Tribulations of a Founder

Noam Wasserman dropped by from Harvard to discuss a case study of his, relating to the relationships of a team when building a venture, and how team members were rightly or wrongly selected. It was a lively discussion and covered many areas that were really useful when considering team makeup, such as skills, knowledge, network and passion. Each area is a key factor when trying to decide who to bring on board at the critical stages of a new business.
The second stage of the talk looked into Noam’s research into the life cycle of a founder of a business, and how his studies have shown the usually finite life as a CEO of the company.

It was interesting to hear the different opinions from the fellows during this talk, and how each of them viewed the various attributes of the founding partners. Each having their own viewpoint on the key attributes for who to bring on board for the business. During the talk on his research Noam made some really interesting observations that are great to know at this stage of business. The salient point was that as the founder and CEO of the company, you are likely to be removed from this position, whether you are successful or a failure. Obviously if you the company is failing with you at the helm, then you will be replaced by the board, but also, if you are very successful, then the board (usually pushed by the investors) will replace you with someone that they feel will be in a better position to take the company into this new era.
Another interesting area was how to split equity amongst the founding team members the key elements being; past contributions, future contributions, opportunity cost and willingness to fight over equity. Even though the majority of partners split the equity equally, this can have implications for team stability and growth potential. Serious consideration should be made for a vetting strategy for equity, and increase the teams equity based on their achievements and time at the company.
Noam has a blog, http://FounderResearch.blogspot.com, that he is updating alongside his research, so I will be following this closely to gain a better insight into the role of the founder and CEO.

Noam made the discussion of the case study really easy, and encouraged involvement and for us to offer differing viewpoints. It was a good split for the talk to follow first the case study, before looking more in depth into Noam’s research. Overall Noam was a great speaker and I’m looking forward to following his research further, and hopefully seeing him again when we make a trip to Harvard.