Founder’s syndrome is the idea a business’ creator can’t keep their hands off as it grows. How should founders avoid this problem? What’s the best way to pass the baton as a business evolves? What can go wrong?

Lucy Liu

Airwallex co-founder and president

LinkedIn  |  Twitter

I often say that starting and growing a business is akin to raising a child. In the early days, you are fully invested and involved: emotionally, mentally, physically. Over time, a parent has to eventually send their child to school, and trust that the child’s development will thrive under the guidance of the school’s teachers and caregivers. Similarly, as a company matures, there will come a time when a founder has to share some of the primary responsibilities. It is perfectly normal to struggle with giving up control. There is an inevitable risk in entrusting something you have built to someone else, but it is a risk that has to be taken in order for the business to grow.

When my co-founders and I started Airwallex, we agreed that having the right team in place was critical to our success, so we led and owned the entire recruitment process for the first couple of years. This took up a huge chunk of our time that we now realise could have been better spent elsewhere.

Learning from that experience, we brought onboard an excellent in-house HR team, and worked with the team to implement a hiring process that we believe in. We no longer get as involved, however, all hires are still signed off by a founder. Having that final approval is important to us, because we still want to ensure that anyone who joins us shares our vision, passion and brand values (on top of skills). Across all levels, we also look for people who will treat the business as their own.

So long as you’ve done your due diligence and hired the people you trust, trust them to get the job done and do what they do best.

Ian Whitworth

Scene Change co-founder and Motivation for Sceptics blogger

LinkedIn  |  Twitter 

The most essential lesson is investing in mistakes you wouldn’t have made yourself.

We’ve managed to set up a range of businesses that we don’t work in, run by local managers/partners. As things grow, you have to let them take a long run on the line. It’ll test your faith. Your instincts scream: ‘Oh my god, pull them up before they fail.’ But you have to let them do it.

By all means, give advice. Talk through it and ask them what their own instincts suggest. You might steer them a bit. But don’t tell them exactly what to do. We have deliberately let people make expensive mistakes with our money, purely for the long-term educational value. They have to earn their degree at the University of Pain.

People don’t really learn from being told precedents, lists or what you would have done. It’s not memorable. Nothing beats sticking their hand on the hot frying pan and learning how a good self-searing feels. Once is enough for most people. You can tell good people by how quickly they learn from pain.

We’ve worked with people who have taken horrific metaphorical burns, checked out of casualty with bandaged hands, gone straight into the kitchen to see a smoking pan on the stove and thought: ‘Ooh I wonder what that feels like?’

If you take the ‘I’m always right’ approach, you’ll attract the sort of people who are better suited to running a doughnut franchise in a mall. There are very few surprises to deal with in that context. But if you want innovation and cunning in a business you’re not physically in, you need entrepreneurial hustlers. They don’t want you to be standing over them with a franchise rule book going: ‘Refer to page 125, paragraph 9’.

John Batistich

Foodco chairman, and non-executive director at Zip Co, Stellar Group, General Pants Group and Heart Research Institute

LinkedIn  |  Twitter

Founder’s syndrome describes the inability of a founder to successfully transition from the leader of a startup, through scaling up, and through to a mature sustainable business. Those that do not adapt can become a destructive force, limiting the potential of the business.

Founders require high levels of self-awareness, curiosity and insight supported, by wise advisors and/or boards, to successfully navigate this leadership transition from startup to maturity.

Through the startup phase, the founder assembles a small team to develop a product to deliver on the product vision and acquire customers. The founder leads, from the front, often deploying a pacesetting and more directive leadership style. The founder generates funding, establishes the culture, recruits all new employees, works closely with all employees, directs action and makes the key decisions. There is little forward-planning, structure and systems as the startup focuses on developing a great product and rapidly acquiring customers before funding runs out.

When the startup generates active and returning customers and develops a business model, new leadership skills are required to drive performance to accelerate growth through the scale-up phase. The founder now needs to lead through others, using a more coaching and collaborative leadership style. The founder transitions to leading the strategic planning, culture, structure and developing a high-performance leadership team. At this phase, there are more stakeholders to manage, higher expectations from investors, and the founder no longer knows everyone personally or is across all projects. Reversible decisions are delegated while input or consensus becomes important for key strategic decisions.

When growth starts to slow, and the business reaches the maturity phase, the founder needs to transition to a new operating leadership style and lead from behind. The founder empowers, aligns, supports and drive accountability of the executive leadership teams to lead and serve multiple stakeholders. More decisions are delegated, and systems exist to facilitate the operation of the business. Strengthening employee engagement and harnessing innovation whilst driving optimisation and efficiency, become important to deliver growth.

