Founder’s Dilemma – Rich or King

  • Founder’s Dilemma – to be rich or to be king

  • It is very natural for entrepreneurs to wish to make billions of money and also run the show. But Prof. Noam Wasserman’s research shows that it is tough to do both. Within 3 yrs from the inception of company; 50% of new company CEO is no longer the founder’s.

  • It is very important to decide what you want ? you want to be rich or you want to control your start-up or in other words your baby(The Company). If you don’t figure out you will end up being neither rich nor in control.

  • Discussion: To grow the new venture you will require financial resources to capitalize the opportunities like hiring new employee, setting up new offices, getting new sales partners/channel, marketing cost, acquisition of strategic companies, exploring new ideas, patenting innovation, etc. To get more money means you will need to attaract investors and for that you have to give them equity and subsequently investor’s will change your board’s membership. While to be in control of your business you have to keep more equity and it means less money you will have to capitalize upon opportunities.

  • Before its too late decide what is your primary motivation for starting a business. You have to accept the trade-off associated with your choice between “being Rich or being King”. So that you can make choices to support your venture rather than jeopardize the business and your dreams.

  • If you want to make money and get rich:

  • Founders of startup make more money who give up their equity to attract cofounders, investors, and key employees to build more valuable companies than the founders who part with less equity. Bigger the company so higher the valuation of company and hence though the smaller pie but more money.

  • Once you given away your equity to attract investors and key executives – you have to transfer control of most of the decision making of your company and your CEO position or key position will be at risk. If you don’t have required skills to grow the company and perform the job responsibilities of fast growing company.

  • Startup companies grow in stages and so the investors put money in stages. At each round of investment they will add their own people to the board of the company and gradually you will loose the control of the company.

  • So if you want to make money then judge your limit better and leave the control of the company if the job responsibilities go beyond your capabilities. Its the time to hire a new CEO for your company yourself.

  • If you want to control the company and run the show:

  • You may have to bootstrap your venture using your own capital rather taking money from the investors. You will have less finances to grow your company and its value. But you will be able to run the company yourself.

  • Tips for entrepreneurs who are motivated by power than wealth

  • Start a business in the field, where you already have the desired skills and the network you need to build the business and grow it.

  • Start a business which does not require large capital to start your venture. Biotech, pharma, heavy manufacturing industry related business require huge startup cost so this business area is not for people who wants to be a king.

  • Its better to start your venture late in your life when you have better skills to grow your business and saved some money for bootstrapping.

  • So before beginning your new venture its better to think in your mind very carefully – Do you want to be a King or do you want to be a rich?

  • There is no harm in being Rich type entrepreneur or being King type entrepreneur. Be yourself as that is your strength.

  •  My dilemma was cleared by Prof. Wasserman during his lecture at Kauffman Foundation (Jan 2011) and Harvard Business school(March 2011). Adapted from Prof. Noam Wasserman’s (Harvard Business School) article “The Founder’s Dilemma”, full article available here.


  1. kedar says:

    Startling find!!!

  2. Parameswaran says:

    nice one sir

  3. Savan says:

    Good one sir!

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