Entrepreneur Myths (35 page)

How do you feel about having your mom or dad work for you? How about your sister or brother? Just because they're your family, doesn't make them great employees. Bringing family members into your venture is one of the most dangerous things you can do as an entrepreneur.

Do you really want to hire family into the business?

I can tell you many horror stories about families getting into pissing matches while working with each other. But this one will suffice:

I once funded an entrepreneur who hired her husband and his sister to run the business. The entrepreneur was competent, but she made the crucial error of not thinking through whether her family members were qualified to run certain functions of the business. Believe me, I quickly found out the truth.

Her husband handled sales and marketing, even though he knew nothing, absolutely nothing about selling, and acted like a complete
asshole
. His sister worked in operations but could not, would not, lift one fucking finger. By the way, if you think I’m talking about Sarah Palin and her family, rest assured I’m not. And after a few clusterfuck situations where her husband proved to be completely incompetent, I convinced the entrepreneur, and she agreed, to hire a COO to help her run the company and push her husband to the side. Obviously, when you remove your spouse from one of the top positions, it creates all kinds of other clusterfuck problems, which I won’t get into here. You can imagine that your personal relationship won’t go well for some time if you fire your spouse. I never asked, nor did I care to know, but my guess is that the spouse did not receive any sex for at least six months. The good news is that the business was doing better.

How will other employees treat your family members?

I once worked for a successful company where the CEO hired his sister and his brother-in-law. His sister worked in marketing and his brother-in-law worked in operations. I managed distribution sales, so I was the lucky one to deal with both of them.

The CEO was eloquent, smart and highly educated, while his two family members acted a little rough at times. Let’s just say their management and communications techniques were not optimal for the corporate environment. They were good people, but their social skills were more aligned with running a bar than working for a high-tech company.

I noticed that most of the other employees were kissing the sister and bro-in-law’s asses. That’s one of the issues you run into when you hire family members. The other employees are going to treat your family members differently than non-family members — especially if they think family members can help influence you on business-related management decisions that benefit them.

Another issue is that family members, even when they don’t have equity in the business, might act as if they own the company. One time, the brother-in-law got mad at me for bringing in a huge order at the end of the month because it caused “his” operations people to work long hours on a Friday in order to get the shipment processed and out the door. He called me up and screamed at me for getting the sales order in so late on a Friday afternoon. I couldn’t help it. I was hustling to make revenue, so I was happy to get the large order since it was the end of the month and the quota had to be met.

If you knew my culture (I’m a Serbian and Croatian) then you would know that we are able to scream with the best of the best. In our culture, to scream is to sing. It’s quite a spectacle to see if you observe it from another culture. Everyone is loud, and as the family gathering extends into the night, everyone gets louder. And this is without alcohol being an excuse.

So after listening to the brother-in-law yell for about a minute, I ripped into him screaming over the phone so loud I could have ruptured his eardrums. The office workers around me freaked. They wondered who I was yelling at and were horrified when they found out I was screaming at the CEO’s brother-in-law. I told them I didn’t give a shit because the product had to get out of the fucking warehouse so that the CEO (his brother-in-law) could continue to drive his fucking Lamborghini.

Consider it carefully before you hire a family member.

Do you know how to hire or fire your family?

What if your family member can’t perform the tasks you need done in your venture? What the fuck do you do? What do you do if your husband can’t sell the product like he thought and said he could? Do you fire his ass and hire another salesperson? Or do you move him into marketing? FYI: marketing is where you put people who can’t sell. (This is joke. I assure you.)

What do you do if your brother-in-law is a lazy ass, can’t learn his job quickly, or his management skills suck and all the employees who work for him think he sucks too? Worst of all, they hate his ass and it’s disrupting the culture of your company.

What do you do if one of your family members is talking bad about you behind your back to other employees? What do you do if one of your family members abuses their management power because they are family? What do you do if your family spends money like there's no tomorrow during business travel, while you keep your employees on a budget?

Do you know how to compensate your family?

How do you compensate your family if they work for you? Are you being fair, overly generous, or taking advantage of them because they are family? Are you going to pay them market rates, below market rates or above market rates? Are you paying your family members salaries while they don’t do shit, while other employees are busting their asses? Are you going to provide a compensation package to your family member the same as you would any other employee?

Do you know how to manage your family?

