Start Me Up

A new book shows how to anticipate the critical decision points in a start-up company’s growth.
CFO StaffNovember 15, 2012

Among the never-ending stream of books on starting and growing new businesses, one of the most thoughtful and complete to appear in recent months is The Founder’s Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup, by Noam Wasserman (Princeton University Press, $35). “If entrepreneurship is a battle, most casualties stem from friendly fire or self-inflicted wounds,” writes Wasserman, who teaches on entrepreneurship at Harvard Business School. His book shows how to avoid such casualties by examining the numerous dilemmas, or critical decision points, that start-up owners typically encounter as their companies grow. They include role dilemmas (for example, who should be the CEO?), reward dilemmas (how should you divide equity among the founding team?), and investor dilemmas (should you self-fund, and if not, what kind of outside investor should you seek?). The book also features case studies of entrepreneurs and their start-ups, such as Evan Williams (Twitter and Blogger), Tim Westergren (Pandora), and Genevieve Theirs (Sittercity).

Intended for scholars and educators as well as entrepreneurs, Wasserman’s book may be more academic than business readers are used to; there are pages of notes, an extensive bibliography, and occasional sentences like, “Thus, homophily has powerful effects on the homogeneity within groups.” But everything is explained: here, the introduction of the unusual word (from sociology, it basically means birds of a feather flock together) leads to a valuable discussion of the pros and cons of homogeneity and diversity in a founding team’s members.

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