Whenever a new business is launched, it’s long-term survival is a key aim.This is symbolized by a “Built to Last” mentality, a theme popularized by management guru Jim Collins, co-author of a popular business book by the same name.

The evolution of a business can be very ephemeral and uncertain. Moreover, poorly designed systems, mismanagement, and neglect can quickly sink a company. This symbolizes a terribly weak, fragile infrastructure. For often it’s not outside influence that destroys a company but rather inside neglect.

In his bestselling book Antifragile, author and prominent thought-leader Nassim Taleb explores a concept known as fragility through the lens of the following metaphor:

At some point, you’ve likely received a package in the mail at some point in your life marked:

FRAGILE: PLEASE HANDLE WITH CARE

But have you ever received a box that says

PLEASE MISHANDLE THIS BOX AND DROP IT?

Most likely you haven’t

In Taleb’s taxonomy, fragility reflects the inclination to ignore risks. Or to be overwhelmed in monitoring the risks in an attempt to survive and prevent disaster.

That’s the state of many companies and their document systems — they’re massively unprepared for unforeseen risks, what Taleb affectionately refers to as “Black Swan events.” An example of this would be a major compliance audit, where a company discovers major deficiencies in their document systems.

So what is the antithesis of fragile? Given that we don’t really even have a word define it, Taleb took it upon himself to invent it.

And he calls it:

ANTIFRAGILE

To approach this from an antifragile point of view means to do so with strength, wisdom, systems, and resources. This allows a company to not only survive, but prosper amidst the uncertainty, and turbulence of these events.

In explaining his own personal proclivities in terms of antifragility, Taleb is fond of saying:

“I want to live happily in a world I don’t understand.”

Skin In The Game

“Skin in the game” according to Taleb is the foundation of risk management. As he says, “The symmetry of skin in the game is a simple rule that’s necessary for fairness and justice and the ultimate BS-buster. Furthermore, he says: “Never trust anyone who doesn’t have skin in the game. Without it, fools and crooks will benefit, and their mistakes will never come back to haunt them.”

Chuck Williams, Lead Developer for Equa START and huge fan of Taleb“antifragility” model argues that business owners, investors, entrepreneurs, change-makers, innovators, creators, and builders all inherently recognize that an important attribute that should never get lost in the shuffle irrespective of how much money a company makes is the reward of a personal achievement that aligns with one’s identity. In fact, it is for this very reason, he believes, that our identity is often wrapped up in the work and projects to which we are most dedicated.

Says Williams:

“Equa enables participants to manage their portions of “skin” (identity), in the form of legally recognized equity (backed BOTH by reviewed legal documentation, and blockchain-enabled asset issuance of stock & equity agreements) and allocate these across and among multiple organizations within their networks and communities.”

According to Williams, we call this “ownership.” Being an owner of an organization, project, or even simple task, he believes, measurably improves results for EVERYONE involved.

“As an “Agreements Service Management Platform” the #1 goal of Equa is to structure, maintain, protect, solidify, communicate, and amend AGREEMENTS. In business, ALL failures and ruin can be easily traced back to failures in an agreement due to the lack of or failure to effectively execute these types of agreement activities.”

Williams goes on to note that company agreements that are not structured properly with regulators may lead to the IRS, SEC, or CFTC knocking at your door.

“Failure to maintain these filings can get you slapped with fines, or worse, shut-down by government agencies. Moreover, a lack of due diligence in protecting the authenticity of your agreements can leave you with a worthless bill of goods.”

Concludes Williams:

“Communications, finalizations, and amendment of agreements manifest as Operating Agreements, Board Meetings, and Voting activities. All of these activities are centered on keeping organization agreements alive, functional, relevant, pragmatic, and true. This greatly reduces the risk of ruin for any organization.”

Delivering proactive, highly personalized service is a hallmark of Equa’s value proposition to clients. In this brief Q&A, we asked customer success team members, Kyle Croyle, and Andrea Stevens, to discuss their approach to delivering exceptional service during the client onboarding stage and beyond.

What does a typical day look like for the two of you?

Kyle: While Cap Tables are a key element of what we do for clients, there are so many other areas where we can deliver value. This isn’t the type of stuff that’s taught in any school. So for our clients, a lot of it is just learning on the fly.

Andrea: We offer companies a foundation that allows them to effectively engage with their startup employees. Unfortunately, a lot of these businesses miss out on this opportunity to reinforce what they’re building.

Kyle: Agreed. The system we offer provides a great way for our client companies to build loyalty within their organization through transparency. It’s all about exposing everyone to those numbers.

What sort of problems are business owners facing these days?

