What Part Does Religion Play In Gender

Roles at Work?
When Mark sees that Facebook is opening up positions in Kansas City, Mo., he jumps! He
knows that he might lack some of what they require, but the opportunity and wide-open doors
drive him to do whatever it takes to get the position. Hell study hard, get the best clothes for the
interview, network to see if anyone has any suggestions for landing the job and hell tell his fear
to go to hell.
But when Mary sees the same position, her first response will be to question whether or not she
really has what it takes. Her internal monitor will discredit her and shell begin to assess whether
or not shell be viewed as too aggressive for pursuing such a top-paying position. Then her
mind will go to family, responsibilities and whether or not its really the right season for her to
soar. Shell get some input from people on whether or not she should even pursue such a position
and before long, shell rationalize that she probably wouldnt get the role anyway, so its best to
be grateful for all she does have.
Why is it that after all these years of womens liberation, gender equality and the pursuit of our
dreams, women are still holding themselves back in the corporate world? I believe one of the
answers to this question will shock you.
The oppression of women is not a new topic. Do a Google search and youll find women in third
world countries still working as slaves to their husbands and tribal leaders accepted as normal.
Do research on the role of women in the world, the church and the home and youll find that the
attack is still very active and very real. Women from various sectors within the U.S. still believe
their opinions, ideas and even their talent should always be focused primarily on the home and
children. Many still believe, after all these years of advancement in technology, smartphones and
even the information age, that men should be leading the charge in our economy and women
should be supporting them, on a side-role slot.
Related: Why Faith Belongs In Your Workplace
I live in an area where the Amish are alive and well. But that is an extreme case, and wouldnt
even hold weight when I begin to speak about women in leadership, so I wont go there.
However, right in my own backyard, where I live as one of the top social-media influencers in
the world, I am often asked the same question: Are you sure you want to pursue all of this and
put so much pressure on your family?
Ironically no one has ever asked my husband Alan this question. When he pursued his career, no
one ever questioned what it would do to our family, his lifestyle or his livelihood as a man. It
was just a given that he, as the man, should pursue the best career he could. It was also
understood without any conversation or input that as he did this he would be a good man and
one with upright character.
Where is this coming from? Is it merely a personality thing where some women, who have an
instinctive nature to be a leader, are overriding what they should be and where their natural
stationed position should be, meaning in the home?
Where did this idea that if a woman pursues an executive position the home will suffer come
from? And why is the I can have it all mindset really not working for most women in the year
2014?
I write this column from the perspective of faith at work. Youll find very unconventional topics
such as prayer in the workplace, the prophetic in business and everything in between. You could
say I write a column that compels some and repels others. As I unravel what I believe to be some
real issues in this topic of women in executive positions in the corporate world I am sure this will
escalate. Some will love me and shout a resounding, AMEN! Some will hate me and call me a
heretic. Thats OK. I want to create an uproar!
Related: Setting Boundaries to Be a Better Leader
The oppression of women started a long time ago. It started way before women began to enter
the workforce and way before they were given the rights to vote. It started when a religious spirit
decided to infect the minds of men and women into believing that God created women as
secondary and subservient to the man. In many cultures, its more than subservient. Its slavery.
Now many of you are probably shaking your head and thinking, What the heck is she talking
about? A woman decides to stay at home with her children and that is viewed as slavery?!
Whatever! Yes, that is typically the first response. The extreme one. The religious spirit has
done a good job of programming people to react without even thinking about what theyre
saying. Its funny, isnt it? When we talk about women its all or nothing. Its one or the other.
No one ever bothers to use the intelligence that God gave us to diligently process what this
actually looks like in the real world. Well pull up an extreme case of a successful woman or two
in executive positions who have unruly children, drug addicts or the like and well conclude that
any woman who pursues such a position is destroying her home.
I think its time we grow up.
God Himself wires us when we are knit in our mothers womb. He gives us gifts, talents, abilities
and drive. Just interview a group of people and youll find out we are NOT all wired the same.
