So, you’ve recently finished an extremely intense year and earned your MBA at Acton. A company in your chosen industry with whom you have been corresponding since the end of first semester has raised several hundred thousand dollars in order to launch and has asked you to become its President of U.S. Operations and one of its largest shareholders. Sounds pretty good, right?

First, a bit of background: After graduating with a Finance degree from Texas A&M, you went into mid-market commercial banking in Chicago and then strategic consulting in New York.  At 26, you were accepted to Acton and began pursuing an entrepreneurial future, although you had no idea what industry to pursue.

During the Life of Meaning course, you were asked to think about all the things you’ve ever wanted to do. The only recurring theme for you was a long-dormant music career aspiration. You didn’t want to be a rock star, but you wanted to be the guy that picked who the next rock stars were, something a bit beyond the A&R rep’s job description. Your love for music and helping new artists had never waned since high school and, given the turmoil of the music industry, it seemed like the time to help artists find a new solution.

Through a serendipitous connection with a friend you were told about a company in Europe developing a product like one you’d had bouncing around in your head. You reached out to the CEO and developed a working relationship where you applied what you were learning at Acton directly to his business. The insights you had were invaluable to the team and result in your flying to Europe over Christmas break to help develop a U.S. strategy. During the spring, the CEO flew in for SXSW, giving you business cards with your new title, and you closed a partnership with another music startup.  It sounds really great, right?

Shortly after your graduation, however, the CTO leaves to work with another venture and the company must look for new developers for a product that is 95% finished. One of the primary investors (a source of major credibility) doesn’t come through and the CEO (currently living in South Korea with his new wife) seems to lose focus, frustrated by trying to raise money and get the site in working condition. Also, the CEO only owns about 22% of the company before it has even launched, meaning that as soon as you get your VC round of financing, everyone, including you and the CEO, will only own a tiny fraction of the company.

However, you’ve now been offered a much more prestigious role: President of [all] Operations.  Still sound good?

If you are like me pre-Acton, there is little chance that, despite these complications, you would ever turn down this offer. Yet, that is exactly what I did. I turned down an equity position with a company that perfectly aligned with my goals from the Life of Meaning course. Instead, I’m currently in the process of launching my own company, GigFunder, the world’s first crowd-funded tour site. (Sign up for an invite to the launch at GigFunder.com.)

I decided to let the first opportunity go in favor of my own company because one of my Lessons Learned at Acton was to “pay attention to red flags.”  Before Acton, I may not have even been aware that seemingly small flaws could be so detrimental to a company with such a great concept. I still think the company may have a bright future–but it will be an uphill battle to make it work due to mismanagement of the launch phase.

The largest red flags that contributed to my decision to let the opportunity go were:

• The company’s lack of clear direction and my inability to influence it without fighting the internal politics of an organization spread across three continents,
• A team that owned a majority of the company, but wouldn’t be able to serve the company in the future (or had already left), and
• An incomplete product and no proven market despite over two years of development and several hundred thousand dollars in funding.

That’s why we are doing things differently at GigFunder – The Acton Way. At GigFunder, we are:

• Launching quick and cheap. We are developing the minimum viable product at a fraction of the cost of a full-blown website to gain traction before further investment. If GigFunder fails, we will fail quickly.
• Guarding equity closely. By avoiding raising money and mandating that equity options have buyback, I won’t lose control of my company.
• Focusing on a small niche of the growing crowd-funding market that has not been served at all. Currently, no other crowd-funding sites exist to get artists on the road to your (the fan’s) city of choice.

Please sign up for the GigFunder launch and tell any friends that are into music about it. Thanks!

Photo courtesy of Daniel R. Blume

Tags: Acton Alumni, Advice, Class of 2011, Job, Lessons Learned, Life of Meaning

Posted in Guest Writers, Lessons Learned