Article
The Startup Growth Lifecycle: Re-inventing Leadership at Every Stage
October 13, 2024
Starting a company is exhilarating. The energy, passion, and creativity needed to get a startup off the ground are boundless, often resulting in rapid progress. But here’s the hard truth: what made you successful in the early days can sabotage you as you grow. There’s a breaking point—usually when your startup begins scaling—that demands a whole new approach.
Founders who fail to adapt often face disastrous outcomes. Think about how promising startups, like the infamous fall of Blackberry, once dominated their niche but crumbled under the weight of their own success because their founders were too fixated on early strategies and failed to scale. The tension is real, and many founders experience it but don’t know how to address it.
The Early Stages: A Playground for Mavericks
In the pre-seed and seed stages, founders are visionaries, hustling on every front. You’re wearing multiple hats—marketer, product designer, chief salesperson—and decision-making is quick and intuitive. These early days are defined by innovation, creativity, and the power of improvisation. Startups like Uber thrived in this environment, with Travis Kalanick’s adaptable, risk-taking leadership style playing a significant role in those formative stages.
But here’s the twist: as crucial as these qualities are, they become liabilities if not balanced as the company matures. Founders often fall into the trap of assuming that the instincts that helped them launch their company will also be their ticket to scaling. Spoiler: they won’t.
The Growth Stage: From Visionary to Strategist
As the startup enters the traction stage, the founder’s role begins to shift dramatically. This is where companies like Boo .com struggled, with Ernst Malmsten’s lavish spending and lack of focus on profitability spiraling into unchecked ambition and poor strategic management. Boo .com, a high-profile online fashion retailer that launched in the late 1990s, raised significant capital but ultimately failed due to a combination of factors, including overspending, a lack of focus on profitability, and an inability to adapt to the market's demands. This aligns with the challenges that startups often face during the growth stage, where they need to transition from a focus on innovation and customer acquisition to building sustainable systems and processes. Founders must pivot from being hands-on doers to becoming big-picture thinkers.
Key Challenge: Scaling isn’t just about adding people or increasing revenue—it’s about building systems that can handle growth.
Example: Consider a startup founder who once thrived by being decisive and intuitive. Suddenly, those same strengths become weaknesses. At this stage, data-driven decision-making, clear objectives, and team alignment become more important than gut instinct. At fab .com for example, the founder initially assumed that a flash-sales model for designer goods was enough. Fab .com's initial success was based on a niche market strategy, but as it expanded, it faced challenges in managing inventory, maintaining customer satisfaction, and adapting to the changing e-commerce landscape. This example highlights the importance of data-driven decision-making, clear objectives, and team alignment during the growth stage. It wasn’t until later, with customer feedback and market validation, that they realized the need for a much broader platform. This critical pivot fueled their continued growth.
You can no longer make decisions in isolation. Founders who don't delegate or rely on the insights of their growing teams are bottlenecking their own companies. In the early days, this might have worked, but in the traction phase, failure to delegate and empower others can crush a startup’s momentum.
Scaling Stage: Collaborative Leadership and Risk Management
As your startup moves into the expansion stage, you’re no longer a scrappy underdog; you’re playing in the big leagues. But here’s where many founders get stuck. Scaling is about efficiency, consistency, and letting go of control.
Key Challenge: Founders must move from solo decision-makers to collaborative leaders. While in the early days, your strength lay in your ability to do everything yourself, this will no longer cut it. The shift from risk-taker to risk-manager becomes critical. Founders need to balance their instinct for innovation with a more calculated, process-driven approach. The introduction of processes, governance structures, and professional management becomes essential to avoid burnout and chaos.
Consider Zynga under Mark Pincus: initially, his aggressive, growth-at-all-costs mentality helped the company conquer markets globally. However, as Zynga grew, that same aggressive attitude led to internal cultural issues, regulatory challenges, and reputational damage. This illustrates the need for founders to transition from risk-takers to risk-managers during the scaling stage and to balance their instinct for innovation with a more calculated, process-driven approach. The inability to transition from a disruptive force to a company with proper checks and balances left Zynga in need of an overhaul.
Founders who thrive at this stage are those who not only manage risk but also develop emotional intelligence. Successful founders become socially astute, supporting their teams, creating a positive culture, and understanding that leadership isn’t just about driving results but also about fostering a thriving environment for long-term success.
Continuous Growth: The Leadership Evolution
At the continuous growth stage, startups that survive are those with founders who have fully evolved their leadership styles. You’re no longer in the business of product launches and rapid pivots but rather in sustaining growth, profitability, and strategic differentiation. Your new job is governance, and the decisions you make today must focus on long-term sustainability. This is where companies like Yahoo! struggled, with Jerry Yang's inability to adapt to the changing landscape of the internet industry and his failure to embrace the rise of social media and mobile led to the company's downfall.
Key Challenge: Long-term planning and vision become more important than short-term wins. Founders must transition into CEOs who set the tone for culture, governance, and sustainable growth. This often involves a collaborative decision-making style, focusing on bringing diverse perspectives together to fuel innovation while avoiding stagnation.
Here’s where many companies fail: the founder remains overly attached to the “startup hustle.” This is no longer the place for it. Founders must shift from inspirational figures to developers of talent. Leadership is now about making your people successful, not just driving product success.
What’s at Stake? If you fail to adapt, your startup won’t just stall—it could implode. Take the case of Pets .com, where Julie Wainwright, unwilling to let go of her early vision and failing to adapt to the realities of the pet supply industry and scaling, steered the company into disaster. In contrast, those who successfully pivot at each stage—from visionary to strategist to risk manager and mentor—will lead their startups to sustained success.
Success in the early stages of a startup often reinforces behaviors that can be destructive as the company scales. What got you here won’t get you there.
Are You Ready to Evolve? So, ask yourself: Are you ready to let go of what made you a successful founder to become the strategic leader your startup needs? Are you willing to delegate, build systems, and adapt your leadership style as your company grows? If not, you may find yourself standing in the way of your own success. The future of your startup depends on it. It’s time to rethink your approach to leadership—before it’s too late.
Founders who fail to adapt often face disastrous outcomes. Think about how promising startups, like the infamous fall of Blackberry, once dominated their niche but crumbled under the weight of their own success because their founders were too fixated on early strategies and failed to scale. The tension is real, and many founders experience it but don’t know how to address it.
The Early Stages: A Playground for Mavericks
In the pre-seed and seed stages, founders are visionaries, hustling on every front. You’re wearing multiple hats—marketer, product designer, chief salesperson—and decision-making is quick and intuitive. These early days are defined by innovation, creativity, and the power of improvisation. Startups like Uber thrived in this environment, with Travis Kalanick’s adaptable, risk-taking leadership style playing a significant role in those formative stages.
But here’s the twist: as crucial as these qualities are, they become liabilities if not balanced as the company matures. Founders often fall into the trap of assuming that the instincts that helped them launch their company will also be their ticket to scaling. Spoiler: they won’t.
The Growth Stage: From Visionary to Strategist
As the startup enters the traction stage, the founder’s role begins to shift dramatically. This is where companies like Boo .com struggled, with Ernst Malmsten’s lavish spending and lack of focus on profitability spiraling into unchecked ambition and poor strategic management. Boo .com, a high-profile online fashion retailer that launched in the late 1990s, raised significant capital but ultimately failed due to a combination of factors, including overspending, a lack of focus on profitability, and an inability to adapt to the market's demands. This aligns with the challenges that startups often face during the growth stage, where they need to transition from a focus on innovation and customer acquisition to building sustainable systems and processes. Founders must pivot from being hands-on doers to becoming big-picture thinkers.
Key Challenge: Scaling isn’t just about adding people or increasing revenue—it’s about building systems that can handle growth.
Example: Consider a startup founder who once thrived by being decisive and intuitive. Suddenly, those same strengths become weaknesses. At this stage, data-driven decision-making, clear objectives, and team alignment become more important than gut instinct. At fab .com for example, the founder initially assumed that a flash-sales model for designer goods was enough. Fab .com's initial success was based on a niche market strategy, but as it expanded, it faced challenges in managing inventory, maintaining customer satisfaction, and adapting to the changing e-commerce landscape. This example highlights the importance of data-driven decision-making, clear objectives, and team alignment during the growth stage. It wasn’t until later, with customer feedback and market validation, that they realized the need for a much broader platform. This critical pivot fueled their continued growth.
You can no longer make decisions in isolation. Founders who don't delegate or rely on the insights of their growing teams are bottlenecking their own companies. In the early days, this might have worked, but in the traction phase, failure to delegate and empower others can crush a startup’s momentum.
Scaling Stage: Collaborative Leadership and Risk Management
As your startup moves into the expansion stage, you’re no longer a scrappy underdog; you’re playing in the big leagues. But here’s where many founders get stuck. Scaling is about efficiency, consistency, and letting go of control.
Key Challenge: Founders must move from solo decision-makers to collaborative leaders. While in the early days, your strength lay in your ability to do everything yourself, this will no longer cut it. The shift from risk-taker to risk-manager becomes critical. Founders need to balance their instinct for innovation with a more calculated, process-driven approach. The introduction of processes, governance structures, and professional management becomes essential to avoid burnout and chaos.
Consider Zynga under Mark Pincus: initially, his aggressive, growth-at-all-costs mentality helped the company conquer markets globally. However, as Zynga grew, that same aggressive attitude led to internal cultural issues, regulatory challenges, and reputational damage. This illustrates the need for founders to transition from risk-takers to risk-managers during the scaling stage and to balance their instinct for innovation with a more calculated, process-driven approach. The inability to transition from a disruptive force to a company with proper checks and balances left Zynga in need of an overhaul.
Founders who thrive at this stage are those who not only manage risk but also develop emotional intelligence. Successful founders become socially astute, supporting their teams, creating a positive culture, and understanding that leadership isn’t just about driving results but also about fostering a thriving environment for long-term success.
Continuous Growth: The Leadership Evolution
At the continuous growth stage, startups that survive are those with founders who have fully evolved their leadership styles. You’re no longer in the business of product launches and rapid pivots but rather in sustaining growth, profitability, and strategic differentiation. Your new job is governance, and the decisions you make today must focus on long-term sustainability. This is where companies like Yahoo! struggled, with Jerry Yang's inability to adapt to the changing landscape of the internet industry and his failure to embrace the rise of social media and mobile led to the company's downfall.
Key Challenge: Long-term planning and vision become more important than short-term wins. Founders must transition into CEOs who set the tone for culture, governance, and sustainable growth. This often involves a collaborative decision-making style, focusing on bringing diverse perspectives together to fuel innovation while avoiding stagnation.
Here’s where many companies fail: the founder remains overly attached to the “startup hustle.” This is no longer the place for it. Founders must shift from inspirational figures to developers of talent. Leadership is now about making your people successful, not just driving product success.
What’s at Stake? If you fail to adapt, your startup won’t just stall—it could implode. Take the case of Pets .com, where Julie Wainwright, unwilling to let go of her early vision and failing to adapt to the realities of the pet supply industry and scaling, steered the company into disaster. In contrast, those who successfully pivot at each stage—from visionary to strategist to risk manager and mentor—will lead their startups to sustained success.
Success in the early stages of a startup often reinforces behaviors that can be destructive as the company scales. What got you here won’t get you there.
Are You Ready to Evolve? So, ask yourself: Are you ready to let go of what made you a successful founder to become the strategic leader your startup needs? Are you willing to delegate, build systems, and adapt your leadership style as your company grows? If not, you may find yourself standing in the way of your own success. The future of your startup depends on it. It’s time to rethink your approach to leadership—before it’s too late.
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Startup founders represent the ultimate paradox: celebrated for their innovative brilliance yet notoriously susceptible to failure. In reality, the difference between astronomical success and dismal failure boils down to a surprisingly consistent set of behaviors and personality traits. Drawing from extensive 360 feedback studies, personality assessments, and deep insights from Founders Keepers, we've unraveled exactly what separates winners from losers in the startup world. Myth-busting: Genius Jerks Rarely Prevail A common myth persists that successful founders must be narcissistic, domineering, and abrasive—the stereotypical "genius jerk." Yet, our rigorous analysis of data from 122 founders, comparing the top performers (at least 10X returns) with bottom performers (zero returns), decisively shatters this myth. Successful founders, contrary to popular belief, rarely succeed because of egocentric ruthlessness. Instead, they thrive due to their extraordinary adaptability, relationship-building skills, disciplined execution, and deep personal grounding. Meanwhile, unsuccessful founders often implode because of their rigidity, isolation, impulsivity, and inability to truly lead teams. Adaptability: The Endless Pursuit of Product-Market Fit Successful founders understand one critical truth: product-market fit isn't a finish line; it’s a continuous process. They show an exceptional ability to: Remain open to input, eagerly soliciting and integrating team feedback. Effectively manage resistance, empathetically addressing team concerns. Skillfully create buy-in, building commitment through transparency and genuine engagement. In contrast, unsuccessful founders typically fail due to rigidity. They stubbornly anchor themselves to outdated strategies, ignore valuable feedback, and react defensively to challenges, eventually becoming roadblocks in their own companies. Relationship Building: From Loners to Leaders A pivotal distinction lies in the ability to work effectively through others. Successful founders consistently excel in empowering their teams. They: Delegate effectively, granting autonomy while clearly defining expectations. Maintain trust through consistent behavior, integrity, and transparency. Develop robust emotional intelligence, adeptly managing conflict and strengthening team cohesion. Unsuccessful founders, on the other hand, struggle profoundly with delegation. Their chronic micromanagement erodes trust and morale, creating environments of fear and resentment. They often isolate themselves, failing to build genuine relationships, thus missing critical insights and innovations their teams could provide. Execution: Discipline Over Charisma Execution—arguably the most underrated pillar of startup leadership—truly separates winners from losers. Successful founders meticulously: Set clear, measurable, and achievable goals. Follow through relentlessly, holding themselves and others accountable. Create robust systems and processes to scale effectively. Conversely, unsuccessful founders typically suffer from chronic disorganization and impulsivity. Their inability to prioritize, constant pivots without strategic clarity, and poor follow-through generate chaos and stifle growth. Personal Grounding: Stability Amidst Chaos Perhaps most counterintuitively, successful founders exhibit deep personal grounding—a trait seldom highlighted in sensational startup narratives. They: Demonstrate emotional resilience, remaining composed under extreme stress. Exhibit patience, tolerating ambiguity and uncertainty with grace. Maintain optimistic yet realistic perspectives, avoiding destructive cycles of anxiety or panic. Unsuccessful founders, however, often spiral under pressure. Their volatility and emotional reactivity exacerbate crises, leading to poor decision-making and destructive interpersonal dynamics. Self-Awareness: The Hidden Driver of Success Underpinning all these traits is profound self-awareness—arguably the most critical competency of all. Successful founders consistently seek self-improvement, humbly recognizing their weaknesses and proactively addressing them. They actively solicit honest feedback, never fearing the vulnerability required for growth. Unsuccessful founders, conversely, often display a tragic lack of self-awareness. Their denial of shortcomings, defensiveness to feedback, and unwillingness to evolve ultimately doom their startups. Real-World Wisdom: Voices from the Trenches Beyond the data, the human stories captured in 360 feedback illustrate these differences vividly: Successful founders receive praise like, “He constantly solicits input, adapts swiftly, and builds deep trust. His humility makes everyone want to follow him.” Unsuccessful founders, by contrast, earn harsh critiques: “He ignores input, reacts defensively, and insists on controlling every detail. The team is disengaged and demoralized.” These narratives underscore the simple but powerful truth that the best founders aren't isolated geniuses—they’re skilled leaders who build environments where everyone can thrive. The Path Forward: Turning Insights into Action If you're a founder, investor, or leader within the startup ecosystem, confront these truths head-on. Assess yourself and your organization rigorously: Are you truly adaptable, or merely superficially agile? Are you empowering your team, or stifling their potential? Are you executing with discipline, or flailing with chaos? Are you grounded emotionally, or reactive and volatile? Are you genuinely self-aware, or defensively delusional? Final Thoughts Ultimately, founder success isn’t about flashy charisma or ruthless ambition. It’s about a disciplined commitment to growth—both personal and organizational. Embrace adaptability, deepen your self-awareness, and master the art of leadership grounded in trust and integrity. This is not merely good advice—it’s the proven difference between a startup’s spectacular success and its avoidable failure. What traits do you see defining successful and unsuccessful founders in your experience? Let's discuss!
We’ve all seen the headlines: visionary founders, celebrated one day, indicted for fraud the next. Elizabeth Holmes of Theranos, Sam Bankman-Fried of FTX, Trevor Milton of Nikola—each a cautionary tale. But why does this keep happening? More importantly, how can investors and venture capitalists spot the red flags before disaster strikes? After decades coaching startup founders and executives, and through intensive psychological profiling research in my book, Founders Keepers, it’s clear that the qualities which make founders extraordinary can also lead them into ethical peril. Ambition Gone Rogue Ambition is the engine of innovation, but when unchecked, it can spiral into something destructive. Elizabeth Holmes, once hailed as the next Steve Jobs, turned ambition into deception, sacrificing integrity for the illusion of success. Her willingness to misrepresent Theranos's technology eventually led to fraud convictions and a 11-year prison sentence. Similarly, Trevor Milton fabricated demonstrations of Nikola’s hydrogen-powered trucks, deceiving investors and regulators alike. Ambition that isn’t tempered by reality becomes toxic, pushing founders to prioritize appearances over substance. Narcissism and the Cult of Personality A striking number of fraudulent founders exhibit narcissistic traits. Narcissistic Personality Disorder (NPD) is disturbingly common among indicted entrepreneurs like Holmes, Adam Neumann, and Billy McFarland. These individuals have inflated self-worth, entitlement, and a troubling lack of empathy—traits that enable them to manipulate investors, employees, and markets. Adam Neumann’s charismatic leadership at WeWork masked a self-serving agenda. He leased his own properties to WeWork and indulged in extravagances funded by investor capital. His eventual downfall underscores a critical point: charisma and confidence, unchecked by accountability, can devastate companies. Pressure, Risk, and Rationalization Founders operate in pressure cookers. Investor demands, market competition, and internal expectations can distort ethical boundaries. Under such strain, founders rationalize questionable decisions—initially minor, then increasingly severe. Sam Bankman-Fried’s FTX saga exemplifies this slippery slope. Praised for his effective altruism, he secretly diverted customer funds into his own hedge fund, creating one of history’s largest financial implosions. Under extreme pressure to perform, ethical lines blurred into oblivion. The Dark Triad and Founder Psychology Research identifies a psychological pattern—the Dark Triad: narcissism, Machiavellianism, and psychopathy. Founders exhibiting these traits manipulate, charm, and dominate others effortlessly. Their moral compasses malfunction, viewing ethics as mere obstacles. Martin Shkreli of Turing Pharmaceuticals raised drug prices mercilessly, justified as smart business. He ultimately faced securities fraud charges. This combination of manipulative charm, moral disengagement, and ruthless pragmatism frequently ends in corporate ruin. Red Flags Investors Can’t Ignore VCs and investors must vigilantly recognize signals of potential ethical crises: Accountability Gaps: Founders who deflect blame, resist feedback, or evade responsibility when faced with failures. Deceptive Fluency: Founders who remain intentionally vague, changing narratives to fit different audiences, lack transparency, and dodge specifics. Weak Governance: Companies lacking robust financial controls, passive boards, or weak compliance protocols enable founder misconduct. Excessive Charm: Overly charismatic leaders who evade scrutiny, foster cult-like devotion, and dismiss ethical concerns as trivial. Case Study: When Good Intentions Go Bad Consider Charlie Javice the Frank founder. Desperate to sell her startup, she fabricated millions of fake users, deceiving JPMorgan into a $175 million acquisition. Ambition, pressure, and opportunity collided disastrously, underscoring that even well-intentioned founders can fall if ethical vigilance wanes. Prevention through Awareness and Systems To mitigate these risks, investors must foster cultures of accountability. This means: Rigorous Due Diligence: Deep vetting of founder histories, not just their pitch decks. Transparent Governance: Enforcing independent oversight, clear reporting, and stringent ethical guidelines. Balanced Teams: Encouraging founders to build leadership teams empowered to challenge decisions. Healthy skepticism, combined with robust systems, creates a strong firewall against unethical behavior. Redemption and Self-Awareness Not all troubled founders are irredeemable. Many need interventions—coaching, accountability partners, and structured feedback—to prevent ethical slippage. Self-awareness is key. Founders who reflect on their blind spots and acknowledge limitations have a far better prognosis. Investing Wisely Means Looking Deeper The stark truth for investors is this: brilliance without integrity is dangerous. Investing isn't merely betting on ideas; it's assessing character. The cost of ignoring red flags is staggering, not just financially, but reputationally and ethically. Ask yourself one simple question when evaluating founders: If they weren't successful, would their behaviors still seem acceptable? The answer reveals everything. The line between visionary and fraudster is thin. Vigilance, skepticism, and structured accountability are critical tools in protecting your investments—and ensuring the next headline isn't about your portfolio.
Founders live in a world of chaos. It’s exhilarating, intense, and downright terrifying. You’re constantly shifting between the thrill of new ideas and the crushing weight of responsibility. Every decision feels like a life-or-death moment for your company, and the stress is unrelenting. Yet, amid this madness, there’s one thing that determines whether you’ll thrive or crash and burn: personal grounding.
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