New Business: Is it inevitable that founders will not be able to go the distance?
Noam Wasserman: Not inevitable, but probable. We teach a case in our first-year entrepreneurship course on a Silicon Valley VC firm called Onset Ventures, which lays out a “test” for all entrepreneurs it considers backing. It’s called the “Rich versus King” test. It gets to this essential trade-off around what drives an entrepreneur: Is it the need to control the company (that is, to be King), or is it the drive for success, particularly financial success, which may require that the entrepreneur step aside once certain business milestones have been reached? Onset does not like to invest in founders who “want to be King” out of concern that they will not want to be replaced if such a step is required in order for the company to be successful.