The Hollywood version of a founder’s entrepreneurial experience tends towards a neat story arc of struggle, instinct-driven “Eureka” solutions, financial success and mystique. Fictional illustrations rarely accurately show the tensions in the trade-offs founders make to acquire the resources for growing their ventures by relinquishing points, equity and control.
Real life founders rarely ride that arc.
Early in the book, “The Founder’s Dilemmas”, author, Noam Wasserman states that venture founders face many decisions that should never be made based upon instinct. Wasserman does not dislike instinct.
Rather, he challenges founders and entrepreneurs to develop an understanding of why they start their venture and “what they want to accomplish”. Or, as Arthur Ashe famously said, “start with the end in mind”, using their motivation as a “north star” for decision-making.
I cannot shake the belief that instinct plays a role in the decisions founders make, but Wasserman advice compels a view that founders can “game” their way through trade-offs through a little self- awareness.
Wasserman suggests that the best way for founders to be effective at the repetitive choices requiring trade-offs is to understand “their own motivations”. Studies researching founders’ motives for launching a business indicate that the two biggest reasons are having and maintaining control and growing a company’s value and building wealth.
Surprisingly, he does not judge the mutual desires to control and build independence or build wealth. I expected him to offer a deeper prescription.
Wasserman refers to consistently building for control as working to achieve “King” outcomes and consistently building for wealth as working to achieve “Rich” outcomes. And, rather than favoring one entrepreneurial outcome more than another, he seems to view clarity around self-motivation as key to making consistent decisions and compromises.
Historically, books and articles about founders and entrepreneurs focused on outcomes with little regard for personal motivations and self-awareness.
Two who are clear that value creation is a founder’s desired outcome are Max Finger and Oliver Samwer. Their book, “America’s Most Successful Startups”, includes a chapter entitled The Role of the Founder. In it, they reject ego, control and personal interest as valid reasons for starting a business. They postulate that a founder’s role is to support all efforts to add value.
This traditional view of becoming an entrepreneur dismisses personal interests and views. Specifically, they articulate that founders often do not grow as rapidly as their ventures and as much as they might want to remain in control the only self-awareness these authors value in a founder or entrepreneur is knowing when to cede control to a better talented CEO to increase the value of the company.
Finger and Samwer focus on scale and rapid growth as levers for adding value. In today’s landscape, their views seem dated and uninspiring.
What inspires you in the debate over control versus wealth?