The guide to advisor shares - Carta: Mean People Fail

The guide to advisor shares - Carta: Mean People Fail

In the world of startups and entrepreneurship, there are two key topics that often come up: advisor shares and the importance of being a good person. While these may seem unrelated at first glance, there are actually some common points that can be drawn between them.

When it comes to advisor shares, it is crucial to have a vesting schedule in place, just like you would for yourself and your employees. These agreements typically have a two-year schedule, vesting monthly, with no cliff. This ensures that advisors are committed to the success of the company for a significant period of time.

However, before promising equity to a potential advisor, it is worth considering if they would be willing to invest in your company instead. By investing directly, they have more skin in the game and it also sends a valuable signal to future investors. It shows that your advisor believes in the potential of your company and is willing to put their own money on the line.

Choosing the right advisors is also crucial. Just like you would be selective when choosing a co-founder, the same should apply to advisors. They can either be critical to your success or a distraction and waste of time. It is important to carefully consider their expertise and how they can compensate for any weaknesses you may have.

In addition to providing expertise, advisors can also be a valuable sounding board. They can offer guidance and insights based on their experience, helping you make better decisions for your company. It is not uncommon for advisors to even consider investing their own money in future financing rounds, further aligning their interests with the success of the company.

When establishing a relationship with an advisor, it is important to have a clear agreement in place. This includes defining their domain of expertise, what they will help you with, and the percentage of equity or other compensation they will receive. It is crucial to document this agreement, especially if equity is involved, and consider consulting a lawyer to ensure it works for everyone involved.

Now, let's shift our focus to the importance of being a good person in the startup world. It is interesting to note that many successful startup founders are known for their good character. While there may be exceptions, it is remarkable how consistently good people tend to succeed while bad people often fail.

One reason for this is that being mean makes you stupid. Engaging in fights and conflicts prevents you from doing your best work because it narrows your focus and limits your ability to think creatively. Startups don't win by attacking, they win by transcending the challenges they face.

Mean founders also struggle to attract the best talent to work for them. Unless they possess exceptional persuasive skills, being mean is not an attractive quality for potential employees. Building a great team is crucial for the success of a startup, and good people are more likely to be drawn to leaders who treat them with respect and kindness.

Furthermore, the most successful founders are not driven solely by money. They are often motivated by a spirit of benevolence and a desire to make a positive impact. This aligns with historical examples of successful individuals in various fields who were not known for being ruthless. Mathematicians, writers, and artists who achieved greatness did so with a focus on their craft and a desire to contribute something meaningful to the world.

In conclusion, the guide to advisor shares and the importance of being a good person in the startup world may seem unrelated, but they share some common points. When choosing advisors, it is important to have a clear agreement in place and select individuals who can compensate for your weaknesses. Likewise, being a good person and treating others with respect can lead to greater success in the long run.

Here are three actionable pieces of advice to take away from this article:

1. When considering advisor shares, explore the possibility of having potential advisors invest directly in your company instead of taking equity. This shows their commitment and belief in your company's potential.

2. Choose advisors like you would choose a co-founder. Look for individuals who can compensate for your weaknesses and provide valuable insights and guidance.

3. Focus on being a good person in the startup world. Treat others with respect, be kind, and build a team of talented individuals who are motivated by a desire to make a positive impact.

By incorporating these advice into your startup journey, you can increase your chances of success while also fostering a positive and inclusive work environment.