Entrepreneurs Are Selfish

I had an interesting conversation with a colleague yesterday. She made the statement that "Entrepreneurs Are Selfish." I didn't think about it much when she said it but later had some time to brood on that thought.

The context of the statement was a discussion about the importance of capital in the formation and launching of a startup. Essentially, we disagreed on the concept that it is possible to start up a company without capital. The main point of disagreement was her belief that it is difficult to find people who are willing to work for equity without immediate compensation. Those individuals who are willing to work for equity are entrepreneurial and will probably not join your enterprise because they want to own more of the enterprise. They want don't want to share. They are selfish. They want to run the show. Thus in order to start a company and bring people along, you must have capital in order to pay them. That is the function of capital in the startup process.

While I don't think anybody likes to be called selfish, in some ways, entrepreneurs are selfish. The concept of wanting to run the show and own a piece of the pie does resonate with me and does resonate with most entrepreneurs I know. The preference of equity over cash payment also resonates.

I've said previously that the strongest currency in a startup should be its equity. Everybody should be aligned to make the equity as valuable as possible. Thus individuals who value cash payment over equity in some sense are not well aligned and may detract from the true value mission of the startup. Those who are more entrepreneurial and want to share in the founder's journey will seek stock ownership as a form of compensation.

I can't argue that capital is necessary to bring people on board. I will submit that there are people out there such as myself and many in our network who will work and advise for equity. The entrepreneurial spirit may be somewhat selfish but it wishes to be free and wishes to take risks for ultimate reward. That reward may be financial, emotional, or intellectual. It clearly is unpredictable whether the reward will come, but the journey towards it is what excites the entrepreneurial individual.

While some may call it selfish, entrepreneurial spirit is necessary and essential to push the economic cycle and to reward those who take risk.

Comments

[Jeff D]

Selfishness is the cornerstone of capitalism. "Invisible Hand" and all that. I don't think being called selfish in the context your friend is using it is a bad thing at all.

As someone about to go to work at a start-up, I'd say is definitely a sliding scale of money/equity that I'd base my decision on. Offering less money is fine (to a point) but that better be accompanied by more equity.