This data seems to affirm some factors I identified in another thread about what research to do on a company before joining and what questions to ask them.
My view is that incentives drive strategy, which then drives culture. Again, all IMO, but the later stage a company is, as an employee the greater portion of your energy will be devoted to sustaining cognitive dissonance to survive, as a priority over applying creativity and technical skill.
According to the data as presented, by the time the company has hit the C and D rounds, the founders have lost control of the company. Culturally, it means the visionary stage could be over, and founders may have a company wide technical veto, but with no way to drive their own initiatives.
The culture could be defined by a power struggle between the new(ish) CEO's team and the founders' tribe. Find out which tribe you are supposed to be joining before signing on and act accordingly.
As a developer, after C and D, you will more likely be solving optimization problems and all the tech debt they accrued to raise the previous rounds.
The exception will be if they raised the last round to finance a big pivot, where you can build something new again. Joining a pivot team is great, but there will be an attrition period as the old guard is cleared out.
It's tea leaves, but potentially useful questions to ask if you are about to invest 3-5 years of your life and your reputation into a company.
This is interesting data, but it's a bit dangerous to do population stats on open ended populations -and anyone can create a cap table or name a series whatever they want. It would be interesting to see the same data normalized by number of employees or dollars in, instead of by the count of companies. (This happens a lot when app stores and platforms do stats about how many titles are on then platform, etc.)
> A former Harvard Business School professor recently released research into the effect of founder control on startup valuations.
> He found that valuations of founder-controlled companies are 17% – 44% lower than non-founder-controlled companies.
> This would seem to indicate that giving up control is a key to creating more value.
A bit of rambling here, but it seems to me that shedding founders is a common stage of growth among companies that are "making it big". Companies hire c-suite level people in roles that didn't exist on-paper before (COO, CFO, CPO), from established public companies.
From an investor/equity-rich-employee point of view, the path to cashing-in on your big, higher-valued company is made more clear with each such hire; as you can convince IPO underwriters that the future of the company is in the hands of people they should trust ("household" c-suite names).
Of course, this has the effect of diluting the founder's ownership, which is what this researcher observed. Although, in exchange for diluting ownership, you're definitely growing the probability of being able to sell that ownership on the market one day.
My view is that incentives drive strategy, which then drives culture. Again, all IMO, but the later stage a company is, as an employee the greater portion of your energy will be devoted to sustaining cognitive dissonance to survive, as a priority over applying creativity and technical skill.
According to the data as presented, by the time the company has hit the C and D rounds, the founders have lost control of the company. Culturally, it means the visionary stage could be over, and founders may have a company wide technical veto, but with no way to drive their own initiatives.
The culture could be defined by a power struggle between the new(ish) CEO's team and the founders' tribe. Find out which tribe you are supposed to be joining before signing on and act accordingly.
As a developer, after C and D, you will more likely be solving optimization problems and all the tech debt they accrued to raise the previous rounds.
The exception will be if they raised the last round to finance a big pivot, where you can build something new again. Joining a pivot team is great, but there will be an attrition period as the old guard is cleared out.
It's tea leaves, but potentially useful questions to ask if you are about to invest 3-5 years of your life and your reputation into a company.