KATHERINE BECKS

Essay & Personal Reflection-Personal Dilemma

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Part 1 – Essay

Wasserman (2012, p. 1-486) presents substantive research on common pitfalls faced by founders and the strategies to employ in avoiding them. The research focuses on the founding team, the process, and period for spliting equity among members. Wasserman (2012, p. 370) creates an argument of whether it is good for one to cofound a start-up with either relatives or friends. He discusses an exiting strategy for a successful CEO. The presentation of strategies associated with the anticipation, avoidance, or recovering of a founder from disasterous mistakes creates an interest in disucssing dillemas experienced by a CEO from Livingston (2008, p. 67-78). In this case, the paper evaluates an interview by PayPal’s founder, Max Levchin.

Presenting the Dilemmas Experienced by Max Levchin in Founding PayPal

Wasserman (2012, p. 338) argues that it is the goal of every would-be entrepreneur to become a Bill Gates. Most entrepreneurs want to found large companies and lead them for years just as their wealthy mentor (mostly Bill Gates). However, it is important to note that successful company founders are a rare reed. There is a lot of information regarding founders that had their start-ups springing up during the late 1990s and early 2000s. The common trend about these founders is that most of them surrendered from their management control before their companies became public. Over 50% of the founders were no longer the executive leaders of their already struggling companies (Wasserman, 2012, p. 69). By the fourth year of their companies’ operations, 40% worked from corner offices. At least 25% of the founders had led their companies into achieving initial public offerings (Wasserman, 2012, p. 69-70). The case applies to the PayPal founder, Max Levchin. Max Levchin goes through similar challenges with significant dilemmas that almost influence him to quit. However, he is always upfront on identifying innovative ways to handle his situation.

As per the interview conducted by Livingston (2008, p. 28-56), Max Levchin has a dilemma on the area of focus for his newly founded company. As per his answer, PayPal beings without its current objective, which is to facilitate payments. The main reason for this is because he has a significant focus on security and crypto, an interest he develops while in college. It is evident that he starts three different companies during his college period but fails to bring them up to their successful status. However, he also has to decide on giving up his graduate schooling for Silicon Valley to venture into a new company. Silicon Valley is not the place for him during the 1998 summer period. He does not have plans for his life and squats on the floor of a friend (Livingston, 2008, p. 28-29). This is not a plan for a person who may become an essential figure in the corporate sector. A Stanford random Lecturer (Peter) becomes his only answer for building the company ground upwards.

According to Wasserman (2012, p. 370), founders are in dire need of financial resources at the beginning of their ventures. In the case of Max, he needs investment from a hedge fund owner such as Peter since he does not have anything to start PayPal with. Since Peter is the one who has provided him with funding to continue with his venture, Peter becomes the suitable senior executive for the company. It seems that Max is afraid to become a frontal force to the development of PayPal. Therefore, he has to relinquish is founding powers for Peter and for him to become the background man in terms of developing the company (Livingston, 2008, p. 32-34).

He has the skills, knowledge and the drive to run his venture as per his own culture. This may be seen with Peter taking a sabbatical leave, and the company remains with Max. However, Max does not want to be the executive director despite him being the founder. He has to leave the superior role to the guy who runs X.com. However, conflict arises with the new CEO who prefers Windows Code to Unix. Max is in a dilemma of leadership in the situation. He has to think of either using Windows or having to fix problems associated with the development of a robust, strong framework for PayPal. The situation creates bad blood between Max and the CEO. Therefore, Max finds himself in a situation whereby he either has to save his company or choose to make the CEO to leave.

Max thinks of his prominent position as a founder and chooses to sack the CEO when Peter returns to the company (Livingston, 2008, p. 37-39). Wasserman (2012, p. 370) argues that some founders make mistakes of venture capital firms taking advantage over their start-ups. In the case of X.com and the CEO wanting to overshadow Max is a critical dilemma that affects current founders. A merger is an investment indirectly, depending on who has the sit at the decision-making table. If Max had not been careful with X.com CEO, then he would have lost control over the company. He had already started arguing about the use of Windows instead of Unix.

Concerning saving the company, Max finds himself in a situation whereby he has to think either leaving the fraud to continue or develop a robust framework to stop it. He is angry and afraid at the same time as what he loses (millions of dollars) through his company. Max has to be forced to sit down with his intern for countless hours to make software that would graphically monitor and reduce the fraud that is bringing the company to the grass level (p. 36-40). This is a normal thing for many founders who find a small problem to be a significant challenge for themselves. Therefore, problems may push out founders who may give up their superior positions to investors. Wasserman (2012, p. 367) presents an argument that supports the situation that befalls Max.

