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The Founder's Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup

4.05  ·  Rating Details ·  1,612 Ratings  ·  69 Reviews

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 ventur

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ebook, 448 pages
Published March 25th 2012 by Princeton University Press (first published January 1st 2011)
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Brad Feld
May 06, 2012 Brad Feld rated it it was amazing  ·  review of another edition
Shelves: business
The Founder’s Dilemmas by Noam Wasserman is another book that belongs on every entrepreneur’s bookshelf. It’s excellent.

I met Noam for the first time last week when I was at HBS. I was on a panel of VCs (me, Mike Maples Jr., Kate Mitchell, and David Frankel) talking to a room full of HBS alumni who are VCs. Noam and I had exchanged several emails over the past few months and he sent me a review copy of the book but it got lost in my infinite pile of books to read. After seeing him and talking to
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Carlos Rodarte
Sep 10, 2012 Carlos Rodarte rated it it was amazing  ·  review of another edition
Shelves: business
My expectation for The Founder's Dilemmas was pretty high as a result of having just read several of Professor Wasserman's publications, including "Stewards, Agents, and the Founder Discount: Executive Compensation in New Ventures."

The book explores key decisions faced by startup founders throughout the life of a company ... from pre-founding, funding options, initial team and transitional hires, salary negotiations, board management, to exit. I especially liked Wasserman's explanation around th
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Shannon
May 08, 2012 Shannon rated it really liked it  ·  review of another edition
Shelves: business
If you are thinking about founding a business, or you are a founder of a business, I highly recommend checking if your library has this book. From Harvard Business School, Wasserman has studied the social and economic dilemmas and decisions of start-up founders for 10+ years, and in this book he gives us exquisite data on the results. Wasserman focuses on tech start-ups and businesses in the life sciences, but this book applies to all business founders if you read around the tech details and loo ...more
Athan Tolis
Nov 11, 2016 Athan Tolis rated it liked it  ·  review of another edition
Shelves: startups
“The Founder’s Dilemmas” comes recommended by relevant authors Brad Feld, Eric Ries and my former classmate Jeff Bussgang, all of whom really know what they are talking about.

It’s rigged up as a parallel structure between serious statistical research and anecdotal stories that are meant to guide you, the entrepreneur, in the early decisions that stand to influence the future success of your business.

So you get told “Evan next decided he would only hire junior developers via Craigslist” and then
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Cole Simmons
Jul 28, 2016 Cole Simmons rated it really liked it  ·  review of another edition
Coming in to starting my own company, I figured there had to be right answers. A right way to do things. And if you did things just in that manner, your chances of success would be significantly higher.

Boy was I wrong, and this book is what highlighted it. Compiled from the author's extensive research and data set of thousands of startups since the start of the millennium, he is able to draw conclusions about the dilemmas founders face, the possible paths, and what kind of outcomes they lead to.
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Tigran Mamikonian
Mar 22, 2015 Tigran Mamikonian rated it really liked it  ·  review of another edition
Quite instructive book about different stages of startup development with plenty of examples and statistical data.

The central theme of the book is so called RICH or KING dilemma. Which refers to two basic types of founders - motivated to get profit (RICH), or motivated to control and creation (KING).

Of course there is a middle point to which author refers as "Ideal entrepreneur".

The book is longer than it could be, however I'd recommend it for reader who would want to dig deeper in this area. An
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Josh Steimle
Mar 14, 2013 Josh Steimle rated it really liked it  ·  review of another edition
This is a great addition to data-driven literature that can truly help entrepreneurs. It covers basics every entrepreneur should be aware of, like the perils of setting things up the wrong way at the beginning. But rather than just being the pontifications of someone who has been there done that, it's real data, showing the probabilities of things working out well or poorly depending on choices made during the founding process. Along with Founders at Work, Four Steps to the Epiphany, and Venture ...more
Pavel
Jan 21, 2013 Pavel rated it it was amazing  ·  review of another edition
Very good book, easy to read given the topic. Mostly based on research, and where not, is clearly stated.

The book covers a lot of grounds for startups from co-fouding, to hiring first people, getting investors, and selling the company. The book goes over the decisions founders will face and how they affect long term value or control of the company.

