The 'Founder Takes All' Fallacy
Recognizing God's Role in Our Success, and The Responsibility to Share
You did it! You built a successful business printing cash like the U.S. government… well, not that much, but you’re doing well. You can keep it going and take out the dividends or pursue a sale.
Either way, you’re likely feeling good and looking forward to the money that comes with either outcome.
But hold your horses.
How should a Catholic Founder look at this situation?
God’s Role In Our Success
Let’s start in the first place. God has been with us our entire lives. He gave us the drive to start something and helped us succeed. Of course, we can take some credit for having worked hard, but in reality, we have just been making use of the talents He gave us.
So, why should all the rewards go to us alone as the company's founders? I mean, in reality, we definitely could not have built the company to what it is without the employees who joined us on this journey. Yes, they were paid a wage, but unless you built a huge solopreneur business, you had help on this journey.
Most people would cash out without even thinking about it. Maybe a few of the early loyal employees would get some last-minute equity before the sale.
I am convinced this is absolutely not how a Catholic Founder would approach the situation.
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Let’s pause to consider a few more details.
Parable of the Talents
As we see in the parable of the talents, not everyone is given the same number of talents. As entrepreneurs, we can argue we’ve been given abundant talents. Is this solely for our own benefit? Or do we have a responsibility towards those around us? Yes! Yes, we do, and we all know it. The challenging part is discerning to what extent we are responsible versus what is a charitable thing to do.
This may not translate exactly 1:1, but as an example, we can say that folks with fewer talents are more likely to be employees. Does the fact they are just employees justify their need to struggle to feed their big families? Many people without the entrepreneurial drive want to have a job that is at least mildly fulfilling, pays the bills, and allows them to spend time with their families. Just because they are not starting a company doesn’t mean they shouldn’t benefit from their contribution in another person’s company.
Now, back to the shoes of the entrepreneur.
What are you to do about this situation? If you’re going to hold the company and keep making good money, are you willing to set up a profit-sharing plan with the team? And I’m not talking about some carrot to tide people over each year. I mean a program that will genuinely pay out a percentage of profits to all involved in the plan, ensuring everyone works to maintain a healthy profit each year. The type of money that can drastically change the type of life they can provide.
What About Exits
If you decide to sell, why not give each employee meaningful equity that will also be life-changing? After all, after a sale, there is likely to be a lot of uncertainty and possible redundancies, and it’s also possible the acquirers are not as charitable to their employees as you are. The least you can do is get them in the cut in a meaningful way to help give them certainty.
I believe this is the route of the Catholic Founder.
So, how do we do this, practically speaking?
For starters, we need to figure out our number.
Figure out Your Number
For me, it’s $300k. At $300k, I have, by far, enough to provide for the biggest family God could give me. And not just provide—but have a very good life. This number seems by far enough for me and a number that, once I get to that annually, my level of generosity should go up massively.
An Example
So, let’s say I’m running a successful enterprise that is putting off $1m of profit a year. I pay myself $200k salary as the CEO. Then I give myself a $100k bonus from the profit. I’m now at my $300k number. Most of my employees are being paid between $80-120k. So, with that remaining $900k profit, I set aside 50% of it to be distributed among all employees in a way that is commensurate with experience and responsibility. That’s $450k distributed across, say, 10 people. That’s an additional $45k per person for the year. That amount wouldn’t mean too much more to me, but a $45k bonus when you’re making $100k is huge.
Long-Term Thinking
We have still preserved some extras for reinvestment into the business but have given the team a huge lift. Now, what do you think this does for these employees? Well, unless they are an outlier, they are not going to get a salary somewhere else that pays them $45k more per year. I’ll tell you what happens: if they are being treated well in their role and don’t have any other major career motives in a different direction, they are going to stay.
Not only will they stay, but they will do what they can to recruit their friends to ‘work at this great place.’ This is a winning talent strategy for those focused on the long game. I would argue that as Catholic Founders, we should be focused on the long game. Or, in the words of Naval Ravikant, Play Long-Term Games With Long-Term People.
Laborem Exercens
Don’t agree with this? Think this is a little too whack. Maybe even a little commie. Well, consider the encyclical of Pope Saint John Paul II, Laborem Exercens. In this, he lays out a few things. One of them is the right of the worker to a just wage. In Catholic Social Tradition, this means the ability to provide for a person’s family.
Again, maybe you’re not convinced you want to implement a profit-sharing scheme. But at the bare minimum, you must audit your company to ensure that you are, in fact, paying your team a just wage.
Incentive Aligment
Personally, I’m really in favor of the profit-sharing model because it incentivizes everyone to work as a team to increase profit. Even if you’re managing a teller, you’re more likely to do everything you can to increase customer experience if it means more loyalty or new customers each year.
Next Steps
So, what do you say? Ready to recognize God’s part in your success? And willing to share the winnings in a radical way? Here are the next steps.
Get clear on your number.
We discussed it before, but think deeply about the life you want to live. Think deeply also about the life you know you need to live in the light of our Faith. Don’t allow any dissonance. Similar to what we talked about last time, create a crystal clear vision of the life you are aiming up at. Once you have this you can come to a clear number that should get you there.Create a plan.
Now that you know your number, what are you going to do with the excess? I’d even encourage you to consider what you will do with the money you make each year on the way to your number. Perhaps you’re still starting out like I am, and are still in pursuit of that number of yours. Just because you are not there yet doesn’t mean you shouldn’t be setting aside money for The Church along the way. Spend time thinking about how you’ll allocate the money you make. Witout a plan, it’s unlikely you’ll follow through as the time comes.Communicate to your employees.
Once you’re ready to roll this out, communicate to your employees why you’re doing this. I know we have talked about this being the right thing to do, but there is also a co-benefit to your business. If you structure it right and demonstrate the value and importance of each person’s job, they can start to see the way they all play into the bigger picture. This is especially true for junior employees, or those who don’t always see direct correlation to their efforts. For example, people in customer success, or managing a store-front. Often they will overlook the role they play in continuing to build loyalty. So take the time to paint a clear picture.
If you are about to go through a sale, you need to pray hard about what amounts you should allocate to each person. This is going to be a much harder decision but trust me, it’s important you think deeply about it and pray what is the right thing to do.
Seeking others who share your Catholic beliefs and who are building businesses? Meet folks in the comments by sharing your thoughts about this post, any ideas you have, and perhaps more about what you do. Let’s support each other by connecting.
John D. Rockefeller
If you’re not already familiar with the life of John D. Rockefeller, I’d encourage you to do so. The man had many flaws, but one of his core beliefs was that he was picked by God to make a lot of money so he could give it away for the benefit of others. Yes, we can argue he may have been better off paying his employees more as we’ve discussed today. But, this idea, despite being Protestant in its origin, is something we ought to consider. It’s widely believed that he was one of the richest men in the world during his lifetime, if not the richest. Yet, he gave away millions. He’s responsible for the construction of thousands of libraries around NYC and the country.
The key point here is, he believed that God was helping him. God was part of his journey and most certainly part of, if not the reason, for his massive success and wealth. While we are not at the level of Rockefeller, we need to recognize this fact as well. God is part of our entrepreneurial journey. He helps us along so that we can benefit as well as the people around us. What are we going to do with the gifts God gave us?
Homework: Figure out what you number is, and determine the plan of how to share more of the trappings with your employees.
See ya next time!
Silas Mähner
PS: If anyone has any resources / literature on this topic, please share since it’s super difficult to find much about this idea.
Asks
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