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ACHIEVING SCALE

Surviving the 3 Stages of Founder Growth

Founders tend to go through three stages as their companies grow. To get through the second, you'll need a founder whisperer.
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My marketing associate’s mouth hung agape as her eyes darted from side to side, desperately seeking an escape route. She had asked the founder and CEO--me--what she thought was a simple question about a draft of a marketing document. Unfortunately for her, I found a way to wax on about everything from code base branches to revenue recognition.  

This cringe-worthy moment was when I realized I was not a good manager. As a growth company investor, I see similar founder/CEO dynamics play out, often in a predictable pattern. If founders want to successfully coax their companies into larger enterprises, they have to evolve through three stages: Doing, Managing, and Leading.  

Doing

The first stage is just what it sounds like: whiteboarding in the proverbial garage, cobbling together a product, pounding the pavement for customers, begging for start-up capital. “Doing” skills are usually scalable, in that individual excellence in coding or product design or marketing or relationship management is valuable in companies of any size.

Think of any founders you know about. They typically were key to the flagship product or service for a long time (à la Google, Facebook, etc.). “Doing” should be a temporary stage, though, because this is not the best and highest use of the founder. What if Mark Zuckerberg only did coding? A company can find other doers, but the founder’s strategic vision and energy are singular.  

Managing

If the founder’s "doing" is successful, the company grows and the founder must eventually manage others. In this stage, the founder’s expectation is that everyone is as brilliant/competent/motivated as he or she is and will know what to do without being told. This collides messily with reality. And here we have a classic problem: The founder can’t manage their way out of a box, but they’re a key manager.   

The solution is to have someone besides the founder do the managing. Investors refer to this as hiring “professional management.” This is fraught with danger. Entrepreneurs find this situation demeaning, as if they’re being relegated to the kids’ table at Thanksgiving dinner. But it’s sort of like exercise: Once the founder starts to see good results, they will usually buy in to the idea.

The key to good results in this stage is finding the "founder whisperer"--the executive who knows how to deal with founders. This person can take the founder’s big ideas, wild rants, brilliant insights, and ADHD whims and make them actual action items to people who have specific jobs, all while maintaining a partner type of relationship with the founder (e.g., Eric Schmidt).  

In my case, I recovered from my marketing manager episode by redirecting all that founder energy toward my own founder whisperer (the COO). He took my fire hydrant of thoughts and transformed them into discrete goals for my VP of marketing, who could then break those into specific objectives for the marketing manager. The terrific results hooked me, and I soon was keeping all my arm-waving monologues within my senior executive team. They were excellent managers and also fluent in translating the language of founder arm-waving into business actions.  

Just to be clear, the entrepreneur is indispensable. They’re like plutonium--powerful in small quantities and essential to a big reaction. The founder whisperer is not as glamorous a position as the founder, but it just as critical--they are like the nuclear power plant that turns the founder’s plutonium into usable electricity for the rest of the company. Without it, the plutonium just burns a hole in the ground and causes a lot of radiation.  

Leading

If the founder can get through the managing phase, they are well-positioned to thrive in the leading stage. Founder leadership is about providing clear vision, consistent communication, strategic insight, and emotional energy--being the beacon that guides the company. This cultural and strategic leadership is the best and highest use of the founder, and they can only throw themselves into this role successfully if the management infrastructure is there to support them.  

Doing, managing, and leading are stages that every founder/CEO must traverse to scale a growth business. How they handle each stage will dictate their own fortunes and those of their company. 

 

IMAGE: Getty
Last updated: Jan 15, 2013

ALAN YING | Managing Director, Polus Capital

Alan is the non-executive chairman of KLAS Enterprises, a leading provider of healthcare information services. He is also the President of Polus Capital, a provider of entrepreneur-friendly capital to growing and profitable businesses based out of Houston. He was formerly the founder and CEO of MercuryMD.




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