Not all men are natural-born leaders. Not all women are quiet, meek and mild. It has nothing to
do with ambition, the pursuit of our dreams or the drive to get ahead. It has EVERYTHING to do
with how were wired. Let me ask you this very critical question: Did you have anyone ask you,
during womb service, what YOU would like to be?
I not only want to consider the topic of women in executive roles and their God-given and
designed wiring and calling to pursue such things. I think its about time we take some pressure
off my brothers the ones who have a gentle nature, are designed by God to be tender and caring
and mediators. These men are not less manly, nor are they less of a leader with these natural
instincts, talents and gifts. They are perfectly designed and created by a loving God who knew
just what He was doing. Equally, the woman who is wired with a competitive leading nature,
who has a drive and instinct to lead and govern is not going against her natural grain or bent. She
is actually designed by a loving God to do exactly what her instinct is telling her.
Related: Faith Works at Work. So Why Can't We Talk About It?
As women struggle to get ahead, slay their inner fears and find some form of confidence in the
decisions they make, it is important to find the root of this struggle and where the societal
programming has really originated. It is my belief it started in the religious system. I wont say it
started in the church, or even from my own personal perspective in a Christian church, because
that isnt the case. The religious system in general, across the lines into the Muslim community,
the Mormons, the Catholics, Buddhist, Seventh Day Adventists, Masonic Lodge and the list go
on all have a history of some measure of female oppression.
Our roots really do say a lot about who we become. Our beliefs about ourselves, and our beliefs
about others, govern how we behave on a day-to-day basis. Sadly, these beliefs are rarely
challenged, questioned or even assessed. Now let me throw out the wild card: The topic of living
out the decisions of our fathers and mothers who have gone before us and making conscious
choices about what we will believe, while also forgiving and releasing those who have wronged
us, is the only way to reprogram our internal voice. When is the last time you heard that
discussed in a corporate environment? Never. It is my belief that this is where we need to go.
What is in your bloodline? Has the oppression of women been a strong belief for many
generations and you are the first one to challenge (or walk differently in) this pattern? What is in
our corporate bloodline, the belief system of the organization we are considering working for?
And how will that affect me, an executive woman, when I decide to walk instinctively and
powerfully into all that I was designed to be? Lets go there, shall we?
Start challenging all you believe and see where you come up. Interview your family history and
see if there are some things that need a cleanup.
13 Signs of a Disengaged Employee (Infographic)
Can the Academic Entrepreneur Save the
Ivory Tower?
Contrary to popular belief, the modern professor is not just an academic intellectual but also an
entrepreneur.
He (or she) may be an entrepreneur who spends the morning wearing a pair of Google Glasses
and digitally reviewing his portfolio of angel investments. Tomorrow, hell submit a grant to
National Institute of Health and a draft of his next New York Times bestseller to his editors. He'll
attend a regional industry conference next month on the way to giving a TED Talk and appearing
on the Oprah Winfrey Network.
This might not sound like any professor you know, but he is your academic entrepreneur and he
does exist. Here are a few examples:
Related: Could Entrepreneurship Be the Great Equalizer?
In 2011, Daniel Kahneman, an Israeli-American psychologist and winner of the 2002 Nobel
Prize in economic sciences, published Thinking Fast and Slow. The book became a Times
bestseller and Kahneman a TED Talk presenter.
Daniel Pink, a Yale Law School graduate, has authored three New York Times bestsellers A
Whole New Mind, Drive and To Sell Is Human, about an activity that's crucial to business.
Bren Brown, a research professor at the University of Houston Graduate College of Social
Work, has studied personality traits, including vulnerability, courage, worthiness and shame. Her
2010 TED talk on vulnerability has been watched more than 15 million times and her 2012
book Daring Greatly was a New York Times bestseller.
Academics are strongly positioned to be the thought leaders of the 21st century, to help cure
cancer, identify new energy sources and enhance the human experience with smaller, faster and
better technology. So whats holding them back?
Related: 9 Lessons You Won't Learn in Business School
For every Bren Brown, thousands of academics are chasing the century-old promise of an
established and safe future that's just a brick wall. Graduating with an advanced degree used to
ensure getting a great-paying job at a secure institution. This is no longer the case.
