The Founder’s Dilemmas Book Summary By Noam Wasserman

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The Founder’s Dilemmas is an essential guide for anyone looking to become the founder of a start-up company.

This book provides an in-depth look at what it really takes to form and run a successful business, drawing from research and case studies.

In addition, it offers practical advice on how to handle common problems that founders face in those early stages, such as fundraising, hiring staff and managing growth.

The Founder's Dilemmas is a must-have resource for entrepreneurs who are just starting out on their journey or are already well into their business roadmap.

The Founder’s Dilemmas Book

Book Name: The Founder’s Dilemmas (Anticipating and Avoiding the Pitfalls that Can Sink a Start-Up)

Author(s): Noam Wasserman

Rating: 4.3/5

Reading Time: 18 Minutes

Categories: Entrepreneurship

Author Bio

The Founder's Dilemmas is a book written by Noam Wasserman, professor of Harvard Business School.

It was highly acclaimed, winning the Academy of Management’s Innovation in Pedagogy award in 2010 and also named one of the top entrepreneurship courses in the country by Inc.

Magazine in 2011.

Noam Wasserman is well known for his insights into founding companies and business decisions that entrepreneurs make.

His expertise has been used to shape The Founder's Dilemmas into an invaluable tool for those looking to delve into the inner workings of running a successful business.

What Makes Entrepreneurs Different From Regular Employees: A Guide To What You Need To Know Before Starting A Business

Regular Employees

As a business founder or entrepeneur, you face unique challenges and dilemmas that threaten your chances of success.

Found in the pages of The Founder’s Dilemmas, understanding these potential problems will help you secure enough cash to launch your start-up and tackle lower hanging fruit.

You’ll discover the biggest challenge start-up founders encounter and what Evan Williams learned about hiring family before founding Twitter; how female entrepreneurs stand out from male entrepreneurs; and ways Pandora Radio ensured it had enough funds to get off the ground.

The aim of this book is to give you insight into the kinds of problems a new business must take on and how they can be tackled head on.

You’ll optimise success rate by understanding when to hire professionals, how to handle growth responsibly, when it’s best to stick with family, among other key decisions.

At the end of this book summary, readers should now have an idea on which direction they want their new business to take and strategies for avoiding some of the most common issues faced by start-up founders.

The Motivations Behind Entrepreneurship And Career-Oriented People: What Sets Them Apart?

Entrepreneurs are fueled by the desire for power, influence, and autonomy.

It’s not just about financial gain – many entrepreneurs often pass up lucrative deals simply because it means giving up control or influence over their businesses.

Take Evan Williams, founder of Blogger, who famously turned down a buyout offer worth millions in order to retain control of his company.

The motivations behind why female entrepreneurs choose to stay independent and strike out on their own is very much in line with this sentiment as well as what drives male entrepreneurs.

A key difference here being that amongst women, altruism has been added to the list of motivators along with autonomy, power, influence and managing people.

Meanwhile, female career-oriented individuals tend seek out things like recognition and lifestyle rather than these other motivations which drive entrepreneurs to take risks and become independent business owners.

To be a successful entrepreneur, you need to understand your motivations and how they can help you succeed in your pursuits.

Are you looking for financial gain? Power? Influence? Figure out where your motivation lies – then start exploring the potential of being an entrepreneur!

Do You Have The Right Human Capital To Succeed As An Entrepreneur?

Starting a company as an entrepreneur goes beyond just having an idea.

It requires resources, and mostly importantly, human capital.

Human capital includes the skills, knowledge and expertise in your business and intended industry that are necessary to make it a success.

Barry Nalls is a great example of someone who had plenty of relevant experience before launching his own telecom business, Masergy.

His long tenure at GTE was invaluable: it enabled him to understand his product’s industry and build a strong foundation for his business.

Similarly, Curt Schilling was able to use the skills he developed in sports – namely leadership qualities and a strong work ethic – to launch 38 Studios; however, he soon learned that managing people could be more challenging than expected as he wasn’t experienced in the field.

