Thế lưỡng nan của các nhà sáng lập doanh nghiệp

by Noam Wasserman (Dương Cầm )

Dựa trên một nghiên cứu kéo dài 10 năm, Noam đã liệt kê ra những cạm bẫy mà các nhà khởi nghiệp thường gặp phải và cách thức né tránh chúng. Ông tập trung vào phân tích xem liệu việc đồng sáng lập với bạn bè và người thân có phải là một ý tưởng tuyệt vời, cách thức và thời gian phân chia cổ phần thích hợp trong đội ngũ sáng lập và cách thức nhận ra thời điểm một nhà sáng lập kiêm CEO của công ty nên tiếp tục tại vị hay thoái vị. Wasserman cũng lý giải cách thức làm rõ và né tránh những sai lầm có thể làm "tan đàn xẻ nghé" đội ngũ sáng lập, hay nhu cầu cân đối giữa quyền kiểm soát công ty mới khởi nghiệp và việc thu hút những nguồn tài nguyên tốt nhất để phát triển công ty.

Genres: Business, Entrepreneurship, Nonfiction, Leadership, Management, Buisness, Economics

423 pages

First published January 1, 2011

Reviews

[Athan Tolis · Rating 3 out of 5]

“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 you get presented with the relevant performance of the 3,000 startups that only hired juniors versus the 3,500 that hired senior developers. And so on.

Nice idea and a decent way for a professor to lay out all the studies he’s ever done, but you know what? It’s a sad state of affairs if people are running statistical studies of all these things, it kind of tells me we’re hitting a “top” and, more relevantly, it adds up to 400 pages.

400 pages!

What entrepreneur has time to read 400 pages? Would Brad, Eric or Jeff ever invest in some loser who found the time to read 400 pages about the statistical advantages of starting a company with your girlfriend versus starting it with three guys you met in business school?

(I secretly hope the answer is “yes,” because I must confess I finished this thick tome, but my excuse is I take the Green line from Earl’s Court to Mansion House every day and the time I travel there’s no elbow room for the FT)

So I can’t recommend this. It’s too long. But I read it and I kind of enjoyed it and I picked up some stuff here and there I had not thought about. it wasn’t a bad book, it just went on forever, basically.

If you plan on reading it, look away now, here come the takeaways:

1. People mainly start companies for two reasons: autonomy and power. Well, that’s what they say, but the rest of the book is structured around two other axes: control and financial reward.

2. Hold off starting your company until (i) you’re not giving up too much (for example rewards, or relevant learning) by leaving your current job (ii) the personal angle is covered, including an adequate financial cushion and a family that’s on board and (iii) the market you’re about to tackle is on the up and uncrowded.

3. Generally speaking you should get yourself some co-founders, to get on board as much as possible of three types of “capital:” Human (skills), Social (connections) and Financial. You don’t need to do it right off the bat, but the stats say you’ll do better if you do.

4. Your co-founders really should not be friends or family, because there’s stuff that is best left unsaid or undone in a friendship or within a family that you absolutely need to discuss or do in business, but it won’t feel right to do so.

5. It’s rather good to start a business with past co-workers and particularly so if you carry on working with the same hierarchy.

6. The C-level titles (yes, American book, or maybe only I have a filthy mind) matter. CEO is the biggie and it typically goes to the “idea person” and correlates well with future reward. The rest can act to motivate and that’s good, provided they are appropriate and you don’t find yourself having to take them away later. CEO statistically gets underpaid relative to what he’d get in the outside world, though. The rest don’t.

7. You and your co-founders need to have the same goals, particularly on the “control versus financial reward” axis.

8. Do not split the ownership equally just to avoid conflict. Do not split it equally, period. Do it right, reflecting past, present and expected future contribution. Maybe even formalize how it will all take place and how it may all be revised. And remember that once you’ve taken outside money this question will be out of your hands.

9. At the beginning, all hiring will be done by the CEO, who will be hiring cheap and friendly-to-him “generalists,” but over time this goes away and the firm will start hiring “specialists” and the CEO won’t know what specialists to hire in all departments. So then you move to “impersonal searches” (like an ad in the paper) and eventually you move on to hiring a headhunter to do it.

10. It is possible to hire expensive “specialists” too early. It’s also possible that you’ll hire them at the right time, but they won’t be able to operate in a small company. The right time to hire them is when on top of their skills you also need the credibility they bring to your operation, their ability to hire others like themselves and the stability that will come from not having to replace them later.

11. An outsider, non-founding CEO gets 6% on average to join. COO gets 2.9, CTO gets 1.7 and COO gets 1.3. VPs get 1 to 1.3. They all need to stay 4 years to vest.

12. Don’t take money from friends and family. Many bad things can happen. You can lose it all. Or you can lose your sanity as you try to protect their investment. Well, if you cannot get it anywhere else, take it, but know it sucks.

13. Angel investors, if you can get money from them, are a much better idea because you don’t get any of that baggage, plus they can put you in touch with other sources of funding later, or even with people to hire. And they don’t just do tech and biotech. They are good for half a million, usually. They eventually get chased / bought out by the VCs, should you get to that stage.

14. VCs bring the financial muscle your business will need. And the cred. And the connections. And they’ve done it before and they’ll put together a board that will lead you and bring you structure. They’re not going anywhere these guys, they outlast you. They will exert their control via the board.

15. Three times out of four, the founder who took money from VC will not get a penny beyond his salary. He will lose control or he will sell for less than was necessary to participate in the spoils. Typically because in the interest of the firm being a success he will sign on some pretty optimistic terms that leave him with zip unless some targets (business or financial) are met.

16. If the firm is a success you get chucked. You need to get ahead of this process. If you embrace it and help appoint your replacement, typically a professional CEO who’s done it all before, you do a lot better than if you find out from your board the day they announce it to everybody else. It is the “paradox of entrepreneurial success.”

17. Get your head straight, right from the beginning: do you want control or do you want success? If you as much as think about both you will get neither. Pick one and make every single decision you will ever make consistent with this one goal. Serial entrepreneurs have a history of swinging from wanting control to wanting success, but successful ones do not make any sharp turns while they are with the same company. While you’re with the same company make it one or the other.

Really makes you want to take the leap, doesn’t it? Maybe that’s why the book is 400 pages. In the hope that you won’t make it till the end!

[Brad Feld · Rating 5 out of 5]

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 him briefly, I decided to put it on the top of the stack. I laid on the couch all day yesterday with Amy and the dogs and demolished a pair of books. The Founder’s Dilemmas was the first.

