I’ve always seen myself as a starter more than a finisher. I’m a dreamer, an ideator and yeah sometimes even a good planner. But once I ‘get it’ and can somehow see the finish line I’m tempted to move on to the next thing. Talk to the 3 novels on my nightstand with a bookmark firmly implanted somewhere about half way through.
Unlike a certain type of founder I’m also thinking of version 2.0 and 3.0 of my product as I can already see the path to long term growth and how my idea or company might evolve. That’s great ‘n’ all but I had to realize that I had to get 1.0 off the ground and working well before I could bring 2.0 into the picture. Luckily both sides of my brain work well, and with a bit more focus on nurturing my left brain I have developed excellence in execution and efficiency, so much so that the current role I’m incubating with potential business partners is that of COO. That’s the guy who delivers the results this cycle while the CEO dreams. And I’m gonna be great at it.
But I’ve been at this awhile and I’m not sure how many people starting out are similarly self aware. Especially as I audit the founder community. Largely a cohort of generally awesome, inspired people but mostly dialed in to the 1.0 that I talked about earlier. That’s a good thing in many ways but problematic in others.
These types are starters. Sure, they have dreams of having a big place in the world but the future is fairly murky to them as they focus on making 1.0 sing in the marketplace. I can’t fault them for that because starting a company requires a defined skill set and excellence under a certain type of environment.
The disappointing part for some lies in the process of transitioning from founder to CEO (or C-level exec). Successful transition requires confronting a number of realities and adapting accordingly. And I have seen many that are unable to work through the process, which results in them bailing at a certain point for the sake of starting another company or perhaps even switching careers.
I’m not sure most realize that they’d just rather be a starter, as they eventually choose to not complete the job of realizing the full potential of a company. And why? Because they haven’t anticipated the following inevitable truths:
Your inspiration may be only low-hanging fruit.
The career narrative among young professionals is fairly consistent these days and it centers around the notion of wanting to do something great for the world. The tough part is that causing growth and creating meaningful change don’t always go together.
A few years ago I networked with a funded startup that was an online platform where users of a like-minded profile could gather to solve each other’s problems in a particular area (I’m being quite non-specific here to protect the innocent). The founder was (is!) an intelligent and clearly well-intentioned guy but his platform was built off of a key premise – that people are naturally charitable and would visit this platform in great numbers and on the regular just cuz they wanted to help. It was clear to me that this founder saw himself at the center of this epic world of charity.
I’ll put aside the fact that there were a number of UX issues to address with the platform and focus on the one huge obstacle facing him – that the numbers of people who are innately charitable and willing to dispense their wisdom simply out of kindness will be low. Really low. There is no way that he could approach growth targets in users and daily usage without some clear incentives. (The fact that his investors never told him that is even more troubling; I address the belief that investors are about to become wiser and more influential in this post on failing startups).
Needless to say that feedback landed with a thud, because to suggest that the world doesn’t want to be generous with free help was to attack the very inspiration of the business. Fast forward two years and the platform is gone, and the founder has moved on to something else.
This is not a new idea but the lesson for founders is that if you want a sustainable, growing company, you have to quickly prepare yourself to pivot toward the bigger opportunity. And the pivot is likely to take you away from the emotional foundation of your interest in starting up.
Achieving growth becomes much more difficult.
This is an extension of the low-hanging fruit concept.
There is something absolutely intoxicating about growth of any magnitude. In my experience I have found that there is a fairly direct correlation between growth and employee happiness. So much so that even the best company cultures begin to collapse once growth slows or stops. For this reason I will only seek to commit myself to companies that are on a clear growth trajectory or have a long-term growth plan.
Growth breeds excitement. Budgets increase, career opportunities proliferate and by any measure you can call yourself successful. On that last point, if you grow 20%, no one can call you a failure even though if you look deeply into strategies and plans some expert might surmise that a better strategy might have delivered 50%. But who cares – you’re growing! There is no watermark.
