Once, while being interviewed by a founder for the CEO role, I was asked, “Do you not like founders?” He asked that question because he had done some research and discovered that in the majority of cases, when I took over as CEO, the founders either resigned or were terminated.
My best friend happens to be the founder of a company that I was hired as the CEO, so it isn’t that I dislike founders personally, it is just that most founders tend to be their own worst enemy once they accept venture capital.
Founders will risk everything for the sake of their idea.
The great thing about founders is the passion and drive they have to bring their idea to market. They will absolutely risk everything. This is fine when it is your money, but once you take venture capital, it is no longer your money and frankly it is no longer your company.
My advice has always been to take venture capital as the last possible option. Regardless of whether the venture firm gets 30 percent or 90 percent of the business as part of their investment, they will essentially own your company. Most founders don’t understand that and they do not learn to accept it. In their mind, they were responsible for the company from day one and they need to continue to call the shots (even though the company has grown to a point where the founder no longer has what it takes to manage and lead).
Founders think only they know how to run the company.
The majority of the founders I worked with were super smart (sometimes borderline crazy) and young. That is a dangerous combination. When you are inexperienced but smart, you tend to believe everyone else is stupid or just doesn’t get it.
One of my last CEO roles I worked with a pair of young founders. The two young men were smart and had successful careers before starting the company. The problem was they hated each other and anyone else who attempted to tell them what to do or how to run the company. My days were spent meeting with employees who were literally in tears over how they were being treated, then in the evening I would find myself meeting with one founder or the other, hearing them complain about their partner, the board or the investors. Those meetings were followed by meetings with the investors insisting I make changes. In the end, no one really won and it was because of egos, those of the founders and the investors.
If, as a founder, you self-fund the company, you can do whatever you want. If, however, you take investments, you need to learn to accept the fact that you aren’t the final decision maker and it isn’t your company. Most founders can’t accept that change.
You aren’t Mark Zuckerberg.
There is a unique skill or gene that successful founders possess. They are able to see things the majority or us never see. They see solutions and alternatives that we are blind to.
On the flip side, founders tend to not play well with others (especially those trying to run their company) and lack the skill or gene to grow the company. I lack the vision or skill to start a business but I can grow one, and have the operational experience and skill to take it to the next level.
Whenever I would have this conversation with the founder, they would always talk about Mark Zuckerberg or Larry Page. They would be so bold to say, “I’m a Mark Zuckerberg.” They weren’t and I would argue that even Mark or Larry Page would tell you that it wasn’t them who grew the company. They simply understood what their role was and decided to put aside their ego for the sake of the company.
Should you fire the founders?
No. But every founder needs to understand that in order for the company to grow and succeed, it will need money. If you decide to take that money from an outside investor you need to put your ego aside and understand that it isn’t your baby anymore. Michael Jones was the founder I mentioned earlier. He started his company because he was passionate about his cause and never put his ego ahead of the company, the employees or the investors. Unfortunately, Michael is the exception. FBN
By T Paul Thomas