You’re the one in control.
There are various reasons as to why Deliveroo has delivered an underwhelming performance (so far) as a public company. One is the idea that investors on the London Stock Exchange are reluctant to back a company that’s tightly controlled by its founder (Will Shu) thanks to a system of dual-class shares.
The debate around who should control a business has raged for ages. Indeed, we remember the greatest entrepreneurs of all time as people who had the ability to tame their shareholders and maintain control over the reins of their company:
Henry Ford, the founding father of the car industry, once went through a notoriously brutal battle with two of his shareholders, the Dodge brothers, who filed a lawsuit in 1916 claiming that Ford had priced his cars too low, thereby cheating shareholders of potential income. What an insult to an entrepreneur who had declared his intent to democratize the automobile by making it possible for every American household to purchase one!
A while later, the legendary Alfred Sloan, CEO of Ford’s competitor General Motors, was taking great satisfaction in the fact that the company had more individual shareholders (half a million) than it had employees (a quarter of a million). That division of shareholders’ forces helped Sloan dictate his terms and do as he pleased, without paying too much attention to what individual investors had to say.
More recently, Jeff Bezos has been displaying absolute mastery when it comes to taming financial markets and making Amazon’s shareholders behave. About that, see my Train your investors to behave and the lessons early-stage founders can draw as to how to deal with investors across the ups and downs of a company’s life. (In short, it’s not enough to say that you’re in control–you need to prove that you actually are, in every circumstance, good or bad!)
Yet these spectacular anecdotes don’t make a general rule. There are as many (if not many more) founders who drove their companies into the ground while exerting tight control over its governance (see: WeWork). And there have been many strong-minded entrepreneurs who have succeeded despite not having as much room to maneuver as they would have liked—think about Steve Jobs, who famously was once fired by his board of directors, or Oracle’s Larry Ellison.
Since it’s impossible to decide that it’s ‘right’ to go in one direction or the other, let me just share three simple thoughts to help you decide how much control you want over the company you founded:
Much depends on whether you’re pre- or post-product/market fit. In the former case, you basically have no idea about what your company’s doing, therefore it’s better to have free rein. In the latter case, be prepared to trade control for capital because what matters is speed and focus—and investors can help you with both.
Much also depends on who your investors are. If you’re in a mature, healthy ecosystem such as Silicon Valley, you’re granting some level of control to valuable advisors who have been “exposed to hundreds of successes and thousands of failures”, to quote my colleague Balthazar. If you’re in an ecosystem that’s lagging behind, beware bad investors and their toxic tendency to play a “finite game” rather than an “infinite one”, to borrow categories from Alex Danco.
Finally, whatever terms come into play, you’re the founder and you’re at the helm. You know better than others what’s going on within the company and what challenges it has to tackle. You can always ignore others and assert control if you think it’s in the company’s best interest. Being a founder rather than a manager is your superpower—use it wisely!
Want to learn more about using your superpower as a founder? Join The Family’s next batch, which is starting in September. And if you want to find a cofounder to share in the adventure with you, join our next Be My Cofounder event this Thursday!