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

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

by Noam Wasserman
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Princeton University Press
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The Founder's Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup

Often downplayed in the excitement of starting up a new business venture is one of the most important decisions entrepreneurs will face: Should they go it alone or bring in cofounders, hires, and investors to help build the business? More than just financial rewards are at stake. Friendships and relationships can suffer. Bad decisions at the inception of a promising venture lay the foundations for its eventual ruin. The Founder's Dilemmas is the first book to examine the early decisions by entrepreneurs that can make or break a startup and its team.

Drawing on a decade of research, Noam Wasserman reveals the common pitfalls founders face and how to avoid them. He looks at whether it is a good idea to cofound with friends or relatives, how and when to split the equity within the founding team, and how to recognize when a successful founder-CEO should exit or be fired. Wasserman explains how to anticipate, avoid, or recover from disastrous mistakes that can splinter a founding team, strip founders of control, and leave founders without a financial payoff for their hard work and innovative ideas. He highlights the need at each step to strike a careful balance between controlling the startup and attracting the best resources to grow it, and demonstrates why the easy short-term choice is often the most perilous in the long term.

The Founder's Dilemmas draws on the inside stories of founders like Evan Williams of Twitter and Tim Westergren of Pandora, while mining quantitative data on almost ten thousand founders.

People problems are the leading cause of failure in startups. This book offers solutions.

Product Details

ISBN-13: 9780691149134
Publisher: Princeton University Press
Publication date: 03/25/2012
Series: Kauffman Foundation Series on Innovation and Entrepreneurship Series
Edition description: New Edition
Pages: 448
Product dimensions: 6.48(w) x 9.30(h) x 1.42(d)

Table of Contents

List of Illustrations vii

Part I: Introduction and Pre-founding 1

Chapter One: Introduction 3

Chapter Two: Career Dilemmas 27

Part II: Founding Team Dilemmas 69

Chapter Three: The Solo-versus-Team Dilemma 73

Chapter Four: Relationship Dilemmas: Flocking Together and Playing with Fire 89

Chapter Five: Role Dilemmas: Positions and Decision Making 117

Chapter Six: Reward Dilemmas: Equity Splits and Cash Compensation 145

Chapter Seven: The Three RsSystem: Alignment and Equilibrium 186

Part III: Beyond the Founding Team: Hires and Investors 205

Chapter Eight: Hiring Dilemmas: The Right Hires at the Right Time 209

Chapter Nine: Investor Dilemmas: Adding Value, Adding Risks 249

Chapter Ten: Failure, Success, and Founder-CEO Succession 297

Part IV: Conclusion 329

Chapter Eleven: Wealth-versus-Control Dilemmas 331

Acknowledgments 387

Appendix A: Quantitative Data 391

Appendix B: Summary of Startups and People 403

Notes 425

Bibliography 451

Index 467

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The Founder's Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup 4.3 out of 5 based on 0 ratings. 3 reviews.
Anonymous More than 1 year ago
RolfDobelli More than 1 year ago
Most people admire self-made men and women – the Bill Gateses and Anita Roddicks who establish successful companies and reap a multitude of rewards. However, the path to start-up success is fraught with roadblocks, detours, washouts and dead ends. Harvard Business School professor Noam Wasserman identifies the common “founder’s dilemmas” and details their short- and long-term consequences. More specifically, he exposes the tacit tension that exists between creating wealth and maintaining control. This isn’t a quick read; it’s an in-depth, intelligent analysis based on 10 years of extensive research. At times, you may find yourself wishing for a bullet-point list. Yet getAbstract encourages would-be founders, entrepreneurs and venture capitalists to keep reading: You’ll find Wasserman’s insights and solutions well worth your time – and they may make the difference between your start-up’s success or failure.
Anonymous More than 1 year ago