Founderitis - A Ten Step Recovery Program

CavemanEveryone around you knows that you have it, but you are in denial. You say things like, “I am open to giving control to the right person at the right time”. However, the reality is that the “right person” does not exist and the “right time” never arrives.

Founderitis, Founder’s Disease, Founder’s Syndrome; by any name, this my way or the highway approach to running a business is the same affliction. When Founderitis strikes, the Founder’s drive, energy and vision, characteristics crucial to the startup’s initial success, become a hindrance to the company’s maturation into a self-sustaining entity.

To assess yourself or a loved one for Founderitis, determine if any of the following symptoms are present:

  • Inability to delegate
  • Anger when not included in every decision
  • Paranoia derived from a sense that the venture is “slipping out of their control”
  • Ignoring input from subject-matter experts
  • Expressing prescient knowledge, even when lacking subject-matter expertise
  • Lack of respect for formalized planning
  • Subterfuge of efforts to institute procedures, processes and controls

Founderitis is akin to an active, engaged parent who is a wonderful caregiver until the child reaches adolescence. As the child enters its teens and requires an increasing level of independence to properly mature and prosper, the Founderitis parent futilely attempts to restrict the influence of outside factors and limit the child’s ability to act autonomously. The result is usually a fractured parent / child relationship or an ‘adult child’ that never develops the life-skills necessary to succeed on their own.

One of the most insidious aspects of Founderitis is that the more profound the case, the deeper the denial on the part of the carrier. The afflicted Founder will honestly believe that all of his actions are in the company’s best interest, though their definition of ‘best interest’ is actually whatever is in their own ‘self-interest’.

Like any startup executive, the Founder must honestly separate his self-interest from the company’s interest. For instance, it might be in his self-interest to lead the sales efforts, as well as a great learning experience and a heck of a lot of fun. However, it may not be in the company’s best interest to lose precious time to market while an inexperienced sales novice attempts to learn on the job.

“Interim” CEO

One of the most striking instances of Founderitis that I have experienced first-hand was when a Board Member of one of my ventures stepped in as the ‘Interim’ CEO because, as he loudly declared, it was in the ‘best interest’ of the company. He held this ‘interim’ post for several years, until the company was eventually run into the ground and sold at a fraction of its potential value to its largest competitor.

The Board Member’s only ‘qualification’ was that he had invested a great deal of money into the company, and thus, he owned a majority of the company’s stock. In an attempt to rationalize his coup, he told anyone who would listen, “I may never have another chance to run a public company.” He was right. No smart public company would ever welcome his involvement.

Beach Volleyball

A startup is like a two-man beach volleyball squad. In the early days, the team is comprised of a handful of people, and the primary objective is to keep the ball from hitting the sand at all costs. It is in the team’s best interest for each player to risk running into each other in an attempt to get the ball, as opposed to both staying ‘in position’ and hoping that the other guy can get to the ball before it hits the sand.

Although one player is designated as the primary setter, and the other the spiker, both players must be skilled in all aspects of the game in order for the team to succeed. The spiker needs to be competent at setting the ball, and the setter has to be able to spike the ball, because their rolls can change at any moment.

As your startup grows beyond the initial Core Team (see “The Tribe”), operational matters become more complex and interdependent. New members with specialized skills will join your team with the expectation of acting as subject-matter experts. Your adVenture is now more akin to a four-man volleyball squad. The primary objective is still to keep the ball from hitting the sand. However, the additional personnel lend greater specialization, and require a much more coordinated team effort. It is no longer appropriate for players to play out of position. In fact, such disorganization is disruptive and will hamper the team’s ability to win.

As your company further matures, and each of the primary disciplines is adequately staffed, your team is now analogous to a full, nine-person volleyball team. At this point, coordination among the team is paramount to the team’s success. If the original players from the two-man team continued to roam around the court at will and play all of the positions, they would either run into their teammates, or their teammates would simply step off the court, denying the team their unique skills. Founderitis is like trying to play two-man volleyball on a nine-person team.

As with many mental illnesses, there is hope. Whether you, a loved one, or an acquaintance is afflicted, the following Ten Step program can put into remission even the most resolute cases of Founderitis.

Step One

No surprise here - the first step to recovery involves admitting that you have a problem. In many cases, this is the afflicted Founder’s most difficult admission. Their drive and high self-esteem make it difficult for them acknowledge their deficiencies, especially when the characteristics that underlie Founderitis are also those that are of vital importance when a startup is initially launched.

As such, an intervention is often necessary to force a Founder to recognize that they have a problem. The company’s Board should initiate the intervention, supported by the Co-founders and other key employees. It is important that the Founder understand that he is valued, and that the intervention is not a coup. The Board should make it clear to the afflicted Founder that the goal of the intervention is to help him define an appropriate and constructive role in which his skills can be properly channeled and leveraged as the company moves through its maturation stages toward its ultimate exit.

Step Two

Once the Founder acknowledges that he has a problem, he needs to accept that the issue is bigger than he is, and that he must enlist the power of the Board and his fellow employees to set him on the road to recovery. To facilitate this acceptance, the Board should present a plan to the Founder in which he can continue to play a key role within the company.

This step involves a heavy dose of tough love. If the Founder believes that he can simply apologize for the past err of his ways, without modifying his behavior, the situation may improve for a short period, but he will eventually return to his destructive tendencies if the root of his Founderitis is not resolved. All too often, the key to forcing the Founder to change his ways is the Board’s willingness to force the afflicted Founder out of the organization if he refuses to acknowledge and treat his illness.

