Blog #6 for week 7
Chapter 9 INVESTOR Dilemmas
Enter the Investor.
Startups need human, financial, and social capital to grow (loc no. 3868).
a) The potential disconnects between taking outside and maintaining control of the startup
b) The natural inclination that can get founders into trouble when making investor decisions
Taking outside money arise when investors move to gain control over key decisions protect investments. A founder’s natural optimism can introduce long-term problems when taking early investor money. Core founder are often missing skills, connections, a d financial resources need to build the most valuable startup possible. Attract complementary cofounders and hire talented non-founders. Also, a third possibility is to add investors.
Founders who willingly volunteer to be replaced may be those who are most self-aware and have become convinced that the demands of the CEO job are beyond their abilities.
Founders primarily motivated by building wealth are often quicker to step aside as CEO when they see the startup’s value- and therefore the value of their equity- suffering (loc 4669)
Fired for Failure:
A board may trigger CEO succession of the startup has been performing poorly under the founder-Ceo’s leadership and the board believes a new CEO could do better.
In startups, failure is harder to judge than in big companies, especially when the startup has not yet completed product development.
The paradox of entrepreneurial success:
Succeeding at product development
The founder-CEO may also be attached to his or her original idea for the startup,