The Founders Dilemma: Owner vs Manager Roles | Mark MacLeod

July 14, 2023 - Mark MacLeod

The Founders Dilemma: Separating Ownership from Management

Founders have a special kind of magic. They are not like the other leaders in a company, nor should they be. However, despite that magic, they are often faced with the founder’s dilemma: separating their founder role from their role as a leader in the company.

Differentiating Owner vs Manager Roles

As your company grows, you will begin adding leaders. Ideally, over time, you will be bringing on leaders who are far more experienced than you and have seen scale that you have not seen. As a startup founder, Meta’s Mark Zuckerberg has always made a point of hiring leaders that he would work for. This is a great bar.

One of the (many) areas where management teams can run into issues is when the team goes from being one team to being two: Founders and non-Founders.

It is quite common when debating major issues, strategic direction, etc. for the discussion or the ultimate conclusion to bifurcate. The Founders often end up controlling the discussion. Either they operate with one collective voice, or simply use their ownership status to make the final decision.

This stifles debate, hampers creativity, and sends your other executives a clear message that they do not matter as much as you do. In the extreme, these leaders that you rely upon, may leave your business.

In addressing the owner vs manager dynamic, the healthiest thing to do is to separate ownership from management. I learned this lesson back when I was a venture capitalist. I had invested in a company called Unbounce. It had six co-founders. Now, you cannot productively manage a group of six cofounders, without deliberate, intentional effort, and practices. It takes a lot of effort just to manage a relationship with one other person, let alone five other people.

Separating Startup Founder vs CEO Roles

The Unbounce team did a great job with this. They had a huge focus on culture generally, and that absolutely impacted how they organized and ran their leadership team. There were not two classes of leaders. The startup founders were no more important than the other leaders.

Now, founders/owners do have important things to discuss that are specific to their role as owners of their business. I acknowledge that. Unbounce handled this by having separate and regular founder meetings.

Every month the founder group would meet for dinner. This served two purposes: First, it enabled the founders to have a forum for discussing matters that only apply to them as owners of their business. This was the place to think through topics, such as their ownership position, whether it made sense to raise more capital and dilute further, etc.

Perhaps, at least, as importantly, it also served to bring this large founding team together. It built cohesion, friendship, and trust. They invested in their relationship.

Because of these regular Founder meetings, when the broader leadership team met, there was no need to bifurcate the discussion. The founders could sit at the same side of the table metaphorically as the non-Founders, and discuss the issues. Distinguishing startup founder vs CEO or other exec roles enabled them to reach a conclusion that involved all of the team working together as one.

Overcoming the Founders Dilemma

If you are not satisfied with the cohesion or dynamic in your leadership team, I encourage you to reflect on whether you would benefit from separating ownership from management, and having a separate forum for the owners of the business to meet and discuss things. Can you apply the Unbounce example to your business?

Photo by Campaign Creators on Unsplash

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