13: Founder's Dilemma I (Equity Splits)

Date: 
Wednesday, November 4, 2015

Summary Entrepreneurship is a team sport. What are the critical human resource issues for new ventures? The NanoGene case examines the big three: assembling a team, developing a compensation policy, and creating an innovative culture.

Quote of the Day: "Never, never, never, never give up." ~ Winston Churchill  

Guest: Josh Reeves CEO & Co-Founder of Gusto

Study Question (Policy on Study Questions)

  • In start-ups, what are the key actions that a founder or CEO must take regarding human resources?
  • Evaluate the founding team and the resources they bring to the venture. Independent of the equity ownership issue, what are some risks associated with this founding team? How might these risks be reduced if Paige Miller joined the team? Should Paige be hired now as a full-time employee or not?
  • Although Susan Stone (the venture capitalist) likes NanoGene's technology and business prospects, she seems very concerned by the equity split among the founders. It's exactly the same for all. What consequences for NanoGene might she fear from the even equity split? Please take a moment to carefully review the capitalization table in Exhibit 2 and the backgrounds and expected contributions of all 5 members of the founding team at NanoGene.
Required Readings (Policy on Required Readings.)
Online Assignment (Policy on Case Analyses.) - Group A only submits

We [would/would not -- choose one] hire Paige Miller because ... 

Extra Credit: If you are proposing Paige Miller be hired now, please propose a job title and compensation package (salary and stock amounts).

Team Dynamics Exercise:

Please designate one member of your team to send an email to the teaching team by the end of the day of this session confirming completion of the team exercise introduced in Session 12.

Handouts: