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Started reading
January 29, 2018
“Because they are your most trusted friends, you can be almost 99% open with them. But somehow there is 1% out there you think you will risk hurting them if you say it. It is exactly this 1% that makes all the difference.”
their new professional relationship is quite different from their prior social relationship;
“I think you’re much better off founding with and hiring strangers; they’re easier to part with, easier to be ‘all business’ with, and, whether you like it or not, will bring a lot more diversity to the company than family and friends.”
one expects that people who are like each other will get along easily and be able to understand and trust each other—but there are fatal flaws.
wrong to assume that trust and relationships developed in the social realm will transfer easily to the professional realm.
social relationships place a premium on fairness and equality while professional relationships place a premium on equity and merit, and, in many situations, equality and equity can conflict.
With a clear division of labor comes clear accountability:
“While dictators can move resources quickly behind an idea, they can also move resources quickly behind bad ideas and can ignore feedback.”
The principles illustrated in this book can be applied to other sphere like politics. This statement could be related to dictators or autocrats of this time.
Egalitarian approaches are particularly likely to emerge in two situations: when the founders have similar backgrounds and when the team does not name an official CEO.
“I’d rather have a decisive dictator who makes the occasional mistake (and learns from it) than an indecisive committee of founders that can’t make a timely decision.
When the time comes that your business is working and you need to act fast and make decisions quickly to grow and seize opportunities, the best thing is to have a dictatorship.
it was better to make wrong decisions fast than no decision, especially when coming to a consensus was getting harder and harder.
“One thing I am clear about now: Two people at the wheel is the worst way to drive. You end up going straight when either a right or a left would be better.”
the more capital a founder had contributed, the larger that founder’s equity stake.
Eventually Antje left the company altogether while continuing as a shareholder.
Hence the need to make sure first that the cofounder will be as comitted as the founder himself otherwise it will be regret later on when he or she starts to slug undetermined and uncommitted.
past contributions are usually easier to assess than future contributions,
We can now better appreciate the power of dynamic agreements. We saw how splitting equity early can help attract cofounders but can undermine the founders’ motivation and foster free riding, while late splits can bolster the founders’ motivation but interfere with attracting cofounders.
Thus, had Dick gotten his wish and split roles early with cofounders he barely knew, the team might not have made it through multiple startups together and not been together to build FeedBurner into the success it became.
teams without prior social relationships and operating under a business logic (e.g., teams of former coworkers or teams of strangers) will find the rule of equitable distribution—distributing rewards in proportion to the value of each individual’s contribution—
Overlapping, nondistinct roles make it harder for cofounders to determine the value that each has contributed or will contribute to the startup and therefore make it more likely that the team will decide to split the equity equally.
Thus, early inefficient uses of equity rewards within the founding team can leave the team handcuffed when it needs to fill necessary roles.
Founders are therefore imperiling their startups, and possibly their personal lives, if they do not force themselves to plan for the worst and to vigilantly watch for signs that their Three Rs equilibrium has fallen out of balance and needs to be reevaluated or renegotiated.