Most first-time founders tend to think of either becoming wealthy or create a meaningful organization. In the case of Max, he has to continue making money or losing it for the fraudsters. The company loses $ 10 million a month which accounts only for 1% since the company transacts and makes close to $ 300 million monthly (Livingston, 2008, p. 46). The surprising outcome of such an outcome is the aspect of choosing the money and the management of the ventures (Wasserman, 2012, p.89). Any founder who does not have a firm position on his firm may end up without power and wealth. However, Max finds himself in a situation whereby he can deal with the fraud problem.

Circumnavigating the Dilemma by Max Levichin

Some strategies apply to the situations and the dilemmas that befall Max Levichin when it comes to founding PayPal. The first approach focuses on the objectives of founding companies. In the first place, we are told that he founds three companies during his college life but doe not pursue them. This is a problem that needs to be handled when proper planning is undertaken. A company formulated by a founder should be in line with a specific goal and with a particular market niche. It is through the above that it becomes easy to establish a direction for operational development. Having to stick to one start-up is essential because it opens up the mind of the founder and makes it possible to acquire the needed finances to ensure successful operational development. Concerning proper planning, Max should have chosen to remain with one of the companies before choosing to abandon the three of them. However, it was a beautiful thing for him to come to Silicon Valley and invest in a new company. The situation shows that he has the direction to head one company to his ultimate goal.

Another critical factor is to think of leadership. Max should have chosen to remain the CEO instead of giving it to Peter. Peter’s sabbatical was seen to create leadership void and conflict with the X.com CEO. It is essential for a founder to think of becoming the head of the board and the market representative of the company. This stabilizes leadership and ensures that the company becomes stable in terms of decision-making. Division of roles and responsibilities is crucial. When Max heads the company, it becomes easy for the programmers to think of issues such as fraud and security maintenance of the company. Peter has to come back for him to take over the role of saving the company from fraud, a move that is a mistake for the budding founder. Max does not act as the founder of the company since he leaves everything to Peter and heads the programming portfolio. This is a significant mistake that needs to be changed for any founder. The situation may be the reason as to why he thinks of selling the company to eBay in the end. When a leader has full control and comprehends the potential of the company, it becomes easy to protect it from its sale. Therefore, founders have to be keen on what they do in terms of creating fate for their companies.

Part 2 – Personal Reflection

The entrepreneurship journey is a fascinating, exciting, and difficult for any startup founder who goes through it. I have my share of stories to tell about this journey that has become a stepping stone for successful entrepreneurs in the market. Personal entrepreneurial preferences are difficult to formulate and maintain. This is because of the enticement from the changes that occur in the market in terms of meeting the needs of the customers and having to maintain an entrepreneurial position. I have gone through some situations that have built the current personality that I possess.

Each day brings a new thing for me. I am always expectant of a challenge and a solution in my daily life, a factor that makes me competitive in my area of development. I always find research as a backbone towards my business development. I am currently a student who has a long way to go, but this does not stop me from becoming a successful entrepreneur in the future. I always believe that being a student has similarities to the concept of entrepreneurship. Studentship requires proper planning, motivation, dedication, and investment of resources. There are stakeholders around you full time. The investors have a stake in your education. The first investors are the parents who put a lot of money into putting money into my education — secondly, the lecturers who invest their time in teaching me to become a successful professional in the future. I have to work hard to either acquire a job or start a successful venture.

Therefore, my journey in school is a mirror of what I should do when it comes to set preferences. Imagining it as entrepreneurship, I always think of my objectives as the critical foundation of my entrepreneurial journey. I want to come up with a business that will be meaningful to myself and the market at large. I prefer doing my businesses on my own without the involvement of investors because I have learned that they are the ones that create a dilemma. For young founders, the aspect of accessing a vast amount of money tends to be confusing. Young founders always want to keep up with the ‘showing off’ lifestyle, which is a problem when it comes to concentrating in the classroom environment. The situation influences me to always think about the final goals of being an entrepreneur. Just like my education, I cannot get a job without having to graduate, unless I have a particular skill that is lacking among my peers. This serves as the reason that I would like to harness my skills, understand my market, and create an adequate planning strategy to ensure that I can meet my goals in terms of growth.

I would like to know the different challenges that I have to experience in the market. I experience challenges in my student life, and if I give up, then it means I will not have the opportunity to run a successful business. My journey of entrepreneurship is one that involves in-depth comprehension of my surrounding and how it affects my business.

References

Livingston, J. (2008). Founders at work: Stories of startups' early days. New York: Apress.

Wasserman, N. (2012). The founder's dilemmas: Anticipating and avoiding the pitfalls that can sink a startup. Princeton: Princeton University Press.