Founders Need to Uncouple Their Own Idea from Its Creator

Founders Need to Uncouple Their Own Idea from Its Creator

All founders want their businesses to succeed without them, but the willingness to act on that realization remains one of the most difficult topics in today’s market. After all, the veneration of founders (and our propensity of treating them as rockstars) has some justification: 

People who are visionaries are inherently fascinating, so much so that they would overnight in strangers’ houses or use a bird-friendly app to communicate their uncensored views every day.

This dichotomy — between society’s framing of a founder as the face of a startup’s success and the realization that succession is critical to a company’s long-term viability — is why a few phrases in Jack Dorsey’s recent Twitter resignation post stuck out to me.

“A lot of people talk about how important it is for a firm to be ‘founder-led,'” Dorsey wrote. “In the end, I think it’s highly restrictive and a single point of failure.” I’ve put in a lot of effort to guarantee that this firm can break free from its founders.” “It’s vital that a firm can stand on its own, devoid of its founder’s influence or direction,” Dorsey noted.

Dorsey initiated a topic that I have been having with founders and investors all week: it is beneficial for the company to separate the concept from the founder’s persona so that the firm does not seem fundamentally attached to its creator. 

However, it will necessitate some serious attribution discussions. Last month, I discussed the necessity of distinguishing between a founder, a founding team member, an adviser, an investor, an angel investor, and an early employee in terms of both ownership and incentive. This week, we will discuss why it is critical to understand how governance evolves over time, and why a founder’s job title may, one day “VP of Nothing.”

During our last Equity podcast, Iris Choi, collaborate at Floodgate, observed, “At some point, the entrepreneur becomes the VP of nothing.” “At first, you’re the head of product, the head engineer — you’re both an individual contributor and the one who picks up all the loose ends or fills in the gaps.”

When a corporation reaches the growth stage, it experiences an identity crisis. Then, instead of seeming like a scrappy engineer pulling an all-nighter, founders appear as the visionary in charge of acquiring talent and ensuring “the trains are running on schedule.” “You have to allow the founder to be elevated to a certain amount and not just be in the weeds anymore,” Choi added.

Stella Han, a co-founder of Fractional, just completed Y Combinator and raised millions in a seed round. Her company’s mission is to make ownership more accessible to strangers and friends, which has necessitated discussions with her co-founder on how to do it inside.

“You’re really involved in the execution of the product as a co-founder, versus being an executive leader, where it’s about how effectively you can empower other people to take the reins and put things into action and have the business flourish,” she explained. 

“When you need a conductor for an orchestra, it’s about articulating that vision and magic, and then having everyone able to work together as a team to carry out that entire experience and present it to the audience and customers.”

While it is not contentious to start developing a clever executive, the team around a genius founder as the company grows, telling the person who came up with the concept that it is time to stand aside and create a place for another acting CEO is. To put it another way, what do you do if you are not ready to stand down or at the very least walk away? Han believes it all boils down to matching incentives. “Ego is a large aspect of a person,” she said, adding that the founder (and any other new or current leaders) must find out “what is the more holistic bigger-picture motivation that everyone should be unified on.”

Then, she added, founders, must “get out of the weeds in the heat of the moment and do what’s best in the long run.” To become more comfortable with decentralizing authority within organizations, investors will need to change the way they write checks. When it comes to convincing a venture investor to gamble on them, having a concept and then receiving, credit for it is today’s most valuable currency. What may take its place as a motivator?