Editor’s Note: Each week Maynard Webb, former CEO of LiveOps and the former COO of eBay, will offer candid, practical, and sometimes surprising advice to entrepreneurs and founders. To submit a question, write to Webb at dearfounder@fastcompany.com.
Q. I started my company solo but brought on a cofounder a year in. It wasn’t the right fit and I let her go, though she has equity in the company and is on my capitalization table. I’m fundraising now and not sure what to disclose to investors. Also, I’m not sure if I call myself founder, or cofounder.
–Founder (or cofounder?) of a consumer startup
Dear Founder,
That’s exactly what I would call you, no question. You have always been a founder and though you once had a cofounder you no longer do.
I don’t think having someone on the cap table who is no longer a part of the company is uncommon. Don’t beat yourself up about the fact that the cofounder didn’t work out. It’s unfortunate but it’s not that unusual. When you have something to explain, the truth is always better than the spin. If asked, just be upfront about the situation.
If you have a great company and a lot of investor interest you will not have to worry about this. If you don’t have a lot of investor interest you may get questions about what happened. I hate to say this, but it more likely means that that they are searching for ways to say no—rather than actually disqualifying you for this issue.
The most important thing is to be compelling and to have a great product and service. That’s what will incentivize people to buy your product or service and it is what will motivate people to invest. If what you’re offering is not captivating no one will want to fund you—and they will use anything as an excuse to say no. The stated reason could be that you have too many people on your cap table . . . but that won’t be the real reason.
I am going to admit that we have a lot of “safe” ways to say no, things like: “it’s not the right space;” “it’s not our focus;” “it’s too early . . . it’s too late;” and it goes on. There are lot of nice ways to say no that enable people to feel okay, but perhaps we might serve them better if we told them the true reasons. However that can be really hard to hear and no one wants to be the crusher of dreams.
The fact is most investors must say “no” 10 to 100 times more than they say “yes”. Therefore, to stand out, you have to be outstanding. Focus on building a place that people want to join. You want to be in demand. You can’t just wish for that; you have to execute your way into that.
Time will tell who was right and who was wrong. But time is not your friend—you have to work hard now to make it amazing.
As a founder you will believe in your idea more than anyone else. That’s great. But to succeed, it’s not just about you believing, it’s about finding other champions. Everything gets easier with more believers—believers who are customers, employees, and investors. I wish you luck on your journey.
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