Literature for Starting a Business

This page will document some of the literature I have found to be useful for learning the business, marketing, and management side of creating a startup. Engineers who want to start their own businesses should take useful steps to educate themselves on these matters before attempting to acquire a bunch of money only to lose it all. My sense is that companies that hire engineers will go either two routes: either engineers will become cogs in a machine confined to very specific tasks or they will be required to know more about the business side. The former is likely the case for junior engineers in larger companies but the latter likely will be required for more senior engineers and leads of smaller companies.

I will update the list as I can. If there is a work I should add to this list, please send me an email.

The Founder’s Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup. Noam Wasserman. Princeton University Press, 2012.

Noam Wasserman’s book was the number one top bestseller on Amazon in management. The data presented in this book is based on surveys conducted between 2000-2009, which includes 9,900 founders, 19k executive, and 3607 startups. The book highlights a series of tradeoffs that entrepreneurs must make when deciding when and how to create a startup. The main dilemma that is at the core is the choice between being Rich or being King. The book follows numerous real world “serial” entrepreneurs such as Evan Williams (Twitter / Blogger / Medium) and traces the sort of trade offs these individuals had to make based on different circumstances. I found the discussions of how founders might think about equity splits, how roles can be divided, and what sort of characteristics matter for executives to be insightful as someone who had not worked on that side of the business before.

The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses. Eric Ries. Crown, 2011.

Lean management is the an approach to management whereby the company seeks to eliminate waste by listening to customers, acting upon good data, and continuously delivering to the customer. In this book Eric Ries applies the idea of lean management to startups. He argues that this approach to management - as well as to entrepreneurship - is suited for startups as they go through different stages in their evolution. Startups are defined in part by working under conditions of extreme uncertainty; Ries suggests ways to manage the level of uncertainty and risk by using the concept of validated learning. Validated learning is an empirical method for making decisions based on useful metrics in order to discover useful inforamtion about the state and future prospects of the company. In one place, Ries describes the process as Build-Measure-Learn, which then repeats. This book is a filling out of that process. Useful other concepts in the book include the Five Whys, a discussion of how to take useful rather than vanity metrics, and diffenent ways in which companies will need pivot their business and actions. Although Ries does not explicitly put it this way, The Lean Startup is an application of scientific reasoning to entrepreneurship with the aim of bringing quality products or services to the customer efficiently and without greater risk.

Slicing Pie: Funding Your Company Without Funds. Version 2.3 Mike Moyer. 2013.

A startup with founders on day 1 and no product, customers, or revenue is worth nothing. How does one go about deciding how to divine up equity? In this book, Mike Moyer proposes a model for how to divide up equity according to the promise to issue equity when the company has a discernible value. The primary goal is to cut up equity so that every person receiving it believes it was fairly divided. I recommend reading this book as a follow up to Noam Wasserman’s because it gives more concrete details on how exactly one might assign a value to hard cash, hours worked, and other contributions by the “grunts” (it’s not a pejorative in this book) that work on the promise of turning a startup into something of real value.

Startup Leadership: How Savvy Entrepreneurs Turn Their Ideas Into Successful Enterprises. Derek Lidow. Jossey-Bass, 2014.

Whereas other books speak about the traits of companies, this book focuses on the properties of entrepreneurs who build those companies. According to Derek Lidow, who at the time was teaching entrepreneurial leadership at Princeton University, entrepreneurial leaders require a mix between selfish reasons to motivate themselves but they also require a selfless vision that others can be motivated to work. This book is helpful in that it breaks down four different stages of how an organization gets built from the ground to being a self-sustaining enterprise, and he focuses on some management or personal skills that are needed at each stage. For example, how does one lead during a crisis? How can one motivate others at different stages? How much energy should be spent on carving out distinct roles early? How important is it for a leader to think about the role of culture within an organization and what can a leader to increase the likelihood it is a flourishing one? I recommend reading this book after the Wasserman or Ries book because it will complement those well.