Founders as CEOs – Noam Wasserman

Day 14, Thursday 6th Feb: Noam Wasserman is an Assistant Professor of Business Administration at Harvard Business School. He has taught on Harvard’s MBA course (Entrepreneurial Management), and the University’s Doctoral and Executive Education programs. Noam received his PhD in Organizational Behavior (with concentrations in Sociology and Microeconomics) from Harvard University in 2002, and received an MBA (with High Distinction) from Harvard Business School in 1999, graduating as a Baker Scholar. Noam talked to us in the afternoon about founders of companies becoming CEOs and the various trends/statistics related to this. In particular he focused on issues that arise for these CEO/Founders later on in the venture following SeriesA/B of VC investment. Sometimes VCs want to replace a Founding CEO once he had brought the company throught he hard times and success is on the horizon. The reasons being that perhaps now once the company is about to take on a massive scale the VC wants someone they know at the wheel, despite the Founder’s efforts up to that point. I found his talk extremely interesting, insightful and practical. Summary of key points:
- VCs on biggest reason for failure of new ventures
    – 65%: problems within founding or management teams
    - Statistic hasn’t change din 15 years!
- Dynamic vrs static equity splits
    - Organically/vesting based on effort/time/milestones
    - Past/future contributions
    - Opportunity cost
    - Willingness to fight for equity stake
- Team stability does not necessarily imply team success
- Founder as CEO less likely to leave so less likely to get a raise later in venture
- Mr X, Founder & CEO: implies that he’s CEO because he was founder
- Mr X, President & CEO: fit for purpose, presumably!
- http://founderresearch.blogspot.com/