So you have put your MVP up, and a few users have latched on to it. Enough to know you won’t fail, and you actually have to build a team. Here is perhaps your greatest chance of failure.

Two founders working in a bedroom or a garage can usually get along while the business is in startup mode. But co-founders are locked in a sexy relationship that very quickly turns into a marriage when they have that first child — the MVP. Childless founders can move away from each other, no harm no foul, but as in real life the child presents complications.

How, indeed, should we raise this child? Very few people have this conversation in advance, and very few people discuss what kind of culture they’d like in the company they are building.. Instead, each assumes the other agrees about how the little prodigy should be raised. And that’s where the partnership often begins to go awry. Reading the advance publication section of Paul Allen’s autobiography, you can see (in hindsight) early on that these founders will have a problem. When your co-founder eats his chicken with a spoon, wears only one color pants, and codes all night without sleeping, if you have the misfortune to develop a serious illness you cannot expect the solicitude you might get from a person with a more social personality. Same-same for Jobs and Woz, who had a falling out as the company grew, and for Zuckerberg and Eduardo Savarin.

The more people who come into the company, including the investors, the less you can shape the company to your original vision without codifying that vision from the get-go. A good friend of mine is a technical recruiter for a recently funded company. They want to hire 100 engineers immediately. Without serious thought about how those people fit in with each other, with the founders, and with the other parts of the company, that will be a huge clusterfunk.

Ideally, every single hire should be a reflection of the founders’ vision. That means founders should be writing vision statements during the YCombinator phase of the company, or whatever comes before. Once you gather momentum, it’s almost too late. The bad examples of this are legendary. They lead to churn and dissatisfaction, and the inability to turn out a quality product.

The good examples are worth remembering. Starbucks happens to be one of them. When Howard Schultz discovered the barista culture in Milan and decided that Starbucks should be a similar experience, he found its differentiator. But he wasn’t a founder of Starbucks — he was its marketing guy, and he encountered major resistance. The three founders, all professors, were already heading in different directions, and Schultz made it worse for a while. There’s a great case study about all this.

In order to get his vision realized, Schultz had to create a separate company to try it out; two of the Starbucks founders were Schultz’s investors, and finally Schultz acquired Starbucks. Once he owned it, he could develop the “experience” he sought. And every employee fits into that experience. Starbucks hires for attitude (outgoing and customer-focused), and then trains its hires to know about coffee.

Another example of a strong corporate culture is Southwest Airlines, whose culture was defined by its hard-drinking, chain-smoking founder, Herb Kelleher, who made public appearances drinking a shot of Wild Turkey at the podium. Herb believed it was possible to run an airline and have fun at the same time, and as the company expanded, he kept its vision by also hiring for attitudes rather than skills. Even today, you can always tell the difference between a Southwest employee and an employee of any other airline: the Southwest employee will tell you the truth about why the plane is late, and actually try to help you.

Google is an example of a strongly defined corporate culture that hires on skills. From the get-go. It was designed to be a company where the smartest people in the world gathered to spend far more than the average work day. Even the young Google included food, games, couches, and other ways to keep the employees at the office. Google’s vision involves hiring the best engineers. After ten years, I’m told the hiring criteria are changing: you can’t build a culture on just brilliance.

To bottom line it for you: hiring others is the most important thing you will do, and too many founders can’t do it. Then one morning they wake up to their troubled, disfunctional organization and wonder how it got that way.

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In the last post, I wrote about the Lean Startup philosophy of getting the minimum viable product into the market to see whether it had any market acceptance. If it doesn’t, the Silicon Valley mentality says you fail fast and start something else. But what if you are not in Silicon Valley, and you don’t fail?

If you didn’t actually fail, you got a product to market and you are now struggling. You  are struggling for enough traction to take you to profitability, but you are also struggling with the questions that come with scaling a business: how many people can work out of your house/garage before you have to get an office and pay rent? How do you find and hire people to keep up with your growth?  Where does the money come from to bridge the gap from startup to sustainability?

In Silicon Valley it comes from the magical angels and super-angels. But they are few and far between in most communities. Instead, there are time-honored ways of financing businesses while they grow. They all suck, I warn you.

1. Credit cards. Yes, the easiest way to finance a growing business is on credit cards, and American Express is usually the best, because it doesn’t have stated upper limits, and while some things must be paid for in 30 days, other things (such as travel) have longer timelines. Along with the Amex card comes a slew of small business discounts, too. It depends on the nature of your business which ones you can use, but FedEx is one of the small business discounts, and almost every business needs that:-) Ignore the things people have told you about not getting too deeply in credit card debt; if you are growing a business, all bets are off.

2. Loans or investment from family and friends. The first round of financing has to come from people who know you, because you don’t have much else to recommend your company outside your own experience, integrity, passion, or expertise. Fortunately, relatives often invest in each other, and so do friends.  Is this comfortable? Of course not.  If you don’t succeed and they lose their investment or you have to default on the loan, they hate you.

3. Factoring and discounting receivables. Once you have sold a product or a service and money is due your company, you can either factor or discount receivables. Factoring involves selling your receivables to a third party, who pays you about 65-75% of their face value in exchange for immediate cash. Discounting involves getting a loan for which the receivables serve as collateral. That can be even worse, as the loan-to-value can be as low as 50%. When you have to make payroll and the checks aren’t yet flying in, these terrible tools can save your company.

4. Customer-financing. I like this method a bit better than the others, because it doesn’t involved borrowing or giving away your company or your receivables. Customer financing is a negotiation in which the potential customer for your service agrees to pay in advance in exchange for favorable pricing. Although Web 2.0 companies often do free private beta tests, in the past customers have been willing to pay smaller amounts for beta testing.

5. Venture-leasing. In this scenario, a supplier who wants to sell your company something you can’t afford to buy yet leases it to you, assuming some of the risk for your company not being around for the duration of the lease. Rates are not ideal, but – hey – if you need the equipment to scale, this is a way to get it.

The best way to finance growth: In all the years I have been working with startups, both my own and those of clients and investees, I’ve found that the best way to grow is to incur no overhead before its time. Don’t get ahead of yourself. Contract and outsource rather than hire. Work as a distributed team out of homes if you can. Don’t spend money on big fancy brands.

At the end of the day, anyone who lends or invests money in your business assumes power over you and can throw you out of your own company, even though they couldn’t run it as well as you can, and even though they can ruin the entire company by doing so. Their motives are not yours, and as a result, lenders and investors have some pretty strange ideas about how your company should be run. They should be feared, not embraced.

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