Less than a year ago I received a call from a friend. He suggested that I have a coffee with a group of entrepreneurs who were stuck on a project they were involved in.

We decided to have a beer (and a salmon and caper sandwich) at the Laie Café in Pau Claris St. in Barcelona. Within minutes of arriving the entrepreneurs appeared. We sat in a corner, at a round table, and they began to tell me about their project.

Their project was interesting, meeting a real need for the potential market. There was no doubt about it being scalable and, in principle, profitable. Indeed, the project was so good that they had received 600,000 Euros in finance from investors…

WHAT DO YOU NEED? WHAT?!!

– ‘So, what do you need? How could I help you?’ I asked them.

– ‘money’, they answered.

Money. Yes. It can be difficult, if you have more than sufficient resources, to control finances – sometimes leading to spending without learning. It is very difficult to not jump into creating structures, developing sophisticated technological platforms and simply assuming the business model will suffice. It’s very easy to engage in execution and to happily move forward but like a headless chicken.

Once, a lawyer mentioned that it’s important to go to trial with ‘nerve’ but not nervous, because he viewed me as too relaxed in a situation related to my company. That was the same advice given by his handball coach and is the same advice I would give to any entrepreneur “lucky” enough to have lots of money for his or her business venture.

WHAT HAPPENED?

So, what happened? Investors who had brought in the 600k – 6 of them in total – wanted to join the management of the company and joined the three existing partners. In total, this amounted to nine people managing a company with zero sales…

Vital models were radically different between the investors and entrepreneurs. Some were devoted to selling, others to assembling a great technology platform, others to networking topics… without knowing really what they were offering. As there were so many running the company no one felt that the company was ‘theirs’ and so, financial control began slipping. Taking advantage of the circumstances, a partner mis-spent funds. The investors and entrepreneurs ended up suing each other and bankruptcy of the company was inevitable. In the final stages before the fatal outcome, the entrepreneur partners had to make additional contributions of funds to sustain the business, ended up re-mortgaging houses and today still continue paying that debt.

WHY?

Steven Blank defines a startup as a temporary organization where the goal is to find a relevant, scalable, repeatable and profitable business model, through use of agile development and clients. But the entrepreneurs in my story had not done that, instead seeing themselves as a small version of a large company.

The moral of this story is that it is not good to have an excess of resources (Yes, I know that it is better that a lack of them), because it leads to indolence.

NOW, A QUESTION FOR YOU ALL..

Would you like to have a lot money for your startup? You do not need to answer this question. Better.. How can you avoid what happened in this story happening to you?