I get asked endless questions about founder dynamics, solo founders, optimal number of founders, equity allocations between founders, roles of founders, alignment between founders, and investor – founder relationships. I’ve been involved in many conflicts between founders, transition in roles between founders, emotional struggles with founders as businesses grow and change, investor conflicts (other than me) with founders, and the list goes on and on and on.

I’ve never seen a book before that was particularly helpful – to a founder – about the wide range of issues a founder will face. There are plenty of books lots with stories, anecdotes, and suggestions, but none that are particularly systematic about going through all of the issues. Noam’s book is the first I’ve read – and he totally nails it.

He covers it three ways – with data, with analysis, and with stories. He’s done a ten year quantitative study that he follows up with his own analysis and then intermixes this with actual stories from a set of founders, including two that I know reasonably well – Dick Costolo (FeedBurner – I was on the board), Genevieve Thiers (Sittercity – we looked hard at investing but ultimately didn’t) and many I know from a distance. As a result, I was able to back test the stories and anecdotes and they were completely factual in contrast to many other books like this where the qualitative stories are embellished to fit either the ego of the participants or the point being made by the author.

Noam systematically marches through all of the major dilemmas I could think of for founders: career, solo-vs-team, relationship, role, reward, hiring, investor, failure-vs-success, founder-CEO succession, and wealth-vs-control. I believe he’ll coin several new reference phrases, including my favorite around wealth-vs-control (“do you want to be king or want to be rich?”) He looks at each of these from all sides (e.g. yes – you can be king and rich, but there are other options that may get you where you want to go faster and with a much higher chance of success) and uses a great blend of data, analysis, and anecdote to make and support his points.

If you are a founder, or considering being a founder, a board member, or an investor, buy The Founder’s Dilemmas right now. One of your goals should be to do everything you can to maximize your chance of success. This book will help a lot and you won’t regret the time you invest in it.

[Yevgeniy Brikman · Rating 4 out of 5]

A nice overview of some of the key decisions that every entrepreneur has to make: decisions that are more important than most founders expect, decisions where the options available are not always obvious, and decisions where the implications can be surprising or even counter intuitive. Getting these decisions wrong can be catastrophic: "if entrepreneurship is a battle, most casualties stem from friendly fire or self-inflicted wounds." These decisions include whether to be a solo founder or look for co-founders, whether to work with family and friends, how to split equity, how to define roles and titles, whether to hire more experienced or more junior people, whether to raise money, the types of investors to work with, and how to handle founder-CEO succession.

The book is based on quantitative data from a decade of surveys of thousands of companies, plus qualitative data from interviews with a few specific companies and founders (e.g., Evan Williams of Blogger, Medium, and Twitter and Dick Costolo of FeedBurner). It's written in a dry academic / business style, and not all the content is especially helpful or actionable, but it's still a useful read for every founder to be aware of the issues that every startup runs into.

A few of the key insights I got from this book:

(1) One of the key trade-offs every founder will have to make is whether they want to optimize for wealth or control. Do you want to end up "rich" or do you want to end up a "king?" It's exceptionally rare to get both; founders like Bill Gates, who ended up immensely rich and managed to retain control of Microsoft for decades, are extreme outliers (that's why you hear about them so much in the first place!). The vast majority of founders will need to pick one or the other. The book contains some compelling evidence that:

- Founders who optimize for wealth over control, make, on average, 50% more than those who optimize for control. However, these founders rarely end up in control of their companies (e.g., as the CEO), the companies evolve differently than those founders may have wanted, and those founders often find themselves ousted entirely.
- Founders who optimize for control over wealth end up with smaller, less valuable companies, but they are able to stay with those companies longer, and build companies that more closely resemble their vision.
- Founders who try to optimize for both are more likely to get neither. For example, if you mostly optimize for wealth, but toss in a few items here and there to retain control, the typical result is that, on average, you slightly decrease the odds of a rich outcome, slightly increase the odds of a king outcome, and significantly increase the odds of failing to achieve either one.

(2) To optimize for control, you might make the following decisions: be a solo founder or only work with "weaker" co-founders; keep as much equity for yourself as possible; hire solely from your personal network; hire primarily junior employees; structure the organization so that all important decisions go through you; hold on to the role of CEO as long as possible; avoid raising money if possible; if you do raise money, prefer raising from friends and family, angel investors, and other funding sources (e.g., debt) over venture capitalists, and minimize investor control (e.g., minimize equity, voting rights, board seats, etc).

(3) To optimize for wealth, you might make the following decisions: build a founding team with the strongest co-founders you can find; share equity to attract co-founders and employees; hire from as broad of a network as you can and minimize hiring of family and friends; hire senior, experienced employees; delegate decision making to appropriate experts; be open to giving up the CEO role and other high-level roles to the best candidate; raise money primarily from venture capitalists and be open to investory-friendly terms to attract the best investors (e.g., more equity, voting rights, control over the board, etc).

(4) According to the data in this book, entrepreneurs make 35% less, on average, than people who get jobs. This doesn't surprise me too much, as founders often have to take no or low salaries when first starting a company, and many startups go out of business, so that probably brings the average down considerably. I'd love to see the variance on this data, as I bet founders have both the worst outcomes (no salary followed by bankruptcy) and the best outcomes (making millions from a huge exit), whereas employees probably land mostly in the middle (reasonable salary).

(5) Working with friends or family is usually a bad idea, as you'll be making decisions according to what's best for these personal relationships, rather than what's best for the business. If you do work with friends, and especially family, it's critical to set up "firewalls" in advance (a bit like a prenup for a marriage). That is, before starting to work together, come up with a written plan for how to handle conflicts or issues; if possible, try to have the family and friends report to someone else on your team; etc.

(6) When a founding team is deciding on an equity split, keep in mind that the vast majority of the work of a startup is in the future. Most teams decide on an equity split after working together for days or weeks, but it can take many years, even decades, to build a company, so don't overweight the early work! E.g., If one founder has spent 3 months work on something, and another founder joins, it might make sense for the first founder to get a bit more equity, but don't overdo it, for if the company is successful, it'll likely take ~10 years, making those first 3 months only a tiny part of the overall success.

