Founder Foundations - A Deeper Dive

In a stunningly energetic technology market these past years, we have seen a burst of start-ups, great companies solving real problems with innovative new uses for both technology and products. In these organizations founders have played pivotal and interesting roles, quietly and successfully bring their organizations to prominence, or becoming notorious for less ideal reasons for their behavior or flare for the dramatic.

Founders are acknowledged by many a key investor, to be critical to the staged growth and success of a company. Some investors, like Andreesen Horotwitz, openly encourage their portfolio companies to leverage a founder in the business for as long as possible, working hard to ensure founders grow with the organization they have created and recognizing the correlation between Founder retention and business success. Other investors encourage the same, but are equally open to pulling the rip cord sooner, if they feel a founder is getting in the way of the growth, scale and success of their investment.

I believe that founders are critical to the success of an organization and it's culture: They are it's heartbeat. They can also derail company success if they don't operate with a "company first" mentality, a low ego and humility. Most importantly, development, a simple and key component to founder success is often overlooked by traditional investors.

If you have a founder in your business, or your portfolio investment, here are some concepts and questions to understand as it relates to their longevity in the business and important reasons to put effort, not just money, into making your investment thrive by keeping the heart of the company alive as long as possible.

Founder Vision is Company Heart

When you hear the word vision, you may think about a slick powerpoint that outlines the competitive opportunity, the big problem and a well marketed picture of the future. Most early stage start-up's don't have the time or desire to build these. Founders are the people who have focused on solving a problem. They are the folks either working on the ground, experiencing the challenges they will ultimately solve for their customers, or they are the risk-takers who hear about these problems and jump to fix it.

Mostly I see greater success when founders are the first type. Mid level leaders, still working at levels in their career where the hands-on experience of a problem is real, palpable. Yet experienced enough as leaders to understand the bigger opportunity and to believe in themselves enough to take on the challenge.

In the early stages of a start-up, while exciting, the idea of the future seems out of reach. Reality is in the day-to-day. Making your product work, winning customers, hiring great engineers. The concept that one day your organization might be hundreds of employees with millions in revenue, while a likely goal, isn't a daily reality. The work itself is exciting. To see your product solving real problems for businesses, customers, engineers, your friends, is the fuel that brings great talent and customers to the start-up. The employees in that early stage, don't just drink the 'Kool-aid", they are believers. Their culture is rooted in making a difference and to sit down daily, shoulder to shoulder with their founders, to have immediate access to their customers, to be able to smell the problem daily. This experience weaves the fabric of real emotional commitment and 'heart' in making the early company successful. This is an intangible part of what makes so many early or mid-stage start-ups successful and a great place to work. Successful for their customers, because they get to work with a vendor who truly understands the problem and cares. Successful for investors, because they are putting their money in the hands of people who, in solving this problem daily, know it intimately. Successful for the employees, who join the team with something to believe in, not just money, fame, or notoriety.

The heart of the company is something authentic. It is a real problem. It can be saving the world (tech for climate change) or saving your friends quality of life or career (tech for DevOps). A great product solving a real issue is critical, but Founders who can authentically convey the excitement and commitment to solving this, to their customers and employees, build a 'heart' in the business, which is critical to long term, repeated success and well staged growth.

Founder Faith is Company Fuel

Founders are like the generational memory of a tribe, the muscle memory of a an athlete, the oral tradition of a religion. Having been there from the very beginning, they have seen and experienced every tough moment, failure, disaster and every triumph. Early employees also have this benefit. What this does for a mid-stage start-up is to create resilience. There is no rags to riches story of success for any start-up that doesn't include moments where the organization failed big. No organization that didn't have critical decisions where the entire future resided on making the right one. No start-up that hasn't felt the pain and fear of being the small fish in the big pond, avoiding being eaten while trying to find their place in the ecosystem. And with success, problems don't disappear, the stakes behind those problems just get bigger. At the same time, the successes that these guerrilla like start-ups do experience, are the most worthwhile. Why? Because success that comes from 80% hard work versus 20% luck, long nights, genius code re-writes, true risks... successes that come from a meaningful and intentional amount of hard-work and commitment, are magical fuel for long term commitment and resilience, in both customers and employees.

Having this visceral emotional history laser stamped on the cultural consciousness of a growing organization, builds an enormous reservoir of grit and loyalty within customers and employees and Founders become the iconic symbol of that faith. It is similar to military teams. Faced with long term deployments where true success is many many micro goals away, faced with risk daily and small joys, a military team forms deeply personal bonds going through this together. Their commander isn't a name on a piece of paper sitting safely back at HQ. Their commander is in the trenches with them daily, through good times and bad. Their commander puts their life on the line alongside them, and hands out the beer in success and relief after a successful mission. They are present.

This is why Founders feed the faithful; they are in the trenches, they have experienced everything alongside their customers and employees, first hand, and by remaining alongside everyone, this fuels the essential commitment and resilience that both customers and employees need to ensure the business has a real shot at the long 'moon-shot'.

