Entrepreneurial Founding and Teams (15.394) with Kit Hickey and Erin Scott

Course description:

Entrepreneurial Founding and Teams explores key organizational and strategic decisions in founding and building a new venture. Through a series of cases, readings, and activities, students examine the trade-offs and consequences of early founder decisions:

• whom to include in the founding team
• how to allocate equity among co-founders
• how to determine founder roles
• how to hire and motivate early-employees
• whether to involve external investors.

Aims to equip students with tools and frameworks to help them understand the implications of early decisions, and to build enduring resources that enable the venture to execute even if the original plan changes substantially.

Offered in Spring 2021 Tuesdays & Thursdays from 11:00 – 12:30 OR 2:30 – 4:00 (3-0-6) 

 

Q: Can you talk about your co-teaching model?

Erin Scott: This course is co-taught by myself, Erin Scott, a Senior Lecturer and academic researcher at Sloan focused on the strategy side of startups, and Kit Hickey, a Senior Lecturer and Entrepreneur in Residence based out of the Trust Center who comes from the practitioner side.

Beyond the course description, can you give an overview of this course?

Kit Hickey: This class is focused on the people issues of start-ups. When I was running my own company, Ministry of Supply, I was just shocked at how much time, effort, and strategy had to go into all the people issues, whether that was with co-founders or employees or investors or board members or partners or suppliers. There are a lot of people involved in building a business.

How did you get together and create the class?

Erin: We were introduced by Scott Stern. I had actually taught a Ministry of Supply case for several years in another entrepreneurship class. So, oddly enough, I knew a lot about Kit’s founding story from that perspective. But we were brought together because we both are very passionate, not only about entrepreneurship, but about giving entrepreneurs the tools to build organizations that realize their ideas and their values.

Why is this class important for entrepreneurs?

Erin: In entrepreneurship, there are many one-way doors that you can walk through, not knowing you’re closing out alternative paths. And that’s particularly salient when it comes to choosing co-founders, building an early team, and engaging with investors and other stakeholders.

This class seeks to inform students about key trade-offs and consequences at these decision points, so they can actively make choices that align with the organization they seek to build.

How is the class organized?

Kit: The course is split into three sections. The first third of the class is on co-founders, so finding a co-founder, working out compensation between co-founders, deciding roles, and all that fun stuff.

The second section is on early team, so hiring your first employees, putting structure in place with teams, firing people.

And the last section is on outside stakeholders, mostly board members and investors.

How advanced is this class? Are there prerequisites?

Kit: This is a class anyone can take. It is run out of Sloan, but it’s also cross-campus, so we have undergrads, we have PhD students, we have folks from Harvard, so it’s a diverse mix of students that end up taking it.

The class is about teams, but do the students take the class as teams?

Kit: No. Several of the other entrepreneurship classes are team based, like GSD, E-Lab, and New Enterprises, but this is one you take as an individual. We’ve found this is helpful for students in that they can talk about topics they may not feel comfortable talking about with their team present. By the end of the semester, we want them to be able to have those conversations with a team, but initially, it provides a little bit more of a safe space.

Also, for some of those other classes, more of the students taking the class want to start a company or are already starting a company. For our class, there’s more of a mix between folks that want to start a company, or want to join a start-up, or even want to invest in a start-up. And they need to know, “How do I evaluate a team?”

What do you like the most about teaching this class?

Kit: Together, we have developed a lot of our own material for this course. We found that there are lots of case studies and simulations and exercises based on much larger corporations and not a lot dealing with newer ventures.

So, I think my favorite thing has been developing our own materials, and then teaching those case studies on companies like Ministry of Supply or Gimlet, which was recently sold to Spotify. We also use a few mini exercises based on past delta v teams. It gives us a very intimate look at the company, and then it’s just fun to be able to teach our own stuff and then iterate it or change it based on the student experience.

Erin: Our students tend to tackle big problems that need to be solved, and they put in the work and take the steps to make that happen. I find it rewarding when students come back and say the course and materials we provided them — like our card deck with 52 questions to ask your co-founder — helped them surface potential issues, effectively work through those challenges, and build out the team that is achieving their mission.

How intense is this class compared to other entrepreneurship classes?

Erin: Our goal is that 15.394 is both a rigorous and actionable course. So, we bring in a lot of research, but also bring in tools and tactics so the students can put that research into practice at their startup from day one. We leverage a number of cases, simulations, and guest speakers. It’s a pretty fast paced course.

Which topics within the class do you think your students get the most benefit from?

Kit: Students love being put on the spot and the dynamic of how we challenge their way of thinking. As a student, you pretty quickly realize that everybody has a different perspective coming into a startup. So, conceptually you might think, “Oh, my co-founder would definitely want the same salary as I do, and they would definitely want to raise money from the same people, and we would definitely want to do the same thing.”

But then, very quickly you realize there are so many different people across campus that you’re really going to have to have a wealth of different perspectives as a founder.

Do you have guest lecturers? If so, can you give an example or two?

Kit: Yes, we do. We have had Paul English come the last three years. He’s the founder of KAYAK, which was acquired by Priceline. We have guest lecturers that are tied to our cases, so when we teach Gimlet, Matt Lieber, who is the co-founder there, has come in. We’ve had the co-founders of Harlem Capital come in. We have a bunch of great guest lecturers.

What is some of the best feedback you’ve received as lecturers?

Erin: Students appreciate this marriage of research and practice in the course design. We don’t make these distinct lectures; rather, we integrate them throughout the process. We’ve heard from students that they appreciate including actual empirical work to back up our claims, and that we’ve dispelled a ton of entrepreneurial myths.

Kit: This is one of the higher-rated entrepreneurship classes at Sloan. Students really appreciate the practitioner and academic pairing. Erin and I both bring different perspectives, but we complement each other well. We always get feedback that it’s one of the most engaging courses.

Any last helpful info or tips for students considering this class?

Erin: There are many different versions of entrepreneurial success. And they’re not all compatible with each other, both at an individual and an organizational level. For example, if you have two co-founders who have very different visions about what the company might achieve, they can’t build both of those organizations. Getting the founding and early team working toward the same goal is essential to startup success, and that is the focus of this course.

At the end of the day, a lot of the fractures that occur are because the co-founders aren’t making time for tough conversations and this has very real implications for startup performance. As Noam Wasserman, author of The Founder’s Dilemmas, notes, 65% of venture-backed, high-growth startups fail because of people problems!

Kit: The only other thing is just how important this topic is. When I was a founder, I was shocked at how much time, like 80 percent of my time, was spent on the people issues. Most people think, “Oh, that’s the easy stuff.” But then, they quickly realize it’s not.