(7) Some of the key factors to consider when allocating equity to each founder:

- IP: Is this founder contributing IP they already have? How much of the IP of this company will this founder create in the future?
- Time: How much time has this founder already invested into the startup? How much time will they spend going forward (e.g., part time vs full time)?
- Skills: What skills does this founder bring to the team? Are these skills unique amongst the team? How critical are these skills to the success of the startup? Is there any other way to get these skills (e.g., outsourcing)?
- Networks: What sort of network does this founder bring to the startup? Could they bring in a ton of great employees? Investors? Customers?
- Cash: Will this founder be funding this company?

(8) Consider using dynamic equity splits rather than static ones. At the very least, every founder should be subject to a vesting schedule. However, you may want other dynamic terms based on specific situations: e.g., what happens to the equity if a founder gets sick; earning more equity based on achieving certain milestones; etc.

(9) Be thoughtful with titles:

- Typically, you want to pick a single CEO, and do so early on. It's an awkward conversation to have amongst co-founders, but if you struggle with this conversation, you'll struggle even more with all the other important decisions, so do it early.
- Be wary of handing too many C titles (e.g., CTO, COO, etc) out too early (e.g., just to attract great hires). If that person turns out not to be a good fit for that role when the company grows (e.g., they are a good CTO when the company has 3 engineers, but they don't know how to handle a 300 person org), you won't be able to place anyone above them (the C titles are always the highest in a company), so you'll have to change their title or even fire them, which can be a very unpleasant situation.

[Herve · Rating 3 out of 5]

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 problem, but that if he knows all possible situations, he might better decide based on his own motivation and … personality. So she or he might decide, not on rational criteria but more because of his personal inclinations!

The best illustration of this is Evan Williams who was a founder of Blogger, and then of Odeo (and then after the book was designed of Twitter). Williams had a very different behavior with the two start-ups. He was “control-oriented” with Blogger, hiring people in his close network, taking friends and family (and close network) money only and keeping management control to the point of firing everyone including his former co-founder and girlfriend. With Odeo, he had initially a “wealth-oriented” attitude, taking VC money and having a different hiring strategy. His inclination made him however buy back his investor’s stake, as he needed to control his start-up again.

Wasserman shows that the “3Rs” (Relationships, Roles & Rewards) are key features for decisions about the key dilemmas founders may experience. These dilemmas are classified according to the chapters of the book: Career, Solo-vs.-Team, Weak vs. Network, Positions, Compensations, Hiring, Investors, and Succession. Wasserman explains (or better-said describes) the various dilemmas founders face when taking decisions and shows that their decisions are very often dependent upon their motivation. Do they want to be Kings (power or control-oriented) or Rich (wealth oriented)? He does it with anecdotes (not so good and quite well-known) and with statistics (very good and not so well-known)

In summary I saw it more as a book for academics than for entrepreneurs and founders who apparently will not take better decisions after reading this book as they will be driven by their motivations, not their experience! At least they will be aware of it. It may be another illustration that youth and enthusiasm are as important as experience and rational behaviors!

One interesting puzzle Wasserman addresses is why individuals decide to become entrepreneurs, often thinking that they will become wealthy whereas this is entirely wrong. This has to do with control vs. wealth. You will need to read Wasserman if you want to know more.

[Carlos · Rating 5 out of 5]

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 the need (and value) in making consistent choices throughout; whether the choices are wealth-based or control-ownership-based.

In addition to relying on key case studies to highlight decisions faced, and outcome achieved, by startups, the book relies heavily on a one-of-a-kind longitudinal data set of technology and life science startups. This data set helps inform statistics such as the % of companies choosing dynamic vs static equity splits or % of companies retaining founder CEO post x-rounds of financing, etc. I absolutely love all the statistics and foresee myself referencing them often.

It's nice to see a book on entrepreneurship that provides recommendations based on actual evidence, and not solely based on case studies and experience.

[Nir Altmark · Rating 5 out of 5]

I haven’t founded anything (and I hope I will) but it feels that this book is a must for any wishful founder or any “ongoing” founder.

I found my way to this book as I was trying to understand the importance of the number of founders to a startup, and thanks to the book figured out that besides my original question there are a lot more questions to be answered.

The book is the output of research, What I love about this research is that it covers a lot of areas:

Is it a good time to become a founder?
The motivations for becoming a founder
With whom should you found, friends and family vs coworkers
Egalitarian vs hierarchical approaches
When should you split the equity and how
What happens to founders, especially to CEO after each round
Source of investment, human capital, angels, and VC
Working with the company board

The book will answers all of the above and more.

Unlike other research books which I’ve read, the book is not repetitive. Each chapter can stand on its own which makes it very interesting. Sometimes each chapter of a research book is a small addition to the first chapter, this is not the case with this one. 

The downside is that the research was performed in early 2000 till around the end of 2010 and a lot of change since then. I am also very interested to know how many founders have read it before opening their startups and to be more precise how many successful founders have read it at all.

[Atila Iamarino · Rating 5 out of 5]

Um ótimo apanhado do que startups passam nos primeiros anos. O autor trabalha em cima de um banco de dados de milhares de empreendedores e empresas entrevistados ao longo de anos, para chegar em um cenário bem explicado ao longo do livro. Quem cria uma empresa precisa se decidir desde o começo o que quer priorizar: controle ou lucro. Quanto mais priorizar continuar dono da empresa e ter controle sobre decisões, menos ela tende a valer a longo prazo. E se quiser fazer dinheiro, vai precisar abrir mão de cargos, decisões, participação e do comando da empresa.

No mais, várias explicações valiosas sobre quando partir para o próprio negócio, que tipo de time montar desde o começo (quase sempre o melhor é um time), como se preparar para decisões importantes como a participação de cada um dos sócios e quem será CEO. Insights claros, bem fundados e sem enrolação. Um ótimo livro de ponta a ponta.

[Kenneth Kinyanjui · Rating 5 out of 5]

This is one great book that I would recommend to anyone who is thinking of starting a venture or getting into a partnership to launch something.

A big percentage why most companies or ventures fail is due to people issues according to Noam Wasserman, this book prepares you with the tools needed to overcome people issues that may arise.

I enjoyed the many case studies presented in the book. I would also recommend if you are a founder already to get the audiobook from audible and listen to it on your commute to work , it will help you get the flow in a quicker way but the paperback also has illustrations that cannot be viewed so get the paperback or kindle version as well.

