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| Jeremy Jacobs |
Shareholder activist campaigns led by company founders are relatively rare. Typically, only two or three such campaigns occur each year (2026 may be an outlier with three campaigns so far—at Fermi, Lululemon, and most recently, Better Home and Finance).
One of the reasons they don’t happen often is that to precipitate such a contest, an aggrieved founder must have a large enough stake to mount a credible campaign and must believe activism is the only remaining path to achieve their goals. In addition to being rare, they are unique in a variety of ways that are discussed below. These unique dynamics mean that some well-honed communications strategies typically deployed in an activist situation must be set aside in favor of a more tailored response: one that respects the founder’s credibility without conceding the company’s future, addresses shareholders’ financial interests while acknowledging questions of legacy, and anticipates that the fight may be as personal and persistent as it is strategic.
Persistently Public
Founder-led fights can go public early and then endure for years. An ousted or retired founder has a great deal invested in their former company. Their shares may represent a significant portion of their portfolio, their identity may remain tied to the company, and they may have few competing obligations. Perhaps nothing else more strongly shapes a company’s defense strategy than the knowledge that a determined founder may return year after year until they get what they want.
Most activists begin campaigns with a small stake in the company and quietly build support before going “loud.” Company founders, by contrast, often start with substantial holdings, sometimes acquired cheaply as grants or founder shares and sometimes coupled with disproportionate voting power. An aggrieved founder is unlikely to act in secret; indeed, insider disclosure rules may make secrecy impossible.
Uncompromising Vision
While founder-led campaigns may invoke themes of capital allocation, transactions, or operational performance, they usually turn on legacy: what strategy will protect and build on the founder’s vision, and who has the authority and ability to oversee and implement it. Founders are therefore more likely to seek dramatic change than to accept financial engineering or modest governance adjustments.
Even when their demands resemble those of traditional activists, a founder’s emotional investment can intensify quickly and make compromise difficult, or even impossible. Many activist engagements end in settlement, with both sides giving a little. Settlements are harder to achieve when personal pride, deeply held beliefs, and one’s sense of identity are on the line.
Insider Insights
A founder brings deep familiarity with the company’s business and unique insight into its history and evolution. In most cases they can invoke past eras of success and contrast lengthy personal track records with the shorter tenure of current leadership. Shareholders may therefore view a founder’s critique as credibly grounded in experience, making it harder for the company to dismiss their strategy as short-term oriented or opportunistic. A founder is also well placed to exploit fissures in the boardroom, particularly when members of that board were recruited by the founder.
On the other hand, the founder’s history can also be a vulnerability. Management can argue that a founder who is retired, displaced, or long removed from operations is relying on outdated experience. Leaders who worked under the founder may also understand the founder’s weaknesses and sensitivities at a deeper level than they would those of a traditional activist.
Communications Considerations for Activist Founders
Given these dynamics, founders intent on waging an activist campaign should consider the following principles to help them communicate more effectively:
• Leverage credibility beyond investors. A respected founder can inspire support from employee shareholders and other stakeholders who feel the company has lost its way and stir dissent among a workforce that might otherwise ignore a proxy contest or reflexively support management. The contrast with typical activists is sharp here: employees, customers, business partners, and community members may be considerably more skeptical of a professional activist hedge fund.
• … but don’t mistake cheers for votes. Supporters like these can share useful intelligence, apply behind the scenes pressure to board and management, and provide encouragement from the sidelines, but ultimately success in activist campaigns – especially those that reach an annual meeting – derives from shareholder votes. The founder must make a convincing case to investors that addresses their concerns, which can conflict with those of other stakeholders.
• Try to depersonalize the campaign. In almost every founder fight, both the activist and the target company must reckon with the challenge of separating the person from the campaign. Most founder activists make the claim that “this isn’t personal,” but that is much more credible when backed by action. T. J. Rodgers’ successful campaign at Cypress Semiconductor in 2017 illustrates the point: by nominating two independent directors rather than himself, Rodgers made it harder for the company to dismiss his campaign as an attempt to restore his former leadership role and easier for shareholders to evaluate the governance case on its merits.
• Assemble a team that can both supplement and complement your existing capabilities. A pronounced trend in activism in recent years has been the increased prevalence of campaigns by first-time or occasional activists. Almost by definition, a founder is unlikely to be a professional activist, and a campaign against the company they founded may be their only foray into activism, so they will need to rely on legal, financial, proxy, and communications advisors who can supply the experience they may lack. This advisor team must be able to respect the founder’s vision and legacy while still providing the benefits of an outside perspective.
• Use your media relationships. Coverage of activist campaigns is typically driven by a small cadre of reporters dedicated to the beat, and established activists can often gain a first-mover advantage by originating compelling stories for those journalists. By contrast, founders are unlikely to know these activism reporters, but they do often have significant media relationships and credibility with industry beat reporters. They may also bring long public track records, outsized personalities, and the promise of conflict and controversy, all of which make them compelling subjects for reporters.
Communications Considerations for Boards and Management
On the other side of the contest, here are some communications concepts for the company and its advisors to keep in mind when facing an activist founder:
• Take them seriously. Activist founders cannot be dismissed as simply short-term oriented opportunists. Even if the company believes the founder is relying on false or outdated information, investors are likely to assign them credibility. Think through your messages well in advance – both the affirmative case for company’s strategy and the rebuttal to likely critiques – because you are dealing with an opponent who knows the company inside and out.
• Try to depersonalize the campaign. Yes, the same advice as for the activist: while the current board and management team may feel personally attacked and betrayed by the founder, who is likely their former boss or colleague, a defense campaign fueled by personal animus will not activate investor support. It’s a commonplace axiom but a true one: people need something to vote for, not just something to vote against.
• Exploit gaps where you can find them. As first-time activists, founders may need to lean on the experience and support of professional advisors and/or hedge funds focused on activist strategies. The goals and methods of professionals may differ from those of the founder, creating an uneasy relationship. When gaps between them become apparent, shine a bright light on them. Founders may also have economic interests distinct from those of other shareholders; a cany company will seek to underline those differences.
• Recognize the media mismatch. As noted above, activist founders can have built-in advantages for attracting media attention. Counter this with active outreach to both activism and industry reporters to correct inaccuracies and provide balance.
• Settle in for the long haul. Founder campaigns can unfold in public for months or years. For example, after the company he founded, ETFS Capital, was acquired by WisdomTree, investor Graham Tuckwell used the stake he acquired in the deal to launch three consecutive proxy campaigns in recent years.
Be prepared to address a founder critique not as a one-off battle but rather as an ongoing reputational matter. Look at every public communication as an opportunity to articulate a credible case not just for the immediate future but for years to come and recognize that what you say today may still be part of the dialogue in those future years.
For a company facing the possibility of a public dispute with one of its founders, the first principle should be to recognize that none of this is likely to be normal. A founder who holds substantial stock, thinks in years rather than quarters, knows the company deeply, cares about it passionately, and is familiar with management and key stakeholders cannot be managed with an off-the-shelf defense plan. The companies best positioned to prevail will be those that understand not only the activist’s demands, but also the founder’s enduring claim on the company’s story.
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Jeremy Jacobs is senior managing director at August Strategic Communications.
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