The self sacrificial founder CEO has a far loftier challenge

Every would-be entrepreneur wants to be a Raymond Ackerman, Brian Joffe or an Adrian Gore, each of whom founded a large company and led it for many years.

However, successful founder CEOs of companies which are over 20 years old are actually a rare breed. Many founders surrender management control long before their companies go public or get to the point where they become sustainable national brands.

Founders appear to not let go of their business that easily – even if they are offered great sums of money to do so. Many entrepreneurs are forced to step down from the CEO’s post and are shocked when external investors insist that they relinquish control, and they’re pushed out of office in ways they don’t like and well before they want to abdicate. The change in leadership can be particularly damaging when employees, who are loyal to the founder, oppose it. In fact, the manner in which founders tackle their first leadership transition often makes or breaks young enterprises.

The transitions take place relatively smoothly if, at the outset, founders are honest about their motives for getting into business in the first place. Isn’t that obvious, you may ask? Don’t people start a business only to make lots of money? They do. However, a 2000 paper in the Journal of Political Economy and, two years later, in the American Economic Review showed that entrepreneurs, as a class, made only as much money as they could have if they had been employees! In fact, entrepreneurs make less, if one accounts for the higher risk they take.
What’s more, in my experience, founders often make decisions that conflict with the wealth-maximization principle. Many founders are quite frankly so in love with their businesses and the idea of leading their enterprise to greater heights, that they are the ones who allow many people around them to make more money than they do.

Often entrepreneurs become self-sacrificial for the sake of the business; many of them treat their businesses like babies and although they have options for generating higher personal financial gains they often choose the growth of the business, and the people around them, to move ahead versus the desire for money.

The reason isn’t hard to fathom: there is, of course, another factor motivating entrepreneurs along with the desire to become wealthy, which is the drive to create and lead an organisation. The surprising thing is that trying to maximize one side often imperils achievement of the other.

Entrepreneurs face a choice, at every step, between making money and leading their ventures. As a founder entrepreneur, I fully understand this contact conflict between leading an organisation and trying to strip out as much cash as you can to facilitate personal wealth.

Often I have felt that I was stupid and should not worry about the growth of the business and try to cash in as much as possible, but that decision conflicts with my personal view that a business is not only about money. Businesses change markets, form public opinion and have ideals far loftier than cash and profits. In my view, if the fundamentals are right, the entrepreneur will always make money, but he has the ability to create something and that is far more exciting than a simple accumulation of wealth.

An entrepreneur is a person who holds a vision, spirit, intelligence and an art of making an enterprise run successfully. They have an important role in society through bringing in new ideas, methods and objects through their business; irrespective of the basic issues of satisfying their personal goals and ambitions. If they are part of creating something that was never there before, their idea becomes reality and the satisfaction of doing this outweighs any personal self-sacrifice.