The Parable of Talents
A man of considerable wealth was planning extended travel to another country, so he gathered his three most trusted employees and tasked them with managing his affairs. He divided his assets into eight portions and distributed them among these three to invest and provide a return. He distributed the portions according to the capabilities of each person. To one, he gave 5 portions, to another he gave 2 and to the last, he gave 1 portion of the assets.
After some years, the man returned and called together his team for an accounting. The one granted 5 portions doubled their value to 10 and the one with 2 portions doubled their value to 4. But the one who was granted one portion stored the assets in safe keeping, only returning the original amount. When challenged, the employee replied, “Sir, I know you to be a hard man, reaping where you do not sow and profiting from the efforts of others. I was afraid so I hid my portion in order to return it to you.” Angry that his employee squandered his investment, the owner took the one portion and gave it to the one who had 10. Then he cast the unproductive employee out of his company.
This parable from the scriptures is disturbing because it does not end happily, nor does it involve virtues of forgiveness and empathy. Yet, it is a warning to those entrusted with resources, not to squander them and it reminds us that life is not always fair. The story applies directly to entrepreneurs. Here are 5 lessons.
Entrepreneurs are Value Multipliers
Common definitions of entrepreneurs include concepts of assuming risk to make money. But this is incorrect and misses the point. A more accurate definition comes from, of all places, a college textbook and has to do with pursuing opportunities without regard to resources they currently control. In other words, entrepreneurs are resource multipliers; having the ability to gather money, people, and time, and transforming an idea into a profitable growing concern.
The entrepreneur is a person in whom other’s resources have been entrusted. Your investor chose to risk her capital on you because she believes you will multiply the value when she could have been safe and invested in a bond fund. She believes in you and by accepting her resources, you have a profound responsibility to provide a significant return.
Your key employees entrusted their time on earth to you when they could have gotten paid much more to work less risky jobs. They believe in you and by accepting their employment, you have a profound responsibility to provide a significant return.
Two Types of People…
There are pure consumers; those who suck up resources without putting anything back. Their priority is investing the universe’s resources in themselves. Stewardship is a strange and foreign concept and they believe everything they have was earned and deserved. Ironically, our economy needs them to buy cars and iPhones.
Then there are the problem solvers. For them, money is an enabler. Their calling is to change the world, leaving things better off in exchange for their time on the planet. Sometimes small money returns really big and if that happens, it’s passed on to those who made it possible. With what’s left, the problem solvers return it through philanthropy or perhaps in starting the next venture.
Life is a gift and was given to you at someone’s cost. You can bury it or you can make meaning.
Life is Not Fair
In his angel round, it is reported that Jeff Bezos raised just under $1 million for Amazon at an estimated $5 million pre-money valuation. A small but perhaps equally deserving startup in the southeastern US struggles to raise the same amount at a $3 million valuation. Maybe it’s the exuberance of the West Coast. Maybe it was the heady days of the mid-1990’s. Maybe west coast investors don’t do deals in East Tennessee. We don’t know why one employee was given 5 portions and another just 1 because it’s not important. The majority of people raising money never see a dime. Valuation is a number on a term sheet. What is important is what you do with the resources you are granted.
What is important is how you spend your time on the planet.
The Rule of the 5 Talents
Although we don’t know why the one was given 5 portions of the wealthy man’s assets, we can be sure it had something to do with trust and past performance. The key word is trust. Trust that the resources will be carefully applied and returned with a multiple.
Losing it all is a potential outcome. Maybe the technology just didn’t work. Maybe the market or the economy changed. Maybe the customers preferred the competitor. Or maybe the strategic partner went bankrupt. There are a million ways to fail.
The one thing that is absolutely not acceptable is doing nothing with the resources entrusted to you.
Don’t do nothing!