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Last year I wrote an article on GigaOM about the ultimate lesson [learned] from my last startup: Knowing what matters to everyone involved is the most important thing when founding a company.

Knowing what matters requires you to:

  • Think through your own values. Few people do. Ask yourself the really hard questions, and be brutally honest.
  • Make sure you understand which values your fellow co-founders and early employees consider non-negotiable, and screen for them in yourself and others. If these values can’t be reconciled, it’s a showstopper.
  • Make sure you understand which values your co-founders consider important but notnon-negotiable. Talk through what the lack of alignment means in practice: What types of issues may arise and how do you deal with them? Make sure everyone has the same expectations.

Several people who thought this made sense contacted me, because they weren’t sure how to operationalize the advice. Having learned from past mistakes, we created a set of “Value Alignment Questions” before starting I’m sharing them with you below in the hope it will eliminate a lot of “WTF?!” moments for you down the road — whether you already have or are about to start a company.

It took us two days to go through the questions and build a thorough understanding of each other’s perspectives. While that’s not an insignificant time investment, I think it might be the cheapest form of risk mitigation a founder will ever find.

Personal Values

Starting a company is an emotional and probably financial rollercoaster. Why are you doing it? What’s the intrinsic drive that’s going to power you through all the obstacles ahead?

What you might hear: “I want to make a dent in the universe.” “I want to be invited to Davos” “I want to attract more gold diggers than the 1848 Gold Rush.”

What are your personal constraints? 

What you might hear: “I have a kid, so I’m only staying in the office for eight hours a day” “I’m committing a maximum of three years to this venture, because after that I think I might need a sabbatical.”

What are your biggest fears about the venture? 

What you might hear: “That it will turn into an enterprise company.” “That my wife gets tired of our financial struggles and leaves me.” “That I don’t get enough say about product direction.”

What are the things that really tend to bother you? 

What you might hear: “Lack of progress.” “Music in the office.” “Lack of ownership/accountability.” “Not having crystal-clear goals.” “Not shipping or testing a new version of our product at least weekly.”

What would cause you to want to shut down or leave the company? 

What you might hear: “When it’s not fun anymore.”

What are your character flaws, and what are you bad at? 

What you might hear: “I tend to over-promise and under-deliver.” “I am not good at time management.” “I can be irritable.” “I’m easily distracted.” “I just can’t stand doing certain types of work, including XYZ.”

What are your character strengths, and what are you really good at?

What you might hear: “I consider my signature strengths to be love of learning, humility and integrity, and I’m really good at XYZ.”

What about working hours and working weekends? 

What you might hear: “40-hour weeks” or “16 hours per day, including weekends.”

What about time off? 

What you might hear: “Five weeks per year.” “Two weeks per year.” “Nothing until the company is profitable.”

What types of people do you want, and do you not want, to work with?

What you might hear: “I only want to work with people who can X.” “I refuse to work with anyone that is Y.”

How do you expect to grow as a person from building this company and what to you hope to learn?

What you might hear: “In the short term, I want to get better at lean startup methodology.”

What support do you need from your co-founder(s)?

What you might hear: “I need you to understand my financial situation and not pressure me to take risks I can’t afford.”

Execution Values

What role do you see yourself in two years down the road?

What you might hear: “CEO.” “I couldn’t care less.”

What if others don’t feel this role is a good fit?

What you might hear: “Then I’m flexible.” “Honestly, then I’ll probably leave.”

How do you want us to make day-to-day decisions?

What you might hear: “I want veto right on X.” “I think I should decide everything related to Y, and I don’t care about the rest.”

How do you want us to make major decisions like firing, selling the company and raising funds?

What you might hear: “I want to vote on executive hiring/firing, parting ways with co-founder, raising funding and issuing stock options.”

What barriers are you worried about us running into? 

What you might hear: “Funding.” “Burnout.” “Product direction.”

Financial Values

What would be your fair market salary?

What you might hear: “I’m currently making $140,000 per year, but could probably get another $20k somewhere else.”

What’s the minimum salary you’d be willing to work for and for how long?

What you might hear: “Six months with no pay plus 18 months with $50,000 per year.”

What your maximum “tolerable” opportunity cost?

What you might hear: “$120,000, because my market salary is $100,000 post-tax, and I’m willing to work for two years at $40,000 per year. That’s the most I can afford.”

What do you think of the possible financing solutions: paying customers, venture funding, consulting, keeping our day jobs, etc.?

What you might hear: “Getting venture funding is probably a requirement for me. I don’t want to **** around and do random consulting just to keep the boat afloat.”

What do you think is a fair approach to splitting the founders’ pie? 

What you might hear: “Equal parts.” “Founders’ Pie Calculator.” “I don’t know; make me an offer, and let’s take it from there.”

What valuation would make you want to sell the company?

What you might hear: “$5 million.” “$1B”, “I don’t ever want to sell. Are you in it for the money?!”

I recommend writing down and revisiting the answers to these questions periodically. The answers will inevitably change as you move forward. Your personal circumstances will change; your knowledge of the market will change, and the company itself will change. Still, if you do proper values due diligence on day one, you have a good foundation to stand on as you move forward together.