The startup world is filled with vibrant personalities and inspiring characters. However, not all founders offer the leadership qualities necessary to guide their teams effectively.

Here we dive into four potentially toxic startup founder personality types:

  1. the Egotist (GOD),
  2. the Savant (WIZ),
  3. the Control Freak (OCD), and
  4. the Faux Nice Guy (FNG).

In this article, our commercial and corporate partner Jaan Larner will examine how they interact with key stakeholders including employees, advisers, suppliers, investors, competitors, and customers.

The Egotist (GOD)

This founder sees themself as the ultimate authority, the all-knowing, all-powerful leader. With a nickname like GOD, it’s easy to picture how an Egotist could negatively impact a startup. They disregard employees’ inputs, viewing them as underlings rather than team members. Advisers find their counsel dismissed because, after all, who knows better than the God? Suppliers and customers are expected to adapt to the founder’s whims, creating a rigid, non-negotiable business atmosphere. Investors may initially be taken in by the founder’s confidence, but soon realize the lack of humility impedes growth. Lastly, the Egotist views competitors with disdain, potentially underestimating them and missing critical strategic insights.

The Savant (WIZ)

As an expert in their domain, the Savant often struggles with communication, resulting in a frustrating environment for others. Employees may feel lost or unvalued as the WIZ fails to clearly articulate the company’s goals. Advisers may struggle to guide the WIZ, who often retreats into their area of expertise and neglects broader business considerations. Suppliers and customers may find it challenging to deal with the WIZ due to a lack of relationship-building skills and a single-minded focus on the product. Investors often find the WIZ’s vision compelling but become frustrated with the founder’s inability to execute outside their area of expertise. Competitors can easily outmanoeuvre the WIZ who tends to focus on technology and fails to address market dynamics.

The Control Freak (OCD)

Obsessed with order, precision, and control, the OCD personality can create a stifling, high-stress environment. Employees in such a setting can feel micromanaged, reducing morale and creativity. Advisers may find their advice ignored unless it aligns precisely with the OCD’s vision. Suppliers may be excessively scrutinised, and customers can be alienated by the inflexible service or product offering. Investors may be wary of the OCD’s reluctance to delegate, a crucial attribute for scale. Competitors can capitalise on the OCD’s inability to adapt quickly, using their rigidity as a strategic advantage.

The Faux Nice Guy (FNG)

Unlike the other types, the FNG appears outwardly approachable and amiable. However, underneath lies a lack of authenticity that damages trust. Employees often feel manipulated, and their loyalty diminishes as they see through the FNG’s superficial charm. Advisers may be treated well initially, but their advice may be discarded if it does not serve the FNG’s agenda. Suppliers and customers may feel deceived when the friendly façade evaporates upon disagreement or conflict. Investors become disillusioned with the lack of transparency, which hampers long-term relations. Competitors may initially underestimate the FNG, but the façade often fails under competitive pressure, revealing the founder’s true colours.

Dealing with a potentially toxic startup founder

Understanding these personality types allows stakeholders to better navigate their interactions. Employees can protect their morale, advisers can tailor their advice, suppliers and customers can negotiate more effectively, investors can assess risks more accurately, and competitors can strategize better.

It should be said that these toxic founder types are not necessarily doomed to their detrimental behaviours. Self-awareness and a willingness to adapt can transform them into effective leaders. An Egotist can learn humility, a Savant can work on communication, a Control Freak can learn to delegate, and a Faux Nice Guy can strive for authenticity. As with any growth, recognising the need for change is the first step.

What if you have to deal with one of these characters? Well, the obvious options are to resign, don’t invest, refuse to take instructions and take a disproportionate pleasure in the knowledge that even if they have a modicum of success, they live lives of such miserable pathology that cash is scant reward for being so derided. Schadenfreude is a dish best served while living life on your own terms.

Alternatively, you can accept the negatives for what they are, recognise that they are likely temporary (you can always find another employer, investee, client) and look to maximise your own benefit via working with a (hopefully) cutting-edge high-growth company, gain experience in challenging circumstances or simply take the payday.

Whatever you choose, recognise that while the behaviour of a toxic founder is outside of your control, how you react to them is entirely within yours.

If you are a startup founder or have questions about a startup company, please contact Jaan Larner.

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This article is for general information purposes only and does not constitute legal or professional advice. It should not be used as a substitute for legal advice relating to your particular circumstances. Please note that the law may have changed since the date of this article.