Do a search on “Founder Syndrome” and you will see two prevailing schools of thought.
Good Thing
On the one hand it is considered a good thing. Think Steve Jobs, Michael Dell, Charles Schwab or Michael Bloomberg. All were founders, entrepreneurs, risk takers and innovators. And they were obsessed with control and getting their way. All of that is helpful to move the needle of success for a startup, and subsequently scaling it. Shareholders love it.
But in all four of these cases, they were asked to leave the company when they sailed their ship into storms with heavy seas. After a period of time their board of directors invited each of them back. Why?
Founder magic. Over time the company had lost that magic after they left the company. Even after weathering the storm these companies struggled with innovation, growth, market share and profitability. Employee moral suffered. Shareholders were concerned. Why wouldn’t you bring back the magic?
Upon returning these founders made a positive impact on their companies with Jobs setting the high-water mark for measuring a successful turnaround.
That is the case for why it can be a good thing.
So why can it also be a bad thing?
Bad Thing
To be clear, not every founder demonstrates most or all of the following traits. But before I delve into the subtleties of adverse founder syndrome behavior, here is the slate of obvious founder syndrome things that can harm a startup while still at the helm of the company:
- Decisions are made by the founder often without input from others.
- The founder is deferred to in all matters regardless of their actual expertise.
- Snap decisions and decision reversals are common without any explanation, warning, or consideration of the impact to others.
- Information flow throughout the organization is stilted or actively stifled, with the founder at the center of all information flows.
- Planning courses of action and setting priorities are the purview of the founder.
- Employees can often feel like they are not paid to think but simply to deliver on orders, which themselves can change at the drop of a hat, undoing weeks of effort.
- If the organization has a board, that board can be filled by people who are loyal to the founder and not likely to countermand anything the founder has said or done.
- Proposals for change coming from any direction other than the founder are expertly resisted and even actively discouraged.
- Founder’s usually have an ‘inner circle’ of people they ‘trust’ to whom implicit power is conferred through their proximity to the founder.
In my years as Board Chair of a technology business incubator, as a CEO who took over from a founder of a young technology company, and as an advisor to hundreds of startups the last two and half decades, I know founder syndrome when I see it. All of those bullets apply.
But those can be addressed with a strong board and a new CEO supported by that board – if the founder is not the Board Chair of course.
But it doesn’t end there. Even after gaining agreement with the founder that these behaviors will not be acceptable going forward, here’s what can happen – which I have seen all too often:
- Many of the key employees will still have loyalty to the founder. He or she hired them after all. We are humans and loyalty is a powerful trait that can be easily manipulated behind the scenes. If the founder disagrees with the new CEO on strategy, policy or even execution, for example, this loyalty camp will be supportive of the founder. This creates at least two factions in the company that is the launch pad for organizational dysfunction.
- The founder takes unilateral action on key business decisions, not in her area of responsibilities, without consent or agreement with the CEO or other key leadership team members. “This is the way I’ve always done it”.
- Going dark or ghosting the CEO or other team members. A typical employee would never do this to their boss or other team members without consequence. It is nearly impossible for a founder to flip the switch to employee status and accept all that goes with it.
- Using the company as a piggy bank. I’m not talking embezzlement. It’s more of the odd expenses on an expense report that you would never see an employee submit. But a founder? Not unusual. Now you must cut them off and that conversation is a friction point. I’ll come back to that.
- And finally, here is the most insidious issue. Passive-Aggressive behavior. You are being told all the right things and seeing general positivity from the founder, but the resistance to change and acceptance of the new world order is palpable. The aggressive behavior is being manifested quietly, subtly and effectively.
If most of these behaviors or conditions are occurring and you are the founder, you should look hard in the mirror and ask yourself “am I really helping myself”? If you are undermining the company, then you are indeed hurting yourself. And besides that, you aren’t following Lou Holtz’ “Do the right thing” rule.
If you are the CEO, Board Chair or a Director, you have a problem you must address sooner rather than later. It can be poisonous to a young company. It is a leading cause of startup failure put bluntly. At first you will be dealing with the behavior when it occurs which creates friction between you and the founder. Then it will occur again and again. Hopefully not, but it often does. The friction will add up and force the call to action. Just realize that if it happens more than a couple of times don’t delay moving on it decisively.
If you searched for Founder Syndrome you probably found several articles on how to deal with it. Here is one. The bottom line is that it must be forcefully addressed with empathy, clarity and accountability.
David Karabinos | CEO | Healthcare Technology Strategist
www.DavidKarabinosAdvisory.com