So when starting your own venture, don’t forget to find talent – even if it means looking outside your expected sources – in order to shore up any weak spots you may have!

Having human capital will help you avoid potentially fatal mistakes for sure, so make sure you have enough experience or recruit individuals who do have it before jumping into any major decisions.

Building Your Social Capital: How To Get The Connections You Need For A Successful Start-Up

Social Capital

As a founder, having social capital is just as important as having human capital.

Your social capital is the network of contacts – customers, advisors, investors, employees – that you already have prior to starting your business.

It gives you resources and new information that can help make your company viable.

For example, Barry Nalls made Masergy viable within six months of launching with the support of his pre-existing professional connections.

However, potential founders can become too specialized in their field if they stay at one job for too long.

Afounder needs diverse skills in order to be successful, so it’s best to keep job hopping until ready to join the start-up world.

If spending more time in a certain position or field will help build an individual’s social capital, then it may be worth considering that option – but only for 2 years max!

Overall, when creating a new company or becoming a founder of an existing one: make your connections before jumping into the venture but don’t linger too long at that old job.

The Importance Of Having Balanced Roles In Your Business Venture

Having enough human, social and financial capital is key when running a successful business.

Barry Nalls was in that fortunate position when founding Masergy; he had the appropriate experience, connections and financial resources to start up successfully.

However, not all entrepreneurs have that luxury.

In such cases, finding co-founders to fill the social and financial holes can be necessary.

Take Pandora Radio’s founder Tim Westergren for example – his idea for an advanced music database required technical skills he didn’t have so he waited until he could bring on the right people with him.

It’s important to ensure that your company’s roles are balanced, even if you already possess sufficient capital in each area.

If you feel overwhelmed by the tasks of starting a business alone or simply wish to focus more on raising money than recruiting people yourself, seeking out co-founders could be beneficial.

Divide Roles According To Your Co-Founders’ Skills For Long-Term Business Success

It’s understandable why someone would become jealous if their co-founder is handed the chief executive officer title.

However, it’s important that when delegating roles for a start-up, you’re not being arbitrary.

The CEO title should be given to someone who deserves it – not necessarily the person who put in the most capital or came up with the original idea.

Rather, roles should be assigned according to strategic and leadership abilities.

By looking at examples like Apple, where Steve Jobs was the natural CEO and Steve Wozniak had R&D duties, it’s easy to see how delegating roles according to each founder’s actual skills made them successful overnight.

There may be situations where co-founders have similar skillsets that overlap with one another.

In this case, flexibility and proper management of daily tasks are essential for a successful business.

Even better is when you and your co-founders can assume clearly separated roles based on different skillsets – this creates greater accountability within your organization while ensuring that success and failure can easily be traced back to their source.

An example of this would be Pandora Radio, where one founder handled tech issues while another focused on business development and a third managed contacts in the music industry.

At the end of the day – make sure that all of your co-founder roles are crystal clear from the start!

The Lessons Of Equity Distribution: Postpone Splitting Until Co-Founders Know Each Other’s Skills And Commitments

Skills And Commitments

When distributing equity amongst co-founders of a start up, it’s important to tread lightly.

What may seem fair in the present moment may not stay that way tomorrow.

This lesson is best exemplified through the experience of entrepreneur Evan Williams with podcast publishing start-up Odeo.

When he first decided to give co-founder Noah Glass a 70 percent share in the company it wasn’t necessarily an issue.

After all, Glass was working full time at the project and Williams was only doing so part time.

As their venture grew and soon found themselves both working full time, a rift began to form as the two discussed who should be CEO.

Eventually Noah decided to leave the company altogether – something that could have been avoided if they had been smarter about equity distribution from the very beginning.

This is why it’s important to take your team’s abilities into account before splitting equity and not jump too quickly into what seems like a relatively equal division at first glance.

The founders of tech start-up UpDown ran into this same hurdle when they distributed company equity among themselves before really getting to know each other’s skills and contributions well.

