Money has the unbelievable capacity to turn everyone into the virtual opposite of what they are now. No other force I know of can make a person do a complete 180 degree flip.
I’ve heard stories now of friendships being destroyed, of family members making incredible demands, families being broken – the list goes on. All of these stories have been in context of starting businesses.
I’ve personally experienced an episode where a partner didn’t pay up his share of a business despite claims to the contrary and I’ve now had to exit that business. I’ve lost an opportunity and a friend.
Somehow in our society, money is some kind of magical force in our lives. It is the path to freedom, to getting things done, and also to nightmares and headaches beyond belief. We are programmed like this from the day we are born – to succeed, to go to school and make money, to buy things, to gain pleasure from buying things, to want more, to have more – as if money is going to solve all our problems by having more.
So therefore, when people are asked to commit actual money to a venture – that’s where the adventure begins or ends.
When you have skin in the game, you’re committed like nothing else. Because in our society, it’s not acceptable to commit one’s life (you succeed, you live – you fail, you die). So you commit the next best thing that has a similar perceived severity in one’s life – your cold hard cash.
Yes, that cash that you slaved over. That you worked years for. That you equate to other things which give you status. Status to attract a mate. To elevate you in society in the eyes of others.
Without which you are a nobody. You can’t eat. You have no roof over your head. You don’t have a mate. You suck.
So what have I learned:
1. No partners are truly committed unless they have put in some substantial level of cash. $100 is not enough. We’re talking at least $1000, if not much more.
2. Don’t start any work until the money shows up in the corporation’s bank account.
3. If it doesn’t show up, just cut loose as fast as possible. It ain’t worth the headache to chase it down no matter what the opportunity is with this partner.
4. I’ve learned to let go of the cash I put in any venture myself. You need to have that mindset that this money is gone and I may never see it again. Because if you don’t have that attitude, you’ll always be nickel and diming everything and you’ll miss opportunities because you’re not willing to spend to generate more cash.
5. Money ain’t everything. There are way more important things in life than money despite what’s been burned into our brains by our immigrant-have-nothing-hiked-50-miles-in-the-snow-to-school-every-day parents. For them, it was very much about making money and surviving. We’re past that.
6. Depending on externalities, like what money can buy, for happiness is an undependable road fraught with disaster. Work on your internal abilities instead. In the end, when you’ve left the poker table and you’ve lost your shirt, you’re still left with yourself and you better be ok with…YOU.
OK I’m diverging and giving you life advice when I should be talking about entrepreneurship. Sorry.
A few more business things I’ve learned:
7. DO NOT BE GREEDY. Be patient. There will always be time to make the next thousand, million, billion. Whatever. We all were greedy through the internet bubble years and look what happened to all that wealth. Take the time to build your business, your credibility, and do it step by step versus trying to make that last one killing. Why would you want to put all your eggs in one basket?
8. Working with friends and family adds another huge level of complexity, commitment, and obligation if you’re doing business with them. You can much more easily walk away from strangers if you don’t get along with them in business. Trying to walk away from friends and family can be hugely stressful, emotional, and/or impossible. It’s like a breakup or divorce of huge proportions. You should be aware of the pitfalls and make sure you set expectations with your friends/family you’re doing business with or taking money from. Most likely, friends/family won’t be experienced in this type of thing and are not used to losing money.
Institutional money, however, is different. They are professionals, and are used to losing money all the time – not that I’m saying you should lose it ;-).
Make your call if you’re going to work with friends/family and beware the consequences.