One-Man business mentality and other people’s money, by Simbo Olorunfemi

I just read a troubling report about the current state of affairs at one of the major Telecommunications companies. The writer expressed strong concern about the future of the company in the light of legacy issues, erosion of customer base, financial management and leadership style.

The understanding is that the company’s struggle revolves around its single-ownership structure and strongman management style, which accentuates the keyman risk already evident. Reflecting on this development, I summed it up as a sad case of culture having the goodwill and bright prospects the company had for lunch.

Saddening and concerning as it is, whatever is playing out there is neither new nor strange in this part of the world. One of our challenges has been that of transitioning from one-man businesses, not just in the sense of opening up ownership, but especially in terms of mindset.

Such is it that even with the few who make the move to go public, they do so simply to mop up cheap funds from the public, only to maintain a stranglehold on management and control, sucking the company dry, leaving shareholders with the short end of the stick, if any at all. Some people raised money from the public through private placement and public offers, and simply melted into thin air.

It is sad.

Unfortunately, that culture of lack of accountability has been passed on to the younger generations, who have the privilege of access to foreign or local capital through the activities of Venture Capitalists and Angel Investors.

Reports are rife of how people are taking advantage of the opportunity to raise funding and/or capital to launch startups whose primary objective is simply to raise funds, which these founders fritter away through reckless and conspicuous consumption, handsomely paying themselves without regard for the state or future of the enterprise, living large while the businesses limp, until everything packs up, and the Founders walk away. They either japa or move on to start the routine all over again.

Weeks back, I got to know about the ‘Ile Iyan’ saga on Foluke’s page. It was another story of a Founder falling out with an investor. The accusation was that of hostile takeover by the investor. As expected, a large chunk of the sympathy was for the founder. Most of the comments were hard on the investor for what was purportedly, but erroneously tagged, a hostile takeover.

The story reminded of that of a popular pharmaceutical company which happened a few years ago. I urged for a bit of caution, knowing the games that our founders can get up to.

I was not surprised to see the other side of the Ile Iyan’ story, with both parties sharing details speaking to lack of due diligence, weak management structure and poor governance system, lack of accountability, as well as failure to make a distinction between personal and business interests in consonance with the one-man mentality that is a characteristic of many of our businesses.

What is going on is quite concerning, not just because there is only so much one can do growing a business without making use of ‘other people’s money’. But how do we sustain a culture of using other people’s money to grow ventures if we keep up with this culture which struggles with accountability, leaving Founders to fritter away funds from investors and venture capitalists? How do we grow businesses if people raise capital and then convert same to personal use to fund their indulgences?

Even for those who mean well, there is the issue of competency on the part of some of the Founders. People don’t want to let go. Our people will rather want to hold on to 100% of nothing rather than 5% of something that is working.

Founders and men/women with ideas, talent or must consider the words of Kiyosaki cautioning those who raise money without knowing the difference between a product and a system.

” Just because you can sing (write, code, dance or have an idea) does not mean you understand the system of marketing, or the system of finance and accounting, and the system of sales, and the system of hiring and firing people, and the legal system, and the many systems that are required to keep a business afloat and make it successful”.

That you have an idea, or even money, or that you founded the company, does not mean that you have what (all) it takes to run the business, especially when other people’s money is involved.