A start-up is persuading a group of people to plan and forge a new future.

From a positive point of view, a start-up is to persuade a group of people to plan and forge a new future. The most important strength of a new company is the new idea, which is even more important than flexibility, and the space for thinking is small. The book raises the question of how to succeed on the road to innovation: It's not a guide, it's a thought movement. And that's exactly what every start-up has to do: question existing ideas and re-examine what they are doing from scratch.

As a marriage, the wrong person can only leave

Every great enterprise is unique, and as a founder, your first job is to lay the groundwork. I often emphasize this so that friends jokingly call it "the Law of Tyre": startups that don't have a good foundation are irreparable because you can't create a great enterprise on a flawed basis. Companies are like countries where earlier mistakes were made (such as choosing the wrong partner, choosing the wrong employee) and then being hard to correct. To correct these mistakes, the company may be in danger of bankruptcy.

When starting a business, the crucial decision is who to work with. Choosing partners is like getting married, and the founders are as unhappy as divorce. Each relationship begins with optimism, and a calm thinking about the problems that may arise in the future is less enjoyable, so people don't think about it. But if there are irreconcilable contradictions between the founders, the company will suffer.

In 1999, Louck Nossek became a partner of mine at PayPal, and the year before PayPal was founded, I invested in Luke's partnership with other companies. We didn't realize at the time that the company was doomed to fail from the start because Luke and his partner were bad partners. Luke has a brilliant, fanciful mind, and his partner is a typical MBA graduate who doesn't want to miss the the 1990s gold rush. They met in a network event and talked about it and decided to start a business together. It's as bad as marrying the first person you meet in front of a slot machine in Las Vegas casino: There may be a chance to hit, but it's more likely to break up. Their company went bankrupt and my money was floating.

Now when I think about investing in a start-up, I look at the founding team. It is important to be complementary to technology and talent, but the degree of understanding among founders is as important as the degree to which they collaborate. The founders should have a deep friendship before they start a joint venture, otherwise they will try their luck.

Board of Directors, three people ideal

Not only do the founders have to get along, everyone in the company needs to live in harmony, and if there is no team, 0 to 1 is very difficult. To find out why the company is not united, it is useful to distinguish between the following three concepts:

Ownership: Who owns the company's assets legally?

The right to operate: who is actually managing the company's day-to-day affairs?

Control: Who is formally managing company affairs?

Typical startups assign ownership to founders, employees, and investors. The management staff and employees of the company have the right to operate. The Board of directors, usually composed of founders and investors, exercises control.

Theoretically, this division of labor can make the company run smoothly. The advantage of ownership allocation is that it attracts and rewards investors and employees. Effective management can motivate founders and employees and empower them-which means they can do their job. The board's oversight can be used to evaluate managers ' plans from a broader perspective. In fact, assigning different jobs to different people is effective, but it also increases the likelihood of disunity.

To see the extremes of disunity, go to the DMV. Suppose you need a new driver's license now, theoretically, it should be easy to get it, because the DMV is a government agency and the United States is a Democratic republic. But that is not the case. As people, although we "own" the resources of the DMV, the ownership is negligible. The DMV is not responsible to anyone and naturally does not have to cater to everyone. The experience of getting your driver's license is a pleasure or a nightmare, and it all depends on the bureaucrats. You can try to cite political theory to remind them that you are the boss, but it is impossible for you to get better service.

Big companies do better than the DMV, but it's still easy to make mistakes, especially if there's a conflict between ownership and management. The chief executive of a large company like GE has some stakes in the company but only a tiny share. As a result, the return on the right to management is more motivating than ownership. That is, regardless of the company's actual value, as long as the release of Good Quarterly reports, it is enough to keep him high salaries and take the company charter. Even if he gets a share in the name of "shareholder interest", the inconsistency of interest may still exist. If the stock is rewarded for short-term performance, he will cut costs rather than invest in a plan that will create greater value for all shareholders in the distant future, because he thinks the former is more profitable and easier to operate.

Most of the contradictions in startups arise between ownership and control, the founder and investor of the board. Because of the different interests, potential conflicts will increase over time: board members may want the company to be listed as soon as possible to make a profit for the company, while the founders prefer to keep private and expand their business.

Board, the less people the better. The smaller the board, the easier it is for directors to communicate, agree, and monitor effectively. However, this effectively means that in any conflict, a small board can manage to step down. This is why careful selection of directors is essential: every member of the board is important. A problem director can make you miserable and may even endanger the company's future development.

