Trust, when running a startup, it is one of the more popular commodity exchanged aside from equity. Money is always short and you have only your skills to back you up, trust is all you have left. The moment that trust ends up broken, what happens? Here are some true stories that I heard around some startup gatherings.
Friendship, a flicker word.
While during a trip to Ho Chih Minh City, a senior in the startup scene shared a story of betrayal.
He was a single founder and found another single founder of a different startup to partner and enter Vietnam. The idea was to reduce personal cost by sharing all expenses such as office space and housing. Things went well for a couple of months, from a small home office to a proper co-working space. That is when trouble struck.
Both of them went back to Singapore for Luna New Year. When my senior returned, he found that the other startup founder vanished without even informing him. The house and office were empty, there were almost no traces of his partner.
The partner left unpaid, 3 staff, office and rental. The partner blatantly refused to pay anything nor was even morally adept enough to inform his staff. Without any hard copy nor contracts, my senior could not claim anything. The messes his partner made fell into his hands. Forced to evict, my senior lost his side of the deposit on both office and house.
The moral of the story here, always have a contract written, agreed and signed. Whenever you are partnering and the total finances you do not have, it is wise to protect yourself.
Another story from a peer was about his co-founder. When things first started, everyone was hopeful and full of energy. The moment things turn sour, that is when you see the true colours of the people around you.
Having financial ups and downs in a startup is normal. When it was time for the founders of my peer’s startup to either reduce or stop drawing a salary. The moment he noticed the financial distress, the co-founder demanded a refund of financial contributions. Claiming that his financial contribution to the company belongs to his parents. The company obviously rejected his demands and the co-founder said:: “if you cannot pay me, why should I work?”.
As with most things, time heals. My peer’s startup had progressed and was about to launch. The co-founder suddenly appeared back in the office full of gusto but also brought in a new term and condition. The contract briefly states that he will be able to cash out his contributions above all else at any moment. He was of coursed, fired.
The moral of the story here is, always have a founders agreement. Having one will prevent the founders from doing things that are against the company’s wellbeing.
It is just business
I would like to remind everyone regardless of profession. Trust is only as powerful as the repercussions that come with breaking it. You should always have agreements written out and signed. Never be afraid to enforce your rights when your trust has been broken.