The problem may not be widespread among startups. But these instances aren’t outliers either – they are at best outliers in their intensity.
People who are risk-takers, such as startup founders, have often been found to exhibit such behaviour, says Paramjeet Singh, a psychiatrist at PSRI Hospital in Delhi. The stress of raising funds and keeping the business growing, he says, may result in unpredictable outbursts.
A senior executive who recently sat through a job interview at a young Delhi NCR-based edtech startup, was asked, “How will you handle a boss who will call you to his cabin and throw things at you?” The boss in question was no other than the co-founder of the company, who has garnered a fierce reputation of being volatile and unpredictable. The interviewer went on to confide: “Even I am looking to move on as fast as possible.”
And that’s one of the big problems with founder arrogance, especially in these times when talent is in short supply. They will vote with their feet. In today’s world, employees are the biggest IP, says Krishna Kumar, founder & CEO of Blackstone-backed online learning company Simplilearn. “There is a war for talent. So, no company can afford to have a toxic culture. It all starts from the top. Business leaders in the org emulate the founders’ approach. You as a founder need to be aware of that and ensure you are setting the right example to build a positive culture,” he says.
Krish Subramanian, co-founder & CEO at subscription billing and revenue management platform Chargebee, says in a world where the best talent has more choices than ever before, “a great work culture is a serious moat and boards will start paying closer attention.” The values or behavioural traits of founders, he says, heavily influences how an organisation grows. “You can be kind, compassionate, and yet be ambitious. There is so much to learn by reading about leaders like Ratan Tata,” he says.
Naveen Tewari, founder & CEO of ad tech unicorn InMobi, says creating a culture that is toxic and restricts freedom at the workplace is one of the quickest ways to kill creativity and stifle innovation. “When people do not feel free to express themselves, you will find that your company is not creating real value for its users and customers and not doing anything different, anything ground-breaking. While I cannot speak for the entire industry, for us, every employee, and not just the board, has the right and the responsibility to ask the questions that matter,” he says.
Don’t boards keep a close eye on company culture? Kumar says there are many instances where the board ignores such things, especially when the company is growing aggressively.
Prasanna K, managing partner of SaaS accelerator Upekkha, says protecting founder interest often becomes paramount. “In the US, earlier, it was very common for investors to replace the founding CEO with a professional CEO after series B (funding round). But if you look at Google or Facebook, they structured founder equity to have 10x voting rights of investors and stayed in control,” he says.
Kumar says the best way to handle such problems is to have strong independent board members. “If you get industry veterans on your board, they will always stand for what is good corporate governance,” he says.