Often downplayed in the excitement of starting up a new business venture is one of the most important decisions entrepreneurs will face: should they go it alone, or bring in cofounders, hires, and investors to help build the business? More than just financial rewards are at stake. Friendships and relationships can suffer. Bad decisions at the inception of a promising venture lay the foundations for its eventual ruin. The Founder's Dilemmas is the first book to examine the early decisions by entrepreneurs that can make or break a startup and its team.
Drawing on a decade of research, Noam Wasserman reveals the common pitfalls founders face and how to avoid them. He looks at whether it is a good idea to cofound with friends or relatives, how and when to split the equity within the founding team, and how to recognize when a successful founder-CEO should exit or be fired. Wasserman explains how to anticipate, avoid, or recover from disastrous mistakes that can splinter a founding team, strip founders of control, and leave founders without a financial payoff for their hard work and innovative ideas. He highlights the need at each step to strike a careful balance between controlling the startup and attracting the best resources to grow it, and demonstrates why the easy short-term choice is often the most perilous in the long term.
The Founder's Dilemmas draws on the inside stories of founders like Evan Williams of Twitter and Tim Westergren of Pandora, while mining quantitative data on almost ten thousand founders.
People problems are the leading cause of failure in startups. This book offers solutions.
First published in 2012.Noam Wasserman is an associate professor at Harvard Business School.
More about this book
- Winner of the 2014 Entrepreneurship Practice Award, Entrepreneurship Division of the Academy of Management
- Winner of the 2013 Silver Medal Book Award in Entrepreneurship, Axiom Business
- Finalist for the 2013 George R. Terry Book Award, Academy of Management
Table of Contents
Part I: Introduction and Pre-founding 1
Chapter One: Introduction 3
Chapter Two: Career Dilemmas 27
Part II: Founding Team Dilemmas 69
Chapter Three: The Solo-versus-Team Dilemma 73
Chapter Four: Relationship Dilemmas: Flocking Together and Playing with Fire 89
Chapter Five: Role Dilemmas: Positions and Decision Making 117
Chapter Six: Reward Dilemmas: Equity Splits and Cash Compensation 145
Chapter Seven: The Three RsSystem: Alignment and Equilibrium 186
Part III: Beyond the Founding Team: Hires and Investors 205
Chapter Eight: Hiring Dilemmas: The Right Hires at the Right Time 209
Chapter Nine: Investor Dilemmas: Adding Value, Adding Risks 249
Chapter Ten: Failure, Success, and Founder-CEO Succession 297
Part IV: Conclusion 329
Chapter Eleven: Wealth-versus-Control Dilemmas 331
Appendix A: Quantitative Data 391
Appendix B: Summary of Startups and People 403
Other Books Written by this Author(s)
- Noam Wasserman
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