Startups That Don’t Make A Critical Early On Transformation Will Likely Fail

Behaviours that generate initial success later lead to failure.

Hello 👋

Martin here. Welcome to another edition of Founders’ Hustle!

I write newsletters about entrepreneurship and building startups through the lense of my own experiences launching and growing companies.

Today, I’m sharing my thoughts on a critical transformation startup founding teams need to undertake in order to thrive at the earliest stages.

The genesis of a startup is among my favorite phases.

At this point it’s just a handful of founders — maybe just one — with a hypothesis in-hand, usually little in the way of resources, and a ton of energy.

The sense of pioneership from working on an idea, area of investigation, or product that no one else in the world “has done before” gives an awesome sense of purpose.

It feels like “anything could happen”. From abject failure to ludicrous success.

Those diametrically opposed outcomes inject an intoxicating cocktail of excitement and apprehension into the mission.

In order to mobilize a hypothesis into an early product and achieve tangible results, founders have to own certain domains of expertise and seemlessly switch between many others too.

Examples are sales, tech, customer relations, marketing, research, fundraising, product development, PR, operations, legal, admin, accounting, regulatory compliance, etc.

Taking on all of these roles is exactly what’s needed to succeed in the very beginning. There’s simply no one else to do them.

Plus, the efficiencies gained from just a few people handling all of them can create incredible momentum.

This versatile founder input propels a startup to its first funding round or product-market-fit (eureka!) moment, often both simultaneously.

But, this dynamic can’t persist.

It’s critical founders drastically recalibrate their contributional activities from that point onwards, otherwise, it will likely lead to failure.

Here’s why.

At my first two startups there were a few founders.

We each owned our core domains of expertise and dipped in and out of many others along the way.

In both cases, I also developed entirely new domains of expertise on the fly that proved to be crucial to success.

So much so that I started to become emotionally attached to them and, in particular, how they were run — which I’ll get into more below.

Here’s what I noticed:

You start to get really good at certain activities that are materially moving the needle for the company. You’ve figured out what works and can execute it quickly. So have your cofounders.

This applies to everything — sales, coding, product development, customer relations, etc. Small amounts of time deliver outsized rewards because you’ve hit product-market-fit.

You get “into the zone” quickly and are insanely productive. Your startup, which consists of a few founders, runs like clockwork. Communication, culture, and cadence is completely in-sync.

It feels like everything is coming together. Your business is set to skyrocket.

But, there’s a problem.

You have to do something really counterintuitive in order to take your startup to the next phase and beyond —change what has worked so far.

This involves disrupting the highly productive rhythm you’ve established, and, developing an entirely new one that’ll support much larger growth.

The daily behaviours and activities of you and your fellow co-founders have to be reprogrammed in order to scale — rarely do a handful of people build a big valuable company.

This means “firing yourself” from numerous roles and spending most of your time engaged in completely different activities. The transformation in what you are and do is dramatic — like a butterfly emerging from a chrysalis.

Most importantly, you need to hire amazing people that’ll each specialize in one of the various roles you were previously performing (and 10X it).

This will arm your startup with the horsepower it needs for massive growth.

At my first startup I was psychologically unprepared for how much time hiring would take up of my day-to-day.

Everything that goes into it — job description writing, recruitment platforms, recruiters, resumes, prospecting, candidate research, interviews, follow-ups, employment proposals and agreements, references, etc is incredibly time-consuming.

In the short term — it can feel like you’re going backwards or losing pace.

Midway through the process a sense of panic and urgency can kick in.

You start to rationalize with yourself that you need to get back to full-time sales, operations, or coding. Or, that just hiring “anyone” ASAP is better than no one right now. Otherwise “growth will fall off a cliff”.

These thoughts are dangerous. Actions taken at this point compound overtime. They have an outsized impact.

You’re not hiring just for now, but mainly the future. The impact of hiring a foundation of awesome people immediately as oppose to delaying will magnify outcomes 10X in the short term and 100X further down the line.

Rushing and hiring less than optimal people will also be incredibly damaging in the long run. They often don’t “hit the ground running” quickly enough and struggle to better the results you were previously achieving.

Therefore, it takes you longer to remove yourself from a role completely at a time when you should be conducting more hiring. Or planning. Or fundraising.

The ideal hire will demonstrate or highlight how badly or sub-optimally you were doing things before and will just own it.

Some of the hardest roles to hire for are the ones you enjoy the most. These are the most personal. They’re also often the roles you’re best at, to the degree they’re a competitive advantage for your startup.

It’s difficult to withdraw from them psychologically and practically. You start to feel indispensable and irreplaceable executing them. But, in most scenarios, it’s critical that you do in order to scale.

Culture, approach, and the nuances of execution are amplified when hiring for such roles. You’ll feel like a fussy critic. But, this is a good thing. You know what you’re looking for. Take your time to get the perfect fit.

It’s imperative to shift your mindset from being fully engrossed in XYZ or ABC activity to higher-level initiatives, like hiring, that are crucial to longterm growth and success.

From personal experience, I know this is hard to do. Natural curiosity and interest in your “passion roles” are difficult to withdraw from.

Your role as founder going forward is proportionally less about “hands-on” work and increasingly more about building a team, culture, and framework that will generate continued outsized returns. An engine of growth.

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