Max levchin cofounder paypal founders dilemmas

Most are faced with questions such as, what should I do? Is it the right time? Do I have the experience? Or should I take the risk anyway? Indeed, Max Levchin, the co-founder of PayPal, admits that before launching PayPal, he had attempted to launch four other companies which all failed (Livingston, 2008, 2). He was merely caught up in the excitement of developing companies because for him none of it seemed challenging. However, when the idea to create PayPal got started, the plan was not to develop a payment platform. In fact, Levchin wanted to develop crypto and other things associated with it. During that period, Levchin had just moved out of Silicon Valley and was unsure about what he was going to do with the rest of his life, highlighting a common problem that most founders are faced with.

Even though the amount was little, it was enough to kick-start the company. Founding Team Dilemma –The Solo vs. Team Dilemma During a startup, a founder is faced with the dilemma of whether to launch the business on their own or invite a co-founder. And if so, should they rely on family members, strangers, friends or previous co-workers. Similarly, before starting the company, Levchin lacked a potential candidate to help run the company. Thus it is usually essential for founders to be as realistic as possible (Wasserman, 2012, 86). Initially, Levchin was more into building technology without considering the commercialization aspect of the startup. However, at the time, nobody else was making the kind of software developed by Levchin because there was simply no demand for it anywhere.

They would make software, only to realize that nobody needed it despite how much complex and secure it was. Not many people could comprehend what the Crypto application was or what it aimed to achieve (Livingston 2008, 10). However, none of them was prepared for the change in roles that would arise if the company was to merge with another. When PayPal merged with X. Com, Peter, the CEO at the time was forced to vacate his position majorly because of a disagreement on whether the platform should be switched to windows or remain on Unix(Livingston 2008, 13). Thus, he left the company to prevent future altercations between the CEOs. The engineering teams from both companies also could not come to an agreement. Equity Splits and Cash Compensation Dilemma Deciding to launch a startup as a team introduces a variety of dilemmas between the founding partners.

One of the dilemmas Max Levchin was faced with when founding PayPal was how decisions regarding Equity splits and financial compensations would be made (Wasserman, 2012, 64). But the most significant part of the problem was not about making the decision, but rather, the difference in personalities between the co-founders, a factor owned perhaps to his sociological upbringing (Livingston 2008, 15). Levchin was an introvert, a factor he attributes to having led to the unpleasant divorce between the founders. Adding to the fact that finances were involved, it was quite easy for relationships to be destroyed, primarily because the personalities and styles of leadership between the co-founders significantly differed. This implies having people who believe in the same purpose and vision as you do. If that had been the case, it would have prevented unnecessary conflicts and meaningless separations.

When people share the same vision, the affairs of the company can easily be streamlined. In addition to that, when personalities, it is quite easier to reach an agreement because there exists a mutual understanding and appreciation. Personal Reflection Being the CEO of a company that is valued at ten million, where I own 70% of the shares is much more preferable compared to being the CEO of a company worth 100 million and own 7% of the stock. For instance, if the level of investment by each person is equal, then the equity should be split 50/50. In the event that there are variations in the levels of investment, then each person should get a percentage of what they have contributed. That ensures everyone gets a fair their share.