20: Founder's Dilemma, Nanogene

Read Chapter 6 from The Founder's Dilemma, found on Canvas. Think about how you would answer the following questions:

• What considerations should founders factor into an equity split decision?
• How is the division of equity among founders related to happiness later in the venture’s life?
• When should founders split equity in a venture? Explain.
• What additional challenges do family members face when splitting equity?

Read the brief summary of the equity elements from the above chapter as provided in the recent Harvard Business Review article, “The Very First Mistake Most Startup Founders Make”. This article, co-authored by Noam Wasserman, reinforces some key take-aways of the above chapter.

Read the brief case, “How Much Is Sweat Equity Worth”. Though identities have been fictionalized in this recent case, it is based upon events related to the founding of VeeV Spirits LLC. Veev was acquired by Luxco (www.luxco.com) in 2016, and the brand has a minimal presence and single offering, Veev Acai Spirit. Note the divergent opinions expressed in the commentary and epilog at the end of the case. Think about how you would answer the following study questions during your analysis of this case:

• What are the respective contributions and commitments of Brooks and his cousin, Tyler, to their startup company, Erbe?
• To what extent do you believe their respective contributions and commitments should factor into the decision about how the company’s equity should be allocated between them?
• The opinions of five “experts” are provided at the end of the case. With which, if any, would you agree? Why?
• What percentage of the company’s equity should Brooks and Tyler each receive? Why?

Read the “NanoGene Technologies, Inc.” As you read the case, think about how you would answer the following questions:

• Evaluate the founders’ decisions regarding the split of equity and compensation level. As a potential venture investor in the company, would these decisions concern you?
• Evaluate the size and composition of the founding team. What is the difference between being a “founder” and an early employee?
• Evaluate Paige Miller as an addition to the team, and assess her compensation demands. Would you hire her? Would you hire her on the terms she seeks?
• Assess the company’s progress on each of the specific issues discussed in the last section of the case: the hiring process; a compensation policy; the company’s culture. Specifically, in each of these areas, what should the company do?

DUE:

Following the guidelines in the Case Method Overview (posted in Canvas Files), write a concise 2-page essay addressing the question:

Evaluate Paige Miller as an addition to the team, and assess her compensation demands. Would you hire her? Would you hire her on the terms she seeks? Explain your decision.

Submit your essay via Canvas prior to class. This essay must be your own work subject to the University’s Code of Academic Integrity.