Difficulties in Finding Cofounders

Gray, S., Howell, T., Sackett, E. (2024). Talking past each other: Construal Level, Utilitarian Motives, and Entrepreneurial Team Formation. Forthcoming at Organization Science

Founding teams perform best when team members (1) have complementary skillsets/resources, and (2) fit well interpersonally. Yet, it is exceedingly difficult for entrepreneurs to find team members who fit both criteria. To help explain why this is so rare, we identify an asymmetry between lead entrepreneurs – i.e., individuals who identify a business idea and then form a team, and potential cofounders – i.e., individuals who evaluate whether to join a lead entrepreneur. Specifically, we show that during the team formation process, lead entrepreneurs prioritize resources, whereas potential cofounders prioritize interpersonal attraction. We further explain that lead entrepreneurs can overcome this asymmetry by communicating in ways that highlight interpersonal compatibility since it matches the preferences of potential cofounders. We find support for our theory across three studies with data from: 1) the Y Combinator Co-Founder Matching online platform, 2) an online experiment with entrepreneurs, and (3) a networking event hosted at a prestigious university incubator program. 

How Do Entrepreneurs Choose Cofounders?

Gray, S., Howell, T., Strassman, J., Yamamoto, K. (2024). Credentials or Chemistry? Entrepreneur Gender and Cofounder Selection. Forthcoming at Academy of Management Journal

How do entrepreneurs choose cofounders? How do entrepreneurs prioritize between the interpersonal fit and complementary skillsets of potential cofounders? And do women entrepreneurs prioritize different qualities than men entrepreneurs? In this study, we show that men entrepreneurs almost always prioritize skillsets over interpersonal fit. In contrast, women entrepreneurs adapt to situational factors, such that sometimes they prioritize interpersonal fit and other times they prioritize skillsets, depending on the situation they are in. In supplementary analyses, we find that entrepreneurs who prioritize cofounder skillsets are more likely to receive funding, but those who prioritize interpersonal attraction are more likely to form lasting teams. 

When/How Can Solo Founders Succeed? 

Howell, T., Bingham, C. and Hendricks, B., 2022. Going alone or together? A configurational analysis of solo founding vs. cofounding. Organization Science, 33(6), pp.2421-2450.

The choice of whether to remain solo or find co-founders is one of the most important and fundamental decisions each entrepreneur must make. Past research finds that larger founding teams outperform smaller teams on average; however, it also suggests that conflict and drama among co-founders is one of the primary sources of failure. Using in-depth qualitative data collected over many years, we examine the conditions under which it might make sense to solo found rather than find co-founders. Our findings reveal how solo-founders strategically use co-creators rather than co-founders to overcome challenges, retain control, and mobilize resources in unique and unexpected ways. 

Harvard Business Review article:

Do Founders Tune Out Their Teams?

Hendricks, B., Howell, T. and Bingham, C., 2019. How much do top management teams matter in founder‐led firms?. Strategic Management Journal, 40(6), pp.959-986.

As firms mature, their founders are often replaced with seasoned executives. When founders stick around, their surrounding team members are often viewed as necessary to help compensate for the founder’s managerial weaknesses. But do founders actually listen to the advice of the seasoned executives who surround them? Or do they shrug it off and march to the beat of their own drum? To better understand this, we collected and analyzed data on more than 2,000 companies. This examination uncovered surprising insights relevant for leaders of large and small organizations, which you can read more about at the sources below:

MIT Sloan article:

Coworking Spaces: What Are They?

Howell, T., 2022. Coworking spaces: An overview and research agenda. Research Policy, 51(2), p.104447.

In the past decade, coworking spaces have emerged as a new and promising phenomenon. Due to its prevalence, popularity, and potential for disruptive change, coworking is increasingly relevant to the workplace, yet its implications are largely unstudied given the rapid rise of the phenomenon. Overall, more data and analysis is needed to inform owners, policy makers, and remote workers regarding the effects of coworking. My research addresses this gap. Specifically, I explore whether coworking “works’, or in other words, whether (and how) it adds value for its members. You can read more about this at the link below:

MIT Sloan article:

Entrepreneurs and Heuristic Thinking

Bingham, C.B., Howell, T. and Ott, T.E., 2019. Capability creation: Heuristics as microfoundations. Strategic Entrepreneurship Journal, 13(2), pp.121-153.

