We all make mistakes. I’ve been working on the Brazilian for almost a year, so far. There is one major mistake that I see most people doing while trying to launch your own startup: people. I’m sure timing is the most important thing to you to succeed, but you need people to find out when it’s the best time to go live. And the problem is not about talent; in Brazil, we have plenty of great workers. The problem is how founders deal with people who are part of his/her startups.
I firmly believe in the Brazilian ecosystem due to its people. The problem is that we don’t value people’s job, as it should be. In the startup case, I don’t see many people willing to share stock option to hire the bests of each area. The people problem here is the founders who don’t want to give up on its shares. This is clear to me. I know there is no right or wrong rule for stock options pool, but it should be faced as a tool, not a prize. Giving stocks to relevant employees is good for the future of your company.
We Brazilians love to have things. Founders like to have a lot of shares. They only forget that 100% of nothing is nothing. Most of the founders I’ve met suffer while discussing selling shares for investors, and even more to future employees. Sometimes I remember them that Jeff Bezos, Amazon’s CEO and the wealthiest person in the planet owns about 15% of his company.
Founders must remember that one of the first questions any VC will ask is how is your team. Indeed, in the Silicon Valley standard deck, there is a good description about founders, employees or even advisors, as they would be a relevant part of the team. Again, it matters for investors; they invest in people, not ideas. Founders must remember that, if you have good people in your organization your valuation will be higher.
All that does not mean that you should start giving away shares. You should offer people who deserve and how much they deserve. Plus, some mechanisms can protect your startup if the person doesn’t perform. It is better to own 1% of a billion-dollar startup than 100% of an idea.