Entrepreneurship is a thrilling journey filled with ambition, innovation, and the promise of independence. Yet, beneath the surface of every startup lies a fundamental challenge, one that Noam Wasserman’s seminal research, captured in The Founder’s Dilemma (Harvard Business Review, February 2008), so aptly illuminates: founders must navigate the critical trade-off between wealth and control.

This dilemma—the decision to prioritize financial growth or retain decision-making power—shapes the trajectory of startups and the legacies of their founders. While some entrepreneurs achieve both goals, Wasserman’s research demonstrates that most founders face a stark choice: to grow their companies rapidly by relinquishing control or to retain power at the cost of limiting the venture’s potential.

At the core of The Founder’s Dilemma is a fundamental question: do you want to be rich or do you want to be king? Founders often set out believing they can achieve both, only to discover that their decisions at every stage—bringing on co-founders, hiring executives, or raising capital—pull them in opposite directions.

The “rich” path involves maximizing financial returns by bringing in external resources—experienced hires, venture capital, and new systems to support growth. These decisions often require founders to relinquish control of the company’s direction and decision-making. Founders who prioritize wealth accept that professional managers and outside investors may take the reins, allowing the company to scale far beyond what they could achieve on their own.

The “king” path, on the other hand, reflects a founder’s desire to maintain control over their creation. Founders motivated by control often bootstrap their ventures, remain sole decision-makers, and are more cautious about seeking external funding. While this approach allows them to retain their vision and authority, it frequently limits the company’s growth potential.

Wasserman’s analysis reveals that most founders cannot remain in control while maximizing their company’s value. In fact, less than 25% of founder-CEOs lead their companies to an IPO.

For many founders, their startups are more than just businesses—they are deeply personal projects, often described as “their baby.” This emotional attachment fuels a sense of ownership and responsibility, making it difficult for founders to entrust their vision to others.

Founders tend to believe they are uniquely qualified to lead their companies. Wasserman’s research highlights that entrepreneurs consistently overestimate their chances of success, often attributing a higher likelihood of achieving their goals compared to similar ventures. This overconfidence can blind founders to their own limitations.

Many founders assume that early success validates their leadership. However, scaling a company requires an entirely different skill set—one that often stretches founders beyond their capabilities. For instance, a tech-oriented founder may excel at developing a product but lack the expertise to manage sales, marketing, or complex organizational structures as the company grows.

The Founder’s Dilemma often comes to a head when startups seek external funding. Investors, particularly venture capitalists, rarely back founders without conditions. These conditions often include appointing new leadership or ceding board control to professional managers. Wasserman’s research reveals that four out of five founders resist these transitions, creating tension that can destabilize the company.

One telling example Wasserman cites involves a California-based internet telephony company. After successfully launching its first product, the company needed a leader with experience scaling operations. Despite the founder’s accomplishments, the board insisted on hiring a professional CEO, a process that took five months of tense negotiations. This scenario highlights a harsh reality: the more successful a startup becomes, the more likely it is that the founder will be replaced.

Founders who successfully navigate the trade-off between wealth and control do so by aligning their decisions with their personal goals and motivations. Wasserman’s research suggests several strategies to help founders make informed choices:

1. Define Your Motivation Early

Before making key decisions, founders must ask themselves: What does success mean to me? Is it building a global enterprise with massive financial returns, or is it maintaining control over the venture I created? Answering this question early helps guide decisions about investors, co-founders, and leadership transitions.

2. Understand the Demands of Growth

Scaling a company requires specialized skills and a willingness to share authority. Founders who choose the “rich” path should be prepared to bring in experienced leaders and relinquish day-to-day control. Those who prioritize control must recognize that their company’s growth will likely be slower and more incremental.

3. Plan for Leadership Transitions

Founders should anticipate the need for new leadership as the company evolves. By preparing for these transitions early, they can reduce tension and maintain stability. This might include:

• Setting clear milestones for when outside expertise will be brought in.

• Establishing an advisory board to guide leadership decisions.

4. Align Decisions with Long-Term Goals

Founders must ensure that every decision—from splitting equity to selecting investors—aligns with their long-term goals. For example, founders who prioritize wealth might seek venture capital early, while those focused on control may rely on bootstrapping or angel investors.

5. Seek Outside Perspectives

Wasserman emphasizes the importance of seeking advice from trusted mentors, advisors, and industry experts. These perspectives can help founders recognize their blind spots and make more objective decisions.

The Founder’s Dilemma is not a zero-sum game. While it is rare, some founders manage to achieve both wealth and control by carefully balancing their decisions and adapting to the evolving needs of their companies. However, as Wasserman’s research demonstrates, these cases are the exception rather than the rule.

Ultimately, founders must confront the rich vs. king trade-off with honesty and self-awareness. By understanding their motivations, planning for leadership transitions, and aligning their decisions with their goals, entrepreneurs can navigate the complexities of the startup journey—whether they aim to be rich, king, or a little bit of both.