[Lukasz Nalepa · Rating 5 out of 5]

It seems that this bookis a must read for anyone who has a romantic on creating and running a startup. For me it was eye-openinig in many cases, and at least I have a better view where dillemmas exists and what severity certain decisions have. The book is backed up by extensive research along with vivid and well-known examples of first-time and serial enterprenuers, so it’s a great use case study, to undrstand how things are intervowen together, when one siezes the opportunity :)

[Tigran Mamikonian · Rating 4 out of 5]

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. Anyway, start with reading this article from the author himself on this topic http://www.people.hbs.edu/nwasserman/...

[Oleksandr Golovatyi · Rating 5 out of 5]

One of the best book for startup makers and persons who want to start working with startups. A lot of great examples are described in this book. For example, Twitter, FeedBurner, Odeo, Blogger and other successful startups histories. I read this book twice: in English and in Russian.
(in English)
-------------------------
Одна из лучших книг для начинающих ИТ предпринимателей и тех, кто хочет начать работать с стартапами. В этой книге описано множество замечательных примеров. Например, Twitter, FeedBurner, Odeo, Blogger и другие успешные истории стартапов. Я дважды читал эту книгу: на английском и на русском.
(на русском)

[Vadim · Rating 4 out of 5]

В книге ученого из Гарварда представлены результаты научных исследований американских высоко-технологичных и биомедицинских ��тартапов. Подробно рассматриваются вопросы мотивации учредителей, анализа имеющихся и необходимых для создания компании ресурсов (человеческого, социального и финансового капиталов), а также способов и стоимости их привлечения. Проводится анализ жизненного цикла стартапа, а также доминантных проблем, возникающих на каждом этапе его развития.

[Vikash Anand · Rating 5 out of 5]

The Founder’s Dilemmas by Noam Wasserman is an insightful book for anyone working as founder, co-founder, angel investor, working in a Venture Capitalist (VC) firm or contemplating to start a company/business. The book gives wide perspective related to various dilemmas faced while taking decisions as founder or co-founder of a company, and the implications for choosing one over other.

The author has analyzed thousands of startups in the field of technology and life science in USA to find out issues resulting into high failure rate of startups. The high rate of failure in startups i.e. around 65% is mainly due to problems within the startup’s management team & people issues resulting in internal conflicts rather than product market misfit.

The book scrutinizes all such important people/management problems that impact startups and their success. These problems often follow predictably from common dilemmas faced by any startup as it grows and evolves i.e. founder’s dilemmas, the dilemmas/tradeoffs involved in the most critical founding decisions, from the dreamer’s decision to found the company to exit the company created. If one consciously understands and anticipates these tradeoffs, it will significantly improve the success of the startup.

Founding a startup dilemma
Founding a startup is a challenging thing, perhaps no business/management pursuit is messier than creating an organization from scratch. The journey from founding to success is a long one, with dilemma after dilemma forcing founders to take important decisions with long term and short term consequences.

While deciding to launch a startup itself is a big dilemma, as many questions related to experience, execution ability, product market match, competition will haunt founders, but there are many many dilemmas post launching a startup. Conscious understanding of these dilemmas will significantly improve success of the startup.

“An easy short term decision may introduce long term problems; a hard short term decision may often be the best in the long run.”

Solo vs Team dilemma

“Should I launch the business myself or try to attract co-founders?”

The journey of entrepreneurship is tough and challenging. Going solo means less chaos, less conflict & more control, but it can result into lack of human, social or financial capital, and lack of emotional and psychological support during the toughest part of entrepreneurial journey. Cofounders and collaborators are needed to refine, develop and execute the idea.

Control or Wealth Dilemma
An individual’s motivations are almost always complex including the individual himself or herself. A founder, co-founders may be motivated by many things i.e. intellectual challenges, prestige, pride, but across entrepreneurs as a whole wealth and control are the two most important factor. A founder who knows whether wealth or control is his or her primary motivation will have an easier time making decisions and can make consistent decisions that increase the chance of reaching the desired outcome.

The incentive of wealth or control, or both plays a big role in the success or failure of a startup in terms of value creation. Potential co-founders should assess each other’s motivation to understand the potential source of role conflict.

Founders who consistently make decisions with orientation towards wealth are likely to achieve more and create value for everyone (greater financial gains, lesser control), while founders who consistently make decisions that enable them to maintain control are more likely to achieve greater control and less financial gains.

A desire for control can lead to the core founder to add fewer cofounders, while a desire to build the start up’s value might lead to a bigger founding team. Each additional person will lead to challenges of communication, can slow things down or can fill the required gaps required to accelerate the start up. In a fast evolving industry with complex start up ideas, the time to disrupt and its early advantage may be the biggest factor in its success, and skilled cofounder with complementary skills may be the best addition in the startup.

A wealth motivated founder and a control motivated founder can be very well aligned as long as the wealth motivated founder has confidence that the control motivated founder can build the startup’s value. Founder motivation can play powerful effect within the team. If both founders are control seek, it can result into tension and erosion of value. Therefore, before founding together, potential cofounders should assess each other’s motivations to understand the potential source of conflict.

“A value seeking founder’s smaller slice of a larger pie is generally greater than the control seeking founder’s larger slice of a smaller pie.”

Relationship Dilemmas
“Whom should I try to involve as cofounders: Friends? Family? Acquaintances? Strangers? Prior Coworkers?”

Excessive confidence and optimism in the startups prospects can lead entrepreneurs to involve family and friends both as employees and as investors. The decision to attract cofounders introduces critical decisions about whom to attract, what role each cofounder should play, and how to split the equity among the cofounders.

When friends or family members are involved in the early stage of a business, it is a recipe for playing with fire scenarios. If there is misalignment of interest, incentives, misunderstanding, it can result into damaging permanently both the business and the relationship. The involvement of friends, relatives needs to be carefully calibrated with firewalls for value creation, and maintain personal and professional relationship.

If the family, friends are involved, it can crate blind spots impacting everyone over a long term. If the founders decide to mix business and social relationships despite the potential problems that may arise without careful contemplation, it can damage the business. Protective steps or fire walls should be there in the structure of the company to resolve potential problems and conflicts viz avoiding structure of co-founders reporting to their relative or close friend.

In order to create valuable startups, the founder should aim for diversity in human capital, social capital and social capital, aim for similarity in softer areas such as values, commitment and risk tolerance. If these things are not managed properly, it can have severe long term implications for the company.

Avoid or Resole Conflict Dilemma
Conflicts, difference of opinions are bound to happen in the early stage of a company, if these conflicts are not appropriately managed with a view to create long term value for everyone and the company, it can damage both the business and the network of family & friends. Conflicts needs to be resolved rather than avoided.

