Many founders confront the most consequential professional decision of their lives precisely when their company reaches its greatest success: stepping away from the CEO role. The short answer to why relinquishing control is so difficult lies in two converging insights. Research demonstrates that the goal of “getting rich” and the goal of “remaining king” within a company are often fundamentally incompatible, and Freudian psychoanalysis illuminates why the company is not merely an asset for the founder—it is a fragment of the self. Understanding these two layers transforms succession from a personal crisis into a conscious choice.
Noam Wasserman, professor at Harvard Business School, demonstrated in his article “The Founder’s Dilemma” (2008) that most founders are driven by two primary motivations: building wealth and maintaining control of their company. His findings reveal that these two goals are largely incompatible. A founder who gives up more equity to attract co-founders, key employees, and investors builds a more valuable company—yet this higher return frequently comes with the founder being replaced by a professional CEO. Wasserman framed this as the choice between being “rich” and being “king.”
Two kings on one board: choosing between wealth and control — Image: srini / Pexels
Why Does Success Increase the Risk of Being Replaced?
In another study (2003), Wasserman examined the CEO succession histories of 202 internet companies. He identified what he termed the “paradoxes of entrepreneurial success”: two pivotal events—completing product development and securing each round of outside financing—dramatically increase the probability of founder replacement. Simply put, the very achievement the founder fought for propels the company into a stage that demands different skills. He further notes that a founder’s attachment to the company they built far exceeds that of later executives.
The Role of Psychological Ownership
Pierce, Kostova, and Dirks (2001), in their theory of “psychological ownership,” explained that people can feel something is “theirs” even without full legal ownership, and this feeling becomes part of the individual’s identity. For a founder, the company has been shaped by years of mental investment, time, and risk; “my company” effectively becomes “me.” When the board initiates succession discussions, the founder hears this not as an administrative decision but as a threat to the self.
Handing over the keys: the moment psychological ownership is tested — Image: Pavel Danilyuk / Pexels
What Does Freud Say About the Founder and His Company?
Freud, in “On Narcissism: An Introduction” (1914; SE Vol. 14), demonstrated that libido can be withdrawn back to the ego, and that a person invests a portion of their love in their creations. For the founder, the company is precisely this beloved creation—a piece of healthy narcissism given form in the external world. Separation from it is therefore a narcissistic wound, not merely a career transition.
In “Totem and Taboo” (1913; SE Vol. 13), Freud articulated the myth of the “primal father”: a father who monopolizes power, and sons who eventually take his place. In organizational language, the founder is the primal father, and the incoming CEO or investors are the sons who succeed him.
In “Group Psychology and the Analysis of the Ego” (1921; SE Vol. 18), Freud explained that group members place the leader in the position of their ego ideal. The founder has occupied this idealized position for years; leaving it means losing the image others have constructed of him—and the image he holds of himself.
Freud’s enduring insight clarifies why succession, at the unconscious level, resembles mourning. The founder is not simply handing over responsibilities; he is separating from an object of libidinal investment, relinquishing a position of primal authority, and departing the pedestal of the group’s ego ideal.
How Can a Founder Choose Consciously?
Wasserman recommends that founders ask themselves early and honestly what success truly means to them. Those who wish to retain control are better served by choosing a venture that requires less outside capital and aligns with skills they already possess. Those who prioritize wealth can bring in a professional CEO themselves and negotiate a new role with the board after succession.
From a psychoanalytic perspective, the inner work requires the founder to establish a healthy distance between “I” and “my company.” Only then does letting go become not a defeat but a mark of leadership maturity.
Conclusion: Letting Go as the Final Leadership Skill
The founder’s dilemma is real: a company’s success often arrives at the point where the founder must choose between wealth and control. Freud shows us why this choice is so painful—the company is the founder’s narcissistic creation and the ego ideal of the group he leads. By recognizing these layers, a founder can plan succession with clarity, preserve his legacy, and exercise the ultimate act of leadership: conscious release.
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Wasserman N. The founder’s dilemma. Harv Bus Rev. 2008;86(2):102-9, 138. PMID: 18314638.
Wasserman N. Founder-CEO Succession and the Paradox of Entrepreneurial Success. Organization Science. 2003;14(2):149-172. DOI: 10.1287/orsc.14.2.149.14995
Pierce JL, Kostova T, Dirks KT. Toward a Theory of Psychological Ownership in Organizations. Academy of Management Review. 2001;26(2):298-310. DOI: 10.5465/amr.2001.4378028
Freud S. (1913). Totem and Taboo. In: Strachey J, ed. The Standard Edition of the Complete Psychological Works of Sigmund Freud, Vol. 13. London: Hogarth Press: 1-161.
Freud S. (1914). On Narcissism: An Introduction. In: Strachey J, ed. The Standard Edition, Vol. 14. London: Hogarth Press: 67-102.
Freud S. (1921). Group Psychology and the Analysis of the Ego. In: Strachey J, ed. The Standard Edition, Vol. 18. London: Hogarth Press: 65-143.
Image Credits
Featured image — Photo: Vic Lee / Pexels · Chess kings — Photo: srini / Pexels · Handing over keys — Photo: Pavel Danilyuk / Pexels.