Founder Authenticity as Leadership

Leadership is a broad and varied spectrum of skills, personality and situational success. One leader is not like any other, and a great leader for one type of organization or team would be a disaster in another. Regardless of other skills, Founders typically (typical not total) tend to be more authentic about their leadership engagement than other leaders. This authenticity is derived because they learned early and learned 'specifics' to their organization. They learned from being in close daily proximity to customers and employees, that faking things doesn't work. Pretending to be confident about an issue when you aren't, breaks trust in customer relationships, especially in the early days when your product might not be as stable as you like. Feeding your employees BS about the cash-flow or product capabilities is lethal if you want to ensure your small resilient bunch of warriors has the trust and faith in you to treat them with the respect they deserve. As fellow travelers, risk-takers putting their careers and sometimes families at risk to support your 'vision', BS is lethal, honesty and its' risk are essential. Founders usually can't avoid authenticity, even if they wanted to. The early days of total proximity to your customers and employees, leaves few places to hide. Customer and employees who love and live to take risks on early stage innovative products, chew up Founders who lack in authenticity and openness, and spit them out fast.

When we take risks, we expect authenticity. When we jump off the cliff into the unknown, we want to know the person we are jumping with, has given us as much insight as is possible, as to what may await us. Authenticity is one of a Founders best qualities. It builds trust, in others and in the vision. Transparency, authenticity and trust are essential when you have a long road ahead and your people have to perform herculean tasks to make it.

Founders are not all perfect, they are not all helpful to business success and they are not always the people who should stay as part of the organization growth. But it is my experience and deeply held belief that helping Founders grow and stay in some role that works for the business, is a exponential factor to customer and employee success. Below are some suggestions on how to help Founders remain in the business.

Founder Success

Consider one, some or all of the below in helping invest in Founder success.

1. Development. As investors, the cheapest way of protecting and growing your investment in a start-up is to also invest in leadership development for your Founders. For them to gain not only the basics of any business areas they are not expert in (Finance fundamentals, investor relations, marketing, strategic alliances, business development) is in my experience the single best investment you can offer to de-risk your portfolio. Investors, who are genius and savvy business leaders themselves, who focus on the board meeting and not the actual quality of impact of their Founders on the start-up, risk millions. Why development programs for Founders are not fully institutionalized by most Venture Capital or Private Equity funds, is a noteworthy question and discussion, when this as an effective low cost program, and can make or break so many decisions on the path to IPO or success.

2. Emotional Intelligence. Founders will find that success forces them to be more and more exposed to humans. With success, you will be trotted out to customers. With success you will become a pivotal part of engaging employees, retaining talent and acquiring new talent. With success you are the brand or a critical part of it. And that means working with people, constantly, every day and not hiding behind your code or your spreadsheet. Some of the best Founders I have worked with have been engineers, analysts, operational or financial wizards. To make a horrific generalization, all areas of a business that don't always generate people with amazing people skills. Yet success relies upon a Founder having the emotional intelligence to read a room, forge deep relationships with employees and investors, have the communication and negotiation skills to take angry customers and turn them into passionate fans. Emotional intelligence cannot always be taught. However, emotional intelligence through the use of 360 feedback, mentoring, coaching, can be increased. Developing self awareness, emotional intelligence and great communications skills can take a 'Ford' of a Founder and turn them into a 'Ferrari'. Investors, leaders, anyone who underestimates the power of developing emotional intelligence in their Founder leaders, does so at great risk.

3. Personal Brand. Don't take your Founder out to Banana Republic or Macy's and kit them out with good jeans and collared shirts! Personal style is about brand. It needs to be genuine. Your Founder will have their personal style in terms for how they talk to people, how they present information, how they listen, how they take in information, how they present in the board room, how they show up at an All Hands meeting or Sprint. The most essential part of balancing authenticity and growth, is to intentionally identify their personal brand, understand it, and make it work for you not against you as a company. Don't try to change a Founder's personal style, but help that Founder learn and explore how to change up that brand, for different situations and audiences, putting it to the most effective use possible. It is key to retaining authenticity, but doing it intentionally, is also key to taking something you don't want to inherently change, and turning it into something that works magic for your brand as you grow. If your Founder is an awkward presenter, don't make they overly smooth. Give them the tools to become more confident, ensure they understand how to make their style work to their advantage in the goals of the presentation or don't use them when that style might derail your outcomes. An awkward introverted Founder making a presentation at an All Hands meeting, who acknowledges their awkwardness and uses self depreciating humor to do so, captures hearts and wins over employees. A Founder in a hoody or a denim jacket, when meeting with customers, might make your sales team roll their eyes, but when the customer stakeholder calls in their Director of Operations to ask how truly critical this product is, that Director can sit down with your Founder and trust they are working with someone like them, someone they can trust. A Founder who is terrible at BS, can open up a critical topic of conversation with transparency at a board meeting, ensuring that investors are getting the right insight and can actually help, should their help be merited.

Don't try and change who your Founders are, but get intentional and aware of their personal style and know when to use it and when to tweak it. Your customers, employees and brand will benefit greatly.

