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Saturday, January 29, 2022

Choose your job title before you name your startup – TechCrunch

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During the garage stage And the days of the Zoom Room in the life of a company, liquidity can feel like the key to idea creation. The lack of contractual obligations lies in how we understand the origin stories of the most famous startups. We celebrate the fast hub, love the best player in the game on perfectly polished platforms and care about repeat entrepreneurs raising money for their next idea before they even know what it is. The ability to put together a team and launch something quickly is clearly the core of what makes Startupland so special (and frankly fun to write about and talk about).

However, while the amorphous start of a startup company can feel incredibly lively, the formalities are important. There is a difference, both in ownership and weight, between founder, founding team member, advisor, investor, angel investor, and early employee. As evidenced by the Winklevoss twins vs. Facebook, Reggie Brown vs. Snapchat, and more recently Avi Dorfman vs. Compass, disagreements can arise simply because definitions differ in all of the above.

I don’t think the convention title is magic; I think it’s just thinking about how to handle the different possible scenarios.” Jonathan Harris, Managing Partner, Harris St. Laurent & Wechsler

While the series of high-profile legal cases shows how pervasive, and pervasive founders’ disagreements have been for years, the current startup environment makes me believe there may be new ones ahead. why? Well, there are a number of factors that could be igniting the fire right now: frenetic funding, an unruly startup build-up environment, and the glorification of being a disjointed team with no titles — just passion and whiteboards.

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Startups and movements need to establish clear governance to manage expectations and avoid late-stage conflict. Although this formal form is easier said than done, it is often a process dictated by your ability to be confrontational, have conversations, and most of all, be transparent.

What else causes discord, if not money and power?

Akshaya Dinesh, the former co-founder of Ladder, was once rejected from an accelerator because she didn’t have a good answer for who the CEO was.

“This was before we even raised any funding, and we were both working on it,” she said. “We said something like, ‘We’re very early and we’re both technical so we kind of do everything together’ but if we had to pick it up it would be X.” Later, the entrepreneur said, she realized that the “correct answer” was to give a name with confidence and give a clear distinction to the areas of focus each person in the company would develop into.

“Headlines are one of the biggest reasons for disagreement between the founders, so they try to assess how comfortable you are in having difficult conversations early on,” she said. A stress test is likely to be the reason why one of the classic YC interview questions is “Who’s the CEO?” (Dinesh went on to make millions from Alexis Ohanian’s Seven Seven Six Ventures, DoorDash, Harry Stebbings, Pear VC, and Forerunner.)

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Saba Karim, an investor in Techstars, agreed with the idea that after a product was not suitable for the market, the biggest startup killer was the co-founder’s struggle. “And what else do you think causes the rift, if not money and power?” He said.

“What you decide today may not be true in two years, or even two months, so it’s important to have slopes and maturity schedules,” he said. While the investor hasn’t noticed a slight rise in founder struggles or equity inflation in the current climate, he believes written agreements are important for setting priorities once there is funding or revenue in the picture.

Additionally, and somewhat counterintuitively, Karim believes that splitting equality between everyone on the founding team is a negative sign.

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