“There’s a lot of talk about the importance of a company being ‘founder-led’,” Jack Dorsey wrote on Monday in his resignation letter. “Ultimately I believe that’s severely limiting and a single point of failure.”

With that, Dorsey, who co-founded Twitter in 2006, and who was fired as chief executive two years later only to return to the position in 2015, was gone. He handed the reigns over to the company’s chief technology officer Parap Agrawal and made for the exit.

Only a fool would bet against Amazon succeeding on the high street

The move hardly comes as a surprise. In a world of lauded tech titans, Dorsey never quite fit the bill. And Twitter and its flat share price seemed to suffer as a result. While other tech stock hit ever greater heights, Twitter just bobbed along. But it was more the manner of Dorsey’s departure, rather than the exit itself, that raised an eyebrow this week. From his departing statement, it was clear that Dorsey was not only circumspect about his own leadership run but that of all “founder-led” companies.

And that’s certainly a contrast with traditional Silicon Valley mythology, which posits a Jobs or a Gates as one of the precursors to fabulous success. And it’s also something of a contradiction to standard branding theory too. We love a founder in brand management. They are a massive source of marketing advantage.

Five benefits of a strong founder

First, in the early stages of a brand’s evolution they become the focus for press coverage and a wonderful source of brand awareness. It may sound a little silly today, but there was a time when Amazon was an unknown and relatively unlikely operation. But its kooky founder Jeff started to make headlines and his brand famous as a result. Like so many brands before and after Amazon, people are initially far more intriguing than startups. So the founders must play the role and make an impact that their brands can then grow into at a later date.

Second, you get an inherent brand position. Whisper it quietly, but what consultants and agencies do later when it comes to positioning a big brand is entirely artificial. It has to be done because the size and scale of a company demands a constructed set of values to pull everything and everyone together. But in the early years of a brand’s life, its strategic direction is usually organic and instinctive and it comes from the almost autonomous decision-making of a founder’s gut.

When Jean and Jane Ford set up Benefit cosmetics, they did not have a brand book to strategically direct the brand to be bold and feminine, and most of all fun. This was just how they always rolled. All the time. And they were determined to apply that same magic to make-up. It was an instinct, not an approach, and it came from within.

One of the great joys of working for a founder-led business is a much quicker and clearer sense of what a brand should and shouldn’t do.

Third, that clarity of position usually delivers astonishingly consistent yet distinctive products and tactical execution. Because founders know exactly what their brand is all about, they also know – a nanosecond later – how it should execute in any and all circumstances.

A designer at Laura Ashley once explained how a design team had been working for weeks on a new wallpaper without being able to get it quite right. Laura popped her head over their shoulders one day, took a paint brush and placed a tiny imperfect dot above each recurring pattern on the paper. It became a bestseller and the team marvelled at how, in an instant, their founder knew exactly what to do. But why wouldn’t she? It was all her idea in the first place.

Fourth, you get the kind of extreme leadership and zealous compliance only usually found in a cult or Eastern Bloc dictatorship. Founders are a potent combination of CEO and celebrity and artist and museum piece, all wrapped up in one. And that can be a wonderfully useful mixture when it comes to leading the team.

I remember heading off from home to fly to New York, to work for Donna Karan. I had a very long drive to the airport and I was already cutting it fine. I also had a pre-arranged call with Donna. I dialled in from my car at the appointed moment and listened as she talked about her expectations for the meetings ahead. About 10 minutes in, the phone went dead and I realised, with a giant profanity, that I was now driving through a notorious black spot with no phone signal. For miles!

The longest seven minutes ensued as I practised my apologies and waited for a signal so I could rejoin the call. Finally, I got back on the line, only to find Donna still talking and oblivious to my absence. I made it all the way to the airport without a single input. With any appointed CEO I might have started to worry, but because it was Donna Karan I treasured every single unnecessary minute.

Finally, you get differentiation. These rare men and women that create brands are usually very different from the rest of us. They aren’t just capable of divergence from the norm, they came with that trajectory baked into them from birth. John Cadbury was determined to change the way people produced and consumed things in the 19th century. Like most founders, the actual products of his creation were merely vessels of a much broader and wider quest. Cadbury, as a result, was not like any other company or brand.

Blend all these three things together – leadership, awareness, position, distinctive presence and differentiated brand image – and it’s easy to see why founders play such an important role in a brand’s evolution.

Twitter is better off without Dorsey

So, does Dorsey have a point? Is being founder-led actually a “limiting” move?

Well, the short answer is yes. But that limitation is no bad thing. If we follow the basic tenet of all good strategy – that it is what we do not do – then setting clear limitations on where we play, on what we stand for and how we win are all very positive things. One of the great joys of working for a founder-led business is a much quicker and clearer sense of what a brand should and shouldn’t do.

The longer answer, however, is more complicated. Over time there is a risk that a founder does not stay in touch with the changing market and competitors that swirl around them. While I genuinely believe brands should never change their core position, I also think that the execution of that position over long periods of time must change. What cool or funky or high-tech meant in 1992 is clearly very different from what it will mean in 2022. The grand paradox of brand management is that, to stay true to its DNA, a brand must change over time.

Occasionally founders are a problem because they limit brands’ capability to adapt or evolve, or they even become barriers to that evolution. A few rare exemplars, such as Giorgio Armani, dodge this bullet because they possess some kind of eternal ability to invent and reinvent their point of view, to stay relevant and keep their brands fresh. Others, like many of the founding champagne families, look to their offspring to engage with the new trends of the market, before bringing those insights back to the family business with time. But, too often, founders hang on too long to their way and damage their businesses as a result. That leadership and influence can have a downside too.

How to ensure founder-led businesses don’t become toxic

“There aren’t many companies,” Dorsey concluded in his exit letter, “that choose their company over their own ego.” It’s a strange statement for a CEO that hung on to power for six long years without any clear success and despite constant calls for his exit. If anything, the Dorsey ego is all the more apparent because of his letter. It is a clear attempt to pin his exit on the flawed founder-led businesses model, not on his own failings in the role. Except Dorsey, unlike so many others, can put his own status to one side for the sake of his company.

But his company is better off without him. Twitter shares jumped by 10% on the news of Dorsey’s exit. They did that not because the founder model is flawed but because Dorsey was a strangely poor example of that model. The inherent strategy, differentiation, distinctiveness and leadership we have come to expect with founders was curiously absent. Despite the Dorsey letter, the founder model lives on.