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From Mine to Theirs; The Founder's Journey

Every business had its beginning. 

That beginning began with the Founder; the one who formulated the idea for what they wanted to create. The one who committed both personally and financially to dedicating their resources to an idea while accepting all the risks that their idea was worth fighting for. Founders are not the norm. They are the outliers. They do not seek the comfort of a 35-year career as an employee. They want to be in the driver’s seat of their own venture. Founders are special people. 

They are innovators and risk takers who drive progress and fuel development for advancing our world. 

An even more rare creature is the founder who can take the company from concept to startup and through the growth phase and into maturity. Creating a self-sustaining business that they can eventually successfully transfer to the next generation or carry the organization through to a successful sale. Navigating all the complexities of the financial, organizational and market forces take a very diverse set of skills, lots of professional growth and operational flexibility which is a very high mountain that few can climb.  

Steve Jobs is the most famous founder who was fired before he reached the pinnacle. His vision propelled the innovative products of Apple, but that same creative mind fought against his ability to responsibly and effectively lead the company and his team. Being a visionary is a skill set that often does notlend itself to someone who can handle the day-to-day ups and downs and present a detached, non-emotional response to adversity. Steve returned about 10 years later but by that time he brought experience gained through his other ventures, such as Pixar. Like Jobs, many founders struggle to evolve their leadership as their companies grow. 

Over the years, I have seen these evolutions fall into three broad stages:

• Mine - Sole decision maker and strategic lead who is the only driver with the keys to the business. 

• Ours - Has opened up to trusting solid and experienced leaders to drive key portions of the business that fill gaps in the founder's capabilities.

• Theirs - Fully developed a company where leadership and decision making is decentralized and the founder can fill the role of an inspirational influence on the big picture future of the business. 

All businesses begin as “mine” by design. 

We love to hear the romantic stories of the businesses that started in a garage like Microsoft. The key to building a sustained enterprise is the successful migration through the three stages above. Bill Gates and Paul Allen made it through all three stages out of both practicality and necessity as they built out their company. Many companies can succeed financially by remaining in the “mine” stage but rarely survive past the time of the founder’s involvement. Keeping everything close to the vest and not allowing others into their company’s inner circle means that the company cannot survive without the founder. In many cases, this even carries forward to founder led companies attempting to pass on to family members. 

Sadly, many second-generation companies fail very quickly after that transition because the company never entered the “ours” phase. 

The Company

• Mine - “Me”, “I” and “mine” are used in everything that relates to business. The company exists only for the benefit of the founder. Profits are for sustaining the business and the owner primarily. Employees are expenses that must be managed relative to the bottom line. 

• Ours - “We,” “us” and “ours” become part of the lexicon. There is an acknowledgment of the company’s existence and success being shared by a growing team of leaders for the mutual benefit of all stakeholders from top to bottom. 

• Theirs - A detachment is now possible through trust being built that what the founder built was now in more capable hands than it had been under their sole guidance. The founder can look proudly at what they built and know that it will outlast them. 

The Management Team

• Mine - There really is no management team. There are people hired to lead departments but the typical criteria are that they work for and at the discretion of the founder. We will usually find less experienced, lower paid managers who will follow the lead by doing exactly what the founder tells them to do. Autonomy of leadership under the founder is a rarity and only outliers may stand out and survive until the next iteration of development.

• Ours - True leaders emerge in positions of influence that have transitioned from just followers and “yes” managers to ones who drive their areas of responsibility to success. The founder has moved from a leader directing the team on what needs to be done and how to do it, into one who lays out the expected outcomes and lets the team drive. This is where the founder becomes the CEO, still leading but allowing others to lead as well. 

• Theirs - Succession planning has created senior leaders who are prepared for C-level roles managing the strategic direction of the business. A deep bullpen of VP and Director level managers are present who in turn are building out strong teams. This organization is inclusive and interactive on decision making which creates resilience and sustainability for the long term. 

The Business

• Mine - The founder is most likely to own the most valuable relationship with key customers. There is a co-dependency where business transactions rely on this direct relationship between parties. This closeness is necessary in the beginning as the company starts up but as the customer base grows and turnover in key positions with customers occurs, reliance on the relationship creates risk for the business. 

• Ours - The founder may retain a key role in the beginning of customer development from prospecting, qualification and introduction to the sales team but understands the long-term value of “stepping aside” and letting the relationship develop with the team that will manage the customer for the long term. The founder always remains in reserve on an as-needed basis to interact with clients on a senior strategic level or when major issues arise but also understands this is likely an exception, not the rule.

• Theirs - Following many years of developing the business, the founder can begin to look outside the core business and bring new possibilities to the team. Adjacent business opportunities might be discovered as possible ideas for expansion but are turned over to the management team for concept, scope and decisions on whether to move forward. At this point, the founder is more of the Chairman of the Board in an advisory role. 

The Money

• Mine - All the funds of the company belong to the founder. Accounting systems can be very rudimentary and as simple as the bank account statement that doubles as the main set of books for the company. All spending decisions are decided at the top and usually all check signing and payment authorization relies solely on the founder. Many times, investment decisions are made based on urgencies rather than adhering to a strategic plan.

• Ours - Money that falls to the bottom line begins to be re-invested in the business to a greater extent. The management team, working with the founder, are building out a longer-term plan and projecting funding needs and identifying projects that will grow the company. These investments and projects will still require approval from the founder but can originate with the team and then be led by them to completion. 

• Theirs - The founder becomes a compensated board member based on the overall performance of the business. Their inspiration and guidance become but one input toward the successful management of the finance and spending priorities of the company. It is up to the team to drive investment and deliver on the projected and promised returns. 

For companies to succeed in the long term, the founders need to work through this progression of steps to make their original ideas and business plans sustainable for the long term. Without working to a more professional organizational structure, the founder has only built themselves a job not a company. The company cannot succeed in the long term without the constant presence and leadership of the founder. 

Companies that are in the “mine” phase are very difficult to monetize for sale because the main asset of the business is the founder themself. Normal valuation processes will fall apart once the acquirers realize that the primary value of the business is not going to be available post-acquisition. 

We love founders. Their ideas and hard work have built our world. We need more of them. We also need more of them to build this succession planning into their model and always keep in mind their eventual exit plan. 

Most businesses exit with closed doors and liquidations. Some are able to move into “ours” and “theirs” status with the founder’s legacy in place well beyond their years. 

Those become true success stories.