Noam Wasserman's "The Founder's Dilemmas"

Noam Wasserman’s “The Founder’s Dilemmas” is a knowledgeable and accessible quantitative analysis of startup dilemmas – when to found, with whom, how to split equity, when and whom to hire, when to step down as CEO, “king v. rich”, et al.  Let’s say you’re an “average” startup professional, say a VC, banker, lawyer or consultant.  Wasserman’s data set is huge – several thousand startups over a ten year period. But - you’ve faced these dilemmas a hundred times, you know what works and what doesn’t, you know the applicable tweaks and the strengths and weaknesses of different approaches.   Do you really need to go through 350 pages of (albeit well-written) quantitative analysis?  Can you actually learn something from someone else’s war stories? The answer is yes for two reasons – one, mathematics, and two, humility.  First, the math. Scholars study large entities and large samples so that they can weed out the idiosyncrasies of any given situation and better find the patterns that are applicable to a larger sample – ie, are more genuinely representative and thus more likely to be similar to a given situation at hand.  Take as an example 50/50 equity splits between founders. Your “gut” (and common wisdom) is that these divisions are highly problematic. True, but isn’t it better to see that X% of these splits in a  large sample led to negative results of Y? Isn’t your “gut” better tuned to seek out those few situations in which this split might be effective?  One need not cite statistical chapter and verse (“73% of these situations in a  sample of 2500 companies led to a split within 2 years”) to be able to use such statistics to better advise founders. Or do you really wish to sell your advice solely on your “gut”?  Second, the humility. Anyone who has dealt with entrepreneurs knows the ferocity of their passion – and anyone who has studied behavioral economics knows the cognitive biases that cloud everyone’s (including entrepreneurs’) judgment. Entrepreneurs by nature or definition are more likely to go it alone or step away from the “certain” middle path. They are idiosyncrasy writ large. Again, say you are an “average” startup professional – have you really heard every story, seen every arrangement under the sun? Even with 30 plus years of experience, a degree of self honesty and humility would dictate that the answer is no. Therefore, Wasserman’s “war stories” may also be of help. I, too, am an old dog, but I always want to learn new tricks.  Wasserman’s book is well worth the read.