Book Review of The Founder's Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup by Noam Wasserman

This is a must read for anyone in the entrepreneurial/venture capital space.

Just occasionally you read a book that you wish you had read 25 years ago.  I worked in the entrepreneurial/venture capital sector 1984-2007 and I so wish I had read this book in 1984.  Unfortunately it was not published until 2012 so it was not possible but if you are (budding) entrepreneur, potential start-up hire, angel investor or venture capitalist you should really read this book.  This is the first book that really gets to the human side of entrepreneurship but is based on the evidence of a ten year study of some 2000 technology and life science start-ups for the period 2000-9. 

Note the title; it is dilemmas not dilemma.  In this book Wasserman identifies a number of defining moments in the trajectory of a start-up where the entrepreneur must make a choice which while it may appear to be operational or tactical ends up having significant strategic consequences  For example a the first decision for an founder to determine what is his or her motivation? Is it wealth-or-control ("do you want to be king or want to be rich?").

This really resonated with me.  For 12 years I was the Executive Chairman of Nanyang Ventures which had three early stage funds doing Series A & B investments.  One of innovations when I introduced at Nanyang Ventures was to psychologically profile the entrepreneurs.  What we discovered after five years is that our winners had three key characteristics.

1.       They had high numerical intelligence.  They could understand the numbers.  We thought we could compensate for those who had high general and verbal intelligence but low numerical IQ with a competent CFO.  We were wrong.

2.      They were dominated by the desire for economic success.  The personality tool we used was the Humm Wadsworth as it is one of the few tests that measures this factor.  Initially we were looking for energetic team builders who were decisive and competitive (kings).  Again we were wrong.  Wasserman lists the problems that ‘king’ entrepreneurs and venture capital investors may have.  We had all of them, many in triplicate.

3.      They were also dominated by the desire to complete projects and saw the start-up as a series of projects.  They were extremely task orientated and focused on the technical details.  They were into planning and compulsively reading everything they could about a project.  Their passion ignited the rest of their team.  We had not picked this factor as being necessary; again we were wrong.

Some of the Amazon reviews criticise it for being academic.  I could not disagree more.  This book resonates with reality