How do you manage your family members in your business? If your son or daughter works for you, do you give them any slack? Are you harder on them than you are on your other employees? Do they take advantage of their position? Are you gearing them up to one day run your empire? Are they competent to run the company? Do they have the passion to someday take over? Is this fair to other employees? Are you going to train your son or daughter in every aspect of the business from the bottom up, or are they just going to join you at the top? Will you let your employees train your children?

Do you really plan to hand over the venture to one of your family members one day?

Ah, such a nice dream — to build an empire and hand it down through the generations. Be careful.

This is how it usually goes… an entrepreneur works hard, pours their blood and sweat into the venture, finally makes it
big
, becomes a billionaire, and later brings their children into the company to run the empire.

Everything is wonderful… for a while.

Later, the children want to move the company in a different direction, while the old entrepreneur and wealthbuilder fights to keep things as they are. The parent and the child (or children) get into a pissing match, and the family fights over control of the business while the attorneys on all sides are billing and billing. The old entrepreneur fights to keep the vision they spent their entire life building, against the child that had been handed over the business to run it. One made it; the other inherited it from the one that made it. It can become a real issue.

Shit like this happens all the time. It happens in small ventures and large conglomerates. Just read about media magnate Sumner Redstone and how his own son and nephew sued him over the family business. Look up the story of the lawsuit filed against Marilyn Carlson (Carlson Travel) by her very own son, for firing him as president and COO of the company. And there’s the high-profile battle between the Ambani brothers over control of Reliance Industries, one of India’s largest conglomerates; their mother had to step in and settle things between them.

You can’t make this shit up. It’s not a movie. It’s reality. If you hire family, I truly hope it all works out rosy. Once again, be careful. If they don’t perform and you fire them, you still have to see them at those family barbecues. 

Brain Candy: questions to consider and ponder

(Q1)
If you hire your family in your venture, are you also prepared to fire their asses if they fuck up? Are you? Do you really have the guts to do it? Did you talk to them about how they exit if they are not performing?

(Q2)
If you hire your children, do you treat them like other employees? What if you hired that lazy brother-in-law before you figured out he was lazy? Do you tell your sis about his fuck ups and get rid of him?

(Q3)
What if you hired your parents? How do you manage them? How do the employees treat them?

(Q4)
What do you do if one of your family members becomes power hungry while you’re gone on vacation or a business trip? What if they make major, irreversible business decisions without your approval? What if they fire someone without your approval?

(Q5)
Have you ever hired your family members in a venture? Was it a good decision? Would you do it again? Did it turn into a nightmare?

EXTRA FUCKING
BONUS
| MORE MYTHS AT NO ADDITIONAL CHARGE

I have provided the following extra myths for free so that, after buying this book for a mere $9.99, you’ll feel like you got more than expected. Of course, I’m being a smartass, but by now you already know this. The original purpose of the book was to provide 50 myths. Why 50 and not 40? How the fuck do I know? Fifty sounded like a nice round number I could remember, but I just kept writing and writing — and so there is more for you here at
no
additional cost.

By offering these extra myths at no additional charge, the moral of the story for entrepreneurs is this: Always fucking deliver more than you fucking promise.

Notice I didn’t say “underpromise and overdeliver”? You never want to underpromise and overdeliver, because when you underpromise something, even my beloved, God rest his soul, Alaskan malamute dog, Zeke, could deliver.

Underpromising does exactly what it says: it underpromises the underpromise, so that you can prove you can deliver. Usually, underpromising turns into mediocre results. What I always say is “over promise and over deliver.”

I should have made that into a myth as well — maybe in
Entrepreneur Myths v2.3
.

Entrepreneur
Myth 51
| Your partners are willing to share the same risk as you

Everyone sees risk differently. This particular myth has caused me much personal grief and headache. I believed this myth for years. And then I finally got it through my head that not every partner is willing to share the same risk. That is just a fact of life. They might say they’re in it until the end, through thick and thin, but in most cases your partners don’t have the same risk tolerance that you do. Hell, you might have the lowest risk tolerance of all and you may not even realize it.

Problems arise when a partner comes on board expecting an equal share of equity, but is not willing or accustomed to sharing the same level of risk. Sharing risk equally, in correlation to equal equity proportion, is critical to any venture. There could be a sliding scale associated with risk vs. equity ownership percentage.

Figure out the risk level a potential partner is willing to take before bringing them into your venture. Even if you're aware that your partners don’t have the same risk tolerance, how the fuck do you know who’s going to run with their tails between their legs and who’ll stick it out? It’s not easy to figure out. And it’s not predictable.

In order for everyone to fully understand partner risk tolerance, you have to figure out some of the following critical variables: