10 little bugs in the way founders are wired as they transition from seed to Series A

As a three time founder, and now investor in thirty founders, some patterns are pretty clear to me about the things that make most founders tick and the way that can cause problems as the company grows. Here are ten of them:

1 — You are extremely hard on yourself and that often translates into being hard on those around you.

This has the advantage of making your expectations very high, often obsessively high around product and execution. That usually has a very positive effect in reaching Product Market Fit (PMF). However, if you do achieve PMF and raise Series A, your team grows, people don’t know you as well, and that high criticality factor can scare and demoralize others.

Tip: Be conscious of this and try to practice the magic ratio of five positive to every negative comment with others.

2 — You are certain that there is a bigger opportunity than what you currently have and want to keep trying things to find it.

This is obviously a huge virtue in finding the best PMF. The more things you try, and the more obsessively, the more likely you are to find the best possible PMF. However, post-PMF, it drives your team nuts. It comes off as inconsistent, and causes changes and re-prioritizations all of the time.

Tip: This one takes a lot of discipline. You need to use your creativity for good in the existing business by pushing your team to try the things you think could be game changers, but let them process and figure out how to try their own way. In areas that you have high conviction that would be disruptive, find a few people in the company that you can regularly call on to be your experimenters and new initiative starters. Jeff Bezos really seemed to get this right, check out my review of Working Backwards here.

3 — Ideas and execution may be more important to you than people.

Pre-PMF when your team is small, this is totally fine. There’s a lot to get done and you are an individual contributor, working alongside your co-founders and early team to get things done. Post-PMF, your employees will quickly detect that they annoy you.

Tip: This is the main area that keeps founders from being effective leaders and it is not something you can change overnight. My biggest tip here is to become a student of the way that people in the company work together. You are likely to find a set of people who everyone else likes to work with. They may be managers, ICs, whatever. Learn from them, and get them more involved in hiring so that you can get as many of them into the company as possible. Figuring out how to lead, even if you are always a bit harder edged, is what gives you the leverage to create an epic company.

4 — The confidence you had which allowed you to start a company can turn to arrogance over time.

Pre-PMF, starting a company and being told no 90% of the time requires a lot of self-confidence. People without it quit. Post-PMF, when your idea was proven correct, it’s easy for that confidence to change into arrogance. Arrogance is a very dangerous thing. It is a story that you tell yourself that you know the right answer, no matter what the facts are. It filters out arguments you don’t like from your consciousness.

Tip: The more humble and open you can be, the more you will learn post-PMF. Yes, you are smart and awesome. But so is your team and so are many of your competitors. They are going to have a good share of insights, and they are also the best informed to call BS on your dumb ideas. Listen to them.

5 — Resist creating a cult.

Many many high-growth startups evolve into the system where the founder is worshipped in one way or another. While the ego gratification is nice, this completely eliminates a team effort when it comes to trying new things, executing and adapting. No matter how smart you are, you cannot be the one brain trying to outsmart the rest of the competition.

Tip: Actively kill the type of hero worship that evolves naturally. Come up with a way that you state plainly that you only want to hear how smart the team is, not how smart you are.

6 — You really aren’t great at getting things done, especially through layers of management.

Because most founders were never managers or leaders before starting their companies, when it comes to executing on ideas in later stages, they often suck. There is a natural tendency to want to keep doing things yourself as you did pre-PMF.

Tip: Surround yourself with people who are as good at execution as your are with ideas. Hopefully they are good enough with ideas and you are good enough with execution to give each other rigorous feedback. But unless you are very unusual, build that team around you and don’t slow the companies growth by trying to do too much on your own.

7 — You are a control freak and letting go is hard for you.

Obsessively controlling everything that matters is a very good way to find PMF, because getting things really right is difficult to delegate early on. Later on, it becomes a significant weakness for many founders.

Tip: It’s often true that in one specific task, someone can not do it as well as you, but if you keep your standards very high and figure out how to empower your team, the company can scale to solve all of the problems you encounter without you becoming a bottleneck.

8 — Hiring people feels risky.

Most founders have never hired big teams. Hiring can be overwhelming. Most founders hire far too slowly and conservatively, insisting that only the best people are worthy of working at their company. Generally, this is not a bad bias, but if it keeps you from hiring it is very bad.

Tip: Read this.

9 — Firing people feels like a betrayal.

Tip: Read this.

10 — Being cheap on equity feels the same as being cheap on cash.

One very common trait among founders is being as frugal as possible. Smart founders know that running out of cash is death, and having plenty of cash is freedom. The same does not apply to equity, because equity is tied to people and its so much more lucrative to own a small piece of an epic company, than a big piece of a moderate success. I do not have a problem when founders are worried about dilution, but if it gets in the way of getting a great investor instead of a good investor, that hurts the company. The same is true on hiring and retention. Paying top of market equity is almost always the right thing, because you want people who are aligned with you on the success of the company over the long term. The employee option pool should be something founders fight to keep increasing, sharing the dilution with investors.

Co-founder and CEO NetGravity, Rocketship Education, Zeal Learning, Dunce Capital. john@danners.org https://dunce.substack.com/