tl;dr: Sharing the burden of risk in big decisions is crucial. It promotes fairness, streamlines business, and helps manage risk. Moreover, on the long run it fosters a deeper understanding of the overall situation.
Coined by renowned investor Nassim Nicholas Taleb², this concept refers to having a personal stake or investment in a venture, beyond just financial capital. In other words, it’s about putting something valuable on the line—whether it’s time, effort, reputation, or resources—to align interests and ensure commitment to success.
For startup founders, having skin in the game goes beyond mere financial investment. It’s about being deeply invested in the vision, mission, and values of the company, and being willing to go the extra mile to make it a reality. This personal commitment often translates into resilience, determination, and a willingness to weather the inevitable challenges and setbacks that come with building a business from the ground up.
Having skin in the game also instills trust and confidence among stakeholders, including investors, employees, and customers. When founders have a personal stake in the success of their venture, it demonstrates their belief in the company’s potential and their dedication to seeing it through. This level of commitment can be contagious, inspiring others to rally behind the vision and contribute their own efforts towards achieving shared goals.
Moreover, having skin in the game can drive better decision-making and accountability within the startup. When founders have a personal stake in the outcome, they are more likely to make thoughtful, strategic choices that prioritize long-term success over short-term gains. This sense of ownership also fosters a culture of accountability, where everyone is accountable for their actions and invested in the collective success of the company.
Links: https://en.wikipedia.org/wiki/Skin_in_the_game_(phrase)
Albrecht Günther 