He is quoted saying,

one factor dominates all others. That factor is whether the founders are aligned with each other. This is key both in terms of structure and company culture. If the founders are in sync, you can move on to the rest of the equation. But if they aren’t, it will blow up the company. Nothing will work. This is why investors should and do focus so much on founding teams. Everything matters. How well the founders know each other matters. How they interact and work with each other matters. Whether they have complimentary skillsets and personalities matters. This set of questions is very important. Any fissures in the founding team will be amplified later on.

Pointer from Tyler Cowen. Read the whole thing. It is difficult to excerpt. There is a whole section on “Ownership, Possession, Control” that could have used Cato as exhibit A for how these issues can bite. Consider:

Employees tend to have lots of day-to-day possession, small ownership stakes, and very minimal control. But issues arise if they’re not happy with their ownership or control pieces.

Gosh, I cannot stop from quoting:

If you have north of 10% after many rounds of financing, that’s generally a very good outcome. Dilution is relentless.

By those standards, I did not have “a very good outcome” when the company I founded got sold. But at every stage of dilution, I kept thinking it was a choice between a large percentage of a small value or a small percentage of a large value, and going with the latter. I don’t think I would do it differently if I had it to do over.

Also, a lot of the dilution I experienced came from adding business partners, as opposed to fundraising. In Under the Radar, I have harsh things to say about fundraising. “Fundraising is not for businesses. Fundraising is for charities.”