Wealth is the Reward

No, really. Take a second and answer that for yourself.

A lot of founders I’ve known have felt slightly awkward answering that question.

They say their motivation is more about helping people (an appeal to alleged altruism) or that they get enjoyment just out of building things and that’s a reward in and of itself.

But wealth is the reward for building something people actually want.

Or at least it’s supposed to be.

This week’s issue is a reminder that it’s ok if your goal is to make a lot of money.

Wealth is the Reward

Wanting to get rich gets a bad rap.

Maybe you even read the above part of this piece and thought there’s some moral highground for the founders who claim to be motivated by things other than getting rich.

But money is just a system to reward people for the value their work provides.

Startups give founders, who take on massive risk and make many hard decisions, a way to provide massive value and earn proportional rewards.

The more you understand the problem you’re solving, and the more effectively you solve it, the more you should be rewarded.

That’s simple, elegant, and true.

Building companies is hard, and there needs to be a reward for doing that work. Even I didn’t fully appreciate how hard until I started building things.

Without getting too political, a capitalist “system” uses wealth as the reward for helping your fellow humans.

Ironically, the cases where this gets distorted tend to be the ones that make capitalism’s emergent behavior more challenging to exist.

In communist systems, value is distributed based on the whims of those in power. It has no regard for emergent value, only desired value, a fantasy.

What does this imply for startups? What can founders take away from this?

First, hiring people who have a goal of becoming rich is not a terrible thing.

Yes, you need to be careful about mercenaries who have a short attention span and don’t believe in your and your mission, or who don’t understand that creating that wealth comes from serving your users.

But someone who believes in the mission without being financially motivated can skew their incentives just as much (and create as many issues) as if they were financially motivated but didn’t believe in the mission, just in a different way.

But equity holders who are financially motivated have an inherent incentive alignment with the interests of the company.

Second, extend this to your selection of a co-founder as well.

Have conversations before you begin about money.

Make sure you trust and believe in each other’s devotion to this principle, and your abilities to achieve it together.

And lastly, align your goals for and decision-making about the business to the things that will increase the value of the business.

This doesn’t always mean increasing revenue will be the #1 goal. Early on it’ll be understanding your customer, for example.

But at any given stage it should be the thing that will do the most to increase the value of the startup and get it to that next stage.

Ironically to some, that’s the best way to serve your mission and solve the problem you’re setting out to solve.