Thank you to everyone who contributed thoughts about “The Founder’s Dilemma.” It was quite interesting to see your reflections on the specific Rich vs. King tradeoffs you have faced, and also your thoughts on what might separate the exceptional Rich&King founders from those who face those tradeoffs.
Much of the current case-writing for my new course (more on the course in an upcoming post) is focusing on the second of these issues: How do Rich&King founders achieve that exceptional status? Whenever I present my research, I find that most people have their own pet theories about how such founders achieve that, and I invite you to share your theories here.
On the one hand, many people seem to think that prominent Rich&King founders (the Bill Gateses of the world) seem to have achieved that status by being in the right place at the right time.
On the other hand, are there things that other founders can replicate more easily than waiting for lightning to strike? Below is a brief outline of three of the relatively replicable patterns I have seen. None are too surprising, but most are a little tough to accomplish. Please post any others you’ve seen!
- When to Found? — They wait until they have gained multi-function experience, in an industry directly relevant to the one in which they’ll start their new venture, and after they have been able to build a cash cushion (so they have the option of bootstrapping longer than usual).
- What to Found? — The founders tend to choose industries that don’t have a competitive need to move fast or do not require major capital investments. These two factors, plus the relevant experience mentioned above, mean that they don’t have to attract as many resources in order to get off the ground.
- How to Found? — The founders try to find ways that they can reverse early choices, such as setting up (in advance) the terms of a co-founder buyout in case one becomes necessary, or setting up vesting within the founding team, in order to avoid the dire consequences of bad choices. They often learn about those dire consequences (and thus the need for advance measures) either from getting burned in prior ventures or by hearing cautionary tales from their advisors.
Multi-venture founders (or “serial entrepreneurs,” though sometimes I have seen them be more “parallel entrepreneurs” than “serial” ones) seem to have a better chance of achieving Rich&King status with each successive venture. Two of the patterns I’ve seen with them:
- Rich then King, or King then Rich? — I have seen many more founders who became Rich&King after becoming Rich-not-King first than after becoming King-not-Rich first. Any thoughts on the comparative advantages of each path?
- Making the Most of Multiple Times At-bat — Founders who take a multi-venture approach increase the chances that they will achieve Rich&King. They can iron out problems with their co-founders, learn about what it takes to be CEO, gain bargaining leverage with investors, and extend their skills in ways that will enable them to remain CEO for longer each time. Are there other benefits you’ve seen them gain?