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You don't know stress until you go through the break-up of something important to you. Whether it's a business or personal divorce, the strain it puts on you is enormous. Your support base eroded, you have only your strength to rely on. It's a nightmare.
Leaving my old company for me was walking away from a business that I founded, and then helped build and manage for five years. It was tough decision - perhaps the hardest of my life. A long, often confusing, negotiation for the sale of my shares and resolving of my restraint of trade created a six-week vacuum in my life, most of which involved listening to legalese and waiting. At the end, I felt that I had seen everything from the birth of a company to its conclusion - at least in that form. I have more experience of business now than any MBA student. I have my Doctorate of Deep-ends. The hardest part, by far, of leaving was telling our staff and calling our clients. For the first time I really understood the concept of business commitments. It was a hugely emotional process, and would have been a lot worse but for the enormous loyalty and support both groups showed. So, after five years, after what I consider many hard knocks, here are my top 6 lessons for people getting both into new businesses, and into this industry. Take them or leave them, they're really just my opinion: - Choose your partners carefully
I think this is a point that could be considered obvious, but I think a lot of people rush into new business without taking enough care over this. Who you are going to count on matters less in the start-up, hype phase, than in the tough times. If you end up working against each other or not trusting one another, your business will suffer enormously. It's hard to judge personalities - which is what this comes down to - up front. The only way to do this properly is to work with the person for a while, and get to know them. In particular, get to know them under immense stress, because that's what counts.
- Set a clear vision, and stick to it
This is also common management sense, but is the single biggest lack in many businesses, particularly in the Internet space where people feel that can't envision because things change too much. A vision is something that remains true regardless of the specific circumstances you are in. It is, as one management consultant we worked with says, "the dream that the company is there to fulfil". If at any stage in a business you either cannot say what the vision is, or you can but it does not reflect what people think or do in the company, you need to stop and fix that first.
- Watch the Internet market carefully
In my experience, companies in the Internet industry are woefully unaware of what is going on in the market: products, buying patterns, market shares. Good research is available, and it is worth spending the money to see it, because it is often completely different from what you'd expect. It is vitally important that you constantly watch what the market is doing, and in particular your potential customer-base, because it can change all your decisions in an instant.
- Know when to stay, and know when to leave
Perhaps my biggest lesson, and one that can be applied to investments other than time. Loyalty is a fantastic quality to have, and many companies are right to insist on this from their employees. But as an individual, one should constantly assess whether your inputs (time, money, ideas, etc.) are ever going to bear commensurate fruits. A salary each month, in this industry, is not the most that one can hope for. Keep your loyalty in balance with your personal ambitions - otherwise, it's easy to become furniture.
- Minority shares in a private company have no intrinsic value
Let's say you join a private company and they offer you 2% of the company, perhaps on a share option basis. You earn those shares by serving the company for a year, and you are now a 2% holder in that business. What are those shares worth? Well, you'll find that they're worth what somebody is willing to pay you to buy them. Not a foreign concept in the ownership of any other property, but many people get confused about this with shareholding. If times are bad, and the business is not an attractive investment, that 2% could very well be worth nothing - or, at least, couldn't be sold for anything. Another interesting point: no outsider wants to own 2% of anything, so if you can't sell to someone else in the business, you're toast. Unless otherwise contractually specified, you cannot force someone to buy shares from you at anything but the price they are willing to pay. You're into the realm of fairness here, which is often in short supply.
- Careful with restraint of trades
Everyone is panicky about restraints. There is also a common wisdom that says they are universally unenforceable. Not true! Courts do uphold these things, provided they can be shown to be protecting only the company's proprietary interests. What does this mean? Typically, if you steal staff, clients or company data, you're going to be in trouble. There are a lot of other clauses in restraints which the courts probably wouldn't enforce, although all the lawyers point out that it is hard to predict what the courts will do. It depends on the circumstances. Generally, you cannot be stopped from working in the same industry as the company you have left, or from dealing with clients who approach you unsolicited. In some instances, however, your specific contract or the extent to which these infringe on the company's interest can change this. In general, it pays to be careful about what you sign (you can usually negotiate, and particularly at management level you should be remunerated for the restraint) and to speak to lawyers if you decide to leave with a signed restraint. Ignoring it is not a good idea. You cannot be forced to sign anything, and it may not even be legal in terms of the new labour laws not to hire someone if they won't sign your restraint.
Editor's Note:
Team Beokenhill would like to thank Jared Cinamin for granting us the permission to re-publish two of his most recent articles. They were first published on Media Toolbox.
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