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Business of Software 2008 - Noah Wasserman

Business of SoftwareI'm starting a series of blog posts from the Business of Software conference that I attended last week in Boston. If you are part of a small technology business (software, hardware, etc.), especially if you are an owner, I'd highly recommend that you attend this conference next year. It's small, 250 or so people, and everyone is interested in business. It's not a lot about technology, but it's inspiring and exciting to talk about business with lots of people looking to build their businesses.

Joel Spolsky introduced Noah as one of the few people whose programs that he graded as a Teacher's Assisstant in college that he remembered. With that introduction, Noah proceeded to say that he's moved completely away from programming and is a Harvard Business School professor.

His talk was about being rich or being a king in a company. I wasn't sure what to think of the talk from the description and title, but I have to say I really enjoy it. Dr. Wasserman has focused on learning more about what makes private companies succeed or fail, and a lot of it from the view of the founders. He researches both small and large companies, but all private, and tries to identify things that can help predict, or even prevent, failure or success.

The talk flowed nicely and I enjoyed his style. He's definitely engaging, interesting, and a good speaker. If you get the chance to see him, take it.

He started by asking how companies get formed. Typically it's one of 4 ways:

  • Go it alone
  • Start with family
  • Start with friends
  • Start with strangers 

 This is one of the first fundamental decisions that you make as a business owner. I know I've gone through it, both with family and strangers and it definitely makes a difference. He talked about how it's often harder with friends because you know each other and that affects your decisions.

From there he went through some of the other decisions you make. Once you have the founders, you next need to decide how to divide up the ownership of the company. You can do this as equal or not equal. He presented some research that showed dividing things up equally doesnt' work well. A few successful companies, like ZipCar, have had issues with not all founders doing equal work, but having equal ownership.

It's interesting to hear him talk about how unequal shares are made. Could be based on exsperience, on the job you'll do, on initial funding, or something else. He talked about the difficulties of talking this out, but it seems important to help the company grow up. Equal ownership seems to not be the best way.

He had a lot more to say, especially about when companies get bought. Interestingly enough, once you start to take some funding from VCs or investors, often the founder gets replaced if he does really poorly or really well. Only a mid level of success allows the founder to remain "king."

I stopped taking notes because I enjoyed the talk quite a bit. You can follow Dr. Wasserman's work at founderresearch.blogspot.com 


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Steve Jones is the editor of SQLServerCentral.com and visits a wide variety of data related topics in his daily editorial. Steve has spent years working as a DBA and general purpose Windows administrator, primarily working with SQL Server since it was ported from Sybase in 1990. You can follow Steve on Twitter at twitter.com/way0utwest


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