In Founder's Dilemmas (2012), Noam Wasserman explores the critical decisions founders face when building a startup, like choosing co-founders, dividing equity, and managing team dynamics. The book emphasizes the trade-offs between control and wealth, showing how early decisions can significantly impact long-term success. It's a must-read for entrepreneurs navigating these early-stage challenges. However, while it is foundational, the problems and corresponding data that Wasserman reviews feel simple and less chaotic than the reality of founding companies in 2024.
I read the book in 2013 while building my first company, TrendKite. While it’s simplistic, it is the one I continue to recommend to first-time founders who are contemplating their company's long-term vision as a viable option. Often, we overlook the early decisions of startups like co-founders, early investors, and key hires because we just want someone, anyone, to buy into our idea! The insights provided on early decisions have a meaningful impact on an organization's future success, and those decisions become foundational to the culture that the company eventually embodies.
Building a company in 2024 However, some of those challenges highlighted in the book seem trivial today, and I often wonder how an updated version of this book would look. Would Wasserman focus less on early-stage dilemmas and more on how founders should adapt as markets, technologies, and customer needs evolve? How would the dynamics of COVID-19, remote work, ZIRP, inflation, and AI reshape the challenges and decisions founders face today? Instead of a chapter on Key Hires, would there be a chapter on hiring AI vs hiring people? These factors add new variables and stress points to the founder's journey, making the role of a founder/CEO more complex. There is so much data to be gleaned from these decisions, and the road ahead is fraught with peril. If you are a risk-averse person, I would not recommend starting a company today.
I would like to see a chapter written today based on data about remote vs in-person. Today, founders must consider how to effectively manage distributed teams, maintain culture, and ensure clear communication across different time zones. The dynamics of co-founder relationships and equity splits might also be impacted by the ability to work remotely. I often wonder, “would QuotaPath look different if we were solely in the office like prior to the pandemic?”
That said, these variables also provide opportunities to see unique insights that set founders apart. Founders today have to build mental models for the future more than ever to see what tomorrow will look like. They do this by talking about their idea and convictions to as many people as they can.
In his book Pattern Breakers, Mike Maples Jr. discusses the importance of "co-conspirators"—people who are as invested in your vision as you are. This concept resonates deeply with me.
Lenny’s Podcast with Mike Maples Jr: How to find a breakthrough startup idea Hot Take - I wish Mike had cited more “Pattern Breaker” startups. He obviously leaned on what he knew with Lyft, X/Twitter, and “AirBed & Breakfast” (the original name of Airbnb, but Mike uses the original name throughout the book since that’s when he met the founders). Not citing more pattern-breaking startups sometimes made the “data” seem more anecdotal since he told stories throughout. We all love a good narrative, but long-term data supporting these could have helped clear up any biases.
Dinner with Asad Zaman, CEO of STA and my cohost of Topline Two weeks ago, I was in Chicago for Catalyst, a conference of 600 partnership leaders nationwide (with companies like Snowflake, Monday.com, HubSpot, Microsoft, and Ernst & Young all present). While the conference was valuable, the most pivotal moment wasn't at the conference itself. It was the three-hour dinner I had with my co-host, Asad Zaman, who became my “co-conspirator” for the night. Asad helped elevate my thinking that night, and I fully embraced it and leaned in.
Here are the three “secrets” that Asad and I explored and uncovered during our evening of conversation over sushi:
1) Product Market Fit: Founders are obsessed with talking about their companies, but being obsessed with the problem rather than the solution is the key to driving your business forward. Uri Levine details this in his book Fall in Love with the Problem, Not the Solution. Founders who have a deep understanding of the problem create more creative and innovative solutions, as they're more likely to explore various possibilities.
Lenny’s Podcast with Uri Levine: Lessons from a two-time unicorn builder, 50-time startup advisor, and 20-time company board member My hot take for this book is that when founders focus solely on the problem, it might be too restrictive. I often think of the quote attributed to Henry Ford: “If I had asked my customers what they wanted, they would have said a faster horse.” (which he likely never said). Regardless, this book is a great pairing to read alongside “Pattern Breakers” because it shows the duality of how founders can start great companies.
I implore founders to think critically about PMF Every. Single. Day. Be skeptical like everyone around you will be. It’s ok for not everyone to buy into what you’re cooking. Don’t be discouraged or cynical, but do be an objective observer.
2) People: “Are they a .1% engineer or a 1% engineer? If they aren’t .1%, they need to go”. I had just finished detailing a cultural problem I had had in a past life with an engineer (not at QuotaPath) and was recounting the painful mistake I had learned. I wasn’t the direct manager of that engineer, so it wasn’t my call to keep them. Still, I knew with absolute certainty that they were causing more alignment challenges in the organization than I wanted.
Asad had a simple solution – get rid of them. Don’t let your standards slip. “A players” can sometimes hire “B players,” who will then, in turn, hire “C players.” Regardless of stage and scale, ensure your team has “A players.”
3) Driving Outcomes: Asad and I delved deeply into the challenge of aligning incentives with objectives – a conversation that spanned nearly two of our three-hour dinner. This is more than just a passing concern; it's the very essence of what QuotaPath is built upon. It’s also a problem that organizations are challenged with at any stage or scale. The question we grappled with is how companies can ensure that their incentive structures drive the outcomes they truly desire. Incentives must be designed precisely and clearly, ensuring every team member knows how their work contributes to the larger organizational goals. This alignment between individual performance and company objectives isn't just a nice-to-have—it's the cornerstone of driving sustainable growth and success.
What does it all mean? The dinner with Asad Zaman was a reminder that the founder’s journey is one of continuous learning and adaptation. Whether it’s revisiting foundational ideas from books like TheFounder's Dilemmas or challenging modern strategies in the context of today’s rapidly changing landscape, the path forward is anything but static. It's about embracing complexity, surrounding yourself with the right people, and relentlessly pursuing alignment between vision and execution. As we continue to build, these conversations and insights will remain central to our strategy, ensuring that we’re not just building another “SaaS” company but a true partner in helping our customers achieve their most ambitious goals.
“In contrast to public markets, private investments are valued largely according to appraisal-based pricing, which is a method that involves infrequent and typically unaudited approximations. Appraisal-based pricing can introduce significant downward bias on private investment volatility and correlation measures, which results in artificially higher allocations using mean-variance portfolio optimization.
To account for these smooth returns and to provide a more accurate depiction of private market volatility, we implement a Geltner autocorrelation desmoothing method.”
What's fueling growth for GTM teams in 2024?
Last year, Pavilion and Crossbeam partnered to survey over 400 GTM leaders, uncovering the emerging strategies teams adopted to navigate evolving market conditions.
We’re conducting this critical research again, and we need your input. By participating, you’ll help shape the future of GTM strategies and gain early access to the report before it’s officially unveiled at GTM2024 in Austin, TX.
The Startup Finance Checklist - OnlyCFO: A comprehensive yet succinct guide that every founder and startup leader needs to read, covering all the key finance and accounting areas that are often neglected but can make or break a company's success.
What Should Your SaaS Marketing Budget Be? - Primary Venture Partners: A compelling breakdown of how SaaS companies should think about customer acquisition cost (CAC) allowables rather than just LTV/CAC ratios, especially in the early stages when churn assumptions are still shaky. The CAC allowable framework provides a structured way to budget for growth initiatives while keeping an eye on payback periods.
Aidan Gomez on The Future of AI at Cohere - 20VC: A fascinating discussion with one of the brightest minds in AI today, covering the key debates around compute vs. data, the evolving value of models, enterprise adoption challenges, and even Aidan's contrarian views on Europe and remote work - a must-listen for anyone interested in the cutting edge of AI.
I found these facts interesting from 2000 to today regarding the transition from On-Prem to Cloud:
HR Software: The market leader in 2000 for HR software was PeopleSoft. Today it’s Workday. Workday wasn’t even invented then.
CRM: The market leader in CRM was Siebel. Today it’s Salesforce. Salesforce was a year old in 2000 and no one had heard them.
ERP: The market leader in ERP was SAP. Today it’s arguably Netsuite. Netsuite wasn’t invented yet.
Market Value: The enterprise value of public B2B software companies was about $300 billion in 2000. Today, it’s $800 billion, with 80% of that growth driven by Cloud companies that didn’t exist in 2000.
My question is, is OpenAI Siebel or Salesforce?”
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