Anticipating and Avoiding the Pitfalls That Can Sink a Startup (The Kauffman Foundation Series on Innovation and Entrepreneurship)

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.

Wow, what a fantastic book. For a startup venture this is to entrepreneurship what Porter's five forces are to strategy. I think its destined to be a classic and, no surprise, its from another Harvard professor. The writing style is very good. You'll be hooked from the opening sentence to the final conclusion. It is an exhaustive study of over 10,000 entrepreneurs and includes detailed scenarios, anecdotal stories and specific flowcharts for how to anticipate and deal with the most common and daunting dilemmas that any founder will face. Tons of solid advice and great takeaways.

It is a must read for anyone thinking of starting a new venture, currently in the thick of a startup or who invests in startups. Heck, even if you're marketing to or purchasing from a startup, the insights in this book could be invaluable for assessing the team and their viability as a customer or vendor to your firm.

I wish I had this as a resource when I quit my job in 1983 to start my first business.

Noam Wasserman will be a guest on my podcast The Free COO on Thursday, June 28, 2012. [...]

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.

Great book for someone starting out as a founder. The chapters stand alone, meaning that some of the information is repeated between chapters. This is great for episodic reading, but a little tedious for a straight-through read. Switched to audio book half-way through for some long road-trips, and found that this was a better way to consume the information. It also allowed me and my co-founder (also on the trip) to share the information in real-time and discuss, which led to insightful and valuable discussions. Highly Recommended.

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 worked in other startups and cites various statistics. I wish there was a bit more scientific reasoning and proof behind some of the claims, however.

One big benefit I got out of this book is a bit of validation for a decision I had already made but was concerned about. The standard advice I hear for startups is to always found with co-founders - that startups with a single founder rarely succeed. However, the Founder's Dilemmas gives more context to that argument and explains that in some situations, a solo founder is better off.

I expect to re-read this book in the coming months/years as my startup transitions into the different stages of development.

The book is well-written and approachable. I would highly recommend it to anyone considering starting a company. I used the book as a blueprint to discuss founding a company with my potential cofounders.

First, I took copious notes on the book and shared them with my potential cofounders. Then, I asked them to take Noam's self-assessment ([...]) and scheduled a four-hour block to go through notes/survey results. During that discussion, it became clear that, while there were minor differences, we were very aligned on the 'rich versus king' framework. We proceeded to discuss the book/my notes for about three hours and had some very intense, serious discussions. "How would we hire?" Answer: consensus, 3-0 vote. "How will be decide what to build?" Answer: straight up vote, i.e. 2-1 moves the product in that direction Mission statement, values, hires, etc. I tried to build out a plan to talk about everything, and I think we came as close as we could. We continued to test it out, over working sessions, customer visits, and dinners/beers.

I must say the book was instrumental in making the discussion to cofound a company. The empirical data, the case studies, and the frameworks in the book are just superb.

As a veteran of several startups and an advisor to several more, I read everything I can get my hands on about starting and succeeding in new ventures. The number of blogs, books, videos, and other resources available are too numerous to count - there is a TON of information out there, most of it entertaining, much of it contradictory, some of it relevant, and very little of it of significant practical use. Amid this last select group, "The Founder's Dilemmas" stands out as probably the best, most thorough, and most practical guide I've seen to the series of crucial decisions faced by startup founders.

Like most writing on entrepreneurship, Wasserman's book draws on engaging stories of founders overcoming (and sometimes succumbing to) the tough odds stacked against a new venture. Unlike others, however, Wasserman backs up his conclusions and advice with years of rigorously compiled data and analysis. The result is perhaps the clearest picture available of the key decision points in a founder's journey and how those early decisions, often taken lightly, affect long-term options available to entrepreneurs and chances for success. On questions of timing, team-building, equity splits, investors and terms, building a board, early hires, and much more, Wasserman presents concrete and actionable advice on how to frame decisions and structure deals to maintain flexibility. He also provides tools to help founders understand their own personal motivations and align their decisions accordingly.

Bottom line: The quality of the decisions described in this book can make or break a startup. Essential reading for founders and investors.

This book was incredibly encouraging, but it also provided a serious reality check for me. As I try to dive into the startup world, it gave a broad overview of a lot of the decisions that are going to be coming up in the near future. I appreciate that the entire text is grounded in his research of startups over the past 12 or so years. It gave me the confidence that this wasn't just a fluffy 'achieve your dreams' book but was actually offering actionable insights that can help me make the important decisions I need to make.

Noam also goes to great lengths to stay impartial on decisions but at the same time clearly outline the pros and the cons quite thoroughly. It's a heavy read at times, but I highly recommend it.

Wow! Great book.

Should I become a founder?
What dilemmas can I expect to face?
How can I make moves to achieve my goals for my business?

These are the age-old questions facing entrepreneurs. Noam Wasserman provides answers that are based on the most rigorous research of its kind.

Personal values and motivations, relationships, roles, rewards, hiring, fundraising--these are the make or break decisions facing any founder. And the balance of wealth and control is affected at every turn in the evolution of a new venture.

Professor Wasserman also treats the reader to special "bonus sections" that provide wise and mature descriptions of the trade-offs of pursuing one strategy vs. another. The overall effect of the book is neither hollowly academic nor hucksterish, but a satisfying blend of wisdom and practical value.