I would not recommend an eBook. There were a lot of footnotes and end of book notes, some of which I felt were really important. Having the book in eB
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Luke Kanies
This is probably a great book for someone thinking of starting a company, but useless for someone who has. And even then, it should have had a lot more information. It presented problems, but very few useful tools for solving them.
Robin
Jan 22, 2017 Robin rated it it was ok  ·  review of another edition
1.5 stars

Didn't read the whole book but skimmed some chapters.
Unfortunately it's more for someone that is thinking about a startup than someone that is already in the middle of one. Found it quite boring to get through, a lot of the book is giving stats about startups which weren't that useful or interesting to me.
I wouldn't really recommend this book unless you are just about to start a startup and want to know what statistically happened between 2000-2009 with 10k startups. How many were solo-
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Jagannath
Jan 14, 2017 Jagannath rated it really liked it  ·  review of another edition
A very clear and frank discussion, aimed at entrepreneurs who are not privy to many of the decisions they would inevitably face. It has a plethora of data from high technology startups in life sciences and tech space highlighting how the different dilemma's faced by entrepreneurs were handled differently.
It would be worthy to revisit the book's closing remarks from each chapter to remind yourself what needs to be thought of at the different stages in a startup's journey
Herve
Dec 12, 2013 Herve rated it liked it  ·  review of another edition
The Founder’s Dilemmas – The Answer is “It depends!”

The Founder’s Dilemmas is at the same time a fascinating and frustrating book. Fascinating because it’s providing very seldom seen (and mostly unknown) data about founders and high-tech start-ups. Frustrating because it is also seldom providing answers to the dilemmas founders may face. It took me the full reading of the book to finally understand that the answer Wasserman provides is that there is no best solution for a founder facing a proble
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Ronald Mcconico
Apr 18, 2016 Ronald Mcconico rated it it was amazing  ·  review of another edition
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 entr ...more
Jake Desyllas
This book usefully outlines key questions facing business founders, such as: are you going to start solo or with others? If with others, how will you split equity? Should you seek funding from investors? Wasserman outlines the potential impact of choosing each option for these dilemmas and also provides statistical evidence on which of the options founders tend to choose more or less.

This book is based on his research on tech and life-science startups, which means is very much focussed on busine
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Troy Swinehart
Feb 26, 2016 Troy Swinehart rated it really liked it  ·  review of another edition
Book 19 of 24 for the year and it's only the end of June! Not getting cocky, but I might need to up the count for 2012. (Assuming the Mayans are wrong about that whole end of the world thing.)

So I am not going to count this one because I really don't see me finishing it - so it's not done done.

While I do think there is a significant amount of information that I have found very relevant to founding your own business I find this a difficult book to read and assimilate. The book (IMHO) is written
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Arvin
Jan 27, 2014 Arvin rated it liked it  ·  review of another edition
I started reading this book to answer the question... "Why do people sell their companies to big corporations if it usually means the death of their product?" While this book does focus onthe wealth vs. control aspect of founding a company... it focuses more on the early stages and dealing with early investors rather than a corporate acquisition (was covered briefly in an appendix at the end of the book).

Still there were some useful information for would-be entrepreneurs.
1) For first time, foun
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Jake
Jun 25, 2013 Jake rated it really liked it  ·  review of another edition
The book covers a variety of key decisions that founders must make at different stages of the startup. Most are pretty obvious. But the book does a good job explaining how to make the choice that is right for you at the various points. You're encouraged to do a lot of introspection and determine exactly what it is that motivates you. Only then, once you truly understand yourself, can you make the best decisions.
The Founder's Dilemmas draws on a bunch of research and summarizes how things have wo
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Way
Feb 23, 2015 Way rated it it was amazing  ·  review of another edition
This is a fantastic book on the various decisions, conflicts, and pitfalls that befall a burgeoning startup. The biggest takeaway is what's called the wealth-control dynamic, where a founder can often take a series of choices that either increase wealth or increase the amount of control of the startup.

Building wealth involves tapping weak ties, finding highly motivated and talented cofounders, hiring expensive but skilled workers, pursuing VC funding, and being willing to let a nonfounding CEO t
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Adam Wiggins
Jun 09, 2015 Adam Wiggins rated it liked it  ·  review of another edition
Shelves: business
As a company founder, you'll face a lot of decisions and situations that have no parallel to the challenges you face in, for example, a salaried job in an existing company or going through school. I found this book very helpful in shedding light on patterns for those decisions and what their outcomes often are.

However, I also found it tedious in many places due to the author's systematic, academic approach. Many of the statistics they rattle off seem like meaningless numbers. Thankfully it's wov
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Victor Delgado
Jan 31, 2016 Victor Delgado rated it really liked it  ·  review of another edition
Shelves: paperplanes
Good collection of tips for founders backed by extensive research and in-depth case studies of some entrepreneurs such as Ev Williams.

