King and Rich?

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Idea generation and making plans for the future is probably one of the most fun parts of starting a company. You get excited about the idea and start to fantasize how it would work out in the future. Most entrepreneurs that I know (including myself) use this to test and receive critical feedback on ideas. What often happens is that a combination of ideas that melts together and creates the –boom- or –ping- effect. Therefore, when you talk with an entrepreneur and he or she is “testing” an idea with you and asks for your feedback, don’t expect that this particular idea is going to happen right away.

Again, this part of starting a company is a phase in which everything is fun and exciting. When a team of excited entrepreneurs start a (high potential) company it gets more challenging. Things like shared norms and values, time investment, equity splits, role description, CEO role, raising funds and many more come into place. Today I would like to discuss the issue of shared norms and values between founders, or as Noam Wasserman names it the “founder’s dilemma”. It’s the choice of the founders team between control over the company or making money.

At my internship company Wholeshare (www.wholeshare.com) there are three founders; Matt, Peter and Miriam. The main two reason that they started this company were: 1) Recognized the growing market (17% cagr.) of sustainable food in the U.S. 2) they want to change the current food system and give people access to sustainable food for a better price. All founders are passionate about the company but are not afraid of giving up control.

To me it seems like a combination between king and rich type. Giving up control in the company is not yet in question because the angel investor that hopefully is coming on board will not receive shares in the company to take control. In the – series A – round (first Venture Capital round) the question of becoming rich over complete” control (>50%) becomes more relevant.

In the end it all leads at the kind of motivation that drives you to go out and work in “your” company. Founders motivated by control will make decisions that enable them to lead the business at the expense of increasing its value.  Founders who are motivated by money will give up more equity to attract investors but will end up with a more valuable slice of the piece, too. Every single decisions that has to be made in the company depends on the question whether you are a king or rich type of person. Both types require a different triangle of skills, attitude and knowledge.

Become-rich

When I was thinking about the trade-offs that I would as entrepreneurs some questions came up: What if you build a high impact business, you give up control to grow the business and the imported CEO changes the kind of impact that you wanted to make? Can you combine both types? If yes, are there certain sectors where combining works best?

I perceive myself as a king-entrepreneur but also realize that sometimes giving up control and put others in charge is better for the business itself, my social life and the impact that it could potentially make!

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