I will be giving a keynote presentation at the “Emerging Ventures” conference in a couple of weeks. Title: “Founder Frustrations” (surprised?).
Love to hear from anyone who attends. Feel free to post comments on the talk (or, if posting isn’t appropriate, to email me directly).…
Read more →In response to the original post about the “Building a Board” results (see below), Tim Connors of USVP inquired about the role played by the company’s stage of development. Even though our analyses (and the original blog posting) focus on the linkage between Board characteristics and CEO characteristics, we also controlled for the impact of the company’s stage of development. (Other controls were the company’s industry segment and the time period in which the data was collected.) We used the following Company Stage controls:
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You’re a founder-CEO with deep technical expertise but little business experience. VCs tell you that they’ll help guide you through the treacherous business issues you’ll face as you grow your business. (In fact, you are having trouble finding any VC firms whose Web sites don’t tell you they’ll do that.) Do they, indeed, provide such mentorship when it’s needed?
In contrast to boards of directors in public companies, which play more of a monitoring role (evaluating the CEO and top management; making decisions about senior hiring, compensation/promotions, and firing; reviewing major decisions), boards in new ventures need both to monitor …
Read more →In addition to the studies described in posts below, my other Founder Frustration research includes the following studies:
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Who makes more cash compensation, founders or non-founders?
More specifically, taking 2 similar executives (same position-title, similar years of work experience and equity holdings, working in companies that are at the same stage of development), will the executive who was a founder of the company make more or less than the executive who didn’t help found the company?
Academic aside #1: From an academic perspective, past research on executive compensation has looked at executive compensation issues using the lens of agency theory. Agency theory suggests that the interests of opportunistic, self-interested executives (“agents”) will conflict with those of owners …
Read more →My initial research on Founder Frustrations focused on Founder-CEO Succession, examining the events and circumstances that increased or decreased the chances that the founder-CEO would be replaced as CEO.
Not surprisingly, I found that founder-CEOs are much more likely to lose their jobs when their companies perform badly, as is also the case with CEOs in large public companies (on whom past academic research on succession has focused). However, my core finding was that, in contrast to large-company CEOs, founder-CEOs are also much more likely to lose their jobs as CEO when their companies perform very well, a finding …
Read more →The creation of new organizations is a major driver of economic development (Schumpeter 1934). Despite this, founders, the people who create those new organizations, are largely absent from past academic research. It is much harder to get systematic data on privately-held companies, so past research has focused almost exclusively on public companies, where founders rarely still number among the members of the top management team. However, young, private start-ups can differ markedly from large public companies (particularly regarding the motivation, presence, and impact of founders on the companies they started), making it risky to extrapolate from research on non-founders to …
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