The three-person board is ideal. Unless your company is listed, the board should not have more than 5 people. So far, the worst way to do this is to expand the board too much. Seeing a nonprofit organization with dozens of directors, the layman would argue that so many successful people are committed to the organization that it will run well. In fact, the big Board is simply unable to supervise effectively, and it only provides cover for the autocratic leadership of the actual operating organization. If you want to get rid of the board's control, expand it as much as possible. If you want it to work efficiently, shrink its size.

The better the company, the less CEO pay

Whenever an entrepreneur asked me to invest in his company, I would ask him how much he was going to pay himself. The better the company is, the less the CEO will pay-and I find it most clear that I've invested in hundreds of startups. In any case, the CEO of a start-up with venture capital injections should not exceed 150,000 dollars a salary. Whether he has ever made more money at Google, or whether he has a big mortgage to pay, and a hefty private school tuition fee, is not the point. If a CEO has a yearly salary of 300,000 dollars, he becomes a politician rather than a founder. A high salary will induce him to keep the status quo, to maintain his current income, rather than to identify problems with others and actively solve the problem. Lower-paid CEOs, by contrast, are committed to creating more value for their companies.

The CEO's low salary also sets standards for others. Arron Livi, the box company's chief executive, had deliberately given himself the lowest salary in the company-he founded Box Company 4

Years later, he is still living in a one-bedroom apartment two blocks from the company's headquarters, where there is no furniture other than mattresses. The staff saw that he threw all his body and mind into the company's development, and they all imitated it. Cash rewards are glamorous, but high cash rewards allow employees to take away the value they already have, rather than devote time to creating new values for the future. A cash dividend is better than a cash pay-it depends at least on how well the job is done. But even so-called incentive payments encourage short-term ideas and value plunder. Any pay paid in cash is a matter of now, not the future.

Trying to keep people together? Try the Stock

Startups don't have to pay high salaries because they offer better treatment: partial ownership of the company. Stock is a form of reward, which can effectively guide people to create value in the future.

However, you must be careful in allocating shares that encourage employees to contribute rather than create conflicts. Giving everyone the same share is wrong: each individual has a unique talent and responsibility, and a completely different opportunity cost, so from the beginning of equal distribution is arbitrary and unfair. On the other hand, it is unfair to be different from the beginning. This stage of resentment can destroy a company, but no way of allocating ownership can completely avoid resentment.

As more and more people join the company, the problem is becoming more and more acute. Early employees get more stock because they risk a lot, but later employees may play a more crucial role in the company's success or failure. The shares that the secretary who joined ebay in 1996 may be 200 times times more than the senior executives who joined the industry in 1999. The 2005 painter who painted the walls of Facebook's office was worth 200 million of dollars, and the talented engineers who joined in 2010 could only be 2 million dollars. Since the allocation of ownership is difficult to achieve absolute fairness, the founders need to do a good job of detail secrecy. Email the whole company and list each person's ownership share, like a nuclear bomb in the office.

Most people don't want stocks at all. At PayPal, we hired a consultant who promised to help us develop our business and win lucrative deals. As a result, he only talked about his 5000-dollar daily salary and refused to pay for the stake. Although there is also the story of a new restaurant chef becoming a millionaire, stocks are not attractive to people because they are not as liquid as cash, can be traded quickly, but are linked to a particular company. If the company fails, the stock is worthless.

It is precisely because of these restrictions that stocks have become a powerful tool. If someone is willing to have a part of your company's ownership, rather than a cash salary, shows that he is willing to long-term commitment to increase the value of the company. Although stocks are not the best way to motivate employees, they are the best way for founders to keep their companies united.

Entrepreneurship can't be too busy dying.

Rock singer Bob Dylan once said that a person is not busy with birth, is busy to die. If he is right, then birth is not a moment, you may have to try to continue to do something, at least it is a poetic saying. and the establishment of the company is indeed only once, only when the establishment of the opportunity to make rules, so that we unite together to create value.

The most valuable companies always encourage inventions, which are typical features of the pioneering phase. This reminds me of another, less obvious, second-tier definition: As long as companies innovate, entrepreneurship is not over, and once innovation stops, entrepreneurship ends. If the timing is right, you can do far more than create a valuable company: You can grasp the direction of its future development to the path of innovation, rather than being caught up in the success. You can even keep your business going indefinitely.