Even attempts to redistribute caused tension among team members; which highlights how important it is not try and split evenly without properly understanding where everyone stands with their roles and responsibilities first

The Pros And Cons Of Hiring Friends And Family For Your Start-Up

Hiring from your own personal network can have a number of advantages – it can create a more dedicated and driven team, as well as potentially increase company valuations.

For example, Pandora Radio found success by hiring people they already knew – because friends and family were willing to make more sacrifices and be more productive.

At the same time, there are some risks associated with hiring friends or relatives.

You may find it difficult to talk about salary raises or performance reviews – especially when you have a long-standing relationship with someone.

Additionally, making tough decisions about team members is often even tougher when there’s a personal connection involved.

When companies are faced with difficult decisions, such as layoffs, this risk is even more pronounced.


With friends on the line, it can be hard for founders to balance the interests of the company with their feelings for that person.

Ultimately, however, your hiring decisions should be based on your objectives for your start-up — what do you need in order to get the most value as quickly as possible?

Why Start-Ups Need Generalists And Not Specialists To Make The Cut

When hiring for a start up, it’s not always the specialists that are the best bet – rather it’s the generalists that prove most useful.

Start-ups are known for their chaotic and rapidly changing environment, which can be difficult for an employee who has come from a rigid job in the corporate world.

They may find it difficult to adjust to this fluid state and keep up with the ever-changing needs of the start-up.

The ideal start-up employee should have experience working in smaller companies, as opposed to large corporations, since they will familiarize themselves better with working with limited resources and being able to handle radically different tasks quickly.

Frank Addante of StrongMail experienced this when hired a VP of Sales with prior IBM & Oracle experience but found he was unable to build a system from scratch as he had no prior background of doing so.

This is why generalists work best; they’re comfortable multitasking and can easily adapt to early start-up challenges.

Not only does expertise help when developing products, but also when managing people – Barry Nalls from Masergy discovered this first hand when he hired a sales manager who specialized in larger corporates: Although he was effective at leading large teams, independently he needed guidance – something essential in any new business venture where everyone must contribute toward each other.

The Pros And Cons Of Bootstrapping Versus Raising Capital For Start-Ups

Raising Capital For Start-Ups

When it comes to launching and running a successful start-up, it’s not a one-size-fits-all decision when it comes to whether you should spend or save.

And the decision between raising capital or bootstrapping your venture can be a difficult one, depending on the market competition and your overall goals.

Jim Triandiflou and Mike Meisenheimer chose the latter approach for their Ockham Technologies, investing just $150,000 of their own money in the project.

Their reasoning? They felt they needed to prove themselves first before taking on outside funding.

Evan Williams had a different plan when he started Blogger; this time relying on friends and family to help him get up and running in exchange for equity.

But when he went on to create Odeo, his strategy changed drastically – feeling that time was of the essence due to their competitors entering the market faster than they’d like, they sought out VCs who offered them $5 million in return for 30 percent of the company.

Raising capital might get your product built faster than attempting to make do with what little funds you have – but at what cost? By taking investors’ money you now have an obligation towards them as well – more bureaucracy and reporting as would be expected.

It’s also worth considering that even though you’re taking on money to speed up developing your product earlier on – you’ll end up spending more time preparing reports for investors each month anyways.

All of this to consider before making such a big decision!

Wrap Up

The final summary of the book The Founder’s Dilemma is clear: Entrepreneurship is a unique blend of motivation and skill that must be nurtured if a start-up is to succeed.

By carefully considering capital needs, company organization and decision making, founders can manage any issue they come up against.

This can begin with understanding what drives their co-founders which can head off any business disasters before they start.

Keeping each founder abreast of the skills, abilities and motivations of the others will help ensure a harmonious working relationship and an overall successful enterprise.

Arturo Miller

Hi, I am Arturo Miller, the Chief Editor of this blog. I'm a passionate reader, learner and blogger. Motivated by the desire to help others reach their fullest potential, I draw from my own experiences and insights to curate blogs.

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