Week 2: Discuss “Maintaining Control versus Maximizing Wealth’ – The Founder’s Dilemmas

WEEK TWO

5-ways-achieve-balance-entrepreneurWhen it comes to prepare or to be an Entrepreneur, the exploring potential founder faces difficult decisions that significantly affect his or her startup direction and outcomes.

In this topic, I want to focus on how decisions affect important outcome: what founders should do and what founder can do? such as the startup growth, the founding team’s stability and the founder long term control. This is the most common and difficult dilemmas for any startup business.

First, find out what is the true definition of Entrepreneur? For me, an entrepreneur is a person with a vision who orchestrate obvious time, talent and money to make his vision real.

What is my business? What is my vision for it? where I want to go? Mostly, I am not quite sure where to go. Communicate with my vision by Mission statement, for example, it holds me accountable. What I will become in 5 years. How to qualify? How to document it? What is my most important motivation? Be aware that motivations call for very different decisions when I conduct my business.

For founders, the best way for them to know what to do is to know their motives to start a business and their decisions automatically or technically oriented toward:

  1. Maximizing Wealth (calls: Rich outcome) or
  2. Driving and maintaining Control (calls: King outcome)

These two above are the most common in the top 6 motivations (altruism, variety, intellectual challenge, etc.,) and also conflict with each other. “A founder who knows whether wealth or control is his or her primary motivation will have an easier time making decision and can make consistent decisions that increase the chances of reaching the desired outcome – Rich or King” – page 14, the Founder’s Dilemmas.

Those motivations effect founder’s decisions on:

  • Pre-founding career (where, when, what to found)
  • Founding team (relationship, role, rewards)
  • Hiring (relationship, role, rewards)
  • Investor (who, when, what term and where to found)
  • With whom to partner (Whether and how to form corporate partnership)
  • Business-strategy (Whether and how to exit from the startup)

Founders need to attract outside resources: people, information and money in order to pursue opportunities and build greatest value. But these resources typically that founders cede more and more control, in other words, founder to give up valuable assets. They must choose between profiting from their hard work and keeping the control of “their baby”-their own creation. A recurring dilemma of what resources to acquire and what cost in ownership and control.

But knowing one’s motivation is only one piece of the puzzle. The founders need a clearer and bigger picture when they are at a crucial fork on the road they are on, about to make decision that will have important consequences for the journey which lead to the outcomes for the founder, the team or the startup:

  • King (remain founder-CEO)
  • Rich
  • Motivation-choice consistency
  • Founding team stability
  • Employment grow.

If the founders could figure out the core motivations before making the decision and consistent about their decisions, they could dramatically increase their probabilities of achieving the more attractive outcomes.

Sources:

Wasserman, Noam (2012). The Founder’s Dilemma. Princeton, NJ: Princeton University Press

Several You Tube Entrepreneurship Videos. Example: Dan Lok and many more.

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12 thoughts on “Week 2: Discuss “Maintaining Control versus Maximizing Wealth’ – The Founder’s Dilemmas

  1. Great Post! This gives me a lot to think about for my small business. I’m a one woman show now but would love to expand in the future. It’s a lot to think about, do it all yourself or hire a great team. keep the money to yourself or hire a great team. I want to read more information about this, there’s a lot to know.

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  2. You bring up so many reasons why people are motivated to be entrepreneurs and all the ramifications of them. It makes me wonder how much thought is given to these motivations before starting a new business. They may want wealth or control, but are they really thinking about that when they start out or are those two motivations foregone conclusions?

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    • Thank you Cece for your feedback. Sometime the founders get caught in some circumstance of business that he/she has no choice, but knowing what direction to make a good decision and adjust from there, with time, is the key.

      Thank you for your time.

      Lil’ Mary

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  3. Hi Mary! That was a really good post. I think you’re spot on in identifying the importance of our motivations for entrepreneurship, and then following through on them consistently in the decisions we make. I’ve seen some business owners and managers who treat decisions with no apparent consistency – usually changing “tactics” extremely often in search of something that sticks. This practice can really frustrate employees, though. So it really is better to check our motivations and goals whenever we have to adjust a practice.

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  4. Hi Mary. Great areas that you focused on for founders and their decision making outcomes end results. I think too any entrepreneur who begins their startup with this focus on which way to go and what their focus is will benefit so much in their venture. No to say, they will not have their fair share of wrong avenues with some of their decisions, but this information is so beneficial to a new entrepreneur. Awesome.

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  5. Mary,

    Great insight on the critical thinking it takes during the growth of a new venture. I believe that bullet list you made on the six motivations that effect founder decisions can serve a dual purpose. You’ve actually constructed a rough guideline for planning the core components of a startup because of the emphasis provided after each point (I.E. where, when, what/relationship, role, rewards). It has certainly helped me anyway.

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