Freemium and Strategic Marketing
50 Shades of C-Suite Selling Success

Founder Effects- what is it and how does it impact your brand.

This is Dr. Eugenia Jones, signing in to the technology marketing center leader’s blog, to bring you insights and inquiries into the biotechnology and healthcare markets.

“She didn’t lick that up off the streets.” A phrase my grandmother, who lived in Ireland, oft repeated whenever her American grandchildren would do something that was peculiar or improper in her eyes or those of her friends. It is a phrase that frequently comes to mind when I am consulting for a group that knows there is a problem, and seems unable to be able to pinpoint it’s source.

The source of the problems shared by ethnic grandmothers and start-up businesses are essentially the same; it is called the founder effect. In biology the founder effect refers to the unusually high expression of a particular trait in a group when compared to the whole population, for example red hair. The unusual trait can be traced back to a single ancestor, or small group of ancestor, who traveled to new territories and started new populations. The trait becomes prevalent in the new population because there is little genetic diversity among the founders.

Start-up companies are in many ways like these pioneers, and if there is not enough diversity among the company’s founders then the start-up will display an unusually high acceptance of business practices that are not common in the business community as a whole.  This way sound like a criticism, and it can be if the traits that flourish are those that decrease a business’s likelihood to survive. On the other hand the founder effect can also be a key differentiator; that thing or collection of things that make a company and it’s brand distinct in the market. 

Two readily recognizable examples of positive founders effect, are Apple and Starbucks. It is difficult to separate the company and brand successes from their respective founders, Steve Jobs and Howard Schultz. For Steve Jobs form was just as important as function. So much so that customer’s believe that every product that bears an Apple logo will wow them with easy to use innovations that will make their lives simpler and more enjoyable. For Howard Schultz coffee was not just a drink it was an occasion to gather and commune, and every store not only invokes the smell of espresso to the consumer, but the idea of a comfortable, environmentally conscience, place to meet a friend.

How engrained the founder effect becomes in business practices depends a great deal on executive level buy-in. If executives “drink the cool-aid” and adhere to the founders principles the company will continue to flourish in absence of the founder as long as market conditions and consumer attitudes are unchanged.

If the founder should depart, and e-level manager do not embrace the founders vision, then the company will head in a different direction, sometimes to the brand demise. Such was the case when Howard Schultz handed the reigns to group of former Disney executives who moved the company in a direction that did not resonate with customers. Luckily Schultz returned in enough time to right the ship and salvage the brand.

These two examples are not representative of the majority of small businesses whose products and services have not “crossed the chasm,” but they do beautifully describe the founder effect. Over the remainder of this year I will post about how founder effects play a key role in determining the success or failure of technology start-ups. I’d love to hear from you if you have an example of a founder effect or a comment on this post. 

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