Andrea: Business owners are inundated with emails and people sending them different documents. And then to make matters worse, these documents are often printed and placed in a paper file.

Maybe in a year, they’ll need to pull together an investor recap. Or maybe there’s an investor that comes on board who wants to see the Cap Table. All of a sudden the business owner has to pour through their email or other document files to try to locate all of this information.

“Antifragility” and the Mitigation of Business Risk 1

So how exactly does Equa START begin simplifying things for founders and business owners?

Andrea: They often want support in streamlining their process. We never again want them to wonder if the Cap Table they pulled off their drive is updated. Then there’s the information necessary for compliance. Some of it could be at their attorney’s office, some could be in a file drawer. Or they could have no clue as to where it is. So there are all of these nuances that onboarding at Equa is going to make so much easier for the business owner.

Kyle: Most startups do not have CFO’s. And if they do it’s a part-time CFO, maybe even an advisor. But as the founder of a company, you wouldn’t want to spend hours dealing with compliance and investor documentation, cap tables, things like that. So there is simplistic value in what we offer because that workload is being migrated over to Equa. This allows owners to focus on the important business at hand.

And how can Equa help the business owner save on costs?

Kyle: If you are a startup you may have a law or CPA firm representing you and drafting things like corporate formation documents and other stuff. But because they’re so expensive, you’ll try your best not have to turn to them for anything but the most important matters.

“Antifragility” and the Mitigation of Business Risk 2

So what do you say to those startups who are confronted with this yet are inclined to cut a corner or two to save on expenses?

Kyle: Yes, there are companies where the mentality is essentially if we mess up or don’t complete something, we’ll ask for forgiveness later. There’s this blind hope that the SEC, FINRA or other regulatory body is not going to care. But let’s be real — the ultimate goal of any startup business is to grow and be profitable as soon as possible. But it’s equally important for these businesses, however, to recognize that everything they’re doing, running up to that hyper-growth scenario, will be uncovered, scrutinized and audited eventually. That’s where the big risk lies.

Kyle, you’ve had your own personal experiences in running a business and dealing with compliance. What was that like?

Kyle: Yes. As a founder of a company, I was scared shitless about managing everything to do with document compliance, particularly those involving investors because I’m not a lawyer. So off-loading all of this on someone like Equa would have offered some peace of mind in addition to taking a ton of actual workload off my plate.

Andrea, anything to add to this?

Andrea: A lot of entrepreneurs are of the thinking, “I’ll build this business and then I’ll sell it”. Great! But if they’ve never done an M&A, they have no clue as to the kind of due diligence they have to go through. In fact, they often do things that make them less desirable when the day comes for an acquisition. So, it begs the question of why even start a company if you’re going to fall into that trap.

Kyle: To piggyback on that, while taking a frugal approach at the early stages of a business is understandable, a company may be opening themselves up to problems down the line. They could end up paying for it financially later on by spending 10X in fees to remedy all of the things that were left incomplete.

What’s the message you’re trying to convey here for businesses?

Andrea: That while it’s hard to have the foresight to address these things early on, I believe it’s imperative for their survival and ultimate success. That’s why the pricing model we offer here at Equa is so attractive, well within a startup’s budget even if they’ve raised a little bit of money. It’s helpful in terms of saving dollars while preventing what could be costly compliance issues. We’re here to help them get that foundation right.

Kyle: You are so right, Andrea. This should be viewed as a long-term versus short term proposition for businesses. Unfortunately, many companies are trying to manage finances in a way that has a short-term effect. Eventually, they could end up paying thousands more than they would than if they’re working with us here at Equa.

So what’s the first step for a business that wants to get started with Equa START?

Andrea: Currently we’re asking new clients that we are on-boarding for some core documents like bylaws, operating documents, shareholder documents, member documents, and a cap table if they have these. At that point, we’ll take those uploaded documents, review them and make sure that they’re all in place and signed. Once all of this has occurred, we’ll have a discovery (check-in) call with the client to ensure that they understand what they’re seeing before moving onto the next step.

Next steps?

Andrea: Well, thismight involve developing a Cap Table for them. Or assisting them with any due diligence needed around the documents they should have in place at any stage of their business.

Kyle: The goal for the customer success team is to ensure that we’re delivering as seamless of a process as possible in terms of the on-boarding. We’ll require a number of upfront documents, as Andrea mentioned, but then we work hand in hand with the client in getting that information into our tech-enabled environment here at Equa. Once all of the data is in there, there are a lot of possibilities on what can be done with it.

Any final thoughts?