Step Three

Once the Founder acknowledges that the Board and other key members of the adVenture are more powerful than he is, and that he must rely on them to help him overcome his ‘problem’, the next step is for the Founder to decide to turn his life around and accept his new, more conscribed role at the company.

At this stage, the Founder needs to understand that it is inevitable for everyone’s role to become more focused as the startup matures. The early-stage Sales VP who initially dictates the company’s marketing decisions must eventually turn over these duties to a marketing specialist. Such enhanced focus should be viewed as a sign of the company’s success, not as a cabal designed to reduce the Founder’s autonomy.

Step Four

At this stage, the Founder must look inside himself and attempt to improve his self-awareness. He needs to demonstrate a deep understanding of his strengths and weaknesses by identifying how those characteristics can be best deployed to further the company’s overall mission. If not properly assisted by other members of the organization, it may be difficult for the Founder to identify any material weaknesses.

Step Five

Unfortunately, the road to recovery often becomes more difficult at this stage because victims of Founderitis must identify and analyze their past wrongs. This challenging task requires afflicted Founders to perform an honest post mortem of recent company initiatives, and acknowledge how their Founderitis directly contributed to the lack of success of such initiatives.

As with each of the ten-steps, the Board and the key employees need to assist the Founder in this process by ensuring that such analysis includes examination of the mistakes made by all parties. In addition, the discussion should be impersonal, and focus on how the organization can avoid such missteps in the future.

Step Six

Once the Founder has confronted his past wrongs, he must accept that the Board can help him address the defects in his personality that have caused him to put his self-interest in front of the company’s interest. As stated previously, the key to the successful completion of these steps is to ensure that the Founder properly and honestly separates his self-interest from the company’s best interest.

Step Seven

Central to the Founder’s recovery and finding their rightful role within the evolving organization, is the process of reparations. At this stage, the Founder must continue to swallow his pride and make a list of the employees, Board members, and other stakeholders whom he has alienated or otherwise negatively impacted by his Founderitis. Recovering Founders must repair the damage caused by their past actions, and make appropriate amends to the impacted parties.

This might involve reassuring an executive that his opinions really are valued, and that they will be heard in the future. It might also include a public admission of one or more significant mistakes, and a commitment to change the underlying behavior that led to such mistakes. In whatever form it manifests itself, it is vital that the Founder heal the wounds caused by his destructive Founderitis activities.

Step Eight

Once amends have been made, the Founder must diligently monitor his actions for future signs of Founderitis. Acknowledging the err of his past is only part of the problem. He must also be careful not to fall into his old ways, especially during the inevitable fire drills that the adVenture will encounter. During tranquil times, recovering Founders can often keep their Founderitis in check. However, as soon as the stress level is heightened, they are apt to go into crises mode and return to their former ‘my way or the highway’ style of management.

The Board can assist the Founder at this stage by gently reminding him that he is edging toward the Founderitis precipice. After pointing out the slippery slope that he is flirting with, the Board should help him refocus on the aspects of the business in which his skills are best suited – in other words, help him get back into his ‘proper position’ on the volleyball court. If a particular problem is outside the scope of his ‘position’, the Founder should be reminded that the company faces a variety of challenges, and that his time is best spent managing the responsibilities encompassed in his newly defined role.

Step Nine

At this point, the Recovering Founder must stay in close communication with the Board to ensure his actions are in accordance with their will. If he has properly accepted that the Board has the company’s best interest in mind, then their guidance will help him stay on the path of recovery, and avoid actions that may lead to a return of full-fledged Founderitis.

Step Ten

Once a victim of Founderitis, always a victim of Founderitis. It is important that the Recovering Founder never forgets this fact. One way to ensure that the evils of Founderitis remain top-of-mind is for the Recovering Founder to counsel other afflicted founders who are either in denial, or at the early stages of recovery.

This may prove difficult to do while his adVenture is maturing. However, once the company experiences an exit, the Recovering Founder can help spread the word to other startup founders regarding the evils of Founderitis, ideally as an Advisor and/or Board member.

There is no substitute for the delivery of the Founderitis message from a Recovering Founder. Someone who has hit rock bottom and risked losing control of his adVenture can deliver a compelling message to afflicted Founders, and in some cases, may be the impetus required to encourage one or more founders to accept the Ten Step Program and successfully complete the most difficult step – Step One.

The ultimate test for a Recovering Founder is whether or not he can have just as much fun (and be equally effective) playing two-man beach volleyball as he does when he plays on a nine-man team. If he gains the same level of satisfaction running all over the sand and ‘saving the day’ over and over as he derives from participating in the success of others and helping to orchestrate complex team plays, then it is clear that his Founderitis is in complete remission.

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John Greathouse is a Partner at Rincon Venture Partners, a venture capital firm investing in early stage, web-based businesses. Previously, John co-founded RevUpNet, a performance-based online marketing agency sold to Coull. During the prior twenty years, he held senior executive positions with several successful startups, spearheading transactions that generated more than $350 million of shareholder value, including an IPO and a multi-hundred-million-dollar acquisition.

John is a CPA and holds an M.B.A. from the Wharton School. He is a member of the University of California at Santa Barbara's Faculty where he teaches several entrepreneurial courses.

Note: All of my advice in this blog is that of a layman. I am not a lawyer and I never played one on TV. You should always assess the veracity of any third-party advice that might have far-reaching implications (be it legal, accounting, personnel, tax or otherwise) with your trusted professional of choice.

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