tag:blogger.com,1999:blog-2460005.post3472361396143545813..comments2023-11-05T04:28:29.961-08:00Comments on Adventures in Capitalism: Why Founders Reap Disproportionate RewardsChrishttp://www.blogger.com/profile/00927628412285314176noreply@blogger.comBlogger10125tag:blogger.com,1999:blog-2460005.post-88649771612354105882009-08-26T03:27:57.095-07:002009-08-26T03:27:57.095-07:00Hi Chris,
I came to your blog from Shefaly's ...Hi Chris,<br /><br />I came to your blog from <a href="http://www.shefaly-yogendra.com/blog/" rel="nofollow">Shefaly's blog</a>.<br /><br />Your post is particularly insightful and I have shared the link with a few people now.<br /><br />I was having a conversation a few months ago with a friend/client (who also started his own company) about starting one's own business. We both laughed about how if we had the chance to re-write the dictionary, our definitions of 'hard work' and 'sacrifice' would be very different. Regardless of the size and scope of a new business, doing it right means a great deal of nights, weekends and very early mornings for the founder(s).Liam Dempseyhttp://liamdempsey.comnoreply@blogger.comtag:blogger.com,1999:blog-2460005.post-65027087630174253322009-08-25T22:25:39.611-07:002009-08-25T22:25:39.611-07:00Touraj,
Excellent point on how founders can easil...Touraj,<br /><br />Excellent point on how founders can easily lose their extra "0" in subsequent rounds of financing.<br /><br />The key to avoiding this eventuality is to avoid down rounds. This is one of the reasons why the counter-intuitive practice of not seeking the highest possible valuation is actually a good move in the long run.Chrishttps://www.blogger.com/profile/00927628412285314176noreply@blogger.comtag:blogger.com,1999:blog-2460005.post-48652118762452075542009-08-25T06:57:29.754-07:002009-08-25T06:57:29.754-07:00Excellent post Chris! The risk-reward trade-off is...Excellent post Chris! The risk-reward trade-off is certainly valid, although over time and given the amount of future dilution, I have seen many founders lose much of that extra "0" that they had in the beginning.Tourajhttps://www.blogger.com/profile/13273031824434449278noreply@blogger.comtag:blogger.com,1999:blog-2460005.post-91320451879399897432009-08-18T11:39:37.602-07:002009-08-18T11:39:37.602-07:00Well, I wasn't really thinking of it as a suck...Well, I wasn't really thinking of it as a sucker's bet (though that might be the best way of looking at it!), but maybe as a reminder to some founders that while they are taking risks, they should look around and see if anyone else is taking a similar risk with them. And if so, then ask whether those others are in line for a similar reward.Shawnnoreply@blogger.comtag:blogger.com,1999:blog-2460005.post-29409266918732520312009-08-18T11:12:36.523-07:002009-08-18T11:12:36.523-07:00Shawn,
Yes, being an early employee of a pre-fund...Shawn,<br /><br />Yes, being an early employee of a pre-funding startup is a sucker's bet.<br /><br />I did it once, but there were special circumstances--I got a good deal, the CEO was an old friend, and the founders had already made hundreds of millions of dollars in their careers, so funding was a certainty.Chrishttps://www.blogger.com/profile/00927628412285314176noreply@blogger.comtag:blogger.com,1999:blog-2460005.post-65920529531281624562009-08-18T11:08:24.140-07:002009-08-18T11:08:24.140-07:00It is very common for early employees to take on b...It is very common for early employees to take on both risks you mention (lack of salary, lots of work) but getting neither of the rewards mentioned (1X instead of 10X, not "a founder"). This is the case for many (most?) startups, but is generally unknown to those on the outside of the situation. It can very often create hard feelings since the founders typically have the power to easily wipe out (or fail to increase) the equity of these employees.Shawnnoreply@blogger.comtag:blogger.com,1999:blog-2460005.post-7190159175794901872009-08-18T07:54:15.477-07:002009-08-18T07:54:15.477-07:00Franziska,
Sadly, large amounts of money can brin...Franziska,<br /><br />Sadly, large amounts of money can bring out the ugly side of human nature. I've seen many friendships ended as a result.<br /><br />My advice has always been to be as open as possible, and to make sure you can really count on whomever you're jumping in a foxhole with.Chrishttps://www.blogger.com/profile/00927628412285314176noreply@blogger.comtag:blogger.com,1999:blog-2460005.post-68114276373212569562009-08-18T07:22:31.114-07:002009-08-18T07:22:31.114-07:00You are lucky that you can work with friends. I se...You are lucky that you can work with friends. I set up my own company with three other "friends" and got so screwed that I lost not only a big chunk of money but also my trust in doing anything ever again that involves money and friends.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2460005.post-45647765491386097952009-08-18T04:55:53.586-07:002009-08-18T04:55:53.586-07:00I should definitely have added that to my list...n...I should definitely have added that to my list...no vacations!Chrishttps://www.blogger.com/profile/00927628412285314176noreply@blogger.comtag:blogger.com,1999:blog-2460005.post-48794507561285244042009-08-18T04:20:45.711-07:002009-08-18T04:20:45.711-07:00Good point. However in Europe even some 'found...Good point. However in Europe even some 'founders' take a 15-day holiday in the middle of their fundraising crises, even as their 'advisors' work. Speaking from experience, of course. :-)Shefalyhttp://www.shefaly-yogendra.com/blognoreply@blogger.com