When you flatten out, there’s a water mark. While there is no difference between growing 20% and 40% in a company (unless you miss a committed forecast), there’s a huuuuuuge difference between growing 5% and shrinking by 5%. Zero growth is a clear watermark and the impact of falling even a little short is substantial. With no revenue growth you are forced to cut expenses including staff. Your team can’t develop in new roles or get promoted unless someone leaves. Everyone side-eyes each other to ensure no one is undermining the success of others for the sake of staying employed. Everything changes. Stuff gets taken away. The entire work environment is less sexy and the positive energy dissipates.
And as a founder, everyone is patting you on the back when you grow. Then, when growth slows, people are apt to call into question your ability – and that makes your office a less enticing place to come to on a daily basis.
I will offer that among all the challenging elements of starting a company, causing growth is the least challenging of all in the early stages. Yes, I just said that. In the beginning, no one has heard of you, no one has an opinion of you, and at least someone out there is willing to spend time or money to solve whatever problem you are trying to solve with your product or service. That’s low-hanging fruit.
You can launch with an MVP and shout to the world that you’re here to solve problem X for your user base, and there will always be a subset of those receiving your message that will bite. And that to you feels like cause for celebration.
You also feel like you kick ass at causing growth. You call yourself a ‘growth hacker’ because you found ways to do it cost effectively. I’m an ex corporate guy and I hear from the startup scene all the time that corporate peeps aren’t focused on growth and then they go on to say something void of insight such as all we care about is our expense accounts. That’s like me saying founders only care about foosball and free snacks. Not so, am I right?
Working in more mature markets means you have to stress the crap out of yourself to get even one more customer. And that type of scenario is the unsexy end point of being a founder and turning yourself into a C-level executive. You have to cause growth somehow when EVERYBODY has heard of you and among the 95% of the population that doesn’t use your product or service over half of them absolutely hate you. Your path to growth no longer comes from simple cost-effective awareness but runs through creating a deep connection into the minds of your target consumers and finding an elusive key (a phrase, a visual, an incentive, a product feature) delivered at the right time and in the right environment to unlock a change in perception and behavior. The amount of sweat required to do this is beyond what most would imagine. And you can almost never do it for free.
I see this in B2B a lot, too, with startups. We have a lot of SaaS and PaaS products out there that thrive selling to each other. That’s a relatively easy pursuit because startups are naturally progressive and prone to helping each other. But then you hit a wall. I love Slack for example, but when I see P&G adopting it as their communications hub I’ll sit up and take notice.
Scaling those walls requires in my mind years of marketing experience or just some inherent genius, but probably both. It’s just plain not easy to penetrate those tougher markets and this is where founders become discouraged. They further become disillusioned if they have to adapt a little to reframe the problem they are actually solving. I’m reading about founders who outright claim to abandon their roles because they are just no longer passionate about solving the problems of their user base in the way they are evolving.
To cause growth and be a true C-level exec, you have to have a voracious appetite for solving problems and an intense curiosity about your target customer. And then you have to quickly adapt your business model to capitalize on the insights you extract. Business at some point ceases to be about you and what you care about, and that’s a tough pill for many to swallow.
Your role changes.
I see leaders in both large and small environments fail to recognize this phenomenon and it was a lesson I, myself, had to learn early on in a painful way.
There three key responsibilities of anyone at the top of the food chain of any sized company:
- Cause growth/results in THIS cycle with current products and business models.
- Plan for and initiate growth in FUTURE cycles via continuous innovation.
- Build and maintain the company’s infrastructure.
The first one is intuitive. The second one is commonly overlooked, because great modern companies are rarely built on a single idea. The moment of launch triggers both growth and obsolescence simultaneously. You need to be able to look deeply into the future to begin incubating new platforms for growth.
That third one probably has you scratching your head a little. In simplest terms, infrastructure represents all components that affect the way you work and the elements that inspire people to work with you…and stay: process, systems, culture etc.
When starting a company you’re probably focused about 80-90% on #1. As you should. It’s just you and a few close pals putting your head down and somehow doing what needs to be done to get the machine running and money rolling in. You’re under-resourced and over-worked, but you love it because you have a strong commitment to what you’re doing and you’re slowly seeing the fruits of your labor. And, that’s inspiring!
