What Happens If A Startup Founder Gets Hit By A Bus?

from the perhaps-not-much dept

The importance of a founder working at a company is a question that gets a lot of attention for various reasons. Most startup founders certainly want to stick around and see their “baby” through, obviously. However, once investors get involved, the role of founders gets trickier. Investors often ask the key question: “what happens if a key founder gets hit by a bus?” That’s the point at which a founder needs to convince the investor that the structure of the company itself is so well established that it can live on without the founder. Of course, if they’re too convincing, it can backfire when the investors look to replace the founder (as they very often do), noting that the founder made a convincing enough argument as to why they’re not needed.

Of course, until now, all of the stories on this were anecdotal. But, Paul Kedrosky points us to new research that was done on what happens if a founder dies early on in the life of a company, in an attempt to determine just how important it is for founders to stick around. It may surprise many (as it surprised me) to discover that, apparently, there isn’t much of an impact if the founder passes on. The only real impact is a brief hit to profitability — but it doesn’t seem to have much long term impact. In other words, it really does take a team of folks to successfully implement an idea and bring it to market. While that doesn’t necessarily mean founders are “expendable,” it does highlight the importance of a strong overall team, rather than reliance on a single “visionary” expected to guide all aspects of the company. It doesn’t mean founders shouldn’t watch out for speeding buses, however.

Filed Under: ,

Rate this comment as insightful
Rate this comment as funny
You have rated this comment as insightful
You have rated this comment as funny
Flag this comment as abusive/trolling/spam
You have flagged this comment
The first word has already been claimed
The last word has already been claimed
Insightful Lightbulb icon Funny Laughing icon Abusive/trolling/spam Flag icon Insightful badge Lightbulb icon Funny badge Laughing icon Comments icon

Comments on “What Happens If A Startup Founder Gets Hit By A Bus?”

Subscribe: RSS Leave a comment
Gary says:

Key person

This amateur friend in the business word is a simple solution. If they founder is vital at least for say a period of time that would effect the investors or profits we buy key person insurance. Just like we insurance a vital pice of equipment. If the person is uninsurable that would be a red flag that there is an increased risk to your capital and you then need to decide what the down time might me. As most start ups have some young hot shot under say 50ish term insurance is so dam cheep you got to be some kind of moron not to buy it or force them to buy it.

Jonathan Hartley (profile) says:

founders unique contribution is...

Isn’t a founder’s unique contribution the ‘decision to execute’? Once that decision is made, and followed up on by cajolling investors and recruiting implementers, then it doesn’t really matter what the founding idea was (since any startup needs to be nimble enough to pursue whatever good opportunities they discover along the way). The founder may well be the brightest and/or most industrious of the people present, but his *most* unique contribution has already been made by that point.

Lawrence D'Oliveiro says:

Why bus?

Why do buses always get such a bad rep, when we should be encouraging people to use public transport?

In future, don’t say “get hit by a bus”. Instead, say “get hit by an SUV driven by some idiot too busy talking on his cellphone”. OK, if that’s too long, then just “get hit by an SUV”. SUV drivers tend to be prats anyway. ‘Nuff said!

Add Your Comment

Your email address will not be published. Required fields are marked *

Have a Techdirt Account? Sign in now. Want one? Register here

Comment Options:

Make this the or (get credits or sign in to see balance) what's this?

What's this?

Techdirt community members with Techdirt Credits can spotlight a comment as either the "First Word" or "Last Word" on a particular comment thread. Credits can be purchased at the Techdirt Insider Shop »

Follow Techdirt

Techdirt Daily Newsletter

Techdirt Deals
Techdirt Insider Discord
The latest chatter on the Techdirt Insider Discord channel...