Lecture Entrepreneurship: Chapter 7 - Zacharakis, Bygrave, Corbett

Chapter 7 - Building the founding team. This chapter takes the view that the process undertaken in developing a tight, well-written story is the most important thing. Furthermore, our research indicates that students who write a business plan, even if it is for an entrepreneurship class, are far more likely to become entrepreneurs than students who haven’t written a business plan.

BUI LDI NG  THE  FOUNDI NG  TEAM

Chapt e r   7

ENTREPRENEURSHI P  I S  A TEAM  SPORT

• Grow beyond self-employment with the support of a team

• Team can include partners, employees, advisors, family, vendors, investors

• Accomplish more with others than you can alone

• The power of a team is its shared vision of success

THE  ADVANTAGES  OF

A  TEAM

3

Zacharakis, Bygrave & Corbett, Entrepreneurship, New York: Wiley,

2017 ©

CONSI DERI NG  YOUR  ROLE

• What position can you best fill?

• What is the best way for you to contribute to your venture’s

success?

• but also don’t be oblivious to them either.

STAFFI NG  PLAN

5

Zacharakis, Bygrave & Corbett, Entrepreneurship, New York: Wiley,

2017 ©

BUI LDI NG  A  POWERFUL  TEAM

RESOURCES  FOR  CREATI NG THE  TEAM

7

Zacharakis, Bygrave & Corbett, Entrepreneurship, New York: Wiley,

2017 ©

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

TYPES  OF  COMPENSATI ON

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Zacharakis, Bygrave & Corbett, Entrepreneurship, New York: Wiley,

2017 ©

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

Issued regardless of company performance, exercised when price increases

Stock appreciation

rights Low cost to the company Dilutes owner’s equity Phantom stock Employees receive no equity Requires cash to be exercised

THE  DI LUTI ON  EFFECT:  

AN  EXAMPLE

Even

t Share Entr

Co-Found er

Famil y/

Frien ds

Angel

s n Pool Optio CEO CFO Sales VP VC Rd 1 VC Rd 2 Total

Valuati

on (000)

Ent’s Value

0

$1,60 5

Harvest Value for All Stakeholders

$2,22 9

$9,90 5

$3,71 4

$6,66

$4,66 7

$28,5 71

$33,3 32

Zacharakis, Bygrave & Corbett, Entrepreneurship, New York: Wiley,

2017 ©

EXTERNAL  TEAM  MEMBERS

PROBLEMS  FACED  BY

START­ UP  TEAMS

Zacharakis, Bygrave & Corbett, Entrepreneurship, New York: Wiley,

2017 ©

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