I was scrolling through my Twitter feed and saw this post titled, “Should A Founder Be Hands-on in Their Start-Up”. I didn’t read the thread but the title got me thinking about the subject.
A Founder of a company is a person who has a business idea and establishes a company based on that idea. The Founder typically takes little or no salary at the inception of the company, and continues without a salary as long as the company is not fully funded and can afford to pay them a salary. This situation can last for several months or several years. Founders stick with their companies, without taking a salary, for as long as their personal financial situation allows it.
I’ve been a co-Founder of a start-up company and I’ve been hired by the Board of Directors as a business executive/leader to work with company founders. In the latter capacity I’ve worked with great Founders and not so great Founders.
I took the time above to state what my definition of a true Founder is because in one situation I was involved in, the “Founders” drew a salary from Day 1 and never made the sacrifice true Founders make.
I wanted to start by identifying the sacrifice Founders make in starting a company. Because of this sacrifice, it’s natural for them to be involved in every aspect of the business and be aware of what’s going on in every corner of the operation in the early days. That being said most Founders come from one two camps: either they have a technical background or they have a business background. An astute Founder will either have co-Founder who compliments them and has a different background, or the Founder hires a business executive for that complimentary role.
As time goes on and the company raises operating funds from outside investors, or funds its' growth in business and operations from its' organic cash flows, the Founder and their Board of Directors will hire staff. They make executive hires, they’ll hire rank-and-file staff, “worker bees” as I like to call them. They’ll grow a team. A good Founder will be involved in these early hires, so they’ll feel comfortable with whom they entrusted to execute on their vision. Like any strong leader the Founder should trust their hires to get the job done - the Founder hired this initial team after all. But this is where I’ve seen it get tricky. The Founder is used to being involved in every aspect of the business. Once they've hired this initial team they need to step back and not micro-manage that team. Many Founders struggle to take that step back. As a Founder you may be one of the biggest shareholders but you now have a more specific role. You need to focus on that job and don’t necessarily need to know the nitty-gritty details of every marketing campaign, or the detailed sales strategy for every addressable market the company is pursuing.
One start-up I was involved in, I was brought in as the CFO/COO. In the first couple of weeks other members of the leadership team cautioned me about the company’s two founders. They told me my predecessor had a tough time dealing with founders as they felt entitled to certain financial info. I thanked my colleagues for their caution and told them that my position on this was very simple. The Founders were members of the leadership team. They would receive the same information that was provided to other members of the leadership team. Similarly the Founders were shareholders of the company they had founded. The company had other shareholders. We had a standard Shareholder Reporting Package that was issued to all shareholders on a quarterly basis. These two Founders would receive the same package. In other words, I don’t know what expectations had been set for the Founders by my predecessor, or the company CEO, but I was going to share standard information they were entitled to and nothing more. In the end, it wasn’t an issue and they were happy with the information I did share with them.
Going back to the Twitter thread that got me thinking about this topic, I now wish I had read the thread. I’d like to better understand the thinking. Did they propose Founders always remain hands-on in the business, regardless of the size and capabilities of the team in-place. No one would want to work in a micro-managed environment for too long. The company I co-founded I was running as President/CEO so I knew what was going on in all aspects of the business. I can appreciate that if I was a Founder and not the CEO, I want to know what is going on in the business I started. In that scenario I would ask the CEO for weekly or bi-weekly meetings to review the business’s operations. As a courtesy to the Founder a good CEO would oblige the Founder and have this update Meeting regularly. In the example I cited above this is exactly what the company CEO did - meet weekly with the two Founders. Perhaps this is why I never had any problems with them.
Comments