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Thank you for the very thorough explanation. It does bring up some more questions in my mind, however:

Even in hunting parties, aren't there leaders who need to resolve disputes or ultimately take on the responsibility to make tough decisions? Isn't the most experienced or best hunter the one in this role? I'm not sure how this maps exactly to a cofounder situation (unless, of course, there happens to be a parallel in the startup in question), but wouldn't it make sense for this hunting leader to become the elder?

Is it not possible for the single leader situation to be replaced by a ruling group? As long as these members continue to do some of the other work involved in the village/startup, it does not seem like it would become a situation where there are too many leaders and not enough workers. Of course, this assumes that the group can continue to reach decisions in a reasonable manner.

I'm not saying these situations could occur easily or frequently, but they seemed to fall outside the realm of your explanation while remaining hypothetically reasonable and workable.




The problem is not one of skills and affinity but one of command structure.

A startup with multiple equal co-Founders is a partnership. No one in a partnership bears fiduciary responsibility. Each partner is responsible for their own interest and that of their family and no one else. So for partners to make decision, they barter. They each decide what they want from each other and out of necessity, they come to a common ground.

At the beginning of a startup, this is not a problem because like a hunting party, they are consumed by their own survival and their common ground is the only ground. The hunters are both owners and executives but there is no conflict.

But as the startup grows and becomes successful, the partners (i.e., co-Founders with more or less equal stature) will have a problem finding common ground.

On the other hand, a company is not a partnership. Company is owned by shareholders, whose interests are represented by the Board of Directors. The Board members (i.e., village elders) are not the executives but instead they appoint an executive (village chief) to run the company (village) on their behalf. The chief executive is given a mandate by the elders and he/she surrounds himself/herself with fellow executives, who together share the fiduciary responsibility.

So for a hunting party to evolve into a village (or a startup to evolve into an operating company), the original co-Founders will have to evolve from a co-owner to co-executive, replacing their ownership interest by fiduciary responsibility, and learn to change their decision making process from one of bartering to one based on mandate.

This sounds easy but almost never done properly.

--Denny--

Denny K Miu

http://www.startupforless.com




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