Opinion: Founders bring authenticity and distinctiveness – lose them at your peril

In the last few months we have seen a number of founders going back into the businesses they have built when performance has faltered, and while initial investor reaction has been positive, time will tell whether they can work their magic and return these brands to growth. 

John Roberts stepped back into the top job at AO six months ago, and latest results show group revenues up 13% year on year, but Europe continues to be loss-making and the shares are trading down 47% year on year. 

In a well-publicised move, Julian Dunkerton was reinstated as chief executive of Superdry in April, causing an immediate spike in the shares, but there is a long way to go to get back to the valuation of 12 months ago.

As entrepreneurs, founders are adept at the start-up but not always so good on the scale-up. They have the creative vision but often lack professional training – so are ill-equipped to run a large, international or public company – or simply don’t want to. 

Some recognise that post-IPO, it’s no longer their baby (this will depend on how much equity they retain, of course) and are happy to count their millions in the sun. Others cannot bear to stand by and watch a new management team either abandon or compromise their strategy and, like Dunkerton, mount a campaign to return to the helm.

Top founders

So how important is it that the founder remains involved? Let’s look at some examples.

Mountain Warehouse has just announced its 22nd year of consecutive growth with sales up 13% and is one of the very few retailers still opening stores, both here and abroad.

Founder/chief executive Mark Neale is maintaining “a relentless focus on value” but continues to resist the urge to float and is still in charge some 20 years after the company was founded.

Boohoo floated on the AIM in 2014 at 50p, and today the share price is 220p. The business now operates five brands across multiple geographies, and this level of complexity has led founders Mahmud Kamani and Carol Kane to bring John Lyttle in as chief executive – although they remain absolutely integral to the management team. 

“What they bring may appear intangible and hard to define as the business grows in scale and complexity, but it often stands between distinctiveness and blandness – or success and failure”

Boohoo was the best-performing share in the FTSE last year and has just announced a sales increase of 39% in Q1 – probably not a coincidence?

Tom Joule founded his eponymous brand 25 years ago and it now has 100 stores, a growing international business and turnover of circa £200m. In 2015 he relinquished the chief executive role, ahead of flotation, to focus on creative design, and remains in place today as the beating heart of the brand.

Ray Kelvin was chief executive of Ted Baker for over 30 years, pre- and post-IPO. Recent trading has been challenged, but until the distractions of this year, growth has been stellar, with revenues in excess of £600m.

Ray focused on what he was good at – the product and ensuring that the quirkiness that defined the brand wasn’t diluted – while highly experienced COO Lindsay Page ran the business and kept the City happy. 

And this is the key. Founders might be infuriating to work with and, in the eyes of some executives, ‘do not understand’ the disciplines and processes involved in running a public company – but lose them at your peril. 

What they bring may appear intangible and hard to define as the business grows in scale and complexity, but it often stands between distinctiveness and blandness – or success and failure. Harness what they are good at and release them from what they’re not, and make sure they continue to sprinkle that magic dust which keeps the soul of the brand alive.