4. Self Care Drives Performance. Founders of any gender or age, carry the burden. Much like a CEO does, they are where the weight and stress and burden of forging ahead with a new idea, untested business, sits day and night. They are often under stress. They are often boot-strapped so working long hours and playing several roles. Sometimes their passion for their work blinds them to the need to self care, or they come from a background or personality type that hasn't really ever considered self care and the role it plays in a successful business. Ironically, let's imagine that while expert in their area, they are inexperienced in other business areas, so daily they are in constant learning mode, taking in new information and being required to rapidly turn that information into good analysis and decisions. Every one of the critical skills and tools they use daily, requires that these people be at the very top of their game. Self care is critical for Founders to be successful. Whether self care is built into the culture of the organization, or whether self care is is something of an intervention from friends, assistants or investors, it is critical to sustaining their contribution in the journey. Invite Founders to join organizations that have external development goals for learning and personal growth, make sure they take vacations because they have a trusted 'Second' in the business to manage when they are gone. Whatever approach is taken, any amount of self care is good, and ideally good balance and self care becomes self evident in the direct benefits it provides in better decision making and creativity.

5. Two Way Respect. As organizations grow and more leaders are added to a team, Founders roles can change and evolve. Not everyone new to the organization will appreciate the experience, value, brand and identity the Founders bring to the team. New people will often bring a set of expectations from prior jobs, that your Founder won't fulfill. Founders can fall into the habit of not respecting new people because they don't bring instant understanding of the problem space, they just arrived to reap the rewards of success when others have been slogging it out from the beginning. Founders can get frustrated at the lack of technical awareness, cultural fit or customer sensitivity that new people might have as they onboard and get up the learning curve. Founders can have a fixed notion of what type of people it takes to be successful in the business, based on their experience of growing the business to date. They are not always right, and in not offering new talent, the time to learn and the respect for new ways of thinking/doing, Founders might risk 'organ rejection' of new talent when it is much needed. Help your Founders be aware of this knee jerk reaction to new people, and give them the tools to manage against it.

Equally, you must be aware of and do the same for your new talent. New hires, new people, new leaders could meet your Founders and instantly dismiss them. Whether its the casual presentation approach, the fact that your Founder has a narrow area of expertise or business knowledge, their age, or simply their style, new people can equally fall into a pattern of disrespecting your Founders in obvious or subtle ways, that are never subtle. Customers, leadership and employees spot it in a hot millisecond. You must have two way respect, tolerance and intentional plans to build trust between new people and your Founder. The original leaders, customers or employees, didn't need to do this with the Founder. Trust was built organically in the trenches. The more successful a start-up becomes, the fewer instances of organic anything exists. Intentional trust development and respect is critical to ensure your Founder can weather and succeed in bringing badly needed new leadership and new insights to the business.

In summary, think hard, carefully and intentionally about the development plan and role of your Founders in your business as it grows.

Below are some massive, subjective and fun generalizations on Founders and more serious things to consider about the foundation and fundamentals for Founders succeeding.

- Mid level founders who have worked the problem space hands-on, but are experienced and smart enough to know or sense a market opportunity, are like gold.

- Founders who bleed for their customers because their customers are them, their friends, their current or past colleagues, are like gold.

- Founders who are engineers, analysts, operational or financial wizards build 'brain' first, and are more likely to create product success, the 'heart' can be learned or coached.

- Founders who are sales and marketing professionals help you fast-track to 'heart' and 'brand' but need genius engineers by their side.

- Founders who are quirky, geeky and awkward, have better chances in the technology sector at building authentic loyalty in their customers and employees, critical for early stage success. Founders who are slick too soon, won't.

- Founders who refuse to put on a tie once you are past C round funding, need help to get 'slick', because slick is sometimes needed.

- Founders who are emotionally intelligent, self aware and can grow with the business, are like gold to your employees, never forget they are symbols of resilience, toughness and authenticity. They represent mutual and deep respect and 'sisterhood' from being in the trenches so long together.

- Founders who relentlessly refocus your team (even if it's distracting and annoying) on the customer and the problem space, are vital to your product and business strategy. Not listening to your customers and not anticipating the space, are the blind-spots that late stage companies invariably risk.

- Founders who don't piss you off, aren't doing their job.

- Founders who don't get development, learning, mentoring and guidance (even Founders with multiple success stories behind them) might succeed temporarily, but they won't win big for the long haul.

- Founders are really important. You need a plan for them, a plan to grow them, keep them, help them find the best version of themselves, play them in the best position on the field and know when to help them move on if they can't.

- Founders are fun and they recognize the need for people to have fun doing hard things, don't forget to let them have fun, and use them to make sure others are having fun too.

- Founders with an ego who care more about their status and celebrity, do damage to the brand or are just general assholes, need to be dealt with by your board - but you need a replacement strategy. Even an asshole founder, has still held a place in peoples hearts and minds. They represented something. When you remove a Founder entirely from the business, either because they aren't ready to grow, or they are an asshole, have a strategy to find and build up another leader to fill the gap in the culture, so you still honor the trust, risks taken and commitment of your early adopters, customers and employees and continue to guarantee retention and future success.