My high school soccer coach used to say “Know Your Weakness.” It was an edict to the team in an effort to identify how we could minimize that weakness, which oftentimes resulted in extra focus on it in practice. Ideally, we could turn that weakness into a strength, which typically proved to be particularly valuable as our weakness was more often than not common to our opponents. Thus, if we could identify our weakness, minimize it or turn it into a strength, we could, presumably have a better chance at winning.
The concept of “knowing one’s weakness,” which invariably elicits some self-reflection, analysis and action, is particularly helpful to start-ups and growth companies. As such, I always ask clients, prospective and existing alike, “what is your company’s weakness?” More often than not, the following are at the top of the list, at least with respect to legal.
TalentGap. All too often a founder can only take the idea and the business so far before help is needed. For some it is earlier than others. Regardless, when the time comes, a founder needs to consider how attracting talent may impact his or her equity. This becomes especially important when considering adding a partner. While I was listening to the The Twenty Minute VC Podcast, Bill Gurley, GP at Benchmark Capital, mentioned that one of the benefits of having partners is that those partners know each other’s weaknesses. As such, not only may a partnership help solve an immediate issue, such as the need for a technical co-founder, but it may also benefit your company going forward as issues become more varied and complex. Knowing how to best structure the same, with a focus on economics, control and dispute resolution can help create the means through which the necessary talent can be added to the company.
Funding Fit. There are so many options today when it comes to funding, along with various legal ways to accomplish the same, such as convertible notes, simple agreement for future equity (SAFE)s, and equity. Founders, and repeat founders for that matter, oftentimes have subject matter expertise but may be weaker when it comes to the best way to capitalize the company. Fortunately, the far reaching implications of financing your company can be considered and implemented so to allow a return to focus on execution as opposed to TAM, valuations, etc.
Proper IP Protection. With so many ideas, inventions, designs, content, brands, slogans and other creations happening at various stages of a company, knowing when to register, monitor or enforce IP can be daunting. All too often I hear company leadership express fear over failed identification of and protection of what otherwise could be valuable intellectual property due to lack of an understanding of the types, processes, or cost of IP protection. This can be lead to some missed opportunities, especially where a company is able to solve a weakness yet fails to realize that its solution could be valuable to other companies and should be protected as a competitive advantage.
I find that any company that asks “What is our weakness?” can benefit from the identification of an issue, analysis toward it and an ultimate solution. Some weaknesses may be stagnating your company while others may become a strength that differentiates your company. So, ask the question, as you may be surprised at how transformational the answer can be for your company.
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