In the United States, less than 30 percent of faculty members had tenure in 2007, down from 42
percent in 1995.
The future is especially bleak for research scientists in academia. The Economist reported in
2010 that 100,000 Ph.D.s were granted from 2005 to 2009 and only 16,000 new professorships
created.
A 2013 nationwide survey by the American Society for Clinical Oncology found that 3 in 4
cancer researchers agree that government funding levels were affecting their ability to conduct
research.
The problem is twofold: First, academic institutions have a long history of turning up their noses
at things like selling products, making profits and building personal platforms. Universities
simply do not know how to handle entrepreneurship. For decades they have struggled to come up
with a system to encourage professors to be inventors.
Second, most professionals with advanced degrees don't have the nerve to get off of the
academic conveyor belt. The academic life has taught them to believe business skills are not
important and punishable by expulsion.
The ivory tower needs to eradicate its love-hate relationship with entrepreneurship in order to
survive. Heres how:
Related: Top 50 College Entrepreneurship Programs in the U.S. (Interactive Graphic)
1. Rebrand and refocus academia. Instead of trying to take uniquely talented individuals and
fit them into a system that has changed very little over the last century, universities should
encourage alternative career paths. The lines between academia, industry and entrepreneurship
are blurring. Academia needs to not only accept this but to embrace it.
The ivory tower shouldnt be perceived as a safe haven or a place for professionals to bide their
time when the economy goes south. Rather it should be considered the best place to learn how to
start and run a business. Academias sole purpose should be developing people not to just be
professors, doctors and lawyers but ones who innovate and invent products and services.
2. Break the herd mentality. Most academics are encouraged to not network in alternative
industries. They are encouraged to stick with the herd as everyone travels together over the edge
of a cliff. Students should be coached on how to build up a professional presence -- both online
and offline -- and how to network across different industries.
We are now in the connection or attention economy. Facebooks acquisition of WhatsApp, a
text-messaging app, for $19 billion is a great example. Medical devices and other physical
products, even those that save lives and advance cancer research, are worth less than text-
messaging programs. Connection is knowledge. Its also a critical skill. Academia must get on
the leading edge of the connection economy if it wants to survive.
Related: A New Startup Financing Model and the Passionate Voices Behind It
3. Change the funding method. The most successfully funded grants are often those with most
translation potential, meaning those that can be converted into products and services that will
either extend life or enhance the quality of life. But a very small group of reviewing academics
and government officials choose which of these grants get funded -- and sometimes decisions are
politicized and not based on pure science.
It's only a matter of time until research and academic funding is awarded through crowdsourcing.
Academia should be at the forefront of this movement and start seeing itself as a giant
entrepreneurial think tank, shark tank and crowd sourcing platform.
The world is in a state of flux. Old, slow-moving establishments are being replaced by new agile
systems. The only way for academia to survive is to rebuild itself in the image of entrepreneurs.
This means rebranding the ivory tower as the entrepreneurs best friend and assisting students in
gathering the business tools they need to be successful.
Why Having an 'Open-Door' Policy Is
Imperative for a Scaling Company
When you take the leap into entrepreneurship and launch a startup, something weird is going to
happen right around the 20 to 30 employees mark: People are going to start looking at you as
the boss.
Youll know youve reached that crossover point when every random comment is treated as if
its written in stone. Make an offhand remark and employees will march away and dedicate days
of effort toward your half-baked thought.
It was a strange moment for NerdWallet co-founder Tim Chen and I when we realized
everything we said carried more weight. Thats when we knew we needed consistent processes
to carry the spirit of informal communications across a workforce that has doubled in size in
recent months and looks to double again before the year is out. Easier said than done.
Open communication is a concept that been around since there have been companies. There isnt
a company or manager on the planet today that doesnt claim to have an open-door policy, even
as office doors have given way to the open, collaborative concept of most startups. That said, its
easy to descend into an all-together-alone treadmill of staring at computer terminals and
communicating by e-mail or instant messenger to a colleague two seats away. And these habits
can demoralize company culture.