Conflict avoidance often leads founders to make short term decisions, rather than acknowledging the problem and resolving it, but resolving conflicts would require difficult conversation, and it can go wrong. Sub-optimum business decisions in order to protect the social relationship can damage the business, and tension arises impacting the social relationship. Transparency and honest discussion of issues is important to resolve issues with focus on creating value.

Role dilemmas in the team

“What position should everyone take within the startup?”

Roles and decision making dilemmas within teams also impact startups significantly. The founders are the idea people who had the intellectual property on which the startup was founded need human, social and financial capital to execute and scale up the idea. The idea guy generally tends to be the CEO of the startup.

Founders with deep technical knowledge are often unable to tackle early tasks that requires sales, marketing, business development and financial knowledge. Cofounders with complementary skills enhances the chance of value creation by the startup and its success. Steve Jobs and Steve Wozniak, cofounders of Apple were not only friends beforehand, but their complementary skills with one serving as technical leader and the other as the external salesperson & idea generator played a big role in the success of Apple.

Diversity in the functional background of team members is important as in turbulent times which entrepreneurs are likely to face, the functional diversity enables teams to quickly respond.

The official titles, autonomy, hierarchy also impacts the functioning of a company. The official title can affect his/her level of commitment. A cofounder or an early employee who is unhappy with his/her initial position may be less motivated to fully commit to the startup. The cofounders bring valuable human, social and financial capital to the startup, and if it is not appropriately valued it can deter his/her commitment and contribution.

The decision making evolves as startup evolves. Decisions through committee or CEO or delegation of decision making depends upon complexity of problems.

Reward Dilemma: Equity or Cash Compensation
“How should equity and other financial rewards be divided among the founding team?”

Founders need to attract outside resources i.e. people and capital in order to pursue opportunities and create value for everyone. But acquiring these resources typically requires that founders cede more and more control. Co-founders and key employees want equity.

Splitting the equity Dilemma
Most of our natural inclinations about equity splits are wrong or counterproductive, destined to cause problems in the long run even when it seems fair and wise in the short run. It should be done cautiously and consciously.

Splitting the equity is one of the most complicated founder’s dilemma. The natural inclination is to bypass the tension by taking the simplest route i.e. equal and static equity. Founders should resist this urge of the simplest route. The equity split should be done at the right time with the right structure. When things start to solidify, the founders should engage to match the initial split with each founder’s long term contribution. The split agreement should be clearly documented avoiding later misunderstanding or miscommunication, protecting the founders and the startup.

The structure and timing of equity split also play a big role i.e. split at the time of founding or later. If equity splits are done without careful consideration and structure, it can impact the success of the company. Putting off the split for long when the value of startup increases exponentially can result in legal tussles, splitting too early can result in free riders and demotivation in the team.

Generally, equity split negotiations should be done before the stakes become very high i.e. before infusion of large capital and entry of VC firm. The dynamics of negotiation post VC firm changes altogether. Capital contribution, Opportunity cost to the cofounder’s/key employees, future contribution to the start up, and the founder motivations should be taken into consideration before deciding structure of equity split.

Dynamic equity agreement in the form of vesting is much more preferable. Vesting terms requires founders to earn their equity stakes, either over a specified time or when they accomplish specific milestones, rather than owning the equity from the start as in the case with static equity splits. Founders who leave a startup before their equity has fully vested must relinquish the unvested portion to the startup or to their co-founders, thus the equity will be reallocated to the cofounder or employee who will continue to build value of the startup. Milestone based vesting with clear objectives can better serve the startup.

Investors like Venture Capitalist, Angel Investor generally results into formal structure and formalization of the startup, beneficial to further scale up the organization.

Hiring Dilemmas
“What type of people should I hire at different stages of the growth of a company?”

In the early stage of a company, people with jack of all trades attitude and skills may be required due to financial constraint, but later on specialized professionals may be required to better handle the operation, sales and management. Any start up that wants to grow beyond the founding team has to face the hiring dilemma of whom to hire, what roles they should play, and how to structure their rewards. To attract the best hires, founders have to give not only cash compensation and equity ownership but also certain level of control over operational decisions.

Governing Board Dilemma
The representation of founders, co-founders in the Governing Body is also crucial factor, and it needs to be handled sensitively. With more and more VC capital and involvement, the representation of founders, co-founders will decrease as VCs will want position in the board.

The number of founder board seats is often smaller than the number of founders and shrinks with each progressive round of investing by VC Firms, forcing the founder to negotiate among themselves who will serve the board creating tension in the team. Also serving on the board requires a founder to put in more hours and to play a complex fiduciary role.

Founder-CEO Succession Dilemma
“Why and how founders replaced as CEOs of the startups they founded?”

Hiring a team for a fast-growing startup, managing a board of directors, and negotiating the tensions between sales and operations requires different skills, and for that founder CEO or co-founders may not be the best person to handle. Therefore, CEO succession from founder-CEO to CEO may be needed to further scale up and better handle the business affairs.

Founder initiated succession and board initiated succession can have different outcomes. If the founder-CEO triggers the succession, he/she is more likely to play a key role in the search and transition and more likely to remain a senior executive role or to remain on the board of directors. If the CEO succession is initiated and lead by the founder CEO at the appropriate time with confidence of the board, it may be the most suitable for long term value creation by the company. But quite often a high percentage of founder-CEOs are replaced most often against their wish by the board resulting into conflicts. If the board is taking the decision to replace the founder-CEO with a rational view if the founder-CEO is not successfully executing the idea, the decision will be in the interest of everyone including founder-CEO to create long term value for everyone.

I have no dilemma in highly recommending the book The Founder’s Dilemmas by Noam Wasserman for founders, co-founders or anyone thinking to launch a startup, and wish you a happy entrepreneurial journey founding a valuable Startup.

[Cooper Easthope · Rating 5 out of 5]

This book was fantastic at accomplishing its purpose. It is not for a general audience, and shouldn’t be held to those expectations. This book is specifically written for founders or prospective founders that have questions about organizational structure. It is academic, but smoothly written. It covers every relevant topic in a proper amount of detail and points readers where to explore for more info.

I found this book to be especially relevant to me right now. It provided the exact advice I needed, so I have to recommend it.

