One of the first things that stood out to me in The Founder’s Dilemmas was the idea that founders eventually have to make a choice between maintaining control and maximizing the value of the business. Before reading about this, I probably would have assumed those two things mostly went together. If you own more of the company, you make more money if it succeeds. Pretty simple. The problem is that growing the company may require giving some of that ownership and control away. Wasserman’s research actually found that founders who gave up more equity to attract cofounders, employees, and investors tended to build more valuable companies.
The catch was that growth could also eventually mean giving up the CEO position itself. That makes this a much more personal decision than just deciding how many shares someone owns. I can see both sides of it. If I spent years building something from nothing, I would have a hard time watching other people gain more influence over it. At the same time, there is probably a point where insisting on controlling everything hurts the company more than it protects it. I thought about this while putting together the equity structure for Mindful Money. My background is heavily finance-focused. I know that I would need people who are better than me in areas like marketing, technology, and financial education. If bringing those people in requires giving up some ownership, I would have to decide whether owning a larger percentage is actually more important than building a stronger company.
I think my answer would depend on what I wanted Mindful Money to become. If the goal was to keep it relatively small and build a business that provided me with a good living, maintaining control might make sense. If I wanted to grow it into a much larger company, I would probably have to accept that I could not own and control everything forever. There is something a little uncomfortable about that, but I think that is really the point of the dilemma. There probably is not a version where the founder gets every benefit without giving something up.
References
Wasserman, N. (2013). The Founder’s Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup. Princeton University Press.
Wasserman, N. (2008). “The Founder’s Dilemma.” Harvard Business Review.