Company Founders: Beware of Arrogance

Here's a lesson for young entrepreneurs.  Watch out for success - it may destroy you!  A contradiction?  Not necessarily.  Let's start at the beginning.  You have an idea, a dream - you work hard to make it a reality, taking risks, raising capital, convincing others, working hard, failing, trying again.  Then - voila - success! You're on the road - finally.  The future looks bright - not perfect - but promising.  You keep at it.  But along the way, keep in mind one rule - stay grounded.  Don't get arrogant.

Here's a case in point.  Dov Charney, 46 year old founder of clothing giant American Apparel Inc., was unceremoniously stripped of his roles as Chair of the Board of Directors, Chief Executive Officer and President, because of concerns related to his personal and corporate activities.  Specifically, they can be broken down into 2 categories.
PERSONAL
:  Sexual harassment and abusive behaviour cases filed against him in recent years.  (walking around factory floors in his underwear)  Remember the Emperor with no clothes?

:  video-taped dancing naked in front female employees.  It ended up on social media,.  Not the kind of image reputable companies want to show the public and clearly an embarrassment to the Board of Directors and investors.

CORPORATE
:  Financial controls are a key responsibility of management in any company.  American Apparel's balance sheet has been on a roller coaster ride for years.  Weak sales, growing debt, strong competition and possible bankruptcy are real issues.  Dov Charney's complicity in this mess can be found in the Board's termination letter to him:  "  you have willfully and continuously failed to substantially perform your job duties under the employment agreement and you have engaged in willful misconduct that has materially injured the financial condition and business reputation of the company."

:  An internal investigation claimed he used company money to buy airline tickets for his mother, used company apartments for friends and parties and posted naked photos of a former saleswoman on a blog - which prompted the woman to file a 260 million dollar lawsuit against him for sexual harassment.  If successful, this action will result in a huge financial hit and a body blow to the company's reputation.

So entrepreneurs beware of hubris.  Stay grounded and remember, you may have gone from obscurity to great heights, but the fall from grace can come a lot faster than the rise to fame and fortune.