Study after study shows that communications is the key toward building greater employee
engagement, productivity and innovation. Yet youll find its a minefield trying to reach that goal
in small, rapidly growing companies. The key thing is this: Open communication really is
synonymous with trust creating trust among colleagues and building confidence to share
without fear of repercussions.
How to achieve that? Here are the lessons weve learned in trying to scale a company built on
open communications:
Open communication isnt natural. We are selective with information we share outside close
friends and family. Our instinct is to play favorites with information -- sharing more with people
you like and trust and being guarded when outsiders enter the room. That predilection cant work
as a manager of a booming startup. Strangers, in the form of new hires, are coming in the door
every week.
Related: Do This, Don't Do That: Why You Should Avoid Mixed Messages at Work
Fostering open communications at your startup takes work and deliberate action. Its an irony
that you have to rethink how you communicate to preserve the informal esprit de corps of early
startup days and protect the spirit of free-flowing innovation as you scale. But its got to be done.
Uneven information distribution kills morale. If information distribution is pocketed among
clusters of employees, it undercuts an atmosphere of open sharing and creates a separate social
class within the office. Those "who know" vs. "those who dont" can create tension.
It doesnt matter if the information is valuable or just small talk. Not including everyone creates
vulnerability where none exists. And rather than scaling your business, your uneven
communications flow is scaling uncertainty among the staff.
What do people want to know? Ask them. It is important to figure out what kind of
information employees want relayed to them. The easiest way to figure this out is ask.
As our business grew, people complained about not being in the know. Poor communication was
high on the list of feedback we got on internal-culture surveys. So we compensated by over
communicating. The result? People complained more. Turns out, people werent begging to hear
a blow-by-blow replay of everything we discussed in our management meetings. Mostly, people
wanted to know who are we hiring and why, as well as what everyone is working on and why.
Beware of "radical transparency." As your pendulum swings from under communication to
over communication, one idea that may be seductive is joining the radical transparency
bandwagon. Theres growing buzz about companies like Buffer, which is making waves by
publicly sharing the salary of each employee and handing out Jawbone wristbands to track
exercise and sleep patterns. Ive talked to several small firms who have adopted radical
transparency tenets such cc:ing all employees on email, so everyone knows what other
employees are working on.
In my opinion, thats nuts. Radical transparency cant succeed for the simple reason that it cant
scale. The information overload would produce a dragon eating its own tail as it attempts to
grow. And lets be honest, tracking employee fitness and sleep patterns is just plain creepy.
Related: In This Smartphone-Obsessed World, He Who Communicates Best With His
Customer Wins
Employees need to understand the why of their jobs. One thing as a company founder you
cant communicate enough is the vision and mission of the compan, and how each person fits in
that mission. Processes like Objectives and Key Results (OKRs) help to reinforce that, but it
must be a refrain at every level, from one-on-one chats to town hall meetings.
Studies show that more than compensation or great perks, employees desire meaning and
purpose in their work. Its your job to give that to them.
Proactive managers trump process. Weve instituted a host of tools to distill information: We
bookend our weeks with all-hands meetings on Monday and Fireside chats with founders on
Friday, we have 360-degree management feedback shared with direct reports, summaries of
weekly management meetings and public display of employee OKRs.
But those things become wooden unless building relationships and trust is a daily, proactive goal.
For example, all managers now have set office hours for one-on-one talks with employees. At
first, nobody showed up. Rather than throw up their hands and count it as a failed initiative, the
management staff proactively pulled people aside to help create the habit of one-on-one
meetings.
Be honest with what you know and dont know. Things change fast in the startup world.
Whats true today may not be true tomorrow.
That can be a wild ride for employees. Open communications provides a safety bar for the roller
coaster. And if youve built trust, theyll stay on the ride through all the hairpin turns that come.
How to Bridge the Workplace Generation
Gap
The workplace has traditionally consisted of old-timers with 20 to 30 years of experience
under their belts and the young hot-shots who know-it-all. The younger workers have
historically viewed older workers as stuck in their ways. Older workers have historically viewed
younger workers as interlopers looking for a fast-track to the top.
