All About Alignment
Make decisions based on what you want.
One of the most important, and most overlooked, ingredients in building something successful is alignment. It’s not enough for the people involved—whether they’re founders, investors, or talent managers—to simply agree on what they’re doing. They also need to agree on why they’re doing it and how they’ll get there.
Misalignment isn’t obvious at first. It usually starts with small differences—one person focusing on quick wins while the other is playing the long game. But those differences compound over time. And when the stakes are high, they blow up. That’s why contracts, structures, and incentives matter so much: they create a framework for alignment before the cracks appear.
The Alignment Problem
The fundamental problem of alignment is that founders, investors, and talent managers all bring different goals to the table:
- Founders/Creators are building something they care about. Their goal is usually long-term: creating a business or legacy that outlives them.
- Investors are optimizing for returns. They want their money back—and more of it—as fast as possible.
- Talent Managers are often focused on execution. Their incentives are tied to immediate wins: brand deals, revenue growth, or operational success.
These goals aren’t naturally aligned. The founder might want to reinvest every dollar into growth, while the manager wants a bonus for hitting revenue milestones. The investor might push for a quick exit, while the founder wants to keep growing. If you don’t create a structure that aligns these goals, the result is tension, frustration, and lost potential.
Establishing Alignment as a Founder
1. Equity Creates Buy-In
The simplest way to align people is to make them owners. When everyone has a stake in the outcome, they stop thinking in terms of "me" and start thinking in terms of "we."
But equity by itself isn’t enough—it has to be structured correctly. Founders should keep voting control, so they’re free to make long-term decisions without interference. Investors need liquidity preferences to protect their downside. And talent managers need vesting schedules to ensure they stick around long enough to create real value.
The key is to give everyone a share of the upside while maintaining clarity about who’s in charge. A well-designed cap table is like a well-designed team: it gives everyone a role to play without stepping on each other’s toes.
2. Revenue Aligns Focus
Equity aligns long-term goals, but it doesn’t solve short-term problems. If your manager isn’t getting paid for deals they close, or if your investors feel like the company isn’t generating enough cash flow, alignment starts to fall apart.
That’s where revenue-sharing comes in. By tying short-term incentives (like commissions or bonuses) to revenue, you can keep everyone motivated to execute today while staying focused on tomorrow. It’s a simple way to ensure that collaborators feel rewarded without giving away too much control.
3. Timeframes Matter
One of the biggest causes of misalignment is differing time horizons. Founders are naturally long-term thinkers—they’re building something they want to last. But investors, especially early-stage ones, often want returns within 5–10 years. And talent managers? They’re often focused on this month, this quarter, or this year.
The best structures acknowledge these differences. For example:
- Investors get liquidation preferences and pro-rata rights, ensuring their capital is protected and they can double down on winners.
- Talent managers get short-term incentives (like revenue shares or bonuses) tied to performance milestones, plus equity for long-term alignment.
- Founders retain enough ownership and control to stay focused on the vision, even when others are thinking more short-term.
When everyone understands the timeframe they’re working within, misalignment becomes less likely.
The Role of Trust
Ah, yes. A maybe cringe section about the role of trust in business. Alignment isn’t just about contracts and incentives. Those things create the structure, but trust is what fills it in. Founders have to trust that their investors and managers are acting in good faith. Investors have to trust that founders are making the right decisions for the business. And managers have to trust that they’ll be rewarded for their contributions.
Without trust, no contract is strong enough to hold things together. With trust, even imperfect structures can work. The best founders don’t just build businesses; they build relationships. They understand that alignment isn’t static—it’s something you have to maintain over time.
As always, if you have any particular questions, feel feel to reach out to em@pre-founder.com.
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