The chapter about negotiating equity splits is especially full of valuable advice. Some quick quotes out of my notes:
- "Ideally, the equity split will approximate each founder’s long-term level of contribution (...)"
- "four sets of criteria emerge that can help sharpen the negotiation and increase the chances of crafting a sustainable agreement. Those criteria ar
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Branimir
Jul 22, 2012 Branimir rated it really liked it  ·  review of another edition
A good book, that pinpoints the possible hurdles ahead of a startup. It is true, as many have pointed out before me, that Wasserman is more of a researcher, so no solutions are given. Still, even seeing a list of structured examples is of great assistance to an entrepreneur. I personally found all of the struggles that I have met so far to be presented inside (and valid for new non-US businesses).

Future readers, have in mind that this book is intended for people that are about to get into a new
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Nic Brisbourne
Apr 01, 2013 Nic Brisbourne rated it really liked it  ·  review of another edition
Founders Dilemmas exposes the choice founders face between maximizing the value of their shares and retaining control of their company. Most entrepreneurs want to do both, but Wasserman empirical study shows that for all but a few lucky founders it is either or. He then goes on to explore the current choices founders can make and how they promote either value growth or control.

The most important of these are:
- whether to have co-founders
- whether to raise venture capital
- whether to make expensi
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Pete
Apr 04, 2015 Pete rated it really liked it  ·  review of another edition
A thoughtful and academically precise review of the dilemmas facing founding and operating a startup

I have to say I always rather enjoyed Noem's book on entrepreneurial dilemmas. It is a dry and fact based read, yet very much a worth while endeavor. The book does a good job of mapping out the decisions and dilemmas implicit in the creation and operation of a startup company using the framework of control verses wealth generation to compare choices and potential outcomes.

I was reminded of late t
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Steve Pipenger
Good. Insightful. Makes one think. Assesses what makes entrepreneurs entrepreneurs. Talks about the advantages and disadvantages of starting one's own business at different experience stages and stages of life.

However, this strikes me as a prototypical book where someone in academia writes about "entrepreneurship." He leaves out a sizable segment of people who have started their own businesses because they had to, either through a layoff, having to go back to work...entrepreneurs by necessity (p
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David
Mar 18, 2013 David rated it it was amazing  ·  review of another edition
Shelves: process, business
Unbelievably awesome book for anyone starting a company that will hire outsiders or solicit investors. Walks one through the decision trees regarding roles, relationships and rewards for early employees. Also has similar trees for investors. Talks about wealth maximization vs control maximization for the founder(s).

Built from surveys of startups. Has the raw data. Also anecdotes. The anecdotes are too long and repeated too often for my taste but they do not do enough damage to make me rate less
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Mugizi Rwebangira
Cons:
-Very dry. The author has a database of 10,000 "high potential" startups in biotech and computers and just summarizes statistics about them which is not that exciting.
-In many cases, the key messages and takeaways are not very clear.

Pros:
-For someone who is thinking about doing their first startup (or even just a regular small business), there are some useful things to think about such as the trade off between control and wealth and how to handle getting outside investment of finding a CEO.
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Brian
Jan 27, 2015 Brian rated it really liked it  ·  review of another edition
While The Founders Dilemmas focuses primarily on tech and medical science startups, with high revenue potential (as do a remarkably high number of startup books), Noam Wasserman takes care to relate the principles of the book to the small business owner.

What sets The Founders Dilemmas apart from many business books on startups is the wealth of data it draws from. Wasserman tracked the progress of literally hundreds of startups and their founders over a ten year period to draw his conclusions.

Rea
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José Vasco
Jan 04, 2017 José Vasco rated it it was amazing  ·  review of another edition
Shelves: favorites
Wasserman's book, on the second read, seems even deeper and more full of content than before. Wasserman presents studies on several dilemmas, mostly focused on co-founder dynamics, equity, hiring, rotation of functions, and related topics.

The book presents specific examples to illustrate each decision, ranging from being control-focused to wealth-focused and its implications (hiring more talented people, foregiving more equity, etc), and other trade-offs - since everything in startup life is a t
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Leo
Oct 11, 2013 Leo rated it liked it  ·  review of another edition
Shelves: business
Interesting overview of the "dilemmas" that startup founders face as they build tech companies. The author believes that the harshest of these dilemmas is the choice between wealth and control. I found the chapter on founder-CEO succession -- which explains why even highly successful founders are likely to be replaced -- particularly interesting. (In short, being great at going from A to M doesn't mean you're the right person to go the rest of the way to Z -- a bit obvious in retrospect, but som ...more
Vismantas
Dec 21, 2015 Vismantas rated it did not like it  ·  review of another edition
Honestly can't understand why this book has such a good score. It is super dry, mouthful. I only managed to read a third of it, the conclusion - it can be compressed to a few bullet points. e.g choose a founder carefully, be careful when choosing friends or family as cofounders, agree details in advance, etc. so most of these advises are common knowledge, you would know most of the catches if you thought of them. This book gives a "pre flight checklist" to go through before choosing founder but ...more
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