Andy Swan » Rule #0.1 of starting a business

Rule #0.1 of starting a business

October 8, 2008 – 10:35 am

Get the structure of the entity nailed down.

I’ve seen a thousand “startups” that didn’t have a structure.

A few guys with a vision but no structure is a disaster in the making. You MUST know who owns what %. Who is responsible for _________? Who is THE MAN that will make the final call? How much will each of you put into the business?

Figure this out from the start.

If not, you’ll put yourself in a lose-lose: Either your idea sucks and the whole thing fails, or, worse, you finally get traction and instead of moving forward, your team is distracted bickering over equity, compensation and vision.

Figure it out BEFORE you get there. You’ll be glad you did.

Serge

so true... I believe this was one of the problems that caused VisiCalc to get distracted and let Lotus 123 slide right past them (Yes, I am obviously reading founders at Work :-) )

andyswan

Ha!

Mike

Andy,
As a 26 year old eager to break into the start-up world (currently in the corporate world), I find this site to be very enlightening due to both your insight and ability to get straight to the point. I am semi-actively networking to break into this arena thanks to in part to a few contacts and a couple pretty good ideas.

What do you say to other young professionals in my shoes that could shed some light on what you did at STEP (not rule) #0.1? In other words, what did it take to move from the idea stage to developing a profitable business? Did you immediately have a source of funding (a big hurdle for someone with limited funds), did you know how to develop the technology behind sites like mytrade.com, etc...? Thanks Andy.

andyswan

Great Q's and thanks for the kind words.....I will try to throw in more "history" here as I know it is very applicable!