4 ms·
Noam Wasserman (Harvard, USC) studies exactly this in a paper called "Rich vs King". As you can guess from the name, the conclusion is that bringing in outside
by kornish 9y ago
Noam Wasserman (Harvard, USC) studies exactly this in a paper called "Rich vs King". As you can guess from the name, the conclusion is that bringing in outside generally management maximizes the expected value of equity.
https://hbr.org/2008/02/the-founders-dilemma https://hbr.org/2008/02/the-founders-dilemma
- geofft 9y agoThanks! One thing the article brings up is that "success" may not be synonymous with "financial success". If you have a specific burning vision for a thing that should exist in the world, it might not be the most profitable thing, and the founder staying on is probably a good way for exactly that product to exist - but an outside CEO might choose to compromise the product vision and significantly expand the potential market in doing so.
- kornish 9y agoVery true! I suspect involuntary founder replacement is much more common in venture-funded companies. While your, my, and the founder's definitions of success may not be synonymous with "financial success", many VCs and their LPs may not feel the same. Obviously it's tricky to fully generalize, but the point is that VC can be expensive if founder and investor motivations aren't closely aligned.