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Society values the title of “founder”… perhaps we do more than we should

Founder.

We in the world of startups, venture investing, and the entrepreneurial ecosystem more broadly, have developed an infatuation with the word. We glorify the person or team who had the idea and took a leap to make the idea a reality (as we should if the business is successful). But the semantic difference between “Founder” or “Co-Founder” and “Founding XXXX” appears so trivial. Why do we care so much if “founder” or “co-founder” comes before our title? Why do investors? Why does my mom?

One possible explanation has to do with perceived stickiness in a job. Despite the oft-cited Wasserman study (and HBR article here) that demonstrates that a company without its founder is statistically more likely succeed as a later-stage venture, a “founder” is harder to get rid of. Internally, that person carries some intangible gravitas. Externally, the signaling of a founder departing has the potential be damaging to the company’s perceived health.

Another argument stems simply from the reality that the market values people with the title more than they rationally should. If a founder or co-founder is let go, someone he/she is likely more employable in the future. Additionally, someone who has already been a “founder” or “co-founder” will be more likely to be able to raise capital for their next venture, as many investors look for second-time or serial entrepreneurs. Founding team members, it seems, do not accumulate such value, even if their efforts are just as significant in building a successful business.

Cynicism aside, I have fallen victim to this obsession with the “F” word before. When I launched my first startup, the discussion of “Co-founder” vs. “Founding COO” was a contentious one. I lost sleep over it. I gave up compensation for it. But is my life any different because of it? I’m pretty sure the answer is no.

In many cases, the title of “co-founder” is a bargaining chip that carries as much value as several percentage points on the cap table. We and the market make it so. I just don’t know if we should.

 

 

 

 

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