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People Power

09 December 2019 by Kirsty-Anne Jasper

People Power

Entrepreneurs are invaluable but without team work companies are doomed to fail

Over the last few month’s news of start-ups sacking their founders have become sadly commonplace. Visionaries, who have built multi-million pound empires have struggled to maintain control as the companies grow, becoming tunnel visioned and unable to grasp the changing requirements of their organisations.

Some business leaders are so closely associated with the companies they run that it’s almost unthinkable the firm could exist without its boss, the brand’s being so synonymous with the founder. Imagine Facebook without Mark Zuckerberg or Virgin without Richard Branson.

Sometimes, though, founders overestimate their importance. The now-former WeWork boss, Adam Neumann, clearly counted himself among that group. The office space organisation was valued at nearly $50bn (£39bn) earlier this year and, in August, told potential investors: “Our future success depends in large part on the continued service of Adam Neumann, our co-founder and chief executive officer”.

The firm described him as “critical to our operations” as it warned that Mr Neumann did not have an employment agreement with WeWork and said his departure would significantly hurt the business.
However, just months later, the firm has pushed Mr Neumann from his board seat, demoting him to the role of ‘observer’, as it agreed to a rescue package from investor Softbank that valued it at just $8bn. Nevertheless, Mr Neumann has walked away from the firm with a $1.5bn payoff.

A Case of Hubris

Mr Neumann is far from alone. He is one of many entrepreneurs who have struggled to steer the ship as their companies grew from fledgling start-ups to corporate giants. Travis Kalanick became a billionaire after founding the wildly successful transportation service Uber. However, he presided over a rampant culture of sexism, the covering up of a major hack, spying on journalists and, allegedly, the theft of trade secrets from Google.

Mr Kalanick became known for his aggressive business tactics. When New York Mayor Bill De Blasio threatened to limit the number of rideshare drivers allowed to work in the city, Uber added “De Blasio’s Uber” feature, which showed no available cars or long waits for a ride. When the city of Austin introduced a bill that Uber didn’t like, the firm switched off services in the city.

In a widely reported email to staff ahead of a company party in Miami in 2013, Mr Kalanick – known as TK – asked employees not to have sex with each other if they were in the “same chain of command” or to throw beer kegs off tall buildings, and levied a $200 (£158) “puke charge” for anyone who was sick, presumably as a result of over-indulgence.

Although some of this behavior may have been seen as acceptable in a small firm, it wasn’t suitable for a modern conglomerate and eventually, in 2017, following a spate of apologies from Mr Kalanick for both his own behaviour and that of members of his leadership team, he resigned. Like Mr Neumann, he also sold down his stake in the firm he founded to Softbank.

Tech strategist Flavilla Fongang says that this is due to the fact that in the start-up phase, new firms can solely focus on growth, raising investment and building infrastructure. However, once the business is up and running, the founder has to turn his or her attention to more delicate tasks, such as cultivating new leaders who can run the company as well or even better.

She describes firms like Uber as “very strong-minded in terms of the disruption they wanted to create” and its employees as people who “wanted to be part of that history”.

“It becomes a bit of a cult almost where people come to work with a feeling that everything they do will make an impact in society,” she says.

Ms Fongang describes people like Mr Kalanick as “honest and direct”.

“They say what they think,” she says. But she says things go wrong when their actions don’t match their words.

Another firm to suffer a similar fate was Theranos. Elizabeth Holmes also became a billionaire after founding the firm on an idea for a drug-delivery patch that could adjust dosage to suit an individual patient’s blood type and then update doctors wirelessly. However, the difference between her and Mr Neumann or Mr Kalanick is that the implosion of Ms Holmes’ business, didn’t just leave her jobless; it has left her facing prison time.

The idea that created the company – a machine that could test for a variety of diseases through only a few drops of blood from a person’s finger – was found to not work.

A story in the Wall Street Journal in 2015, accusing the firm of not using its own machines to test blood samples, prompting an investigation by the US financial regulator, the Securities and Exchange Commission. Within a year, Theranos had its licences revoked and began shutting down its labs. Forbes magazine revised Ms Holmes’ wealth down from $4.5bn to “nothing”.

Team Building

These falls from grace are sometimes saddening or infuriating, but they are nearly always avoidable. Having a company that is founded on one leading light at the top is unsustainable, both for the individual and the company.

Corporate governance can go a long way towards helping, providing a series of checks and balances that allow order and legality to be maintained. However, looking to create infrastructure from within is equally important. When building a company it’s natural that you would recruit the best people available. Why then are so many bosses afraid to use the skills that their employees bring?

By making time to really get to know your staff both in and outside of work, you can learn the talents that reside within your organisation. This may be by providing corporate training or away days, a lunch or staff drinks away from the office, or even a staff sport day.

By taking the staff outside of the corporate setting, you are able to develop as a team and identify skillsets that you may not have even known your workforce possessed.

By identifying skills, work is able to be distributed in a targeted manner, allowing for greater growth and less pressure on a boss who is building a company from scratch, and often has little to no experience at this level. 

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