Related: How to Manage Generational Dynamics
Todays workplace is a bit more complicated. For the first time in history, entrepreneurs have to
manage the challenges of four generations under one roof. Often, the biggest challenge is getting
the generations to see past their biases and learn to work together toward a common goal.
The culture and major historical events of its time shape the worldview of each generation and
how they approach work. They tend to differ on everything from dress code, to work hours, to
interoffice communication. Leadership can encourage harmonious collaboration by:
Creating Diverse Teams. As new projects come up, leaders should develop teams that draw
from a cross-section of all generations. When setting up these teams, pull based on skill, rather
than age and then diversify as needed.
Keeping Employees Connected and Engaged. Employees of all generations want to know that
their work is valuable to the organization. Be sure they understand how their role in specific
projects will help the bottom line and benefit them personally. Ask them who theyd like to have
on their team in order to reach those goals. Keep this in mind as you develop teams for future
projects.
Creating Mentoring Opportunities. Partnering younger workers with older workers can have a
positive impact on larger teams. Younger workers can learn the value of structure and face-to-
face interaction. They can benefit from Boomers experience with the company. Boomers can
also learn from their younger counterparts. They may pick up new technology skills and begin to
embrace work-life-balance. They can also learn new and faster ways to complete tasks.
Related: Are Millennials Really the Entrepreneurial Generation?
Looking Beyond Experience and Skill Sets. Skills can be learned, attitude cannot. Leaders
should look for more than experience and skill sets from younger workers, and look more at their
behaviors. Gen Y is typically very enthusiastic about work. Their enthusiasm may revive teams
who are a bit more jaded. When building teams, identify underlying characteristics and soft skills
that can help move the organization forward.
Productively Dealing With Conflict. Exposing different generations to one another on a regular
basis can create tension but, when managed effectively, that tension lead to innovation and
greater collaboration. Effective leaders help teams work through their differences and understand
that everyone has something valuable to bring to the table. Have processes in place for
employees to raise issues, voice perspectives and resolve conflict productively.
Every generation has valuable lessons that they can teach the next. Traditionalists and Baby
Boomers often have an encyclopedic knowledge of their industry and organization. They can be
a wellspring of tricks of the trade that younger workers need to learn. Generation X can often
act as a bridge between younger and older workers, serving as mediators who value fairness. Gen
Y can teach everyone a thing or two about technology and how to value work-life-balance. When
members of different generations are encouraged to work together, it builds understanding and
trust, helping create a cohesive, yet diverse team.
4 Lessons From the Worst Business Meeting
Ever
When I started Sageworks back in 1998, our goal was to develop an expert system technology
that would convert hard-to-understand financial-statement numbers into plain language. It was a
simple idea, but we struggled mightily for the first four years. We had to develop a system that
really got it right. This took about two years. We were horrible at raising money from
professional funds so we used our own money. Then, once the technology was developed, we
had to sell it to someone. That was when the adventures really began.
One meeting during this tumultuous time stands out in particular because of the impact it had on
me personally and ultimately on the success of our company. This meeting was with the founder
of a very well-known and innovative software company. The names are really irrelevant to my
point, so Ill omit them to avoid being harsh.
As a financial wonk, I had always followed this company and their founder because I loved what
they were trying to do -- to make finance easy for the common man. The match between our
product and theirs seemed perfect: They produced the numbers, and we made sense of them. At
the time, the meeting was a big deal to me. I was meeting an icon of the financial-software
industry running a company with several billions of dollars in revenue while I was running a
company of about 15 people (approximately 12 of whom were part-time college interns).
I woke up the morning of the meeting, left with plenty of time to navigate California 101, and
waited in the lobby of the companys headquarters. The founder walked into the lobby, delivered
an abrupt handshake, and bounded ahead of me up a staircase. I had to nearly sprint up the stairs
to keep up with him.
