Founders Aren't Forever

 

When founders take on outside capital, we are ceding control. 

How much control and under what circumstances is negotiated by lawyers and written down in long documents full of legalese that will, after much hand-wringing, get signed and stuffed in a vault only to be dragged out in extreme scenarios. Good or bad, it’s an extreme scenario that sends you running to the docs. Break glass in case of emergency.

But we ARE ceding control. We are exchanging it for opportunity. Most founders aren’t getting rich off the fundraising process. Yes, there are exceptions but, mostly, we are trying to take a great idea and make it bigger and more meaningful. We are trying to get a product or service that we think the world needs and will love actually distributed to the world or, at least, to a broader community.

Every founder who has taken outside capital has had that conversation with themselves of “Well I’d rather own 60% (or whatever) of something big than 100% of something small.” So that’s what you end up with. Now you have less than all of it. Less than all of the control. Less than all of the say-so. And, if you’ve done several rounds, you might not even be the majority owner anymore. It happens a lot. 

This is how you wind up with founders ousted from their own companies. 

I am a founder and I have taken on outside capital to grow Yellowbird Foods because I absolutely believe it’s one of the best things to happen to the hot sauce category in a long time. That capital has turned into jobs and distribution and awareness and, yes, lots of sales. But I’m not the sole decider anymore. And it is really rare that a founder is cut out for every piece of the business journey to come, especially if a company is wildly successful.

I’ve only been in this for 11 years but I’ve seen a lot of founders turn into CEOs and then turn into ex-CEOs. Sometimes it’s amicable and everyone lines up their press releases and shakes hands and smiles at the door. Sometimes it’s not that. 

Yes, there may be one company we’re all talking about right now. But there are a TON of stories in the past and even more to come and many that are happening right this moment that you won’t ever hear about. The reason I’m writing this post is as a reminder that this is one of the exchanges we make as founders. 

Communication and alignment with the board and stakeholders are really important. It’s not always easy and I’m certainly not always great at it. Founders are in the shit every day. We’re running a company. We’re on the front lines when supply chains get flipped upside down. We’re dealing with ecomm completely changing every 4 months. We’re dealing with product and employees and marketing and distributors and retailers and a thousand other things every day. 

But we also have to remember that the board and stakeholders are our partners. They believed in us and made our company and our growth possible to a point. We’ve ceded control for the ability to grow. And we always have to make sure we’re on the same page. If we’re not being proactive about that or if we, in haste or hubris, picked the wrong partners, those docs might just come out.