Principal & Principal Agent

Startup founders obsess about motivating the top lieutenants of the company. We often find ways to give the founder mentality to the first 15 employees. First 5 employees are the real MVP of the startups

To make people do what you want them to do, you need to get the incentives right. The system is hacked for incentives. If you are a principal, you should give equity options to your top lieutenants of the company and enjoy the aligned partnership with your top lieutenants.

If you cant afford full time employees, then hire a single employee firm. The ideal banker is solo banker. The ideal accountant is a solo accountant. You have got one throat to cut.

In the bigger firms, principal and agent are different. CEO’s issue a low stock options and buy back the stocks in the public market. Principal in bigger firms work for the increase in the stock price but not for your number one job to be done.

Unlike publicly traded markets, Principal agents play a key role in the startup world. If you are an employee, then act like a principal agent. If you are an agent, your number one question would be, what would the founder do?