Related: The 3 Qualities of First-Wave Employees
Once in his office, I gave him the standard opening of who I was and what I was trying to do
with my company. I mentioned that I was the "tri-founder" of the company (I think I made that
term up but it seemed self-explanatory at the time). He cut me off with a smirk and wondered
(more to himself than to me), "What is a tri-founder?" After a feeble, mumbled definition by me,
he replied that he guessed that it made sense.
The fun continued when I began to describe our business. I explained that business owners have
access to a lot financial data without fully understanding the data. To me, this was and is still a
truism, so I was a bit thrown by his response: "Well, right off the bat, I disagree with your major
premise."
You might imagine my internal dialogue: How in the world do I present the product if he does
not even buy into the basic idea of what the business is about? However, having already
commenced the meeting, I thought it was best to keep going -- kind of like when a gymnast has
to finish the whole routine after falling flat on her face right after coming onto the floor.
WellIve made it this far.
I decided to demo our product for him. Unsurprisingly, he was not impressed with it. He made
his displeasure very apparent in various creative, curt and condescending ways. Wow, I thought.
Two years of work down the drain. As I continued, the meetings trajectory began to mirror that
of the Hindenburg. Small beads of sweat began to appear up and down my neck, and I started
thinking about how to best exit the meeting while maintaining a smidgeon of dignity. Even now,
I cannot watch Shark Tank because I feel for the entrepreneurs and recall this meeting. After
about 15 minutes or so, I basically decided I had enough and politely excused myself.
Related: The 4 Things No One Tells You About Entrepreneurship
I vividly remember waking up the next day after the nightmare meeting hoping that it was just
that: a bad dream. Alas, it was not. At that moment, I resolved that, no matter what I had to do, I
would make Sageworks a success. That one meeting crystallized everything for me. It built a
quiet and powerful intensity that has helped me overcome many business obstacles. At the same
time, it instilled several important business principles that have stuck with me over the years:
1. When the inevitable shock and anger subside, the real test begins. Ones first reaction to
rejection is often confusion. At some point relatively soon, you move to anger. How can he treat
people this way? This isn't right. The world is not fair -- that kind of stuff. Its difficult to
imagine a successful entrepreneur on the planet who has not been in a meeting like this or faced
some kind of rejection. Of course, being slammed by a billionaire takes the rejection to another
level.
This next reaction is what separates successful entrepreneurs from unsuccessful entrepreneurs. It
is what you do after you are knocked down that truly defines you. I realize this may come across
as a platitude, but some platitudes really are true. Your ideas (and sometimes your personality)
will be attacked, and you will experience rejection, just as I did. You are either deflated by the
rejection and give up, or you use the embarrassment and pain as fuel to propel your company
forward.
2. Sometimes we dont realize the impact our actions have on others. Maybe I simply caught
the guy on a bad day -- too much coffee, problems at home, the cat is sick. I would hate to have
someone record everything Ive said when Im in a bad mood. You can never truly know the
heart of a person, and you certainly cant make a confident character judgment based on one
interaction. Still, I did resolve at the time that, when I became successful, I would never
patronize a struggling entrepreneur. I hope some of you reading this will remember this as well.
There are nice ways to critique an idea without being a big jerk.
3. All feedback is valuable. The entrepreneur I met made some great points. He provided some
valuable insight about the limitations of the product and our model. These were points that I
really did need to hear, albeit not necessarily in a nasty manner. It is important for you as an
entrepreneur to separate the delivery of content from the value of it. This is incredibly hard to do,
but its a crucial part of getting better. Feedback is always helpful, despite the method of
delivery. Keep in mind, too, that people are not obligated to make time for you; try to be grateful
for anything you get from somebody, whether its time, advice or anything in between.
4. Even very smart people can be quite wrong, and often. Building a business is not a math
equation, and even the most brilliant entrepreneurs are often wrong. There are no gurus in
business, myself included. Absorb as much feedback, insight and advice as humanly possible,
but do not let anyone dictate to you what can and cannot be done in business. It is all an
imperfect science.
