Leadership & Productivity

What happens when a founder can't let go? Lessons from Superdry's Julian Dunkerton

9 min read

12 March 2019

Reporter, Real Business

Superdry founder Julian Dunkerton is waiting on the outcome of a shareholder meeting to see if he can come back as a director. The board is urging shareholders to vote against his reappointment, and considering that his last year of power at Superdry coincided with poor sales, are they right to do so? It also begs the question, when is the right time for a founder to step away from a company, and what can other entrepreneurs do to ensure they know when that right time is?

Whilst an entrepreneur might have had the initial vision and flair to start a successful business, it doesn’t mean they can’t lose their touch.

Entrepreneurs are only human, and although some can be called visionaries, or even geniuses by members of the business community, they can still make mistakes.

These kinds of thoughts beg the question of what happens when a founder or co-founder is asked to step aside because it’s believed that any further influence could be detrimental to the business?

Well, this is exactly what has happened to Superdry co-founder, Julian Dunkerton, who stepped down from the casualwear clothing company last year.

Dunkerton now wants to return to the company as a director and is waiting on the outcome of a shareholder meeting, set to take place on 2 April, to see if he can.

Why doesn’t the board want him back?

Superdry: From a market stall to global domination. Source: Wikipedia.

Superdry is a true start-up success story, (starting life on a market stall in Cheltenham sixteen years ago and going on to achieve global success), more recently, however, it’s been suffering.

The board believe that Dunkerton is hindering rather than helping matters. They claim he oversaw a disappointing Autumn/Winter collection last year, (which is something Dunkerton vehemently disputes).

There is also discord between the two parties over what strategy the business should going forward in terms of product launches.

The founder who can’t let go?

Dunkerton’s reasons for stepping down from Superdry was because he felt “cut out from the design process for many months”, according to the BBC.

“Mr Dunkerton said he was offering to return to Superdry “in any capacity” to correct what he described as a failing strategy.” – BBC

A brand in decline?

There is also disagreement between Dunkerton and the board over what types of retail products the brand should produce going forward.

Whilst he wants to stay true to the brand’s original formula of providing “hoodies and coats”, (something that made the brand’s name), management wants to diversify the line due to what they believe is a “saturated” casual-wear market.

“Superdry customers, want to be seen to be on trend and while the company was once seen as fresh, newer brands filled the space and cheap competitors provided the look for less”. – Kate Hardcastle, fashion retail analyst

Whatever the outcome of this conflict, taking the wrong ‘strategy route’ in an era of high-street decline and online throwaway fashion could be a brand killer for Superdry, which straddles the ‘high-end high-street’ pricing demographic.

In light of the company experiencing a massive 70% decline in share value last year, and set to cut up to 200 jobs in 2019, it’s even more important that the strategy they take is the right one.

Should Dunkerton heed the warning of LK Bennett?

LK Bennett brought ‘Bond-street’ style chic to the high-street but has now gone into administration. Source: BBC.

The ‘high-end high-street’ is a sector of high-street retail which continues to suffer, cue, LK Bennett and the recent news that it’s going into administration.

Commentary surrounding the reasons for LK Bennett’s demise included suggestions that the brand might have outpriced themselves on the high-street, and considering the tough trading conditions the high-street is experiencing, signed its own death warrant. Superdry could also run the risk of a similar fate if it’s not careful.

An entrepreneurial ego gone wrong?

Dunkerton co-founded Superdry with fellow entrepreneur, James Holder back in 2003. However, Dunkerton remains Superdry’s largest shareholder, with an 18.4% stake, whereas co-founder, Holder, who resigned from the business in 2016, only has 9.7% in comparison.

According to the board, it seems to be Dunkerton’s leadership personality that they have a problem with. Where apart from disagreements between both sides over strategy, his leadership style “does not fit within the open-minded collaborative culture, values and operation of the company”.

One thing springs to mind here – ego. ‘I’m the founder, I devised the initial idea for the business, thus, I still know what’s best for the company, regardless of shifting markets.’

Do founders always know best? Not when their advice coincides with declining profits

Can a correlation be drawn between Dunkerton’s leadership ideas, vision and recent profit decline in the company? Perhaps. If you look at the company’s performance last year, the year in which Dunkerton stepped down, it issued a profit warning, (December 2018), with the massive share drop of over 70% not helping Dunkerton’s case either.

Management vs the founder

Here’s what Superdry’s current chief executive Euan Sutherland had to say on the matter last year…

“Superdry had a difficult first half, impacted by unseasonably warm weather across our major markets, a consumer economy that is increasingly discount-driven and the issues we are addressing in product mix and range.”

This is the same person that said having Dunkerton back in the driving seat would be detrimental to the brand’s future. – And he could be right, as Dunkerton is pushing for a strategy (a limited array of casualwear products) that simply can’t keep up in the current consumer binary of cheap and accessible clothing, (think Boohoo) versus quick-drop exclusive wear, (aka American uber-cool skater brand, Supreme).

What can we learn from it?

When a founder creates a business that takes off, it’s easy to get emotionally attached. Then, when things get tough, they can’t quite believe their once successful vision no longer fits the bill of the marketplace and consumer appetite.

This conviction then becomes detrimental to a business when said founder continues to hold a big stake in it, and drives through decisions about its future that are due to ideas around ownership and ego rather than impartial strategy and business sense.

Founders, if you want to stay involved in your company, check yourselves  – and often

How can you stop yourself from making egotistical decisions about your own company? Start by looking at your vision and ideas about leadership, does it fit with the rest of your team?

Are your ideas averse to marketplace conditions? Are you being called out and criticised about your decisions by members of the board or general team? Are you listening to your board or employees?

If you’re making decisions that are falling flat amongst your staff or are causing a decline in company performance, accept the fact that you’re not always right.

Whilst this may sound simple, the entrepreneurial ego can be insidious, and you might be making these kinds of decisions without even realising it. That’s why it’s good to have a team around you that’s unafraid to call you out on decisions.