What you don’t realize is that a new company is naturally lean and aligned. You work in small teams, you think the same, you make decisions quickly, and you adapt to each other quickly to cover a ton of ground with as low effort as possible.
This utopian dynamic begins to break down as you scale up. Because this is the profile of humanity, your team will organically become diverse. The roles of your employees become more specialized and individualized, which in turn can cause interpersonal conflict over objectives. The path to progress and moving forward becomes less clear with underdeveloped systems and processes for which each person must compensate.
Left unattended, companies will become entangled by a lack of clarity and alignment in everything it does. It’s called bureaucracy. And most large companies are collapsing under the weight of it? Why? Because leaders don’t readily see the ROI in investing time in infrastructure. Because leaders don’t know how to fix it. Because leaders think their biggest and only job is to deliver a number. Because leaders think that if they simply articulate a financial goal and complain endlessly about their team’s inability to collaborate, the problems will fix themselves.
In my post about my preferred org design for the future, I highlight infrastructure development as one of the key roles of a leadership team. I’ll let you read more about it there. If you have a goal to be agile, efficient and flush with inspired employees who want to stay, you will simply not export infrastructure matters to some one-off subcommittee. You as a leader will spend no more than a third of your time worrying about this cycle’s results. You are spending over half the day creating future revenue models and cloning yourself, so that your company is loaded with people who work as you do, treat others as you do lead as you do and collaborate as you do.
The infrastructure of a company must be larger than the people in it. If you’re not causing this actively, your company will organically become something different than what you wanted. Undesirable cultural norms can develop that are next to impossible to undo. Cliques develop. All sorts of strange and troubling phenomena begin to emerge that you didn’t see coming, because the DNA of your collaborative vision was not firmly planted.
As a founder, you have to not only see all this coming, but be ahead of it. Like, once you get to about 10 employees, your synchronicity will begin to come off the rails. You have to obsolete yourself and divorce yourself from the day to day. Sure you get to dream, but you are also the administrator, the school principal. You have to come out of your office and become all about people and process. And if you don’t find that sort of role inspiring, you will gravitate back to the day-to-day, making you not much different than the suits you have vowed not to become.
If you tool around the startup space much you will no doubt encounter many founders who leave their startups to start something else. Or, just leave. If you pay close attention to their reasons you’ll see at least one of these three factors embedded in their explanation. It’s something they didn’t expect and more importantly it’s something they didn’t want.
So while I certainly respect those who are able to start companies, I admire more the ones who can finish what they started by guiding a seedling company through the challenging phases of maturity. Those are the people with a nose for business, the ones who can see the future, and the ones who can adapt and develop new and different skill sets. They solve the tough problems no one wants to, and they do it with energy. Those are the people that I think deserve the scout badges because they have the awareness and resilience to create success against a backdrop that loses its luster over time.
Don’t think I’m here only preaching to founders. CEOs need to get the message, too, because to successfully run growth companies, you need to both start AND finish. Incubate and commercialize. That’s the secret — you need both to be the perfect marketplace threat. Sadly, many CEOs — especially in large companies — achieve their title because of their ability to deliver. And by ‘deliver’ I mean hit a quarterly target, if you are public.
These leaders become similarly consumed by the first of the three roles I identified earlier, to the point where numbers 2 and 3 become practically impossible. Innovation becomes near impossible because culture, processes, and short-term thinking all become embedded in concrete.
Solving the corporate innovation problem is the stuff of books (see additional reading below for people who have written them). The lesson for founders is to be mindful of dangerous habits we all seem to fall into, and to realize that what they think is a contemporary tech company may in fact become yet another bloated and entangled business entity. That is, unless we start embracing the notion that we need to start leading companies in a very different way.
This Venture Beat article from summer 2017 outlines why good people are leaving larger tech companies. It both overtly and subliminally supports my commentary about the 3 main functions of a CEO or exec team.
August 2017. Epic article from a Forbes contributor on the 10 Characteristics of a Future-Facing Company. Recurring themes!