Ever hear of ‘Build A Bear’… that site where you can put together your perfect Teddy Bear?
Well, we got to thinking about what it would take to build a perfect founder. Seriously. Let’s talk about how to build the perfect founder and how to get/identify/be one. We culled a few from some of our favorite go-to sources: First Round Review, Fast Company and Techstars.
Hundreds of ideas on what the best attributes are for a successful CEO? Sounds like we should be able to find some patterns among these articles and get a better sense of what’s most likely to help you succeed if you’re the CEO… or how to identify the most effective traits in the teams you’re investing in if you’re an Angel… or even how best to select your successor if you’re a family owned business and thinking about issues of legacy, in other words, who you will groom to succeed you when you’re ready to retire.
Let’s review what assets and attributes are. An asset is something you have or can acquire. Skills, knowledge, degrees, connections to mentors of small or great value, material goods or wealth, access to investment. All these are assets. They can be acquired and they can be lost. An attribute is a piece of the nature of a person. Introverted or extroverted, humble or a braggart, high or low risk tolerance, good listener, patient manager, a thorough researcher, visual or auditory learner, charismatic leader/director. These, among many others, are attributes of a person. Collectively, attributes tell you the ‘mettle’ of the person you are, or are dealing with.
Now, that we have a handle on our terminology, let’s take a look at what experts are saying about this subject.
According to Molly Graham in First Round Review, “80% of your culture will be defined by your core leaders” And culture, as Pete Drucker said, eats strategy for breakfast. The leadership qualities of your founders and CEO’s has everything to do with your success. Or failure. These assets and attributes are the foundation on which you will build you company. So for the benefit of investors, advisors, brilliant contributors considering where they want to work next, and for the edification of the CEOs themselves… let’s build our perfect bear . . . um, Founder.
First the Basics
Integrity, Responsibility, Forgiveness, and Compassion
Fast Company’s Lydia Dishman highlighted these basic character traits. We all know when we see CEO’s lacking in any one of these critical humanist areas. Confidence in the company and INSIDE the company dives. Investors flee and employee performance plunges. There are hard numbers behind this: KRW’s International, a leadership consulting firm, asked 8500 employees at 84 US companies to rate their CEOs’ character. And then compared the ratings to company performance.
They found, “CEO’s whose characters were highly rated by employees had an average return on assets of 9.35% over a two-year period, almost five times as much as CEO’s with low scores whose return on assets average just 1.93%.” Furthermore, they found that integrity was not enough, the other three attributes were required for virtuoso performance.
What else do we need?
Psychologist Benjamin Hardy writing in Fast Company points to four habits of mind that set apart successful entrepreneurs:
- An Internal Locus of control – they give more weight to factors they can control, than to ones they can’t
- A high tolerance for ambiguity and comfort with uncertainty
- Ability to use anxiety as fuel – to pump up, like actors and athletes
- Tendency to focus on cause, not effect, to build confidence
Make sure we have authenticity
Karissa Thacker writes in Fast company recommends adopting the four fundamental habits of authentic leadership:
- Admit what you don’t know.
- Be aware of all your ‘selves” and especially how you react to triggers in your interpersonal environment.
- Hold strong values and live them – there’s that integrity thing again
- Listen carefully to those you disagree with
Last, be sure your leadership team provides both a ‘wizard’ and an ‘executor’. We’ve talk a lot about this, and it’s not new. Whichever one our perfect founder is, let’s provide the other so she or he can function at full power. We need two bears . . . um, founders. One with vision and charismatic leadership abilities to build the corporate or brand community. The other with two feet on the ground, a strong backbone to make tough calls when necessary, to build a company around the Wizard’s ideas.
Even five years ago the need for a dynamic duo at the top was recognized in a study by Compass, which provides automated management reporting. Completing an in-depth analysis of 650 startups, they found that balanced teams with one technical founder and one business founder raise 30% more money, have 2.9 % more user growth and are less likely to scale prematurely, the most common reason the study found for worse performance.
Also, by the way, solo founders take 3.6% longer to reach scale stage, Compass found. Some of those numbers are not huge – 2.9% more growth and 3.6% less time to reach scale would hardly seem to be a big deal in the greater scheme of things. In truth, they make the difference between success and failure. The 30% more money raised is a pretty good indicator that VC’s feel the same way about it.
Huge numbers of companies don’t get off the ground at all or fail within the first few months because they don’t have both a Wizard (often a technologist, but not always) and a business founder. So don’t let the small percentages fool you - they can be the straw that breaks the camel’s back or the puff of wind that pushed the company over the hurdle to first successes, such as raising enough capital early enough to make surviving and thriving possible.
A real life example
Here’s what Sam Levin wrote in Techstars about 10 powerful habits he surfaced at Techstars’ Boulder boot camp as he launched MadKudu, predictive software for SaaS:
Levin learned, a perfect founder:
- Gives First- it’s really true what goes around comes around.
- Obsesses about moving one meaningful metric a week
- Keeps track – KPI’s, OKR’s, whatever the metric of choice, daily, weekly, monthly.
- Determines one big unknown that could hurt your business each week, and plan how to address it.
- Avoids ‘snowed’ blindness – being so excited about what you are doing -- stay honest about your real progress
- Celebrates with the team and takes time to appreciate the journey. Regularly.
- Seek feedback – especially if it makes you uncomfortable. Learn to process conflicting criticism. It will make you stronger
- Keeps track of key processes in a highly visible office location, such as on a white board and sticky notes. A quick visual reference is invaluable, even if you have a good project management software as well.
- Rehearses relentlessly. Pitches, sales calls, presentations –practice makes perfect.
- Spends one hour on personal pursuits every day.
Based on a CEO Coach podcast broadcast on Cranberry.fm August 1, 2016