Perhaps this isn’t quite as accurate as it sounds…
Firstly, you’d have to agree on the definition of a founder. Is it that they were granted equal shares at the formation/founding of the company? If so, then yes, we really did start a business with 250 founders!
However, if the definition extends to working on the business on a day-to-day basis, then we would fit the more traditional model of three to four founders. Our start-up is probably more akin to an employee-owned business, but there’s a twist — we’re building it from scratch as part of our internal Incubator at Gate One.
Why would we want to give everyone at Gate One shares in this new business?
Entrepreneurialism and innovation have been fundamental in Gate One’s DNA since its founding, with consultants encouraged and supported to start their own side hustles rather than having to scurry around in the background trying to hide it. We believe that entrepreneurial, risk-taking go-getters, willing to do what it takes to get their businesses off the ground, make for better consultants and bring higher value solutions to our clients.
As you may know, time is one of the biggest barriers in getting something off the ground, especially if you’re also working full time. So, we thought, how do we give people the opportunity to work on their own start-up, while allowing them to dip in and out depending on other work commitments? Enter the Gate One Start-Up, an initiative designed to give everyone at Gate One the chance to experience the rollercoaster that is the journey of a start-up founder.
So how would this actually work in practice?
The traditional benefits that start-ups have over established bigger companies, for example, quick decision making, less bureaucracy and more innovation, could be more muted due to the number of people involved. How do you decide on what idea you want to pursue? What name? What brand colours? What logo? These are the decisions that can sometimes cause disagreements between just two or three founders, never mind 250!
This is why we created our core ‘founding’ team. We have two people responsible for working on the start-up as part of their day job, with at least two to three others contributing on a weekly basis. We also put out calls for help to the rest of the business when needed, suiting the interests of others when they have availability in their workload.
This has a number of benefits — it allows people to pick and choose the areas that they enjoy, while allowing us to track who has contributed to each part. This last point is important, as you may be thinking why would someone contribute their time if there is someone else doing nothing but receiving the same equity?
This was a question raised at the very start. Should everyone get an equal piece of the pie? How would we manage this in practice, given the admin required
Shares, contributions and rewards
We decided that everyone would start on a level playing field. We knew there would be those who didn’t want to or didn’t have the capacity to get involved, but granting them a share felt like the right thing to do, as it would at least help to motivate interest. If in the future they have a change of heart, they see the business doing well, or just feel like now is a good time to get involved, then they have a stake in the business allowing them to feel a sense of ownership.
This is where Vestd came in. For those of you unfamiliar with the platform, they allow you to set up a number of different employee share schemes, with direct integration into companies house, saving a lot of time. Everything is managed through the platform, from getting signatures to issuing shares, with shareholders able to manage their shares individually through the platform.
It wouldn’t be fair for additional joiners to get the same value as those who have been here from the start, which is why we issued Growth Shares. This meant recipients only benefit from the growth of the company from the time their shares were issued, rather than benefiting from any growth prior to them joining. This also means no income tax liability should the shares have a value when they are issued, with people only paying Capital Gains Tax on any growth in value when/if they come to sell them.
We had a number of thoughts about how to reward individual contributions. In the end, we have looked at the contribution as more like a ‘bounty’ style system. Each task or project, for example building a user persona or conducting competitor/market research, is given an estimated time to complete, with each day of work being worth a certain number of shares. Some tasks could be underestimated, in terms of the amount of time that we thought it would take, and all of it is just an estimation, so if something does take quite a bit longer than anticipated, we increase the number of shares associated with that task. You could quite easily argue that some tasks are more important than others, but don’t actually take as much time, so is it fair that it’s rewarded with a smaller bounty?
All we can say at this point is that there are multiple different ways of doing things, all with benefits and drawbacks, but we will continue to learn as we go to be most effective.
We are also not alone in terms of learning from mistakes. Our ‘steering committee’ was formed at the start — they give feedback not only the business itself, but the internal set-up and processes.
Can a start-up with this many founders actually succeed?
This depends on what the definition of ‘success’ is. For some, this may mean being a profitable company. For others, it may mean selling the company and its shares for financial gain. It may mean that we simply alter the perspective of just one ‘founder’, who has never had the chance to work on a start-up before, arming them with the skills and mindset that they can take across into their everyday work.
For us, as a core incubator team, our goal is to expose as many people as possible within Gate One to the start-up world. There are so many transferable skills that come with starting a business, and we promote these in our day-to-day business. Do other companies really like risk-taking? Do they truly embrace failure? At Gate One, our start-up founders do this with their own businesses, and now everyone has the opportunity to do it with the Gate One Start-up.
So, what’s the Gate One Start-Up currently working on?
Many ideas were submitted from the business as to what we could potentially do. In the end, we narrowed it down to two brilliant ideas, and we left the rest in the hands of our team with a company-wide vote.
- A sustainable e-commerce business that sells bundles of items as part of a set (for instance, a sustainable toiletries travel set).
- A nappy collection and recycling business that would help to divert the almost three billion nappies that go to waste every year (aptly named Dirty Nappy).
Two very different ideas, with quite a variation in terms of potential scale, size and speed to market.
We’ll let you know how the vote went in the next instalment!
Launching a start-up tests creativity, leadership and grit like nothing else. These qualities set our consultants apart from our competitors and directly benefit your business. Find out more about how the Incubator helps us drive innovation.