Startup Evolution (Brings More Dilemmas) – Week 8

Every stage of a startup’s growth presents new, and often unexpected, challenges that test those involved at all levels of the company. This can often fly in the face of conventional business stereo types that seem to suggest the “difficult” days are primarily in the beginning of the venture. In reality, however, as a business scales, more parties become involved and each party has their own interests – and all of these interests must find a way to co-exist with a unified goal. Yet although there are countless problems that arise as a business scales, the changing role of the founder CEO can prevent a unique set of problems for investors, board members, employees, and most of all the CEO him or herself. As aspiring entrepreneurs ourselves, I think it is especially important to consider as many of the future dilemmas we will face as early on as possible – especially when they involve our own motivations and relate to this role of CEO.

The Return of Wealth And Control

Back in Week 2 we examined the tradeoff between maintaining control and maximizing wealth. Once again, this tradeoff presents itself as the business grows and matures. For example, a founder-CEO who places greater value on controlling the business will be very reluctant to give up his or her position as the company grows – even if doing so would benefit the company the most. After all, as a business grows, its needs change and the original team of founders may not possess the newly required resources, talents, or abilities needed to continue the company on a trajectory of growth.

If a founder-CEO places greater value on wealth, however, he or she might be willing to relinquish the title in the name of better company growth and health. The nasty part comes when a founder-CEO is fired by others involved in the company, although this tends to occur more frequently when founder-CEOs value control more than wealth, according to The Founder’s Dilemmas. Personally, after thinking about this scenario to myself, I feel more strongly than before that taking an interest in wealth over control is usually the correct choice of motivations – since it provides both personal and company gain.

Bigger Business, Less Control – How I Fit In

Seeing as this blog post is the final installment of weekly posts for the Entrepreneurial Planning course, I thought it would be fitting to tie my own goals into this topic as a sort of “reflection” – especially since I rarely mention these goals and try instead to focus on topics that benefit all of us.

As I mentioned earlier in this post, I feel that I will value wealth more than control in the business that I one day operate. Although I haven’t always felt this way, I strongly feel this way now and I’ve condensed my reasoning into two points:

  1. A wealth-centric focus allows for the best interest of the company, since my abilities will eventually be inadequate and limited
  2. The wealth I gain from my business, even after losing control, can be used to invest into a brand new business. That sounds pretty exciting to me.

Additionally, it seems like valuing wealth over control will also result in less problems when the time comes for me to step down as CEO. In conclusion, let me ask you this same question:

Which do you value more? Wealth or control? Comment below and tell me about why you chose either one!


Sources:

Bonchek, Mark (2016). How Leaders can Let Go Without Losing Control. Harvard Business Review. Retrieved from https://hbr.org/2016/06/how-leaders-can-let-go-without-losing-control (Note: although this source was not included in the post above, it did influence my thinking on the subject in a unique but somewhat unrelated way. Check it out, Bonchek talks about creating “Doctrine” in businesses as a way of giving employees more autonomy – and come to think about it, more employee autonomy is just what a “wealth” oriented founder would desire).

Wasserman, Noam. MC: Founders: Noam Wasserman – The Founder’s Dilemma: Rich or King? YouTube.com. Retrieved from https://www.youtube.com/watch?v=hw-K1FPmFXA

Wasserman, Noam (2012). The Founder’s Dilemmas. Princeton, NJ: Princeton University Press

What did you think? Leave some feedback! :)

8 thoughts on “Startup Evolution (Brings More Dilemmas) – Week 8

  1. Austin,

    Awesome post!

    My opinion, wealth is logically a “goal” of the founder. It’s a main motivation for growing business and to be able to exercise exit strategy or “cash out” at the pick of the business. Choosing wealth is choosing a good goal unless the founder wants to pass the business on to family as a legacy as he/she gets older. For an aged founder, a legacy is more important than a pick value, I think.

    Mary

    1. Thank you, Mary! I actually completely agree with what you just said. I think sometimes, in our culture, some of us view having a “wealth” motivation as a bad thing, but in reality, it isn’t. It’s only receiving the rewards of the value you have created for your customers through a product or service. Seems fine to me!

  2. Austin,
    For me it would be wealth for a variety of reasons. The main one is I know my limitations and my skill set. I realize that I cannot do it alone and in order to grow the company I will need help from those with the skillsets I lack. I want the company to grow and provide opportunity for others. I also consider myself a delegator rather than someone that has to make every last decision. As a possible aged (thanks Mary) founder, I would love the opportunity to create something that could give me an exit and allow me to concentrate on my community service goals.
    Great question to end the class with.
    Cece

    1. I really see what you mean, Cece – and I can relate to that as well. Realizing our weaknesses and the need for other people to fill in those weaknesses is really okay. Yes, we have to give up control, but the result (in my opinion) is better for everyone – including the company. Thank you for the comment, and I hope that your community service goals become a reality soon!

  3. Austin,

    In the end it still goes back to the main question of wealth or control, the first question that we started with. I think toward the end of the business or the time of the CEO stepping down they all will choose wealth over control even if you start with control. At some point you will have to give up the control in order to exit the business.

    Thanks,

    Mackensie

  4. Hi Austin,
    I am in agreement with you about wealth over control. I am working toward owning my own company so I can better my position financially in life. It is not about the control, but it is nice to be the one who directs the company, especially when it is doing well. There is a strong sense of accomplishment and pride in the work a person has done to get where they are. Great post!!
    Colleen

    1. Hi Colleen! That’s very true. Having that sense of accomplishment does feel nice and cause us to want more control. But then again, we can go build new businesses with our “wealth” after losing control of the initial one. 🙂 Being a serial entrepreneur…now that sounds pretty cool – and an accomplishment in its own right. Thanks so much for the comment!

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