Kyle: Andrea and I believe that customer success should be inherently proactive. Thus it is important for us to develop a solid understanding of your uniqueness as a client. Our emphasis is getting to know all of our clients on a deep level through our discovery and gap analysis process. Through our team skillset, we’ll be able to help a business not just set up a Cap Table but also assist in directing them to additional resources that can help the business become more profitable and feel greater peace of mind.

Launching a new business? Putting in long hours?

Congratulations.

Now for the not so good news: You’re likely going to have a few bumps and hurdles along the way.

As an entrepreneur the possibilities for errors are endless: Like failing to file important compliance documents. Or overlooking an important tax filing deadline. How about blowing through all of your startup funding.

When these and other mishaps occur, it’s so easy to write them off as simply another case of “we didn’t know what we didn’t know.”

But here’s the good news:

Every mistake you make is a learning moment

Below are seven of the most common pitfalls startup entrepreneurs make when launching a new business.

Regardless of whether you’re a newly minted entrepreneur or have been into your business for the past 2–3 years, we invite you to capture some notes and heed the call to action on what you read below.

Pitfall #1: Too Much, Too Fast

You’ve started your business and the adrenaline is flowing. Things have reached a fever pitch. You’re feeling ambitious and on top of the world. And yes, of course, you’re expecting immediate results.

“Next week we’ll be profitable,” you tell yourself. And then you have a Chinese Bamboo Tree moment.

When you find yourself in this trap, it’s important to keep in mind that we often OVERESTIMATE what we can achieve in “Year One” while UNDERESTIMATING what we can do in say Year Five.

The lesson here:

Mistakes are going to occur. So you may as well learn from them.

Pitfall #2: Putting off Setting Up a Corporate Entity:

If you have a highly conservative accountant they will likely tell you that you can get away with simply registering with your Secretary of State as a sole proprietor. But there’s more to this story so listen up: Setting up a business entity ( LLC, S Corporation, or C Corporation) right out of the gate may be an important step for you to consider for one major reason, namely, it can serve as a form of liability and personal asset protection in the event that you’re sued.

Pitfall #3: Not Having a Good Bookkeeping System

Here’s an often overlooked fact: Having a great bookkeeping system (i.e. keeping those receipts) will not only allow you to maximize your tax writeoffs but save you a ton of headaches and extra CPA costs at tax time.

Back in the day, the modus operandi was to toss all of your lose receipts in a bag and hand them off to your bookkeeper monthly for reconciliation. Today we have great online sites and apps that can assist with digital downloads of bank statements and receipts. So there are no excuses for not having a good system in place.

Pitfall #4: A Lack of Startup Funding

It’s well documented that the number one cause of business failure is a lack of funding and working capital. Therefore it is an important piece to get a handle early on in terms of what will it take to keep your business running on a day-to-day basis. Otherwise, this disconnect could lead to funding shortfalls that might quickly put your business in peril.

Your Secret Sauce for better funding outcomes: Learn about the importance of Cap Tables.

Pitfall #5: Poor Sales Execution and Growth Mindset: As a startup, building a sales funnel can often lose importance in our list of priorities even though we are well aware of its importance. It goes without saying that this can lead to disastrous consequences.

Grant Cardone in his bestselling book entitled The 10X Rule: The Only Difference Between Success and Failure admonishes us to take massive action in the work that we do, saying that it is vital for the success of our business.

Here is a brief video of Grant discussing his 10X Growth Mindset!

Pitfall #6: Taking Shortcuts With Your Product or Service

The late inspirational speaker and thought leader Jim Rohn noted in one of his early seminars, “You get paid for bringing value to the marketplace, and if you’re not very valuable you don’t make much money.

The same is true for your business: The MARKETPLACE VALUE of your product or service is what will ultimately determine your business success. In other words, if you focus on all of the other details of your business versus working on the quality of your product or service, your business will likely see an early demise.

Pitfall #7: Lack of Strategic Direction

Here’s the key: Find your business sweet spot and then stay in your lane. Because if you disperse your energy in too scattered of a fashion, you will experience the Law of Diminishing Returns and your business will crumble.

Here’s a great book to read on this point: Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant by W. Chan Kim and Renee Mauborgne

Startups, emerging enterprises, and aspiring entrepreneurs are increasing at the crosshairs of a messy challenge, namely, how to create an orderly, secure, single source of truth for their documents and agreements.

We recently asked Equa Start Vice-President Sten Wie, to share a few brief thoughts on the herculean efforts taking place at Equa START to deliver a fresh set of solutions around this prevailing issue.

What’s the fundamental problem Equa Start is trying to solve?

