Journey
If you’re thinking about founding a startup, be ready to embark on a journey. One of continuous learning.
When things go well, you have to keep up, often reinvent yourself, and try to grow as fast as your startup so that you don’t become a blocker. When things go badly, you have to identify what to keep on doing, what to change and when to pivot. The scale of your ambition needs to be matched by the quality of your execution.
With an increasingly volatile macroeconomic landscape in the background, a founder’s actions become even more consequential. Your sense of perspective, judgment, decision making and resilience are all being put to test.
Many founders succeed, not in spite of the scaling challenges they face, but because of them – through all the personal and professional growth along the way. Here are some insights to consider as you’re beginning the journey.
Acknowledging the often paradoxical balancing act of scaling startups
“Scaling a startup requires constantly doing things you’ve never done before and taking decisions very quickly with limited information. This remains true whether it's your first, second or fourth startup, as the market conditions change constantly, technologies keep evolving and the competition never sleeps,” shares Marta Krupinska, Head of Google for Startups UK and serial tech entrepreneur. "Founders need to master a delicate balance of conviction and humility, to stay confident but keep on incorporating new information from the market and their teams.”
Founders need to show both conviction and coachability, to know when to follow their gut and whose opinion to trust. As Leila Zegna, Founding General Partner at Kindred Capital, summarizes it: “It's hard to find that elusive balance between irrational hubris, visionary conviction, and self-delusion. If you end up being right, you're handsomely rewarded. If you end up being wrong, you were crazy... and everyone told you that you were crazy. Why didn't you just listen?”
Another balancing act that founders face is switching between short and long-term thinking. It can be tempting to compromise now in order to get your business to the next stage but some decisions have significant long-term repercussions. "I have been lucky to have the most supportive group of angel investors, but we recently closed our Series A and taking on institutional investors who were completely aligned with my vision was definitely one of my biggest challenges. I almost accepted a few term sheets that weren’t 100% right – under duress – but I am happy that I held out for the right investors who share similar goals for the company,” says Whitney Hawkings, Founder and CEO of Flowerbx.
Hiring also comes with paradoxes. There’s wide consensus that hiring is a key founder activity early on and there’s a popular piece of advice to hire people who are better than you. Zegna adds a caveat: “One of the hardest things is how to know when someone is better than you at something, especially if you don't have much experience of that thing in the first place! If you've never been a VP Sales at a big enterprise SaaS company, how do you know what to look for in an incredible senior hire? How do you know if they're performing without a benchmark or counterfactual? How do you know when it's time to move your co-founding CTO into a "Chief Architect" role and get a CTO in who can build and lead a team and not just crunch out incredible code? Making critical trajectory-defining decisions across so many dimensions, often with little to no experience in the respective functions, is incredibly challenging.”
Surrounding yourself with the right people and culture
As a founder, there are few more critical decisions to make than the team you bring together as part of your company and the extended network of supporters that you build around yourself – from mentors and advisors to fellow founders.
“I cannot over emphasize the importance of team. Both personally and professionally, you are only as good as your “team”. I would also say, as soon as resource allows, hire people who have done it before. There is a real urgency to startup growth, and it is game-changing to have people on board who have scaled a similar business before and bring with them a wealth of experience,” stresses Hawkings.
Beyond attracting, hiring and retaining talent, another important founder task is to create psychological safety in the team and allow honesty to thrive. “Fostering a culture of giving every employee an opportunity to question, explore and understand how we, as leaders, make decisions, might induce some risk as we share information and debate on strategic decisions, but is essential to trigger trust,” says Herman Narula, CEO and Co-Founder of Improbable. “Personally, scaling our organization has meant working harder to stay connected with those across the business. I am mindful of protecting time to speak directly with a variety of people across the business, and keeping the pulse of the company, even as we moved into being a digital-first organization. No matter how large we get, it will always remain hugely important to me to consider all viewpoints within the company to the decisions we make at an executive level.”
Learning how best to delegate and when to ask for help are also critical to the founder's journey. “Asking for help is scary! I certainly don’t do it enough and need to continue working on it,” admits Krupinska. She encourages founders to prioritize leadership training, mentoring, coaching and executive education, emphasizing that there are ways to do it on a startup budget. Investing in your leadership skills is the beginning of a virtuous cycle and has tangible effects – don’t underestimate the importance of conveying your vision in a clear, inspiring way and leading with empathy and emotional intelligence. Working with mentors who are a few steps ahead of you and committed to helping you succeed, getting an outsider's perspective – even from experts outside of your industry – and having trusted confidantes can help you better navigate scaling challenges.
Even with a strong team and network of advisors, the founder journey can be a lonely one. One way to alleviate that feeling, which has proven to be effective for many startup founders, is surrounding themselves with other founders. Krupinska shares the sentiment: “We set up peer mentoring groups for our founders at Google for Startups and we've seen it work a charm – getting together with other founders to openly discuss challenges and find solutions together. It allows to create closer relationships, combats the feeling of loneliness at the top, and provides much-needed perspective. In fact, many of the founders that we’ve invested in out of the Black Founders Fund say that access to high quality community of fellow founders was one of the main benefits of working with us."
To encourage peer-to-peer learning, Kindred runs Founder Forums, modeled loosely on the YPO, where groups of 6–8 founders form a pod and meet regularly to go deep on issues, both personal and professional. “Finding a peer group that can understand and viscerally relate to the wild swings of up and down on the entrepreneurial journey is one of the absolute best things you can do. To feel heard, understood, and to feel that sense of belonging. Founders are all Davids fighting Goliath in their respective fields. There is so much comradery, so much shared experience. Having real, authentic, conversations, founder-to-founder, can be really valuable. Because it turns out that when it feels like the wheels are coming off the bus, you're not doing it wrong... it's likely that you're doing it right. That's just what building a fast-growth startup feels like,” expands Zegna.
