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The Founder's Dilemmas: Anticipating And Avoiding The Pitfalls That Can Sink A Startup (2012)

by Noam Wasserman(Favorite Author)

4.03 of 5 Votes: 4

ISBN

0691149135 (ISBN13: 9780691149134)

languge

English

genre

Nonfiction

publisher

Princeton University Press

review 1: 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 w... moreas 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.
review 2: 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. less

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