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rebelutionary / 2.0
Rich Or Royal: What Do Founders Want?
HBS has a fascinating interview up about a new paper they're releasing called Rich vs King: The Entrepreneur's Dilemma.
It discusses the two basic desires of entrepreneurs - to become wealthy (Rich) and to control their company (King) - and the tensions between these desires.
However, if an entrepreneur wants to become King, that entrepreneur is more driven by the control motive and is willing to sacrifice financial gains in order to keep control. The interests of such an entrepreneur are not aligned with those of the VCs, and in fact may be in direct conflict with them. Thus, from the beginning, many investors want to find out whether an entrepreneur is motivated by Rich or by King, and then only want to invest in the "I want to be Rich" subset.
I'm not sure where Scott and I fit, but we are certainly lucky enough to have built Atlassian so far without any external capital - so we are still in control of our own destiny. As to the rich part, well - that's debatable I suppose - but I've certainly been enriched by the experience.
Heck, I'm writing this from our user group in Karlsruhe, Germany surrounded by a hundred passionate JIRA & Confluence customers. Who can't be enriched by that buzz?
(PS I'll write more about my recent trip soon - it's been a blast, off to Prague tonight - the 4th country in a week)
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I've met more than a few business owners who started out wanting to become Rich, but after a bad experience with investors or partners they switched to King (or Queen in one case).
Often the problem is that the investor's notion of "Rich" is markedly different from the founder's. Paul Graham has suggested that if VCs let founders take a million or two off the table as a company grows, it would be easier to persuade them that holding out for an IPO makes more money sense than selling out for $10-$20 million when you get an offer.
If the VC forces the founder to hold out and things don't work out, the founder is neither Rich nor King. Thus, some founders conclude that they cannot become Rich unless they are Kings.
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I'm the co-founder and CEO of Atlassian.
I live in Sydney and San Francisco. I'm an Aussie. I travel (a lot). I learn. I read. I talk. I create. I bike. I drink. I'm all in.
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Advising startups is something I've started doing in the last year. It's a fascinating way to use one's brain and experience to solve other people's problems.
I'm loving it.
Besides the few I advise, I've invested in one, HomeThinking.
HomeThinking provides realtor reviews, ratings and metrics (qualitative and quantitive) for home sellers.
I also make a lot of small microfinance loans to entrepreneurs around the world through Kiva. Read more about my on going Kiva Challenge (update).
