By Alexey Gubarev
The World Management Survey has now scored management in more than 13,000 firms across over 35 countries. In every country it covers, family firms score significantly lower, and those that hand the chief executive’s job to a family member score almost a full standard deviation below the rest.
Limassol-based entrepreneur and investor Alexey Gubarev, one of the founders of Cyprus’s TechIsland, argues that the most valuable thing a founder can build is a company that runs well without them in the room.
Founder-led start-ups aren’t family firms. But the risk that research describes is one I recognise from my own career and from many founders I’ve met since: a business whose decisions, relationships and knowledge all run through one person. Sooner or later an investor or a buyer asks what happens to the company if that person steps away. If the honest answer is “it slows down”, the business is worth less than it looks, however fast it’s growing.
I spent nearly two decades in hosting and infrastructure, where customers expect servers to stay up at three on a Sunday morning, whichever country the data centre is in. You can’t run that from one desk. Servers.com, which I co-founded in 2013, was sold in July 2023. Looking back, the sale was possible because years earlier we’d started building a management team that didn’t depend on me.
What the evidence says
This isn’t only anecdote. A summary of nearly two decades of the survey, published in the Oxford Review of Economic Policy in 2021, reports that better-managed firms have higher productivity, operating profits, growth and exports. In one randomised trial, a one standard deviation improvement in management raised productivity by about 10%.
Delegation is part of the story. In a study of almost 4,000 firms in the US, Europe and Asia, Nicholas Bloom, Raffaella Sadun and John Van Reenen measured how far investment, hiring, production and sales decisions were pushed down from head office to local plant managers. They found that firms in countries with higher trust and stronger rule of law delegate more, and that decentralised firms get more out of their information technology. A company in which only the boss decides struggles to scale and gets less from every system it buys.
The founder’s own diary matters too. Oriana Bandiera, Andrea Prat, Stephen Hansen and Raffaella Sadun tracked how 1,114 chief executives in six countries spent their working week. Their 2020 paper separates “leaders”, who spend their time in high-level meetings across several functions, from “managers”, who work one-to-one with core functions. Firms run by leaders were more productive on average, the difference appeared only after the chief executive was hired, and the authors estimated that 17% of the chief executives were mismatched with their firms, at a real cost in productivity.
Delegate decisions, not just tasks
The most common mistake I see is founders handing over tasks while holding on to every decision. A country manager who must ask head office before hiring an engineer or signing a mid-sized contract isn’t really managing.
Write down which decisions belong to whom, with clear limits on spending, hiring and customer commitments. Then live with outcomes you wouldn’t have chosen yourself. That’s the hard bit. If a call sits inside someone’s remit and isn’t a disaster, let it stand, or nobody will believe the remit is real.
An operating rhythm everyone can see
Businesses spread across countries come apart when information flows only through the founder. The fix is dull and it works: a fixed weekly and monthly cycle, the same metrics reviewed in the same order, and written updates the whole leadership team can read.
For us that meant uptime, incident reviews, capacity, sales pipeline and cash, looked at on a schedule rather than whenever I thought to ask. Once that’s in place the founder stops being the switchboard, and a team three time zones away can act on the same picture as the one at head office.
Hire senior people earlier than feels comfortable
I’d tell any founder to bring in a strong finance lead, an operations lead and a head of people at least a year before it feels affordable. Young companies tend to promote loyal generalists into senior roles because they’re there and they’re trusted. Some grow into the job. Plenty don’t, and the founder ends up quietly doing it for them.
People who’ve already run bigger organisations know what breaks at the next stage. They’re expensive and they’ll argue with you. That’s what you’re paying for.
Write it down
Documentation is the least glamorous part of leadership, and it’s what makes a business transferable. Every process that lives only in someone’s head, from pricing a large contract to handling an outage or opening a new market, is a risk.
You don’t need a thousand-page manual. You need short, current documents a new manager can use in their first month, and the discipline to update them when things change. When a buyer’s team arrives for due diligence, that’s among the first things they ask to read.
Why it makes a company sellable
Buyers pay for future cash flows and discount anything that looks fragile. A company whose know-how sits with one person is fragile by definition. A company with capable managers, clear decision rights, a visible rhythm and written processes is one somebody else can own.
These days I spend much of my time as an investor and as a co-founder of Palta, and through TechIsland, where I sit on the board, I meet a lot of founders in Cyprus at exactly the stage where this choice gets made, usually without anyone noticing. My advice doesn’t change. Start building the company that doesn’t need you while you still have the energy for it. I wouldn’t want to try it in a hurry, with a buyer already waiting.
Investor and entrepreneur Alexey Gubarev (also spelled Aleksey Gubarev and Aleksej Gubarev) is a co-founder of Palta and one of the founders of TechIsland, the Cyprus technology association, where he is a board member. Before that he spent nearly two decades in hosting and infrastructure, co-founding Servers.com in 2013; it was sold in July 2023. He lives in Limassol, Cyprus. gubarev.com
