Is it right for founders to step down from their positions?
Priya Wadhwa
10x Industry

Is it right for founders to step down from their positions?

We dig into the different circumstances that surround a resignation.

These past few weeks have seen multiple founders step down from their positions.

Jack Ma stepped down as chairman of Alibaba, remaining on the board.

Adam Neumann went from CEO to non-executive chairman of WeWork.

Kevin Systrom and Mike Krieger co-founders of Instagram, left their positions at Facebook.

Imagine you had an idea for your own business. You have a vision of what you want to do. You want to put the idea into practice and see it changing lives. You give it your all, from pushing forth while facing rejections, to sacrificing family life, putting in late nights, betting your life savings — everything.

And then a day comes when you step down.

Sometimes this is what you need to focus on other parts of your life. But sometimes, when you are forced out of the company you build from scratch, that is unimaginable; while it may be what is right or necessary, sometimes — as we’ve seen in the case of Steve Jobs — not so great of a decision.

It comes down to circumstances surrounding the step down

When you’re at the stage of Jack Ma or Steve Jobs when they retired out of their own will, it’s a difficult yet sometimes a necessary decision. Afterall, a good leader’s job is to ensure the company can survive and thrive without them.

The other instances come under a grey area. When an entrepreneur decides to raise funding from investors, he/she becomes answerable to them, while the latter have a stronger say in the direction of the company. This is why one often sees founders having more votes per share of the company, because they want to guide the company in the direction of their vision.

With the injection of capital, an investor becomes part owner of the company. So while the founder has the vision, the capital is just as necessary in reaching the goal. This is why it is so critical that entrepreneurs raise funding only from investors they are comfortable with, and who share their visions and values.

Moreover, to sustain investor support, it is important that the company becomes profitable. In this scenario, it becomes easier for founders to maintain their position. For instance, look at Mark Zuckerberg, in spite of all the media, government and investor retaliation, he still holds his position.

If the entrepreneurs do not want their vision or direction to be influenced in any way, then they must find other sources of raising capital; or simply prove profitability and sustained growth.

It’s also dependent upon the entrepreneurs themselves.

Some entrepreneurs and disruptive leaders are an eccentric breed. They have ambitious visions that they run with, dubbing voices of reason as obstacles for growth. They build a startup from the ground up. They increase valuations to billions of dollars. They employ hundreds of thousands across the globe.

They are brilliant at getting the startup off the ground and gain investors’ trust to raise capital. But they might not be great people to work with, or be able to sustain a company when it becomes too big, or might even pose a harm to society politically, economically, medically or environmentally.

A founder has the right to govern his company as he sees fit, in accordance to the rules of society and not pose detrimental harm as part of the business’ activities, as long as he is the sole owner and shareholder of the company. To maintain a healthy economic balance, vision is not enough. When investors come on board, they have the right to guide companies should the entrepreneur not be able to sustain growth or fall short in any way.