Week 2 Discussion, Ent 600
“Maintaining Control vs. Maximizing Wealth”
According to Noam Wasserman in The Founder’s Dilemas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup (2012), “Founders’s two most common motivators are (a) building wealth and (b) driving and controlling the growth of their startups.” In some cases, you as the founder of a new startup may find that the two concepts are mutually exclusive. You might need to give up control to some degree in order to maximize wealth. Some founders might have an issue with giving up control due to pride however.
How much control you give up of your fledgling startup is an important process. It is a process because you may have the idea that you will maintain complete control of the business upon conception. In order to maximize wealth you may have to bring in others that have different talents into the mix. These decisions are important as they could have considerable effects on the business both negative and positive.
You should do an honest evaluation of the needs of your startup. Do you have the skills necessary to start the business. For example, there may be technical aspects to the idea that you need to acquire. Another question is whether you have the funds available. A new founder may need to recruit investors in the business.
Once you decide to bring others into the fold, there are another set of decisions to make. Should that person be considered a cofounder? Should you bring in more than one cofounder? The answers to these questions depend on the individual. How much talent or funds they bring to the table would be a determining factor. Certainly, sharing the title of founder would require some level of humility amongst an individual who is attempting to bring an idea that he solely produced to the market. However, this might be necessary to fully realize the potential of the startup.
Having more than one founder would mitigate risk taking due to having to collaborate on decisions. Entrepreneurs tend to be known risk takers by nature. Having a partner to consult lessens the likelihood of making a snap decision that one might regret.
Once the decision of whether or not to have a cofounder(s) has been made, it is important to make sure the person is right for the job. According to “Entrepreneur,” the first two questions one should ask is “Does my potential parter have the skills I lack?” and “Does my potential business partner share my vision for the company?” (Entrepreneur, Phil LaDuke, 5 Questions to Decide If you Need a Business Parter, February 20, 2017). Difference of opinion could have a long lasting effect on one’s relationship and business. In addition, if the potential cofounder does not have the skillset you are looking for, additional cofounders or employees might be required further diminishing wealth. Other decisions will also need to be made such as dividing equity in the company.
Whether or not to maintain control or maximize wealth is not just one decision. It is indeed a journey of many decisions which build upon each other. Overall, bringing additional people with added talent, funds, and connections into your new organization will increase your odds of survival!
References:
“The Founder’s Dilemas: Anticipating and Avoiding the Pitfalls that Can Sink a Startup”
Naom Wasserman (2012)
“5 Questions to Decide if you Need a Business Parter”
Phil LaDuke, Entrepreneur, 2/20/17
“The Study of Bias in Entrepreneurship”
Stephen X. Zhang, Javier Cueto, Baylor University, 2015
Master of Entrepreneurship Website for Mike Weimar 