Walt Disney is one of America’s best known and most beloved founders. Disney liked to say that “the difference between winning and losing is most often … not quitting.”
But there are boards of directors of a few retail companies that are trying to win over customers and investors who would tell you that quitting is, on the contrary, very much what they would like their founder to do.
What founders mean to their companies
Someone who has the ambition to create a company around an idea and pulls it off successfully is usually a person with focus, creativity, and drive — all excellent qualities in business. At least at first.
The early days of a startup often establishes the company’s culture — which can be very much tied to a founder’s vision, personality, and idiosyncrasies. That can help set a company apart and attract both dedicated employees and loyal customers.
When Ingvar Kamprad stepped down earlier this month from the company he founded, Ikea, it made a certain amount of sense. But his move meant that the Swedish retailer didn’t have its founder in a position on the board for the first time ever, since 1943. Still, Kamprad is, after all, 88 years old. And even though his departure was inevitable and not very controversial, the company is nevertheless a bit lost about who will replace him and what it means for the retailer’s future.
Founders can bring trouble at just the wrong time
Sometimes it's the very confidence and think-outside-the-box thinking a founder brings to his or her company that gets in the way when a company is ready to become more established. Investors or shareholders can get queasy if a founder’s behavior or long-term vision for the company conflicts with their own or a majority of the board.
And sometimes it's co-founders that find themselves at odds with each other, a huge distraction for a company ready to move on to the next level. When fab.com co-founder Bradford Shellhammer left last year, both he and the company officially said he was moving on to bigger and better — or at least different — things. But rumors swirled that he was pushed out because of his lavish lifestyle and because his ideas didn’t mesh with others’ vision of success for the company.
Similarly, the continued presence of Best Buy’s founder after the controversial behavior of a CEO he had hand-picked gave the electronics retailer’s board fits in April 2012. Within a month, the board managed to oust him as chairman to better concentrate on the future of the company, which continues to struggle in an intensely competitive retail atmosphere, especially in electronics.
For good measure, Best Buy’s Geek Squad founder Robert Stephens, who left the company two years ago, unleashed a “candid memo” just this past April intended, he said, to spur his former company to drastic action.
Bad behavior eventually becomes a problem
Recently, Lululemon Athletica and American Apparel have become poster children for companies that tolerated idiosyncrasies and even bad-boy behavior from their founders — until they didn’t.
Lululemon founder Chip Wilson has long had a reputation for odd ideas and boorish behavior. But in March 2013, when the company encountered major production-line problems that affected the quality of its signature yoga pant, Wilson was decidedly unhelpful. Wilson opined that only overly large women were having problems with the pants, a churlish and simply untrue statement that made headlines and was a major distraction from the company’s efforts to address the issue.
And just last week, American Apparel’s bad-boy founder Dov Charney was let go as CEO by his company’s board of directors, a move that many saw as a long time coming. Charney’s reputation as an apparent inappropriate sex fiend apparently got too bad to ignore. Plus, the company was increasingly facing some financial and operational consequences from its founder’s questionable behavior.
Parting is not so easy
Lululemon Athletica may have thought they had turned the page on founder Chip Wilson’s leadership of the company when they let him go in as chairman of the board in December. They then brought in Toms CEO Laurent Potdevin to replace abruptly outgoing CEO Christine Day. But the company hasn’t quite righted itself, and is finding it difficult to regain its top footing in the increasingly competitive high-end, high-design activewear retail business.
Wilson, who retains a 27% stake in the company, is now reportedly working with Goldman Sachs to assess his options to regain control, which could include launching a proxy fight to gain more seats on the board or find a partner for a buy-out. Wall Street likes the idea, so far, but some observers say that Wilson’s outspoken, controversial approach could deter many potential investors or allies and undermine any real progress in his efforts.
And freshly fired Dov Charney is not walking away from American Apparel without a fight. Charney, like Wilson, owns 27% of the company he founded. Charney said he is having discussions with supporters, including stockholders, who want to shake up the board and bring Charney back to the retailer’s helm, according to a Monday filing with the Securities and Exchange Commission.
Charney is also taking legal action against the retailer’s board of directors. Part of his argument reportedly is that the board knew about Charney’s behavior for years, giving it little standing to take action now.
Meanwhile, the fate of American Apparel — and Lululemon, and even Best Buy — remains in the balance. It may be difficult to match the early vision and success a founder brings to a retailer, but it can be even more difficult to grow with him or her closely involved. As Walt Disney also said: “Adults are only kids grown up, anyway.” Or, at least, some of them are grown up, anyway.