: that there are people out there that have done this before, they ended up OK and they can understand her when she needs to vent.
Thanks for coming.
The format this morning is that we are going to take a minute or two to for each person to introduce themselves to talk about what you are working on and if you have any issues that you would like to discuss. I will make a note of them and make sure that we cover them in the balance of the 90 minutes that we have.
Most of the networking takes place after the formal meeting when people have had a chance to listen to each other and get acquainted and can now talk about things that were discussed at the meeting in more detail.
Today we had an interesting discussion on risk and how different entrepreneurs assess and tolerate uncertainty. While entrepreneurs often operate in uncertain and ambiguous situations they normally look for ways to manage or reduce the risks they face. Also different entrepreneurs tolerate different levels of risk: Sebastian had the best quote of the day, “I am willing to risk everything I have, all my money, but no more.”
Brian Woodall is the Chief Executive Officer and the founder of Lamplighter Financial. He has been working with small companies for over 13 years in a wide range of finance roles. Brian has a unique blend of expertise in accounting, finance, and corporate transactions that fills a gap in the finance team of most small companies.
Prior to founding Lamplighter Financial in 2011, Brian served as Vice President and Chief Financial Officer for The Central Valley Fund, a private equity fund focused on investing in small, California-based companies. Prior to working in private equity, Brian worked in Grant Thornton’s Global Public Sector consulting group as a Senior Financial Analyst. He also worked for BearingPoint’s Communications and Content group as a Financial Analyst, focusing primarily on the telecom sector. Previously, Mr. Woodall ran an Internet start-up, TheBullseye.com, which focused on global financial markets. He was also an Associate in PricewaterhouseCoopers’ audit and consulting groups.
