Founder Fridays No. 30
Helping founders scale smartly.
Happy Friday.
This briefing is focused on management. Enjoy!
The Seduction of Incentives
One poverty-stricken man spent two decades scamming widowed women out of money, posing as a fisherman. Another man learned he’d make more money as a subprime mortgage banker than he did as a pizza delivery person. In a third example, locals looked past a drug lord’s violent, murderous ways, knowing he’d treat some with kindness, and even paid for one couple’s wedding. In all of these situations, good, honest, well-meaning people ended up supporting or partaking in bad behavior because the incentives to play along were strong. In everyday life and business, a lot of people can resist financial incentives. Cultural and tribal incentives are more seductive. Collab Fund (6 minutes)
Don’t Always Go With Your Gut
No matter if you’re on the founder’s or investor’s side of the table, startups look a lot like poker. They both involve big gambles, the kind where it’s unclear whether you’ll end up with a winning hand, or a “bad beat story” because the cards just didn’t go your way. For renowned retired poker player and decision-making expert Annie Duke, going with your gut doesn’t work as well as her decision-making tactics: 1) Make the implicit explicit. 2) Think outside of a particular decision. 3) Bring others in, but don’t infect the group. 4) Don’t fear process, even if you’re trying to go fast. 5) Review the good with the bad. 6) Make the decision smaller to go faster. First Round Review (31 minutes)
Founder FAQ: What Is a Warrant?
A warrant is a type of security that gives the holder the right to buy stock at a certain price, known as the exercise price, within a specific time frame. Warrants are often used in startup financing as an additional incentive for investors. While warrants can be an attractive incentive for investors and startups alike, there are several risks associated with their use. Namely, issuing warrants can dilute existing shareholders’ equity if they are exercised. Westaway (7 minutes)
Startup Funding Guides
I’ve put together a series of guides to equip founders to excel at fundraising. These guides break down the deal term by term and give you negotiation tips so that you can speak to investors with confidence.
Move Fast. Don’t Break Things.
Hi! I’mKyle. This newsletter is my passion project. When I’m not writing, I run a law firm that helps startups move fast without breaking things. Most founders want a trusted legal partner, but they hate surprise legal bills. At Westaway, we take care of your startup’s legal needs for a flat, monthly fee so you can control your costs and focus on scaling your business. If you’re interested, let’s jump on a call to see if you’re a good fit for the firm.Click here to schedule a 1-on-1 call with me.
Ok, please don’t quote former poker players that are hired by VCs. I mean really :-)