Four years ago, at a panel discussion for my Founders’ Dilemmas course that featured a handful of experienced serial entrepreneurs, one of the questions raised by a student was, “What’s the most important piece of advice you’ve ever gotten from a mentor?” After thinking for a few seconds, one of the panelists said, “That the goal of every board meeting … is to end it.”
My heart fell when I heard that answer. A board of directors can be an extremely valuable part of a startup’s foundation, filling in the team’s biggest remaining holes and helping the founders overcome big-picture …Read more →
A review of Brad Feld and Amy Batchelor’s Startup Life
Halfway through Startup Life, married couple Brad Feld and Amy Batchelor suggest that, “Being in a relationship with an entrepreneur is hard, possibly harder than being an entrepreneur” (p. 78). This hard-learned gem of wisdom is richly conveyed throughout their excellent read.
Through their own real-life examples, and those of others, Brad and Amy drive home the message that a founder’s spouse or life partner is the true cofounder, the one without whose support and contributions the startup could be dead …Read more →
By: Noam Wasserman for Inc.com
Dead equity — equity held by employees and founders no longer working at the company — is a large and growing problem.
Facebook’s IPO minted many millionaires and even billionaires. One who attracted much attention is David Choe, the graffiti artist hired to paint the company’s first headquarters. Choe opted to forgo a cash payment “in the thousands” for the equity equivalent at the time. Thanks to that one decision, he owns nearly four million shares of stock, worth in excess of $100 million. Choe’s equity is a headline-grabbing example of “dead equity”: equity owned …Read more →
Our annual “CompStudy” Entrepreneurship and Compensation surveys are under way right now. If you participate, you’ll get free access to detailed compensation data.
The CompStudy surveys focus on private companies in the Technology and Life Sciences industries. We have conducted these surveys annually since 2000. (I collaborate on the surveys with Ernst & Young, law firm WilmerHale, and executive-search firm Park Square.) Last year, more than 800 private startups participated, giving us an extremely detailed dataset to help you understand the market for executive talent. The first decade of CompStudy surveys – which included almost 10,000 founders from 3,600 …Read more →
By: Noam Wasserman for Inc.com
Mark Zuckerberg and his executive team have been extremely successful at retaining equity in their company. But how well do most other founders do? Even as Facebook prepares to go public, Mark Zuckerberg, the founder and CEO, still owns 28% of his company. As a whole, Zuckerberg, his co-founders, and his former and present employees, own about 55% of Facebook. How did they do this?
Fear vs. Greed
Each time founders seek capital they face what my colleague Bill Sahlman refers to as the fear versus greed tradeoff. On the one hand, founders fear that …Read more →
Noam narrates a lesson from Founder’s Dilemmas (Chapter 2) in this entertaining Kauffman Sketchbook titled “Take the Leap”…Read more →
by: Noam Wasserman for Forbes.com
Many founders ride their companies up the value ladder, and then down it. Last week saw the latest example of this phenomenon, as the next dramatic chapter was written in the evolution of Research-in-Motion (RIM), the once world-beating maker of the Blackberry smartphone. Once again, a founder overstayed his welcome and paid a price.
A founder’s early passion, confidence, and attachment to a vision are often the magical ingredients that fuel the launch of a startup rocket ship. Visionary founders are usually the most central, irreplaceable players in a startup. Seen as the guardians of …Read more →
I’ve been collecting data about startups and compensation since 2001. Here’s what entrepreneurs think they know about startup pay–and what actually happens.
Entrepreneurial decision-making is often guided by anecdotes, rules of thumb, and intuition. Sometimes that’s because entrepreneurs don’t have time to look at reams of data, sometimes it’s because they’ve learned to trust their gut, and often it’s because the data just isn’t there.
But when it comes to pay, you need data. Since 2000, I’ve been collecting information about startups, including how much founders, their lieutenants, and their employees get paid. That research forms the basis for my …Read more →
Eighty years ago, Ralph Heilman, the dean of Northwestern University’s School of Commerce, wrote an article entitled, “Can Business Be Taught?” His answer: yes. Take the lessons about what works and what doesn’t, analyze and organize them, and then teach them—just as we do with engineers, doctors and lawyers.
Clearly, the process works for training M.B.A.s. So, why not entrepreneurs? After all, entrepreneurs are the ultimate general managers. They can benefit from much of the same knowledge that business students gain about marketing, finance and other topics, complemented by lessons that are specifically tailored to start-ups.
And those lessons are …Read more →
When do co-founders split the equity equally, and does an equal split affect their venture’s later valuation?
We are currently conducting our annual CompStudy survey. (I’ll soon be posting details about how to participate.) Over the last two years, I have enhanced the Founding Team section of the survey, so we can get a deeper view of various founding issues.
The first issue I am revisiting is how founders split equity among themselves, an issue that I first surfaced in a series of posts over the last few years (e.g., Splitting the Pie: Founding Team Equity Splits, Equity-Split Results, …Read more →