Your cap table is your culture
One of my learnings from my time as a CEO is that your company’s cap table is your culture.
Here’s what this concept means to me.
(Note: It's possible Ryan Smith of Qualtrics originated this phrase, but I have not been able to reach him.)
What I mean by “your cap table is your culture”
When I say cap table, I’m referring to your company’s capitalization (“cap”) table. In its simplest form, the cap table is a list that shows who owns what percentage of your company.
When I say culture, I am referring to the behavior values and motivations that create your company's unique social and emotional environment. Culture influences the way individuals interact, collaborate, and define success at your company.
Your company will ultimately adopt the behavior values and motivations of the people who control it: the majority owners (or “shareholders”).
For example, if a company is majority-owned and controlled by its founder(s) or management team, it will adopt the behavior values and motivations of its founders or management team. Conversely, if a company is majority-owned and controlled by its investors, it will adopt the behavior values and motivations of its investors.
I am not saying don’t raise money. This is not an anti-venture capital rant.
It’s a reality you need to be aware of and navigate in specific situations.
Situations where this concept applies
Here are a few situations where this applies:
When you join a new company, make sure you share the behavior values and motivations of the company’s owners.
When you start a company, make sure you share the behavior values and motivations of your co-founders.
When you raise money, make sure you share the behavior values and motivations of your new investors.
When you merge or sell, make sure you share the behavior values and motivations of the owners of the new company.
(When you get married, make sure you share the behavior values and motivations of your spouse.)
Ignore this and you may wake up one day hating going to work (or coming home).
How to handle a conflicting situation
You may find yourself in a situation where behavior values and motivations conflict. Here are some options if you do:
Change your behavior values and motivations. Good luck. 😉
Change others’ behavior values and motivations. Not fun. 😬
Change the cap table to fit your behavior values and motivations. This requires bringing on new owners to replace your existing owners. 😤
Opt out and go find a suitable situation. This requires you to walk away. 😔
Survive. There are all kinds of health problems with this approach. 🤒
These options are terrible.
That’s why it’s best to prevent this situation from happening in the first place.