FACT: “Pandora Radio’s Tim Westergren studied piano and political science at Stanford, then worked as a nanny, ran an admissions office at Stanford, and started a rock band, touring with it for nearly a decade before deciding to move on to freelance composing. During his composing years, Tim had the idea to create a music database (which he called ‘the music genome project’) that categorized music based on a long list of attributes and that suggested to users new artists and songs that fit their tastes. In 1999, Tim met Jon Kraft, a Silicon Valley entrepreneur. The two decided to pursue Tim’s idea and formed Pandora (originally called Savage Beast), adding Will Glaser, a talented software engineer, as the third cofounder and CTO.”

The Founder’s Dilemmas:
Anticipating and Avoiding the Pitfalls That Can Sink a Startup

by Noam Wasserman

Often downplayed in the excitement of starting up a new business venture is one of the most important decisions entrepreneurs will face: should they go it alone, or bring in cofounders, hires, and investors to help build the business? More than just financial rewards are at stake. Friendships and relationships can suffer. Bad decisions at the inception of a promising venture lay the foundations for its eventual ruin. The Founder’s Dilemmas is the first book to examine the early decisions by entrepreneurs that can make or break a startup and its team.

Drawing on a decade of research, Noam Wasserman reveals the common pitfalls founders face and how to avoid them. He looks at whether it is a good idea to cofound with friends or relatives, how and when to split the equity within the founding team, and how to recognize when a successful founder-CEO should exit or be fired. Wasserman explains how to anticipate, avoid, or recover from disastrous mistakes that can splinter a founding team, strip founders of control, and leave founders without a financial payoff for their hard work and innovative ideas. He highlights the need at each step to strike a careful balance between controlling the startup and attracting the best resources to grow it, and demonstrates why the easy short-term choice is often the most perilous in the long term.

“This book provides the rare combination of practical advice and scholarly research. It gets to the heart of the people issues that can bedevil every, and I do mean every, startup. Issues such as founder motivations, equity splits, and equity control can make or break a company. I guarantee that the price of this book is approximately one-thousandth of what you’ll pay lawyers to clean up your mess if you don’t read it.”—Guy Kawasaki, author of Enchantment and former chief evangelist of Apple

We invite you to read Chapter 1 here: