ch06 building the founding team

BUILDING THE FOUNDING TEAMCHAPTER 6

Bygrave & Zacharakis, Entrepreneurship, New York: Wiley, 2011. ©


Entrepreneurship is a Team Sport Grow beyond self-employment with the

support of a team Team can include partners, employees,

advisors, family, vendors, investors Do more with others than you can alone


The Advantages of a TeamFeedback

Increased skill set

Moral support

Capacity innovation

Extended network

Higher social

level of support


Considering Your Role

Evaluate your skills

Use your strengths

Get feedback on your actions

What position can you best fill? Don’t be crippled by your weaknesses, but also don’t be oblivious to them either.


Building a Powerful Team

Create a staffing plan

Find people for positions

Your personal network

Friends

Family

Your advisor network

Your extended network

Professors

Alums


Resources for Creating the Team

FoundersOften little or no pay in

the beginning

Salary from another job or support from a

spouse

Prepare for diminished personal cash flow

Employees

Raise capital to pay salaries

Offer stock incentives

Start positions as part-time until there’s

enough cash to pay full-time


The Do Nots of Double Employment

Do not use your employer’s resources Do not expropriate intellectual property

from your current employer Do not solicit your employer’s customers

until you quit the job Do not conceal the fact that you are

founding your own venture


Compensation name

Advantages Disadvantages

Founder Shares

Attracts co-founders Dilutes owner’s equity

Option pool Ties employees goals to those of the company

Employees may leave the company if the price falls

Restricted stock

Vested over time, expensed at current share price

Expensed at current price

Stock appreciation rights

Low cost to the company

Dilutes owner’s equity

Phantom stock Employees do not receive equity

Needs cash to be exercised

Types of Compensation


External Team Members

Virtual

Team

Accountant

Outside investors

Board of directorsLawyers

Board of advisors


Problems Faced by Start-up Teams

Burn outInterpersonal conflicts

Family pressure


Recap Entrepreneurship is a team sport Determine who should be on the team Create a culture so that team can

flourish Maintaining a team is an ongoing effort

ch06 building the founding team

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