The author used many real-world examples throughout the book and always provided the reader with sufficient context to understand the analogy. The author mentions at the start of the book that he will focus on the life of a specific entrepreneur, but I didn’t feel this way when reading it. He shared the stories of many entrepreneurs.

For content, the author writes about the 3 R’s of organizational structure, which are Roles, Relationships, and Rewards. He details how each of these factors are connected with each type of organizational structure (family investors, venture capital, employees, etc.). The content of the book hardly became dry, especially when compared to other academic books.

If you happen to be starting your own business and wondering about involving family or finding investors, this book is definitely worth it.

[Daniel · Rating 4 out of 5]

"Control" and "Wealth" are the 2 main primary incentives among startup founders. The secondary incentives include altruism, autonomy, variety, and intellectual challenge.

Control-motivated founders tend to make different decisions during the lifetime of their company than those of Wealth-motivated founders which can significantly affect the company's prospects in terms of:

- Value Creation
- Growth Rate
- Company Size
- Financing
- Hiring
- Culture
- Founders' payoff
- Founders' decision power
...

Control-motivated founders tend to:
- Remain solo founder (or attract weak founders)
- First look to the immediate circle for "comfortable cofounders"
- Keep strong control of decision making and build hierarchy
- Maintain most or all equity ownership
- Hire within close personal network (friends, family ...) as required
- Hire less expensive junior employees
- Self-fund the business (bootstrap), use loans and debt, or raise capital from money-only angels
- Resist investor-friendly terms while fundraising
- Avoid building official board; when built, control the composition and makeup
- Avoid succession issues until forced
- Resist giving up the CEO position
- If succession happened, prefer to leave
- Prefer gradual to moderate rate of startup growth
- Prefer low capital intensity
- Well equipped to launch and build startup without much help
- Maintain control and build less value


Wealth-motivated founders tend to:
- Build a founding team; attract best cofounders
- Tap strong and weak ties to find the best and complementary cofounders
- Give decision-making control to cofounders with expertise in specific areas
- Share equity to attract/motivate cofounders
- Aggressively tap broader network (unfamiliar candidates) to find the best hires.
- Delegate decision-making to appropriate expert
- Hire experienced employees and incent them with cash and equity
- Take outside capital
- Target experienced angels and venture capitals
- Be open to terms necessary to attract best investors (e.g. supermajority rights)
- Be open to losing control of board if necessary to get best investors and directors
- Be open to initiating succession when next stage of startup is outside ones' own expertise
- Be open to give up CEO position to better CEO
- After succession want to remain executive in position that matches skills and preferences
- Prefer fast to explosive rate of startup growth
- High capital intensity
- Build more financial value; imperil control

[Elias Tsoukatos · Rating 5 out of 5]

La verdad es que yo no soy muy fan de los Business Books ya que considero que cada negocio es un mundo en si, y que no todas las cosas que leas en estos libros es aplicable a tu propio caso. Sin embargo, este libro es diferente. Me gustó mucho. Yo en este momento estoy en la mitad de mi primer Startup y habían cosas que ni siquiera había considerado que este libro me permitió darme cuenta que podrían resultar un mayor issue en el futuro.

[Popoy Mindalano · Rating 4 out of 5]

Everyone who intends to start a business undergoes a lot of confusions that sometimes hinders the progress of the intended start-up. These are called the Founder’s Dillemas and if you have already experienced it then this is the best book for you in order to deal with the inhibition proceeding and developing further.

This book provides us with a guide on how to best found a start-up. If you are confused whether to start solo or as a team, just for instance, then it will show us the necessary requisites of starting solo otherwise we might as well start as a team if there’s lack of it. Hence one has to consider before deciding if these three capitals necessary to run a start-up and sustain it are present. Do we have all the human, social and financial capital. If you have it all then start solo but if there’s a defeciency in any one of the capital then we might as well find someone to compenasate it and start as a team.

This book mainly centers on the three usual start-up dillemas: The relationship, role and reward dillemas.

Do we like choosing a co-founder like a close relative or a friend for a start-up in order to give it a fresh start but it also has the risk of dragging the problem in the business sphere into the personal sphere that could destroy the business just as it destroys your relationship. Or opting for a stranger that will give the start-up a rough start but it has the propensity of running it smoothly in the long run and we would not be playing with fire as the stranger co-founder could easily be fired without severing a relationship as we are only linked with each other through business.

How about the role of each member which is very important in a company, for example, to prevent an overlapping of roles that makes it less productive. Hence division of labor is important in order that every member of that company wont be wasting their effort an energy on the same task. Would they opt for a heirarchal type of organization or the equal ranking of member in an egalitarian manner? Each has its own pros and cons like the latter mentioned where the problem may arise on the company’s decision-making and the lack of person to lead them and galvanize them which affects the company’s moral.

Last but not the least, the dillemas of reward sharing. Who to and how much would be shared. The equity split is very critical in the start-up’s survival. The founder may be given a heavy choice whether to keep most of the equity or to keep his co-founders or members. If the founder’s motivation is wealth oriented in the first place then he could keep most of it but as I said there’s the risk of co-founder’s leaving the start-up. But if the founder decides to have their start-up thriving and surviving he should keep some of the equity’s share at the meager level enough only to wet his beak and most of it should be divided to it’s members or co-founders based on their level of contributions to the start-up.

I decided to buy this book as a prior knwoledge before founding a small business. I was confused where to start and how to do it and I, personally, have my own dillemas hence I was attracted to the title. But I did not regret it as this provides guidance and basic knowledge in founding a start-up. The start-ups that are given example in this book are the popular gargantuan companies of modern day, nevertheless the principles illustrated are applicable to founding small start-ups and even to different sphere like politics.

I highly recommend this to anyone who have an intention of founding a start-up. The principles are greatly useful and it’s already tried and tested so one could avoid the frustrating trial and error of founding without guidance. This book would not guarantee the success of the start-up; however, it could give those who will follow its principles and advices a much bigger chance of success compared to those who are experimenting the start-up.

[Hee Jung Ryu · Rating 5 out of 5]

Good for people who, yet, don't know when and with whom to start a startup.

[Mihai Cozma · Rating 4 out of 5]

Interesting but overrated. It is very specific to only a few startup types, it stretches statistics too much at times and, while its main idea is great and worth remembering, it could have been explained just as well in half the page number or even less.