--Geoff Smart, Chairman & CEO of ghSMART

Noam Wasserman teaches a class called "Founder's Dilemmas" at Harvard Business School that has become a "must-take" session for aspiring entrepreneurs. This book is the outgrowth of Noam's research and that class. It outlines a series of make-or-break decisions that founders make when embarking on their ventures. Noam analyzes the fundamental trade-offs such as when to found a company, who to found it with (if anyone), how to determine roles and responsibilities, equity splits and many more sensitive issues.

This is a serious book for a serious endeavor: creating a company from scratch that can be a world-beater and life-changer. Analytical, insightful and even a bit wonky at times, Wasserman's story arc is less about war stories - although the books is chock full of them, featuring the founders of Twitter, Pandora and others - and more about the decision tree every founder must climb. Rather than having these decisions happen by chance, Wasserman's book is a towering guide to making these decisions thoughtfully and purposefully.

Every founder should read it - and take the time to digest its rich data and lessons.

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.

Read more....http://www.gedboard.com/six-essential-books-entrepreneurs/

Great book! Finally some objective data and illustrative case studies in the heretofore murky startup phase. I'm in the midst of yet again founding a startup myself, and I picked up the book just at the right time, particularly in terms of initial equity distribution and initial individual and team expectation setting as well as creating the equivalent of prenups just in case. While every startup entrepreneur of course thinks they and their experiences are different (whether he/she and it are or not), and even if such entrepreneur is intending to go against the direction of gravity that Prof Wasserman points it is going, at the very least with this book an entrepreneur can be cognizent of trying something different and having no excuse for trying things the hard way. Kudos all around. A great read from start to finish, or a great reference work where you can easily find the exact challenge that you're dealing with.

I read an early draft of "Founder's Dilemmas" and was amazed by the depth of content and data-rich approach taken by Professor Noam Wasserman.

The ideas discussed in the book are incredibly important for anyone involved in company formation--be it founders or investors. Indeed, the decisions made early-on in a venture have long-lasting implications (i.e how to split equity among founders, whether to bring on additional founders, etc.). They form the concrete foundation of the enterprise. Without a solid foundation, over time cracks appear which affect the strength of the structure and are difficult and expensive to fix.

The book is chock full of practical and usable advice--advice which if followed, will minimize many of the challenges that founders often encounter.

In sum, The Founder's Dilemmas is a vital, original and welcome addition to the body of entrepreneurship literature.

I almost always abstain from any sort of self help product due to a lack of relevance and substance. This however, I could not stop reading. The research is original, fantastic, and thorough. Reading and understanding this book is imperative for any current or would be entrepreneur.

As a veteran of several startups and an advisor to several more, I read everything I can get my hands on about starting and succeeding in new ventures. The number of blogs, books, videos, and other resources available are too numerous to count - there is a TON of information out there, most of it entertaining, much of it contradictory, some of it relevant, and very little of it of significant practical use. Amid this last select group, "The Founder's Dilemmas" stands out as probably the best, most thorough, and most practical guide I've seen to the series of crucial decisions faced by startup founders.

Like most writing on entrepreneurship, Wasserman's book draws on engaging stories of founders overcoming (and sometimes succumbing to) the tough odds stacked against a new venture. Unlike others, however, Wasserman backs up his conclusions and advice with years of rigorously compiled data and analysis. The result is perhaps the clearest picture available of the key decision points in a founder's journey and how those early decisions, often taken lightly, affect long-term options available to entrepreneurs and chances for success. On questions of timing, team-building, equity splits, investors and terms, building a board, early hires, and much more, Wasserman presents concrete and actionable advice on how to frame decisions and structure deals to maintain flexibility. He also provides tools to help founders understand their own personal motivations and align their decisions accordingly.

Bottom line: The quality of the decisions described in this book can make or break a startup. Essential reading for founders and investors.

There's no shortage of literature out there on the startup process and the challenges that come with heading up your own venture. Half of it's great advice, half of it's lousy, and as the saying goes, I don't know which half is which.

I just got Wasserman's book, and have made my way through half of it (it's not meant to be a 1-stop read), and the thing that separates it is the way he intertwines compelling anecdotes of entrepreneurial success and failure with hard data. The research detailed in the book is based on more than a decade's worth of data from thousands of companies, and there are some fascinating conclusions that Wasserman draws out. One interesting takeaway - if you're co-founding a company, however you split the equity, make sure you don't split equally!

If you're thinking about starting your own venture, investing in one, or joining one, keep this book by your bedside!

I'm a venture capitalist in silicon valley and wish every founding team read this book before founding their company. This is a seminal read on how to found companies, how to assemble your founding team, how to divide the equity, etc. I've seen so many startups make mistakes up front that kill a great opportunity. The author has done a great job here at laying out the realities of what the key early decisions mean for your company.

This is truly an excellent book. The moment that I picked it up I could see that I was reading the fruit of serious research. The book is well written and easy to read, while at the same time being highly informative.

The other books on startups are usually contain just memoirs and personal view of the company founder. This book is much more valuable because it contains really scientific research data on hundreds of companies so one can trust the book conclusions.

The only drawback is that the book does not consider failed companies.

For me the most valuable advice of the book is to not set shares of founders unconditionally beforehand but to have agreement on how to divide shares according to activity of the founders in the following years.