Founders Don't Have to Outgrow Themselves With the Company

To organize the situation a bit, the people who bring this kind of question are usually founder CEOs or executives at rapidly growing companies. What started as a “team with visible faces” of just a few people gradually grows into a larger organization, and along the way they start feeling the gap between the abilities they had and the abilities now demanded of them as leaders. That gap is where the trouble starts.

What kind of dilemma occurs?

Leadership at the founding stage requires a clear vision and the drive to push projects forward. For a tech company, it probably also requires being an excellent engineer. But once a team reaches a certain size, what’s demanded shifts toward something more commonly called “management—the ability to manage.” One thing that becomes obvious as headcount grows, for example, is the sheer volume of interpersonal trouble. Simply put, a team of 5 people has only 10 possible pairs, so there are 10 possible sources of trouble rooted in interpersonal relationships. But a team twice that size, 10 people, has 45 possible pairs, so the potential for people-dependent trouble is 4.5 times greater. In other words, trouble increases faster than headcount does. Any manager knows this from experience.

A friend of mine, Mr. A, was the founding CTO of a certain startup, and he quit once the company grew to around 150 people. One day, while mediating an interpersonal dispute as usual, he found himself looking at the staff member causing the problem and thinking, “Wait, who is this guy again?” — and in that instant, his eyes opened. “Is working while stressed out, cleaning up after someone I didn’t even choose to hire, really what I wanted to be doing?” So he left that startup and started a new company again from zero.

That’s right. The answer is simple. It’s fine to quit.

Another senior founder I know, Mr. Y, once stepped down as CEO of the company he founded and demoted himself. Once the company had grown to a certain size and enough years had passed since founding, he started thinking about an eventual exit, and he decided, objectively, that he should entrust the company to someone other than himself. So he handed the CEO role to a professional manager with extensive exit experience and demoted himself to area sales manager. The company went on to succeed in a buyout, and Mr. Y captured an enormous capital gain.

Another friend, Mr. H, built his career at an auditing firm and later raised $76 million as CFO of a startup. But he quit that company without hesitation, saying flatly, “Anything above $76 million just isn’t my field.” He added, “Zero to one isn’t my field either.”

Assess your own strengths and weaknesses objectively, perform where you’re suited to perform, and don’t step into places where you don’t fit. The time given to a human being is limited. The time during which you can perform at your peak is even more limited. There’s no time to keep dragging along doing something you don’t want to do in an area you’re not good at.

The content of this post is an excerpt (original text) from the following book. If you’re interested, please pick up a copy.

The Shape of a Happy IoT Startup

The Shape of a Happy IoT Startup

Originally published in Japanese at https://clazytech.com/2022/10/1178/. Translated with LLM assistance and reviewed before publication.