Creating the Future

“Inveniet viam aut faciet.” – Lucias Annaeus Seneca

As summer morphs into fall, there is quite a bit of excitement surrounding the much anticipated initial public offering (IPO) for Alibaba, China’s largest e-commerce business. It has been an interesting journey for Alibaba’s chief architect and founder, Jack Ma, (his Chinese name is Ma Yun) to go from pretty much dead in the water in 1995, to the biggest IPO in U.S. history raising nearly $21.8 billion USD in 2014. Watching this remarkable journey unfold over the past 19 years, it reminded me of the Seneca quote I learned from Fr. Schumacher, SJ my freshman year high school Latin teacher, “Inveniet viam aut faciet” or “He [Hercules] will find a way or make one.”

A slight variation of this quote “I will find a way or make one” could serve as the official motto for all entrepreneurs. While the diminutive Jack Ma is not going to be mistaken for the physical Hercules, he personifies the very essence of drive, determination, and dedication that it takes to turn an idea into a billion dollar venture.

Of course, to truly understand entrepreneurship we need not only see the success of the journey, but the process that transpires over time which brings the journey to the present. This conundrum of entrepreneurship can be quite perplexing as we tend to over focus on the $21 billion valuation and not the 21 years it took to get there.

Fundraising and Risk

One of the most frequent questions I get from entrepreneurs getting started is, “How much money should I raise?”  In the imaginary world where startup pro formas originate, it is clear how much total capital will be needed to build the business to breakeven, but not when each portion of that capital should come in.  And how you answer that can have a significant impact on the amount of dilution you take over time as a founder.

One extreme would be to just raise all the money up front.  While this approach greatly reduces the total cost of fundraising, it will almost certainly be a worst-case scenario for founder dilution, assuming your valuation goes up over time (which it always does, right?).  So, raising all of that cash at the beginning is obviously not the solution.

Perhaps you could try to raise cash just-in-time, as you need it.  By never raising more than you need, you would minimize the dilution that you’d take overall, again assuming your valuation continues to increase.  But there is a cost to fundraising, including things like your time and effort, out-of-pocket travel and legal expenses, and so on.  And the more times you do it, the more times you disrupt your business and put needed growth expenses on hold.  Definitely not an effective way to grow a company.

So where’s the happy medium?

Preparing Millennials for Startup Success

At a recent career fair our startup’s booth was besieged with students. It seems that startups are the sexy career choice for the generation hitting the job market today. We startup founders certainly need their energy, but too often the reality of the work shocks the Millennial graduate used to much more structure and support than a startup can give.

One could argue that the culture of startups is a product of 20-somethings. Many of the faces of the movement, like Facebook’s Mark Zuckerberg, have defined the work-hard, play-hard culture that startups take on. Google and Apple headquarters feel like the college campuses that Millennials so recently left. Social media and texting are commonplace ways that work is done. Face-to-face conversations in the workplace now are carefully scheduled, if they happen at all. There are natural pluses and minuses to these changes, but the rest of us have to get used to it.

However the Millennial generation must also adapt to succeed, especially if they wish to join the fray at a startup company. I have had the privilege of leading hundreds of Millennials across two entrepreneurial ventures in ten years. Based on this experience, I would offer these three ways in which startups fit their needs, but also need them to adapt quickly.