Amazon’s founder, Jeff Bezos, and his long-serving executive leadership team, including Andy Jassy, have successfully navigated the transition from startup to scale-up, supported high levels of curiosity, insights and clear leadership principles.

The founders of Google, Larry Page and Sergey Brin, were persuaded by investors to build a strong internal leadership team, and hired Eric Schmidt as their CEO to manage the scale-up stage. Brin described the change in leadership as “parental supervision” to help Google scale globally. The founders had the self-awareness to conclude they did not possess the leadership ability to take Google to the next level and required a more seasoned and proven executive to lead this transition.

But not all founders have been able to transition through their startup’s phases of growth. Adam Neuman, co-founder of WeWork, and Travis Kalanick, co-founder of Uber, are founders who were removed by boards and pressured by investors, because their leadership impact had become a destructive force while the organisation was scaling.

All founders have a responsibility to develop strong awareness, understand their leadership impact, and seek board counsel to support their ongoing development.

Alborz Fallah

ExpertMedia founder, CarAdvice founder and Entrepreneur in Residence at The University of Queensland

LinkedIn  |  Instagram

The romantic notion of founder/CEO is very much alive in today’s startup culture.

We idolise the likes of Jobs, Zuckerberg, Gates and so on, who built their business as founders and CEOs into billion-dollar household names. Yet, for every founder/CEO that is successful, there are likely hundreds of thousands who never made it, and probably a fair few of them that would’ve had they brought in a proper CEO at the right time.

I believe that’s the key: the right time. A founder’s job is always the vision and a relentless determination to succeed. Making that actually happen, as a step-by-step process, is sometimes not their core skill set.

From personal experience, the year I gave up being CEO of my last company and hired a competent operator, we went from $400,000 in revenue to $2 million-plus.

Not because of any fundamental change other than a focus on monetisation and organisation.

You have to know what you’re good at and understand where you need help. Some would argue you just hire and manage the people to help you, rather than hand over the reins, and that argument has some merit, but you need management skills to really get the most out of people.

Why go about learning a whole new skill-set if the real value you provide to your company is elsewhere and probably the reason it exists in the first place?

For me, management is not what I am good at, or want to be good at. By freeing myself to do what I am good at, and hiring someone to do what I’m not good at, the business not only grew its traffic but revenue also.

Founder’s syndrome is a predicament every business owner will face. The concept of ‘losing control’ is mainly ego-driven. You will always know what is best for your business, but you may not know how to best execute that vision. Learn the difference.

Adam Schwab

Luxury Escapes co-founder, angel investor and former corporate lawyer

LinkedIn

It’s an incredibly difficult issue, and (as a founder myself) I come from a naturally pro-founder viewpoint. But ultimately, the decision on how and when to hand over is highly dependent on both the business’ life cycle, the type of business and the skills of the founder.

As an investor, I love investing in founder-run businesses. Successful founders inherently have a strong understanding of the customer (and are usually super gritty and determined), but even as a very pro-founder investor, there is always a time when eventually, a founder needs to bring in a great operator to help and potentially take over at a senior level.

Business’ that lend themselves to having longer-term founders are those which are highly product-based (think Evan Spiegel at Snap or Steve Jobs at Apple). That is because their inherent understanding of what the customer wants (often before the customer even realises it) is critical. By contrast, a business which sells a more commoditised product can often benefit from a professional CEO (as growth is less about pure product vision and more about operational execution).

The actual handover very much depends on the business itself. The best handover from a founder is often an internal one, generally to a COO or CFO who has been working in the business and is familiar with how everything works (and knows all the business’ key human capital). The corollary to this is if the business is underperforming and a fresh perspective may be needed.

The most critical aspect is to ensure the founder and new CEO work closely together during the handover process (which could take years) and have strong chemistry on how best to grow the business and continue to improve the customer experience.

Daniel Petre

AirTree Ventures co-founder and general partner

Twitter  |  LinkedIn 

At every point, a founder needs to try to be objective as to whether they are the right person for the company at that point in the company’s life.

Are they growing their skills at the same rate as the company is growing? If this is the case, then maybe they should stay as the founder/chief executive officer. But then, as the company grows, and there are deep teams in growth, product and development, they should ask whether they should be leading these efforts. Again, are they the best person to continue to run the product and be CEO?

In many cases, the founder continues to grow their own skill base fast enough to justify being the best person to be the CEO. In other cases, they need to bring in a CEO, but are the best person to be the CPO, CTO or CRO. In other cases, they should move up to being perhaps the ‘founder and chair’ and allow others to do more of the execution.

It is all about being super-objective as to whether you are the right person for a specific role at a specific point in time. Sometimes, getting external input is helpful to make sure you are being as objective as possible.

Finally, there is no shame in admitting the company grew faster than your skill base. In fact, making this call requires maturity, objectivity and a lack of ego. All good things to have.

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