Research

Talking Past Each Other: Asymmetric Preferences in Founding Teams


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 propose 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 can startups attract top talent?


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?


Do founders need adult supervision?


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.


Going alone or together? Solo founding vs. co-founding


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: https://hbr.org/2022/04/dont-buy-the-myth-that-every-startup-needs-a-co-founder?ab=hero-subleft-2

Published academic article: https://pubsonline.informs.org/doi/full/10.1287/orsc.2021.1548


Do founders tune out their teams?


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: https://sloanreview.mit.edu/article/do-founder-ceos-tune-out-their-teams/

Published academic article: https://onlinelibrary.wiley.com/doi/full/10.1002/smj.3006


Coworking Spaces: Working Alone, Together


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: https://sloanreview.mit.edu/article/coworking-spaces-offer-a-post-pandemic-office-alternative/

Published academic article: https://authors.elsevier.com/sd/article/S0048-7333(21)00239-0


Boomerang founders: What happens when the founder comes back?


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: https://sloanreview.mit.edu/article/boomerang-ceos-what-happens-when-the-ceo-comes-back/

Academic article: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3429244


To Thine Own Self Be True: The Role of Gender in Founding Team Formation


Scholarly interest in gender and entrepreneurship has focused heavily on gender differences in mobilizing external financial capital from investors. Comparatively, little research focuses on gender differences in mobilizing human capital; or in other words, differences in how women and men build their new venture teams. We address two key questions: Do women and men entrepreneurs adopt different team formation strategies, and if so, why? We propose that women entrepreneurs prioritize an interpersonal attraction team formation strategy because they are more likely to adopt an interdependent self-construal, whereas men prioritize a resource seeking team formation strategy because they adopt an independent self-construal. We find support for our framework across three studies using data from: 1) individuals participating in a prestigious university incubator program, 2) a large-scale dataset from an online cofounder matching platform, and 3) a controlled experiment.


Unicorn scandals: How to prevent them


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?

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: https://hbr.org/2021/12/research-how-long-should-a-founder-remain-ceo

Academic article: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3977112