While much research suggests that capabilities are critical for firms, little is known about the individual-level origins (“microfoundations”) of capabilities. Using in-depth nested case studies, we explore how firms develop an internationalization capability. The setting is six entrepreneurial firms from three culturally distinct countries. Our data show that executives begin by seeding the process with imperfect heuristics and then managers continue development by elaborating their understanding of what task to perform and how to perform it. Importantly, managers across hierarchical levels support the development of their firm's internationalization capability by abstracting key heuristics away from any one experience such that the capabilities become less routine over time. Overall, we contribute to the microfoundations movement in strategy and to the literature on organizational learning.

Under Review

How can startups attract top talent?

Howell, T. (2023). How do startups attract early joiners?  Reject and Resubmit at Organization Science

Hiring is one of the most important and yet also one of the most difficult responsibilities in a startup. When an organization is small and only has a few employees, even one bad hire can impede the startup's growth or even lead to its demise. Yet, because startups have limited cash flow, they typically cannot offer the salaries or job security offered by larger corporations with whom they compete for talent. The question then is how startups can attract talented employees without offering competitive financial packages. The questions I address in this study are: Which incentives are most effective in attracting employees to startups, and how do these preferences differ across employee types?

Boomerang founders: What happens when the founder comes back?

Howell, T., Bingham, C., & Kolev, K. (2023). Boomerang founders: What happens when the founder comes back? Reject and Resubmit at Strategic Management Journal, preparing for resubmission.

Founder successions represent critical junctures for firms. What remains unexplored, however, is what happens when the firm rehires a founder as CEO (e.g., a “boomerang founder”). To better understand the consequences of bringing back a founder, we collected and analyzed data on the performance of 167 boomerang CEOs of companies listed on the S&P Composite 1500 index from 1992 to 2017. We then compared their tenures with those of more than 6,000 other (non-boomerang) CEOs over the same period. This comparative investigation revealed some nonobvious insights and critical implications for leaders of large and small organizations, which you can read about at the sources below:

MIT Sloan article:

Black Women in Entrepreneurship

Bermiss, S., Bingham, C., Howell, T., Law, C. (2023). Startups as Entrepreneurial Training Grounds (writing draft)

Black women are underrepresented in entrepreneurship. However, using data from Venture For America (VFA), we find that Black women are much more likely to start companies after working as an employee in a startup. We suggest that this employment acts as a learning and apprenticeship opportunity that gives individuals the confidence to start their own companies. While this is true for all individuals (regardless of race or gender), we find that Black women that worked as employees in a startup were much more likely than any other group to found their own company afterwards. More specifically, Black women appear almost twice as likely to found their own company than other demographic groups, even the most historically dominant group - white males.  

Working Papers

Do founders need adult supervision?

Howell, T., Hendricks, B. (2023). Founder leadership and corporate social irresponsibility: Do founders need adult supervision?  (Preparing for submission)

In this study, we argue that founders have a stronger tendency towards deviation rather than conformity to existing norms, making them more likely than other leaders to engage in behavior that diverges from existing norms – i.e., behavior that is considered irresponsible. However, we also argue that this effect is attenuated by the presence of a “second-in-command” who reigns in some of the founders’ impulses and helps them conform to existing norms. We test our predictions using panel data with over 4,000 firm-years. We find support for our predictions; namely, that founders are more likely to engage in corporate social irresponsibility, but that this effect is attenuated when a second-in-command is present. We also find evidence of various conditions under which a second-in-command is most effective at reducing irresponsible behavior. 

Unicorn scandals: How to prevent them

Howell, T., Hendricks, B., Bingham, C. (2023). Beware the unicorn: Corporate social irresponsibility among founders in rapidly growing new ventures (writing draft)

In recent years, several "unicorn" companies (i.e., startups valued at $1 billion or more) have been in the news for all the wrong reasons. Lofty valuations, lightning-speed growth, and impossible expectations have led many of these firms and their founders to become roiled in scandals and ethical misconduct (think: Theranos, Uber, WeWork, etc.). In this study, we examine which types of unicorns are most likely to experience scandals, and offer insights into how future unicorn misconduct can be prevented. 

How long should a founder remain CEO?

Hendricks, B., Howell, T., Bingham, C. (2023). The Founder Premium Revisited (Preparing for Submission)

Do founder-CEOs have an expiration date? With several high-profile founders recently stepping down from their companies, some have begun asking whether the move could herald a new era, in which founders voluntarily step aside rather than sticking around for decades or waiting to be ousted. To explore the value added by a founder-CEO, we analyzed stock price and financial performance data from more than 2,000 publicly traded companies. We found that on average, founder-led firms outperform those with non-founder-CEOs — but that the difference dwindles to zero just three years post-IPO, after which founder-CEOs actually start detracting from firm value. Given these findings, we offer three strategies to help investors, boards, and executive teams support founders in transitioning out of the CEO role when the time is right.

Harvard Business Review article: