From your description of his behaviour and other actions, it seems the most likely result of any attempt to put your boss/founder "in his place" is that you will be fired - no matter how diplomatically you go about it.

Brush up your resume and go find a better job where you won't be getting cut off at the knees.

Your company seems like, what I call, a generator. It's there to generate cost (more costs, less taxes) and generate hireable employees. Like a HR department combined with boot camp.

Your own manager seems to be aware of this and just wants to get paid, as he realizes that he doesn't have to create anything because that is not the purpose of the company.

From your POV you want to produce good quality product and sell it while having a good team. It's not the POV shared with your manager or shareholder. For them if you want to do that you should start your own company. They're called startups.

And that's the only solution I could give you: change the companies or start your own. You joined, what you thought, will be 1 in the 100 startups when in reality it's one of the 99.

"How do you put him in his place?"

You have this the wrong way round, its his company, he pays you.

If all the others are correct and your company is a unloved child, then the best thing to do is ask the boss how he wants you to run it. You seem to be doing a good job of finding good employees for his favourite company, ask him what else he expects from you so you can do more of it.

You're hired to do some sort of work, normally it'd be to run a company well, but in this case it seems that's not what's expected of you. So find out - are you a training company, or should you just be passing the more profitable clients on to the other company too. Maybe he doesn't want you to build a customer base and all your marketing spend is wasted.

You may not like the answer you get, and what you do then is up to you, but at least you'll be able to make an informed decision.

He's the boss, this seems ok for a startup if he has two companies.

He's bolstering one at the expense of the other. To me it looks like you're in the throwaway company. Lots of legitimate reasons he might have for doing this. A surprising amount of startups are just funding mines and throwaways. More and more all the time.

You're not the boss, so it's not your problem.

There's one thing in your question that really stands out.

For example, when we get a client he tries to make me deliver less than what was promised to them ...

That's called "fraud," and it's something you probably don't want to be involved with. Either leave, or figure out the value of the product the owner is ordering you to take off, and talk to a lawyer about "my company's owner is ordering me to repeatedly commit fraud in this amount. What can I do?" Without being obvious about your motive, see if you can get his orders tin writing.

The next question is, "is he sole owner of the company, or is it a partnership or publicly traded company with him as majority owner?"

In the U.S., at least (if you're not in the U.S., check with a lawyer), if he's not sole owner, he must use his power in a manner that is beneficial to the other shareholders. In this case, you can alert the other partners / shareholders to what's going on, and they can sue to have him be stripped of all authority in the company; then you'll be able to run the place properly.

If he's the sole owner, however, there's nothing you can do about the lawful demands except leave, obey, or get yourself fired.

If he's that bad a manager with his other company--cutting corners and developing a bad corporate reputation--then he's driving both businesses into the ground through ineptitude, and there will never be an epiphany. When his businesses are run into the ground, he'll insist that if he had cut more corners and cheated more people, he could have pulled it out.

If his other company has a sterling reputation with its customers, then he knows exactly what he's doing; he's driving the market to his preferred business, using you to train and filter out the good employees for him, and using your business to prevent new competitors from gaining a foothold. Again, there's never going to be an epiphany, and this will only end with you on the street and him owning and managing a single, healthy company.

Owners set the goals, managers execute them

In all companies, the role of managers is to execute goals set to them by the company owner(s), possibly (in larger companies) through a intermediary structure like the board.

As a manager, including the general manager or CEO, you are an agent of the owner, given stewardship over their company (it's not yours unless you're a shareholder) and responsibility for implementing their goals for that company, whatever (within boundaries of law and morality) they happen to be. Your role includes developing strategies to fulfil these goals and executing them, but it does not include setting these goals. You can and should advise the owner (or the board) on the strategic directions you recommend, but you don't get to decide that; your domain of decisions is on how to execute the goals, not about the ultimate goals themselves. If you want to put him "in his place", well, telling you what strategy you should pursue is exactly "his place". If you don't agree with the goals, you should either fulfil your role and faithfully act to achieve these goals nonetheless, or quit because you're unwilling to do your main job - act as a responsible agent for the owner.

Your job does include setting the goals for the rest of the company but all these goals should fit the direction where the owners want to steer it; they're just delegated subgoals of whatever goals the owners give to you.

What are your goals ?

It appears that there's a misunderstanding about the goals your company has. You're saying "we're trying to build a customer base and a reputation" but is it actually the purpose that's given to you by the owner? The rest of the question suggests that it's not. The trade-off between future growth and current profitability is a somewhat arbitrary strategic choice that the owner may make; it may be that the owner is willing to invest money to achieve rapid growth for the sake of future revenue; and it may be that the owner wants you to achieve as much short-term profitability as possible to gain a return on earlier investments. If the owner wants to exit a market that doesn't show long-term potential (in their view) it might also be reasonable to 'milk the company to death', i.e. extract as much revenue as possible with an expectation to shut it down when all the goodwill and reputation is converted to cash and paid out in dividends.

What you actually should do is to come up with a proposal for a 'strategy document' and a future plan for your company, meet up with the owner, and discuss it (and revise it!) until you have a shared understanding of what the owner wants. You don't need to come to a consensus and want the same thing, you but need to understand and define what they want to achieve with their company. The other answers have all kinds of suggestions and guesses what the owner's plans may be - however, you need to get to the actual truth, and have it explicitly written down. After that you would know what is the strategy you're tasked to execute, and then you can make an informed decision whether you are eager to actually do so or not.

Buy him out.

If he's undermining the business, but he's in charge because he has money, there's one obvious method of removing that control: spending your own money to buy out the shares he owns in the company. Whether you're taking loans to finance this, getting all the other employees to stump up a bit of money to buy shares, getting other investors to buy him out, or some similar scheme, the idea is simply to conduct a takeover of the ownership of the company - and potentially, a hostile takeover.

You put him in his place by either founding another company or joining an existing company that aligns with your work ethics. You take all the good workers with you and make good money with your company long after he's gone bankrupt.

For the current company, it's his, and thus it will be run like he wants it. Unless whatever he does is criminal and you can indicate this to the right authorities there is no way you will change this.

How do I put him in his place considering he's my boss?

You don't.

Need help.

Resign, and work elsewhere instead.

Please be kind.

Good luck.

The whole post sounds wierd - owner has two companies that do the same thing? why? it seems extremaly fishy.

Quit. Start your own company.

It sounds like you literally do everything for the company, and owner is actively sabotaging you.

You need to start your own company. It's less scary then it sounds, you should get help from local government or entrepreneur groups. You can hire an accounting company to do accounting and sign a legal retainer. Initially it's usually much cheaper then hiring your own accountant and lawyer.

Welcome to the world of advertising!

So I am posting this answer after the original poster clarified in the comments that they are working in an advertising agency. Here is the deal: Unless the advertising agency is major and has a long history, lots of “mom and pop” agencies pop up and disappear all the time. The creatives at such places just move on and sometimes with the same owner.

Why? Easy. And for many reasons; note that these reasons can pretty much be applied to other fields but I’m thinking “advertising” when I read this:

• 
  Start Fresh: Some companies seem old and stodgy, and the owner simply wants to start a new firm without completely cutting off old clients.


• 
  Dissolution: Partnerships fizzle and an owner wants to do the minimum amount of work to keep clients, but not enough to make the company spectacular.


• 
  Debt: Sometimes owners of companies start new companies to hide debt and other financial obligations. For all you know the company you work for could have massive debt and this new company is a way for your boss to sidestep the issue.


• 
  Front: The company is a front for something you are not aware of. What? Who knows! But money laundering is simply the “art” of making bad money look good. For all you know that is what this company did and now your boss want’s to let the company fail to distract attention away from it.

How do I put him in his place considering he's my boss? I need help. Please be kind.

You will never be able to do this for all of the reasons I have outlined. If you believe you can do better, go ahead and start your own company and be the boss. But in this situation, no matter how high you climbed up the ranks you are still not the top of the heap.

Remember, you work in advertising… A business based on smoke and mirrors and — to be blunt — straight out lies. Directly asking your boss, “What is happening?” might be the only way to get a straight answer. And honestly might be the best way to calm your fears.