Co-Founders in Business: Be Careful What You Wish For

 

 

Most successful businesses are like one-party states run by benign dictators. Autocracy makes sense in business because companies couldn’t operate as democratic organizations. Even democratic countries grant ultimate decision-making powers to one person, albeit within clearly defined boundaries set down by law. In a company, the C.E.O. has the final say in day-to-day activities subject also to clearly defined rules. The C.E.O. is free to exercise those powers until the board, acting for the shareholders, decides on a replacement. (If the C.E.O. is the majority shareholder, then he or she can never be forced to step down.) Sure, many companies allow a degree of democracy in the way some of their departments operate. It usually aids efficiency and gives employees a greater sense of involvement and ownership. But the department boss has overriding powers, and above him or her is the C.E.O. where the buck finally stops.

 

The C.E.O. sometimes makes wrong decisions, since no human, no matter how brilliant, is always right. In every public company, the board and shareholders know that. That’s why they appoint a C.E.O. on the basis of a track record of making far-sighted, profit-generating decisions most of the time. We will continue to appoint C.E.Os. of large companies that way until we invent a way of connecting the brains of numerous visionary people to a super computer able to distill all their great ideas and come up with the best solution for any given problem. In the meantime, we’re best entrusting our companies’ welfare to one human being – the C.E.O. That doesn’t mean that entrepreneurs in smaller companies and startups shouldn’t have partners. What it does mean, though, is that only one person should have ultimate authority.

 

Problems of authority arise in most organizations, but they’re more likely to have fatal consequences in smaller companies because important investors or shareholders often work in the business, and are constantly close to the action and to each other. That claustrophobic environment often leads to confrontation, which stifles the C.E.O.’s job, disrupts productivity and ultimately threatens the success of the business.

 

That kind of problem arises because, though most entrepreneurs can spot a distant commercial threat long before it ever becomes a serious problem, many are blind to two of the biggest dangers of all, especially at the startup stage. The first is their own unique vision for the new company, and the second is their strong-willed, independent natures. This combination is like a magic potion for a new company run by one person, but is a deadly poison when decision-making has to be shared.

 

Since he set it up twenty years ago, my friend Bill has been running a successful shelving company. Bill likes to tell the story of how his oldest and best friend Jim, (himself a successful business owner), continually tries to persuade Bill to set up a new business with him, “because we get on so well and have such great ideas,” Jim says. Bill always refuses because he has little doubt that their friendship would have soured years ago if he hadn’t  “We’re both as stubborn as mules” he tells Jim, “and going into business together would end in disaster; it would be like racing in a Formula 1 car with two drivers. We wouldn’t get past the first sharp bend.”

 

Bill is right. A company with joint C.E.O.s is driven by two different visions. Every major decision needs the agreement of both people. At best, the value of each one’s vision is neutralized by compromise. At worst, those ongoing conflicting visions make great achievements impossible, and threaten the company’s long-term existence.

 

The entrepreneur’s unique vision is a business’s greatest asset. It inspires and motivates co-workers and partners, and sets the company apart from competitors. In short, it drives success. Without that unique vision, the business is just a doomed bureaucracy carrying out routine tasks with no direction and no goals.

 

You’re probably not an entrepreneur if you feel you can’t follow your business dreams without someone else to share decision making and the risks of failure – someone you can always fall back on. That doesn’t mean that entrepreneurs don’t need help from talented people. They do, which is why they hire experts, and offer the crucial ones minority stakes in the business when pre-defined targets are reached. But entrepreneurs never share ultimate control; they’re clear about their vision and know that it alone drives their business success. A unique vision and the courage to pursue it to the end, no matter what, is what sets entrepreneurs apart from everyone else.

That check box that you so often hear needs to be ticked: “Do you have a Co-Founder?” As Robert DeNiro would say: ” Fogettaboutit”

 

Jeff Robinson

 

Contarian’s Mind