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Founder’s Disease, Big Time
I have waxed philosophic before about Founder’s Disease. In case you have not read my previous blog on the subject the condition describes the inexplicable need of some entrepreneurs to maintain control and be right even to their own detriment or destruction. It is the disease that I believe is the real cause of most business failures as opposed to the oft cited lack of money. Most of the time the lack of money is caused by a lack of faith in the Founder which is born from underperformance resulting from an inability to take advice and delegate. Who in their right mind would invest in a venture where the head honcho is a control freak?
The symptoms are obvious and the results are always, sooner or later, total disaster. This was brought home to me recently by the total screw up of the Yahoo deal with Microsoft. The founder of Yahoo, Jerry Wang, just made a hash of it. There were lots of examinations but the real reason is the disease. It was more important to him to be right than do the right thing for his investors and employees.
The whole thing started when Microsoft made a very generous offer to buy Yahoo to bolster its own efforts to compete with Google. Up until that bid of $62 per share (a significant premium over the current share price), Wang didn’t know what he had, at least in his own mind. He decided that if Microsoft wanted his company that badly, he could really stick it to them and ended up unbelievably outsourcing his search engine, the whole reason that the company was valuable to Microsoft in the first place, to Google! What an idiot! He was trying to play tough but just screwed it up. My guess is that the disease prevented him from taking advice from his team.
So predictably Steve Ballmer, a MUCH more talented executive not suffering from the disease admitted to his shareholders that he made a mistake in trying to take down Yahoo and walked away. I have a feeling that he and Microsoft will survive. Meanwhile, old Jerry Yang can walk the offices of Yahoo still in control and, yes, claiming it was all Ballmer’s fault. Sufferers of the disease always see the blame lying with others after they screw it up.
The lesson in all of this is the simple axiom that you can either be right or be rich, rarely both. Since the only healthy reason to start and run one’s own business is to make money, the successful entrepreneur needs to suppress his or her own ego in favor of the greater good. Surround yourself with good people and advisors, truly embrace that you don’t know everything better than everybody else, and understand that even the lowest man on the totem pole in your company could have the best idea, and share credit and profits.
Or you can be right…..and poor. Your call!
Posted by Herb Kay on Thursday, May 15, 2008
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