Case Study: Telegram

Hi Operators ⚙️

I woke up to the news this week that Pavel Durov, the 39-year-old founder and CEO of Telegram, was arrested at Le Bourget airport outside Paris.

(How did I find out? An Instagram girlie traveling with him posted their location daily on social media.)

Why was he arrested? French authorities say it’s because of illegal activities linked to the Telegram platform, which has over 950 million users worldwide.

This event brings attention to something we often overlook in business: the risks that come with having a single, key founder.

A Russian military blogger compared this arrest to catching “the head of communication for the Russian Army.” (If I got arrested, it would be like losing the person who plans my family’s movie night.)

The arrest is even more important because of the European Union’s Digital Services Act (DSA), which makes platforms responsible for illegal content. This is very different from how things work in the United States under Section 230 of the Communications Decency Act.

But the main point here isn’t just about the legal issues. Durov’s arrest shows how vulnerable companies can be when they rely heavily on one person. According to PwC’s 2023 Global Crisis and Resilience Survey, 96% of business leaders said they faced major disruptions in the past two years, and 76% said these disruptions had a big impact on their operations.

We’ll dive into an important strategy: business continuity planning, focusing on how to reduce risks related to key founders.

How can companies, no matter their size, prepare for the sudden loss of important leaders?

What steps can leaders take to keep their companies strong, even when unexpected problems arise?

Let’s look at how better planning could have helped Telegram, and how you can use these strategies in your own business.

(If you’re the founder, feel free to skip the rest of this essay. This is how we can plan for your absence.)

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Keeping Your Business Running When the Founder Can't

One important plan to think about is making sure your business can keep going if something happens to the founder. This plan isn’t just for big tech companies like Telegram; it’s something all businesses, no matter their size, should have.

This kind of planning, called business continuity planning (BCP), is about making sure that important parts of your business can keep running during and after a crisis.

For Telegram, if Durov suddenly can’t do his job, it could affect everything from daily tasks to big decisions. Think about these questions:

Who makes important decisions if Durov isn’t there?

How will the company talk to employees, customers, and partners?

Can Telegram still follow all the rules without its founder?

To handle founder risk in a BCP, you need to focus on a few key areas:

• Succession Planning: Decide who will take over if the founder isn’t available.

• Knowledge Sharing: Make sure important information isn’t just in the founder’s head.

• Keeping Operations Going: Plan how daily work will continue without the founder.

• Communication: Create a plan for how to talk to employees, customers, and partners.

• Following the Law: Make sure the business can still meet legal obligations without the founder.

Joe Nocera, an expert at PwC, says,

For companies like Telegram that rely a lot on their founder, it’s especially important to plan for what happens if that person isn’t around.

But it’s also important not to overdo it. Alex Fullick from Stone Road Inc. suggests,

This helps avoid over-planning, which can make your business less flexible and waste resources.

By creating a strong plan that considers founder risk, companies like Telegram can reduce the problems that come up when something unexpected happens to key leaders. This approach helps keep the business stable, reassures everyone involved, and shows that the company is strong.

In the next section, we’ll talk about why business leaders should focus on this strategy and how it can help a company succeed in the long run.

Managing Founder Risk

The arrest of Pavel Durov shows why business leaders, especially those in charge of operations, need to think about what could happen if their founder can’t lead. Here’s why this is important:

1. Keeping the Business Running:

   In companies where the founder is very important, like Telegram, losing that person can really mess up how things work.

   Think about how decisions, product development, or partnerships might slow down if Durov isn’t in charge. Planning ahead can help keep everything running smoothly, even during a crisis.

2. Financial Stability:

   Even though Telegram isn’t a public company, other companies have lost a lot of money in similar situations.

   For example, when the founder of Papa John’s, John Schnatter, quit after a controversy, the company’s stock fell by 4.8% in one day. For companies like Telegram, these events can also lower their value and make investors nervous.

3. Following the Rules:

   Durov’s arrest shows how tricky the rules can be for tech companies. The European Union’s Digital Services Act (DSA) is just one example of laws that can affect a company’s operations. A good plan for managing founder risk helps make sure the company can still follow the rules, even if the founder isn’t around.