[Oliver · Rating 4 out of 5]

Key points raised by other reviews:

1. One of the key trade-offs every founder must make is whether they want to optimise for wealth or control. Do you want to end up "rich", or do you want to end up a "king?" It's exceptionally rare to get both; founders like Bill Gates, who ended up immensely rich and managed to retain control of Microsoft for decades, are extreme outliers (that's why you hear about them so much in the first place!). The vast majority of founders will need to pick one or the other. The book contains some compelling evidence that:

2. Generally speaking, you should get yourself some co-founders to get on board as much as possible of three types of “capital:” Human (skills), Social (connections) and Financial. You don’t need to do it immediately, but the stats say you’ll do better if you do.

3. It’s rather good to start a business with past co-workers and particularly so if you carry on working with the same hierarchy.

4. Do not split the ownership equally just to avoid conflict. Do not split it equally, period. Do it right, reflecting past, present and expected future contribution. Maybe even formalize how it will all take place and how it may all be revised. And remember that once you’ve taken outside money this question will be out of your hands.

5. Founders who optimise for wealth over control make, on average, 50% more than those who optimise for control. However, these founders rarely end up in control of their companies (e.g., as the CEO), the companies evolve differently than those founders may have wanted, and those founders often find themselves ousted entirely.

6. Founders who optimise for control over wealth end up with smaller, less valuable companies. Still, they can stay with those companies longer and build companies that more closely resemble their vision.

7. Founders who try optimising for both are likelier to get neither. For example, if you mostly optimise for wealth but toss in a few items here and there to retain control, the typical result is that, on average, you slightly decrease the odds of a prosperous outcome, slightly increase the odds of a king outcome, and significantly increase the odds of failing to achieve either one.

8. To optimise for control, you might make the following decisions: be a solo founder or only work with "weaker" co-founders; keep as much equity for yourself as possible; hire solely from your network; hire primarily junior employees; structure the organisation so that all important decisions go through you; hold on to the role of CEO as long as possible; avoid raising money if possible; if you do raise money, prefer raising from friends and family, angel investors, and other funding sources (e.g., debt) over venture capitalists, and minimise investor control (e.g., minimise equity, voting rights, board seats, etc).

9. To optimize for wealth, you might make the following decisions: build a founding team with the strongest co-founders you can find; share equity to attract co-founders and employees; hire from as broad of a network as you can and minimise the hiring of family and friends; hire senior, experienced employees; delegate decision making to appropriate experts; be open to giving up the CEO role and other high-level roles to the best candidate; raise money primarily from venture capitalists and be open to investor-friendly terms to attract the best investors (e.g., more equity, voting rights, control over the board, etc).

10. According to the data in this book, entrepreneurs make 35% less, on average, than people who work jobs. A sacrifice worth noting.

11. When a founding team is deciding on an equity split, keep in mind that the vast majority of the work of a startup is in the future. Most teams decide on an equity split after working together for days or weeks, but it can take many years, even decades, to build a company, so don't overweight the early work! For example, if one founder has spent 3 months working on something, another founder joins, it might make sense for the first founder to get a bit more equity, but don't overdo it, for if the company is successful, it'll likely take ~10 years, making those first 3 months only a tiny part of the overall success.

12. Some of the key factors to consider when allocating equity to each founder:

(a) IP: Is this founder contributing IP they already have? How much of the IP of this company will this founder create in the future?
(b) Time: How much time has this founder invested in the startup? How much time will they spend going forward (e.g., part-time vs full-time)?
(c) Skills: What skills does this founder bring to the team? Are these skills unique amongst the team? How critical are these skills to the success of the startup? Is there any other way to get these skills (e.g., outsourcing)?
(d) Networks: What network does this founder bring to the startup? Could they bring in a ton of great employees? Investors? Customers?
(e) Cash: Will this founder be funding this company?

(13) Consider using dynamic equity splits rather than static ones. At the very least, every founder should be subject to a vesting schedule. However, you may want other dynamic terms based on specific situations, e.g., what happens to the equity if a founder gets sick, earning more equity based on achieving certain milestones, etc.

(14) Be thoughtful with titles:

- Typically, you want to pick a single CEO, and do so early on. It's an awkward conversation amongst co-founders, but if you struggle with this conversation, you'll struggle even more with all the other important decisions, so do it early.
- Be wary of handing too many C titles (e.g., CTO, COO, etc.) out too early (e.g., only for attracting great hires). If that person turns out not to be a good fit for that role when the company grows (e.g., they are a good CTO when the company has 3 engineers, but they don't know how to handle a 300-person org), you won't be able to place anyone above them (the C titles are always the highest in a company), so you'll have to change their title or even fire them, which can be a very unpleasant situation.

[Vasiliy Sikorskiy · Rating 2 out of 5]

На мой взгляд, это заметки Капитана очевидности. Выводы наподобие: исследовав большой массив данных я обнаружил, что большее число учредителей в стартапе влечет сложность в коммуникациях внутри команды, но больше связей и возможностей для привлечения капитала. Да, ладно?! Или опять-таки "исследовав огромное число бизнесов" приходим к выводу, что если соучредители связаны родственными или дружественными связями, то они более склонны делить доли в равных частях. Класс!

Из хорошего. Книга дала некоторую структуру характеристик стартапов и потенциальных проблем/решений, которые нужно обработать. Немного улучшила картину о фазе привлечения капитала (и то, боюсь, что в России все сильно иначе будет). Также с увлечением прочитал как приключенческие заметки главу про отстранение учредителя генерального директора от деятельности в компании. Еще помогла принять окончательное решение по количеству учредителей в компании.

Возможно, я что-то не понимаю, но в целом не читал бы книгу - ничего бы не изменилось для меня.

[Fernando Rodriguez-Villa · Rating 2 out of 5]

Published in 2012 and it shows. One of the core message of the book is that founders make a series of choices that guide towards either a "king" (high-control) outcome or a "rich" (large-scale or big payout) outcome. It also paints that successful founders are inevitably replaced by professional CEOs. The last 8 years have demonstrated not just that the very best / biggest entrepreneurial results have kept founder-CEOs in supreme positions of control, but that the investment community has recognized this and mostly support founders to realize a "king" AND "rich" outcome.

It was hard not to think about this anachronism while reading it. Otherwise, the book did provide some helpful frameworks about the nuts and bolts of very early founding decisions.

[Muromets · Rating 4 out of 5]

Elementary reading for anyone thinking of starting a business or just useful insight into the minds of entrepreneurs. If you've been on the startup journey already, you'll find yourself nodding along throughout. Yep, maybe don't start your business with family members or your spouse. Yep, it's a good idea to negotiate equity split. Yeah, maybe you're not the best person to be CEO.

