Entrepreneurs aren't always the best leaders of the companies they build. Nor are they always born business people, adept at balancing the books and keeping margins in check. Some aren't even very likeable.
Often, they're "big ideas" people, or so-called visionaries. They see the world as a matter of problems and solutions and when they hit on one that's particularly promising, they have tunnel vision.
This kind of unbending focus, or "passion" as many entrepreneurs call it, can be great for launching startups but it also can be pretty trying for the employees or family members who are brought along for the ride. "Extreme success results from an extreme personality and comes at the cost of many other things," writes Justine Musk, Elon Musk's ex-wife, in a recent Quora post. She and the Tesla founder recently split after eight years of marriage.
Steve Jobs is another example: He may have had an irascible management style, but Jobs's admirers tend not to dwell on it because the man single-mindedly built one of the world's most successful companies. What's a little entrepreneurial genius run amok?
It's a lot tougher to ignore a difficult founder or CEO, however, when his company starts to struggle. Consider the case of Ben Kaufman, the CEO behind the consumer products company Quirky. After quickly hitting the $50 million revenue mark, the company established itself as one of the most innovative manufacturing businesses around. But now Quirky is making headlines for its cash flow problems and layoffs, byproducts perhaps of a brash, young chief exec. At what point does a leader's personality become the problem?
In February, Kaufman announced that the New York City-based company he founded in 2009 to "make invention accessible" was to undergo a significant change to its business model. It would pivot from a company that made and sold hundreds of its own user-generated products each year, to one that would make fewer crowdsourced products. And rather than sell them directly to retailers like Bed, Bath & Beyond, Staples, and Home Depot, Quirky's community would create products for its giant corporate partners like GE.
Speaking in a recorded, town hall-style session, Kaufman introduced the company's community to "Quirky 2.0," which along with the partnerships would involve a raft of major changes, including shuttering its e-commerce store, reducing the staff, and ending the policy that requires Quirky products to come from its community. Now ideas can stem from the company's corporate partners, as well as Quirky staffers.
"The last six months have been incredibly difficult for the Quirky team. There's been a lot of uncertainty of what our future holds in terms of structure; in terms of growth; in terms of what type of products we're going to move forward on. That same uncertainty has spilled over into the community and today it came to a head," said Kaufman during Quriky's town hall. "You could view this as us growing up as a business, and I think that that is a fair thing to say."
In April, the company announced its first acquisition of the New York City-based organizational design firm Undercurrent for an undisclosed sum. Kaufman noted at the time that the purchase helps Quirky transition to serving big clients. "We've gone from [being] a company that only makes products for ourselves to a company that makes products for some of the largest brands in the world," Kaufman told Inc.
Later that week, Quirky announced a partnership with toy-maker Mattel. Besides its longstanding relationship with GE, for which Quirky has built a network of smart-home devices--like connected light switches and air conditioners--audio equipment maker Harman International and Amazon's Dash replenishment service are also brand partners.
Quirky's community, which hit more than 1 million members in December, wasn't thrilled by the changes. While the company vowed to begin paying its community members the funds owed to them on a quarterly basis--a welcome improvement from its previous slapdash payment track record--the royalties Quirky's community would receive going forward would be much diminished. Before Quirky 2.0 launched, community members were getting 10 percent of Quirky's revenue. Now inventors get a smaller cut of sales, ranging 1.5 percent to 5 percent. In addition, the company expects to produce fewer products going forward.
More Than Just a Quirky Personality?
Then, the negative reports began to pour in. First technology site, The Verge posted a piece on troubles at Quirky. Business Insider also detailed Quirky's woes, highlighting the company's recent layoffs of 20 percent of its staff and product recalls, in addition to Kaufman's unorthodox management style. Apparently a common refrain at the company is that Kaufman needs a boss. His curt manner and the company's quota of three product-launches a week weren't helping engender goodwill among staffers.
On Kaufman's own LinkedIn profile, one Quirky marketing staffer, Bret Kovacs, writes: "He's a dick, but hilarious."
Of course, you could write this off as juvenile antics. Kaufman is just 28 after all. He was 18 in 2005 when he launched his first company Mophie, the Burlington, Vermont-based iPod and iPhone accessories maker. In 2007, he landed atop Inc.'s list of the top 30 Under 30 entrepreneurs, before selling the company to its current owners.
You could also note that every company culture is different, and not everyone will be the right fit to work at Quirky. In December, during a live chat on Inc.com, he described the company's five core values: "We have very weird, backward core values," said Kaufman. "We measure employees on their impatience; on their ability to embrace conflict--will you fight with everyone around you including the CEO? Are you agile? Are you selfless; do you care more about the company than you do your own personal gains? And how much stuff do you get done?"
But Kaufman isn't blameless. While it's fine to have a strong personality and a penchant for jokes, a chief exec has a responsibility to his employees--and with that comes the need to make smart decisions about growth. In Quirky's town hall, Kaufman mentioned the Beat Booster, a wireless speaker with a universal charging station, which the company spent $388,000 to develop. Quirky wound up selling a grand total of 28 speakers. Through a press representative, Kaufman declined an invitation to discuss the company's latest missteps and his management style.
When I asked Kaufman about the criticism he's gotten over his management style during December's live chat, here's how he defended himself: "It's sarcasm. I use that to try to make light of difficult situations," said Kaufman, who called his behavior "a matter of authenticity." He added: "I'm not the type of CEO that walks into a room and says a bunch of fluffy shit. I'm going to go right to the problem and probably try to make a joke of it."
When I further asked if he ever considered bringing in a professional manager, a CEO or a COO type of executive, he offered an unambiguous response: "Have I thought about it? Yes... Is it right to bring in a CEO at Quirky? No."
Besides his employees, Kaufman also has to answer to investors. And boy does Quirky have investors. To date, the company has raised $185 million, from its partners including GE and venture capital firms including Kleiner Perkins Caufield & Byers and Andreessen Horowitz.
To be sure, there's no sign that investors are unhappy with Quirky's performance, which is good since the company is reportedly seeking to raise another round of funding. And perhaps the changes unleashed by Quirky 2.0 are precisely what will help the company overcome its recent hurdles and thrive in the years ahead. One thing's for sure, however, Kaufman doesn't rattle easily.
"This is our plan for how we're going to build a business around making invention accessible," he announced during Quirky's town hall. "Frankly, I have an incredible amount of confidence that it'll work."