4. Keeping Everyone Confident:

   Handling the sudden absence of a founder well can help calm employees, investors, and customers. If Telegram had quickly put a plan in place after Durov’s arrest, it could have made everyone feel more secure.

5. Staying Ahead of Competitors:

   In a crisis, companies with strong plans can recover faster and even get ahead of their competitors. For Telegram, a quick recovery could mean keeping users who might otherwise switch to other platforms if problems drag on.

6. Protecting the Brand:

   In today’s fast-paced media world, how a company responds in the first day or two of a crisis can really affect its reputation. A company that’s ready for anything can respond better, helping to protect its brand from long-term damage.

It’s also important to remember that managing founder risk can be different for public and private companies, and in different cultures. For global companies like Telegram, cultural differences matter in how founder risk is seen and handled.

Things like how much power the founder has, whether a culture values individualism or teamwork, and how much planning is done for the future can all affect how companies plan for leadership changes.

By understanding why managing founder risk is so important, business leaders can protect their companies from big problems. As we see with Telegram, even large and successful companies aren’t safe from the risks of depending too much on one person.

Planning ahead isn’t just smart—it’s necessary in today’s unpredictable world.

While we don’t know if Telegram had a plan in place, we can look at other companies that have done a good job of handling founder transitions. For example, when Bill Gates stepped down as CEO of Microsoft in 2000, the company had a well-prepared plan.

Steve Ballmer, who had been with the company since 1980, took over as CEO, making sure the transition was smooth and that Microsoft kept growing.

By following these steps and checking your plan regularly, you can create a strategy that manages founder risk effectively, helping your company handle unexpected challenges and come out stronger.

In the next section, we’ll show you how to put these strategies into action in your own company.

How to Protect Your Business if Something Happens to the Founder

Creating a strong plan to keep your business running smoothly, even if something happens to the founder, is important for businesses of all sizes. Here’s a simple guide on how to do it:

1. Figure Out Important Jobs and Who Does Them

   Start by thinking about the important things the founder or CEO does.

   • List the most important jobs in your business.

   • See which of these jobs depend on the founder.

   • Think about what might happen if the founder can’t do their job.

2. Make a Backup Plan for Leadership

   Plan who will take over if the founder can’t lead. This should include:

   • Naming someone who can take over right away.

   • Picking people who could lead in the long term.

   • Training others so they can do important jobs too.

3. Share Important Information

   Make sure the founder isn’t the only one who knows how to do important things.

   • Write down how to do key tasks.

   • Have regular meetings to share what people know.

   • Use tools to store and share important information.

4. Create a Plan for Communication

   Make a plan for how to talk to everyone if something goes wrong.

   • Make a checklist of supplies and equipment needed.

   • Know where data backups are stored.

   • Have contact information for emergency responders and key people.

5. Set Recovery Goals

   Decide how fast you need to get important things working again and how much data you can afford to lose. This helps you know what to focus on during a crisis.

6. Plan for Keeping Things Running

   Make step-by-step plans for how to keep the business going if the founder isn’t there. This might include:

   • Temporarily giving jobs to other people.

   • Using emergency decision-making processes.

   • Following pre-approved emergency rules.

7. Practice and Update Your Plan

   Alex Fullick of Stone Road Inc. says, "Learning a lesson but not doing anything about it isn’t enough." Test your plan regularly:

   • Do practice exercises at least twice a year.

   • Have full-scale drills once a year.

   • Update the plan based on what you learn and any changes in the business.

8. Think About Different Cultures

   If your business operates in different countries, remember that what works in one place might not work in another. Be mindful of cultural differences.

Conclusion

Remember, the goal isn’t to create a rigid plan, but a strong guide that helps your business through different situations.

By following these steps and keeping your plan updated, you can protect your business from the risks that come if the founder isn’t around, ensuring your company can handle challenges and come out even stronger.

In the end, the situation with Telegram shows us that no company is safe from founder risk.

But with good planning, businesses can reduce these risks and make sure they stay successful for a long time.

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