Lots of good research-anchored insights that ideally would make you stop and evaluate, stop all together, or at least provide a caveat emptor to moving forward.

I'd recommend this as reading not only for those contemplating turning their idea into a reality, but also anyone considering working for a startup.

[Elizabeth · Rating 5 out of 5]

Wasserman does an awesome job diving into all the potential pitfalls and roadblocks entrepreneurs encounter as they build their companies. He delineates between control and wealth-motivated founders, and makes the case that it's critical to be aligned across a founding team (and even in some cases investors) on what your core motives are. Many of his points are backed up with clear statistics on startups that were founded around the time he wrote the book. It's of course a bit of a dry read given the nature of the topic, but I feel so much more confident about going into entrepreneurship after reading this book!

[Josh Steimle · Rating 4 out of 5]

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 Deals, this book is a textbook for entrepreneurs who want to avoid pain.

[Pavel · Rating 5 out of 5]

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 eBook format made it difficult to read those notes and get the full potential of the book.

[Luke Kanies · Rating 3 out of 5]

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.

[Patrick · Rating 4 out of 5]

Noam Wasserman evaluates all of the critical decisions (dilemmas) that founders of start-ups face. Some are more obvious than others, but they all have significant consequences that warrant thoughtful consideration.

According to the author, all of these dilemmas boil down to a central dilemma: wealth vs. power. Founders can choose to prioritize the value created and pursue a rich outcome, or they can prioritize control over the company to pursue what Wasserman calls a "king" outcome. (Spoiler: those who seek a rich outcome and are more willing to give up control consistently come away with a much more valuable equity stake).

Beginning with the decision to found a company, moving through the decision to include cofounders, employees, investors, and ranging to the eventual succession of the founder as CEO, Wasserman uses a sizable sample of historic startup companies to evaluate the pro's and con's of each decision in the general sense. He also uses a handful of specific examples, explains how these entrepreneurs responded to various dilemmas, and outlined the results they were left with.

Examples of dilemmas:
should i found a company - Are you confident, passionate about the idea? Is it profitable?

should i found alone - Do you have the personal, social, and financial capital to make the business work?

roles, relationships, rewards - When bringing on co-founders or employees, who do you hire? Friends, colleagues, relatives? Wasserman says the best is to hire or cofound with previous colleagues, individuals you have worked well with in the past. DO NOT assume a friendly social relationship will make for a fruitful professional relationship. "If you start a business with your friends, you could lose your business and your friends."
What will their title/function be? The plan is to grow a business, so think about how your decisions today impact a company of 100's or 1000's of employees. Is your co-founder qualified to be CTO of that group? Can they gain the skills in time? A demotion is never easy, so maybe avoid it by keeping titles loose or at least not C-level.
Will they get paid salary, equity, both? Is the equity instant or does it vest?
Sometimes founders leave early because they're sick, or called into military service, or win the lottery (life happens). Sometimes they don't add much value. Dynamic vesting is a great method to provide critical flexibility. Give yourself opportunities for future re-negotiation or buy-out.
An example of what NOT to do - launch a business with your wife; assign titles of CEO and CTO; split equity of the company 50/50 at the outset.

investors - Who should a founder look to for funding? Relatives ("dumb money") may be willing to give money with no strings attached, but for the sake of preserving the relationship this money should be considered a gift and not an investment. Angel investors are typically more experienced and can add value in the form of guidance/advice, and normally have more money than friends/relatives. They may want some control over decision making, and a seat on the board. Venture capitalists offer legitimacy, access to significant funds, and often times highly valuable advice. However, this comes at a cost - control. VC's will want seat(s) on the board, a voice in major decisions, and the may fire an underperforming CEO.

CEO succession - Founder-CEO's who initiate their own succession (in Wasserman's sample) fare FAR better than founders whose succession is initiated by the board. Founders who initiate their own succession are often kept on as an executive, are involved in searching for a replacement, and may retain a seat on the board. When the company outgrows the founders skillset, s/he needs to acknowledge it and make the move toward succession.

[Calvin Yuan · Rating 5 out of 5]

If you are really thinking of starting a business, this book is a gold mine.

As many other reviewers have said, Wasserman mostly talks about the dilemmas that many founders face and the respective outcomes of each choice under those circumstances. He does not offer any conclusive solutions to many of the issues being raised. This is mainly due to there isn't such a panacea to all of these difficulties. Nevertheless, Wasserman's research is sound and comprehensive. He let me understand the importance of the decisions my cofounders and I make in the early stage startup. Reading this book is like knowing where all the black holes are such that you will be more cautious in making decisions especially in the early stage where the founders' early decisions have a longlasting impact on the company that many do not realize. One example could be the equity splitting with your cofounders. A quick handshake on even-splitting might seem easy in the short-term but the in long run, this intuitive decision might lead to many instabilities among the founding team in the later stage.

The Founder's Dilemmas is not a cookbook that just tells you all the recipes but rather a descriptive analysis of the important and difficult trade-offs that one has to learn and make at different stages of the company development. It encourages the entrepreneurs to tackle these questions more systematically and more creatively because there might be many ways of doing the same thing. It also let the entrepreneurs know founding a company is not an easy task and there are many things to learn no matter what much you've already known.

[Elton · Rating 4 out of 5]

A mandatory read before launching the founder's journey

This is a 400-page tome that lays out the challenges, dilemmas, and pitfalls of the founder's journey when launching a startup. Note that this is geared towards venture-backable businesses - not small businesses - and as such skews towards technology and biotech. It's long and geared intensely towards founders, but it is easy to read given its effortless transitions between detailed statistics and anecdotes.

The book walks through all sorts of founder's dilemmas encountered from launching a company - be it team, financing, when to start, industry, etc. - up to Series A. Wasserman uses anecdotes and an intimidating amount of data to substantiate his points, and he busts several founder's myths along the way. The key conflict he lays out, which illustrates much of the conflict in startup discourse, is the tradeoff between wealth and control of an enterprise. At every step of the journey, Wasserman lays out these tradeoffs and how specific decisions may favor one or the other. Furthermore, Wasserman points out that different people optimize for different things, and optimizing differently at varying stages of the business can be disastrous.

I'd highly recommend this for anyone considering launching a venture or even in the middle of it. It'll resonate less with anyone else, but for someone in the thick of it, this book is a mandatory read.