Managing yourself and your team during complex situations
As their company scales, founders have to learn to manage an increasing variety of stakeholders while allocating and reallocating resources – including their time, attention and energy. Founders also have to be able to test and learn constantly, amend the direction or change the rhythm when the context or market requires it, as Narula shares: “At Improbable, there have been several times where we’ve had to think again about how to reach technically and experientially our goal of creating incredible virtual worlds that have real meaning, most recently with our ambitious work with Web3 technologies. As you scale, the projects which carry the most risk are harder to embrace, yet those are the ones which carry the greatest positive impact on growth.”
One of the biggest challenges that Tony Jamous, now CEO of Oyster, had to face and learn from was when he merged his previous company Nexmo with Vonage, a public company, back in 2016. Because they were merging with a public company, communication of and about the merger had to be restricted to a few people at the top of the organization. That made managing the change very complicated as many of the employees would be receiving this news as it happened – leading to many questions and leaving some feeling uncertain about their job.
“It’s really hard to dissociate personal with professional when you're a leader of a team or manager of people, because it will become personal based on how you react to the challenges you're faced with. So when executives have stressors in the system, we then react, and sometimes we tend to fall back to our old self,” shares Jamous.
“The biggest challenges many face are these unhealthy reactions to complex, high-stakes situations. The solution is deciding consciously and sometimes unconsciously to not react that way so you can actually grow the business. The personal challenge is how you remove yourself from being in the way of the success of the business and how you continue to gain awareness of when you might be in the way, where your weaknesses as a human being can get in the way of building healthy, strong and trust-based relationships in the business. Fortunately, we were able to manage that change successfully, and the company has continued to grow rapidly, and it actually became a reason why the public company got acquired by Ericsson last year for $6.5 billion.”
Coping with pressure and expectations
As a founder scaling startups, you can’t have all the answers but it sometimes feels like you should. External expectations get internalized. "There is this feeling that leadership has to be strong, confident and provide clear direction, otherwise, it fails. But, if we don’t recognize when we don’t know, how do we learn? If we don’t ask the right questions, how will we find answers? We’ll be limited to our own knowledge and beliefs,” adds Krupinska.
There seem to be a whole set of beliefs about what a founder CEO should be like and how they should behave. “For instance, the belief that the CEO and/or Founder should work on weekends, work late hours and sacrifice their work-life balance. That actually hurts the business in the long-term. In this example, you’d be at a huge risk of burn-out. CEOs and founders need to let go of that belief system and instead dedicate themselves to the opportunity, accept when it's coming their way, and approach it in a way that is healthy, that's positive, and without the attachment of who they think they should be. This mindset has been helpful in realizing my own potential,” explains Jamous.
What amplifies the pressure and expectation that founders often feel is the comparison trap. “I think we live in a world of curated projection – where the easy trap to fall into is comparing how you feel on the inside to how others are projecting themselves on the outside. As a start-up founder, you're constantly reading about your buddy's startup that just raised a $50m Series B. Reading about how some big shot joined the board of a competitor. How your friend's company just signed a mega partnership and published a press release about it. And then all you experience, on the other side, are the relentless problems and fires that you have to put out in your own company. Those don't get shouted about on the loudspeaker that is LinkedIn, or the humblebrags on Twitter,” warns Zegna. “I think comparison is killer. Not least because it's not apples-to-apples. It's insidious and creativity destroying, and those who I've seen reach their own (and their company's) full potential are far more focused on themselves and their companies than on others.”
Practicing self-awareness and finding your purpose
Self-awareness is an ongoing practice that founders should embrace. Constantly assess your role – what are your strengths, what are your weaknesses, what do you have to learn to be better at, and what you can delegate. What do you love and what do you hate doing?
In the early stages, it’s all about the founder and the team. “If the founder doesn’t have the energy to carry the business, to sell the dream and attract and enthuse the best investors, partners and talent, that certainly means they should consider a different role in the business, and look for a different leader,” stresses Krupinska.
Down the line, it’s more frequent to see founder CEOs who love the hustle and the energy of starting a business but aren’t committed to the requirements of running a complex operation with sophisticated HR, finance or compliance functions, as Krupinska explains: “That’s okay – often the people who take the company from 1-100 employees are not the ones to take it to 1000… I’d encourage CEOs to try and frequently check in with themselves at which stage they think they are, and have very honest conversations with their co-founders, their management team and their board. Leadership changes can take a long time to be done without detriment to the business, so early succession planning, i.e. promoting someone to COO or hiring an external one, who has ambition and potential to become CEO, are a great way to de-risk such change.”
Self-awareness is also a prerequisite for developing a sense of purpose, which investors often like to see, as Zegna explains: "Our first question when a founder pitches us is "Why? Why are you doing one of the hardest things you can do?" Our view is that for it to work, it really has to be an obsession, or a calling of sorts, for the founder. Because it demands a level of commitment and dedication to solving a particular problem that is unrelenting. If circumstances change such that the founder loses that fire, loses that relentless desire to push... then it's time for them to step into a different role. Ultimately, we believe that founder-led companies, wherever possible, generate the greatest outcomes. Because it is extremely difficult to replace that true north, that fire, that instinct within a company.”