Why You Need to Think Twice About Seeking
Venture Capital
Venture capital is unlike anything else I've seen in American commerce. People are vigorously
seeking something that's often unattractive. It's extraordinary because markets are almost always
efficient, but this one is not.
In order to back-solve to how we got here, let's start with history. As a professional market
segment, the venture capital industry is only about 40 to 50 years old. In its infancy, it was
probably a good invention in that it gave entrepreneurs the ability to seek out investors more
easily. Before that, it was largely about networking, informal contacts and merchant banking,
which meant seeking capital was unorganized. Now, it's organized: We can go to Google and
search "venture capital firm in NYC" and instantly get a number to call. From that perspective,
venture capital as a model helped because it gave us an identifiable supply of capital and, as
such, has provided some value.
However, from a practical perspective, that of someone who is starting a business today, there
are three important dynamics that must be considered before accepting capital from this
particular pool.
1) It's very unlikely that you will receive funding from a VC firm when you start a business or
even if you are running a small, high growth company. Fewer than 300 start-ups were funded by
venture capital in 2012 throughout the entire United States. Given that between 500,000 and
600,000 businesses are started each year, even in the best-case scenario, only 0.06 percent of
businesses will get funded through this channel. Remember that when you're first starting a
business, you only have your brains and your time to sell,so you have to put your chips where
they will pay off. While the odds of getting venture capital are better than the Lotto, they are not
great.
When I first researched venture capital as an option, I looked at similar statistics and thought,
"Why am I spending a lot of time on something when the odds are so low?" Simply put, there is
not a good risk-reward quotient. Every minute of your time, every second counts, and if you're
chasing a pot of gold that doesn't exist, you're losing your most valuable asset.
Related: 5 Reasons You Need Interns to Build Your Business
2) Even if you're one of the very few people who do get VC funding, the average cost of capital
from a VC firm is extraordinarily high, usually well in excess of 25 percent a year. Now, the VC
guys will say, "If you're growing at 50 or 60 percent a year, then you still make money." But not
many businesses know if they can sustain that rate of growth, so it's an extremely high cost of
capital in most cases. If you borrow at X percent, you need to create value well ahead of that.
Without getting into the financial complexities, I don't see venture capital as equity at all. It is
high-cost debt from any rational perspective.
When we start businesses, most of us entrepreneurs are so desperate to get money that we don't
even think about these costs, but believe me, if your business does eventually become successful,
you will understand the cost of capital. And, it will be very painful.
In most venture capital deals, the firm requires in exchange for their investment something called
preferred stock, which is dangerous if you're running a small company. Simply put, preferred
stock gets paid out first from any liquidity event and therefore locks in a rate of return for the VC
firm. It also gives the firm the option to convert to common stock and take advantage of the
company's value if it has grown, so it's very expensive. I don't know if entrepreneurs truly look at
the terms in the documents they sign when considering one of these deals. All money received is
not good money.
3) You might not want the venture capital firm as a partner, but it definitely will be. Evaluate the
venture capital firm you're considering very carefully because most entrepreneurs don't
inherently get along with venture capitalists. Frankly, most VC guys give me the creeps. You
have to think, "This is someone who will be at our board meetings." And, "I'm going to get a
weekly call from this person."
Do I really want to hear from him? Because you will hear from him.
Venture capitalists are typically from good business schools, highly analytical and very
professional. Alas, unfortunately, a lot of them haven't run businesses and don't really know what
it requires, no matter what they may say. I realize these are blanket statements, but I'm writing
for the benefit of entrepreneurs, and I'm sharing what I've found. I haven't found many venture
capital firms to be very insightful in running a business.
So, venture capital has this weird dynamic where you might not get any money; if you do get it,
it's at a very high cost, and, even still, there is a new person involved in the business who you
might not want involved. Wow.
So, what do you do instead?
Start really small in a room by yourself, building a product. Get a partner. If you have to get
money, get the minimum needed to go to market -- the very minimum. Typically, this is less
capital than you may initially think. The truth is, almost all businesses in this country are started
by bootstrapping, a family and friends round and then organic growth. The data supporting this is
overwhelming.