The problem we are solving ties back to a knowledge gap among entrepreneurs and business owners around running a company efficiently and compliantly from a document system, corporate governance standpoint.

When you say corporate governance, what are you referring to?

It’s true, most people don’t know what that is. They may have a vague understanding or an operating agreement that references it and states that they have to do certain things. But they don’t understand the recipe in terms of their document system.

Can you elaborate a bit more here?

Business owners are often solely focused on building a product, idea or brand, that they are seeking to communicate to customers. While that’s great, they later find that not managing these document systems in an efficient way becomes problematic.

Problematic in what way?

Let’s say you want to add capital to your company because you’ve taken on a new partner. Or you want to issue shares or do a capital raise. It’s no mystery here that your documentation trail needs to be solid. There’s a proscribed process for doing this and doing it right. And if you don’t, you’ll be subjected to a lot of risks.

What are some other instances where due diligence around documentation is important?

If you are a company that’s vastly successful, and you want to get acquired or have now issued shares, documentation is of vital importance. In other words, you have issued stock or vested shares and handshakes have taken place. But if that paper trail is not outlined, defined and stored somewhere, then you expose yourself to a tremendous amount of liability. Even worse, you could even get sued if people become angry.

So a failure to address these shortcomings creates exposure?

Correct. It’s a simple truth that when you are leading a company that has reached a certain level of success, you will have a target on your back in one way, shape, or form. And without a process of establishing and maintaining your corporate governance, all this can now become a threat to the wealth you’ve built, to your livelihood, to your family, to everything.

So how does Equa START fit in here?

Doing this well and doing it right is our motto with clients. We are essentially providing an old school software installation wizard for document management, agreements, and corporate governance.

What’s the primary value proposition?

Whether it’s an employee agreement, vendor agreement, new bylaws, whatever a group of people can create consensus around the terms of a document, that’s where we are here to help.

But why replace the architecture or systems a company currently has in place?

Great question.So here’s the deal,many of these systems made sense and worked when a company was in its early stages and had, say, two partners. Problem is they never went back to their corporate bylaws once their number of partners grew and said, OK, we need to make sure that we have one version of a document instead of each partner making revisions and not knowing what the reality is, what the true document is.

So, in other words, it’s very difficult to reconcile what the truth is when everybody can individually without oversight, without notification, edit that reality?

Correct. If you have nineteen partners and they are all editing things, how do you reconcile all of that? Often things are in paper format, in Dropbox, maybe even in Excel. But there is no path, there is no process to force everyone to do it in only one master document, in one place. This is what we mean by the term “single source of truth.”

What is the ramification of not addressing this?

Without this reconciliation and due diligence, people simply do whatever they feel they need to do with regard to a single source of truth. It’s not malfeasance or people trying to screw one another. It simply becomes a scenario where a bunch of people all acting independently in terms of what they think needs to be done.

What sorts of issues ensue from this?

As more and more people become layered into this process, it becomes extremely problematic. Because if everyone is not looking at the same single source of truth then it becomes almost as if impossible to figure things out and to bring everything together.

So ultimately, what’s the solution?

Reconciling their documents into a digital environment where everyone is looking at one truth.

Can you describe the Equa START onboarding process?

It starts with setting the expectation in terms of the documents that we are going to need from your company, things like an operating agreement, bylaws, board meeting minutes, and corporate shares documents. Our philosophy is to get all of this gathered first and so we can migrate it into our system and structure it properly.

At that point, what’s the next step?

Once captured on our ecosystem all future document changes can occur in a single document instead of ten people having ten different versions of the same document. Everyone who has access to that single document can’t change it unless there’s a consensus.

And then are there principal overseers of this process?

Yes, your company leadership will determine who is going to be the administrator. You’ll also be prompted to invite your chief financial officer and legal counsel so that everyone can begin working within your one document environment.

So how will the system work once these documents have been migrated into the Equa START environment?

Once everyone is working off of the Equa framework, changes can be redlined and passed back and forth through a notification system that essentially says, alright, somebody made an edit or change here. But you can’t delete text because it’s always just redlining. In other words, you make a suggestion and then that suggestion is then sent out into the notification. The beauty here is that all of the documentation is captured in one environment instead of being pulled out to email or retrieved from Dropbox.

So ultimately this represents a much more efficient process?

Yes. When you can make something that may normally take five people, two hours and boil it down to something that takes five people 30-minutes, this can represent enormous time savings. And if you multiply this every time you need to go through this process, you are also fundamentally saving so much money for your company. In the end, you are preserving wealth instead of just letting it go out the back door with all these expenses.

learn more about Equa.

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