Knowing why you started your company

It might seem obvious why you started your company, but deep inside this might not be so straightforward. I think it is very valuable to understand this because it will help you to make decisions and to create a culture which embodies what you find important.

I still recall the question an American investor once asked me years ago. At that time it didn’t resonate that much, but the older I got the more I understood why he asked it. He said: “When founders create a company, they do this for one of the four ‘F’s’. What’s your pick?

• Fun: you just want to have a great time working in your company. You do not care about the money it generates. If you can survive and have a great time, then that is all that matters.
• Fame: you care about the goal of the company, but also the status it gives you. You like the fact that people know that you founded the company. You want to be mentioned and noticed.
• Fortune: you just care about making it big. You do not care that nobody knows your company, you are only interested in making a profitable company or selling it once the price is right.
• Freedom: you decided to found a company to be free. You call the shots, you decide what you are going to do and when you are going to do it.

He indicated that it was crucial to pick one of the F’s mentioned above because it would define the company and the decisions you would make. And the funny thing is, you can’t pick multiple ones. Just one. I’ll explain later why this is important.

In the beginning, this might not be so important, but when your company grows and you start hiring people and perhaps other people start investing in your company, it’s important to keep in mind why you started the company in the first place.

Let’s say you picked ‘Fame’. If you have built a great company and a large multinational comes along and wants to buy your company, this might become an issue. Because very often you will not get the credits for building the company, your invention or the product you created. Your company will be swallowed whole and it will be incorporated into the multinational. You’ll get a nice paycheck (Fortune) and that’s it. For someone who picked ‘Fortune’ this however would be a dream scenario. For entrepreneurs that picked ‘Fun’ or ‘Freedom’ it might not be wise to attract external funding. Because it will limit your freedom and it might affect the fun element.

So when building your company, be very conscious of why you did this in the first place and which ‘F’ is most important for you. Because it will be very helpful when you need to make important decisions, like if you want to attract external funding, if you want to sell your company or hire a potential CEO.

What is your ‘F’? Share it in the comments below!