Split and stall

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Today I want to discuss with you some thing which I have witnessed on a regular basis. I want to put it out and want your comments on how we can improve this. The problem is splitting of a promising just at the time when it might be growing and going to the next level, in my experience I have seen it happen in two ways.

One of the way this happens is that a startup formed with a group of Founders learns the ropes, passes the initial tough phase, and is ready to make it to the next level. Just at that exact moment the founding members decide to break it down into smaller pieces of individual organizations. This split usually results in each member of founding team re-building a new company from scratch. We saw it happening to Kraysis which resulted in Kraysis and Kualitatem just when Kraysis team had it going for them with them winning contract to test Microsoft Ages of Empire and winning the prestigious APICTA Award the founding team split ways. I am sure they would have had perfect and logical reasons to do it, but still it caused a rapidly growing organization to stutter stop and then start again. Similar things has happened to Uraan, Geni-Team and few other organizations. Most of them went on to become successful enterprises on their own, however think what successes we would have witnessed had they decided to stay together and grow together.

Second way that it happens is when a startup has matured. They have a good mid-level management structure the founding team feels they can leave the daily work in autopilot and look at growth opportunities. Just at that specific time one of the senior member of team would decide to leave and start his own individual setup. Remember I am not talking about senior people going to other companies, I am specifically talking about senior team who has an entrepreneurial spark of their own. The problem usually does not appear over night, its usually a slow growing discontent within the employee, he feels that he needs better portion of the profit/revenues because of his contributions. Some of them do take it to their CEOs and Directors before going on their own way. There are very rare cases when an agreement is reached and the person decides to stay back to grow the existing company with increased share in profits. Mostly the discussion breaks and Senior employee leaves. In my opinion fault lies on both ends. The employee usually ignores the factor of risks, hard ships existing founding team has faced while bringing the company to its current level, he demands a share which is higher than what would make sense. On the employer side, they underestimate the value this senior team member would provide in continuing the growth of organization and increasing revenue stream, they make an offer which does not fairly value employees contribution. Whatever the case, the end result is Startup loses the senior member, another Startup is born where the new CEO goes through the whole painful cycle again, while the existing one goes through another cycle of setting up the middle tier, in the end no one wins.

Why do you think this keeps happening, what can we do to bring the expectations to a middle level, and how can we avoid this splitting of companies to form new one.

Facebook comments:


  • This is all a regular feature and dynamism of capitalism. It shows the founders are actually doing something worthwhile and are willing to defend their company from partners who maybe free riders or whose ego is as big as theirs. Geni team, tkxel, confiz and uraan are 4 very successful companies that show that breakups can be a good thing.

  • What is wrong with this breakup? An entrepreneur wants to start his own business after learning from his experience so he should encouraged because of two major reasons. One he is freeing its place in the previous company so a new person can jumps in and the other one he is starting a new business which leads to more employment opportunities. Although after leaving the company, owners have face a lot of pain in filling that gap and building a good team is not such an easy task but this give other people chance of growing.

  • I am not saying that any thing is wrong, as I mention that most of these go on to become successful entrepreneurs. but still all this process act as speed bumps in growth path. almost all of them have to stop dead in their track re-assess and then move on, some times opportunities are lost (and i know more come their way later but still).

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