Should founders be left to run a business?

At some point in the life of a founder, the question must be asked: Am I the right person to continue running this business? Or put another way: am I a Dyson or a Dell?

Both Sir James Dyson, the British creator of the bagless vacuum cleaner and bladeless fan, and Michael Dell, an American who pioneered the sale of PCs configured to order, have their name on their products and their corporate letterheads.

However, while Dell is chairman and chief executive of his business more than 25 years after it was founded, Sir James handed this role to one of his employees, Martin McCourt, in 2001, and now uses the title “chief engineer”.

In spite of the column inches devoted to entrepreneurs such as Dell, most founders follow the Dyson route.

Nick Jenkins created online greetings card company Moonpig a decade ago and relinquished the role of managing director to his former operations head Iain Martin eight years later.

Succession was the last thing on Jenkins’ mind when he started the venture. “Like most entrepreneurs I thought I would start the business and sell it in three years’ time,” he says.

For now, Jenkins claims that he sees the value in remaining owner while handing the executive
headship to someone else.

“All of my skills as an entrepreneur are in getting things running,” he says. “What I take great pride in is that I’ve created a company and I can go away travelling for three months and it can all carry on.”

Having freed himself from the “plate spinning” of running day-to-day operations, Jenkins admits that his next big move will probably be to start another venture.

It is a view reflected by other entrepreneurs, such as Marco Schiavo, founder of Salt, a software staff recruitment business.

“I made the decision to recruit a professional managing director, partly so that I could spend my time on other projects, but also because I recognised companies need different expertise at different stages of growth,” Schiavo says.

“A lot of my clients can’t let go and their growth is inhibited because of this.”

This has not stopped others continuing to seek the founder who can grow into a bigger leadership role as their business empire expands.

Andreessen Horowitz, a $300m venture fund based in Menlo Park, California, openly admits a bias for “founder CEOs”, noting that these people are far more likely to have the creative spark to spot the future opportunities for their business.

While external chief executives are often better at maximising product cycles, this skill can be taught, co-founder Ben Horowitz has argued.

Saul Klein, a partner at venture capital group Index Ventures, is another supporter of the founder chief executive.

“There is no reason why, if you are open minded and determined to learn and develop, you can have no management experience or expertise and still be 10 times a better CEO than a so-called professional manager,” he says.

This does not mean that Klein thinks only these people are worth investing in. Only 15 out of every 100 investments he makes are put into companies run by founder CEOs.

Klein himself is an example of a founder who has handed on the baton, having been part of the team that created online DVD rental business Lovefilm before installing Simon Calver, a senior executive at Dell and Pepsi among other places, as chief executive of the company.

“I think the most interesting founders to back are the ones who have the desire and the potential to go all the way,” Klein says.

“They may not, and many won’t, but that doesn’t change the fact that that is the person you want.”

Klein admits that there is a certain mythology about the importance of chief executives, which plays down the importance of founders who remain with their start-up but not at its head.

“Someone has to be made accountable for making a final decision, but at the end of the day no CEO makes that decision on his or her own,” Klein says. “Running a business is always a team game.”

Richard Moross is founder of Shoreditch-based Moo.com, a UK start-up that has grown into a
multinational business selling customised business cards and other stationery.

He has taken the business from inception, where he was ordering pizza for his programmers, to its current state, where he spends a large chunk of his time presenting slides to a board. However, he still feels comfortable in charge.

“There is a huge advantage to having a strong thread from the beginning of the company to the end,” Moross says, noting that it would be difficult to pass on the level of knowledge he has of the company and its customers to another person. However, he agrees that founders need to continue learning.

Moross claims to have gained a great deal of help from the Young Presidents’ Organisation, a global network of 17,000 business heads in more than 100 countries, whose mission is to build better leaders through education and the exchange of ideas.

He claims that support from other YPO members has increased his confidence that he can achieve his goal of leading the company to far greater heights.

Moross adds that founder chief executives are a lot more common than some people think. If we don’t see them it might be because they don’t believe their role is to seek the limelight.

“It is obvious in some companies because they are led by people with magnetic personalities,” Moross says. “However, there are plenty of other successful companies where the founder chief executive just keeps a lower profile.”

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