The journey from being a founder

Relationships between startup founders are among the most complex you will experience in life. For a startup to be successful, the foundation established by the early founder dynamic must be capable of withstanding immense pressure.

When I speak to entrepreneurs about their founder relationships and consider my own experience, I find that the subject matter of tough conversations is often similar, but the magnitude of difficulty is driven largely by when they happen. I recommend founders have tough conversations at the earliest stages of their startup. The process helps bond the founding team and ensures that when challenges do arise, ground work has already been laid for the business to make the best possible decisions.

Founder Identity vs. Role Identity

When you work on a startup for many years, your status as a founder becomes core to your identity. The word founder evokes characteristics like leadership, ambition, independence, creativity, and success. Founder status is a major part of who we are and it will stick with us even after our startup finishes its independent journey, regardless of outcome. Even though I’m now a venture capitalist, I still think of myself as a founder and an entrepreneur — it is core to who I am.

A key challenge arises when we conflate Founder Identity with Role Identity (and title). A common scenario is when a startup outgrows a founder’s experience level in a particular role and seeks to hire above them. For the organization, that’s a great thing because it means that the business is growing. And even though the idea of doing whatever it takes to help your startup succeed is intuitive to a founder, this particular case can trigger feelings of betrayal, failure, inadequacy, and frustration. This happens when we’ve conflated our Founder Identity with Role Identity.

No matter how your title or the nature of your work changes over time, you will always be a founder.

Founder Identity vs. CEO Identity

During a period of sustained difficulty at Looksharp I called a board member and asked him if we should consider hiring another CEO. He said no, but in broaching the subject I was acting as a founder whose obligation was to consider any possible way of helping the company, even if it meant removing myself from the top job. CEOs tend to scale more easily than founders in other roles because the job doesn’t require domain specialization in the same way. The CEO has the benefit of being able to surround themselves with more experienced executives. That strategy breaks down pretty quickly, however, if members of your executive team are equally inexperienced.

In either case, when an organization decides to recruit somebody with more experience to manage a founder’s domain, it’s actually a huge opportunity to help the company leap forward and accelerate your professional learning curve. You get to either level up your game by learning from the best or think about contributing to a totally different part of the organization that interests you. If you think about it, flexibility in your role aligns perfectly with the founder’s obligation to contribute in the greatest way possible to the overall success of the company.

Can you tell from the beginning whether a Founder can become a successful CEO?

When starting, as a founder you are the decision-maker and the employee doing most of the things by yourself. You don’t need sophisticated visions, strategic plans, roadmaps, – it is all in your head. Your focus is developing the right product, finding the right market (and recruiting the close team and finding the financial resources. Then at the moment, the company starts shipping the first products or having the first clients and you are not any more confused about your business model, your job becomes completely different. It is not only about the product anymore, it is about growth, clients, efficiency, cost management, recruitment, management. You start creating specialized functions, systems, and structures to manage the growing business. You have to make sure that the growth doesn’t happen at the expense of the profit and that you are managing costs as well as the sales. Then you have to resist the temptation of doing things yourself and delegate to the experts and teams without interfering in the process. No more doing! So difficult for a founder! After all, they can do it better! But they have to let go. This transition is the turning point! What a complexity! As a CEO they have to show the stars and lead the way. The job becomes fundamentally different. And requires a completely new set of skills. To better explain this last point, I thought to share what I believe should be the roadmap and compass for the founder CEO – the job!

Unlike the other roles, the role of the founder CEO is not always well defined. So, they create it consciously sometimes unconsciously, often by experimenting and going with the flow. The first thing the founder CEO should ask is « What is my job »? « Where should I focus my time and my energy »? How would I achieve my major goal: creating a great company (however this translates in tangible terms)? When I start coaching founders one of the first things I check out is their last past month’s agenda to find out how they are spending their time. Do they focus on their core business or are they doing other things? Of course, for certain dimensions below, they are not the « doer », just the « architect » and the final decision-maker. They have to make sure that all those variables of the performance below are aligned to the strategy, mission, and vision and assure coherence in between them. After all, it is their responsibility to make the system work and their fault when things go wrong.

Structural elements

Mission
Vision
Strategy
The business model
Culture
Objectives
Operations (including all the functions)
The performance (balance cost-profit-growth-customer experience)
The performance management indicators
The organization structure

The Team & Relations

The recruitment of executives (and the recruitment strategy)
The complementarity of the executive team
The development of the team members & motivation
The management of the relation with co-founders
The management of relations with key stakeholders (employees, suppliers, customers, partners)
Create conditions for success: right resources, support, and means
Communication internally and externally
The communication & inspiration

Keeping the start-up soul alive

Founder Personal Growth

Learning strategy, mentors, advisors, pairs, employees, reading, studying, support circles….

It is quite visible from this roadmap the number of different skills the founder CEO has to master. To add to that she/he needs to develop insights on the key functions of the company. Someone with technical background needs to develop skills in marketing, sales, supply chain, finance, operations….If not, they will be blindsided in the decision-making & would play favorites (with the function they are most comfortable with). You can not solve the problem unless you see it from all the possible angles. Like the human body where every organ has its vital importance, in the organization it is the interaction of different functions that creates value. The CEO is responsible for that synergy. To make it possible, he/she needs to understand and know first.

The personal growth of the founder is the foundation for the rest. I repeat the founder needs to learn, learn, learn….fast! The road to « becoming » a CEO is non-stop learning. It is the founder’s most important imperative and project and should be managed as such: a thoughtful, structured, conscient project with objectives, actions, actors, and milestones.

The successful transformation of the founder to CEO in itself is an extraordinary achievement. Because it has to be made relatively fast and it is inherently complex. In a big company, you have time to prepare yourself to become a CEO (and develop all the required capabilities). You start as a young graduate, become an important expert contributor to the team, then gradually take management responsibilities, having different leadership roles before landing at the top. You are exposed to different functions and divisions. Usually, you benefit from a lot of training, coaching, mentoring, sponsors, support networks, etc…But for the CEO founder, there is no time. He has to switch to CEO mode almost overnight (although it would take years to really « become »one ). Would everybody be successful?

Not really. The difference? PERSONALITY & SKILLS

Those two are connected in the cause and effect link. To measure up to the role of the CEO the founder has to learn new skills and to do so, he needs first to have a curious, open-minded, humble, non-dogmatic personality. What does this mean?

I believe in addition to so widely explored « people » skills and « energy level, intelligence and achievement drive » (which we are mainly « born » with) the following personality features are essential in predicting success: Ambition and Motivation/Self Esteem-Self Awareness/Lateral & Vertical Thinking/GRiT

Ambition and Motivation

The ambition and motivation of the Founder CEO for their start-up – and how much their ego is involved in it is one of the first points to consider.

Some want money, some want power, some want to be free of hierarchies, some want to change the world, and some want to make an impact, some have the inner drive to produce the best possible results and be part of creating something great. Some are interested only in creating, and some in “building”. Well, this departure point is important in predicting the start-up story. It would define the behavior of the founder in the crucial decisions to be made i.e. somebody motivated by money will be more open to having an external CEO on board, somebody who wants control would not take decisions that maximize value, rather those that reinforce his power. What they communicate inside and outside is not necessarily their deep motivation. And this last one will drive the decisions not the rationality or what is good for the company. That’s why is vital for the founder to understand their deep, hidden motivations.

In the case of having other co-founders, this subject is even more important. The lack of alignment of vision and motivations of co-founders can break the relation and ultimately the startup.

– confidence in our ability to think, confidence in our ability to cope with the challenges of life

– confidence in our right to be successful and happy, the feeling of being worthy, deserving, entitled to assert our needs and wants, achieve our values, and enjoy the fruit of our efforts.

Or in other words, to trust one’s mind and to know that one is worthy of happiness.

Narcissism, arrogance, or overconfidence of the Founder are not good indicators of a CEO’s material (even if he/she is a genius). It is logical – the process of « becoming » a CEO starts with the acceptance that the founder doesn’t know it all that there are many areas he needs to develop the necessary knowledge and skills – Humility. It is simply impossible to ignore or shortcut the development process especially for young people with not much experience. If you are at level 3 but desire to be at level 5 you must take the first steps to level 4. If you don’t know at what level you are, you will not learn or grow. So, you have to have as well a high degree of Self-awareness* (having a deep understanding of one’s emotions, strengths, weaknesses, needs, and drives). You know where you stand, you know what you don’t know or what drives you. Self-awareness and self-esteem go together. If you have one you have the other. Knowing yourself and having the self-esteem necessary to be the real YOU is the basis of authenticity as well. In leadership, authenticity is a priceless asset.

FAQs

What are the main challenges in transitioning from a founder to an employee role?

Transitioning from a founder to an employee often involves a shift in mindset, autonomy, and responsibilities. Founders are accustomed to making decisions independently and being in control of the direction of the company, whereas employees typically have to follow orders and work within predefined roles.

How can I cope with the loss of autonomy and control after transitioning from a founder to an employee?

It’s essential to recognize that every role, including that of an employee, brings its own set of opportunities and challenges. Focus on the aspects of the employee role that you find fulfilling, such as learning new skills, collaborating with colleagues, and contributing to the company’s success.

How can I adjust to taking orders and suggestions from someone else after being a founder?

Recognize that taking orders and suggestions from others doesn’t diminish your abilities or accomplishments as a founder. Instead, view it as an opportunity to learn from others, gain new perspectives, and contribute to a collective effort towards a common goal.

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