Four lessons-learned from founders

We just gathered as a Main Sequence portfolio and learned a lot from each other.

We recently hosted Peerless — an annual gathering of the Main Sequence portfolio. We haven’t done this at scale, in the same room since the pandemic and thank goodness we are back!

Most of this session was under Chatham House Rules, so I can’t tell you about most of the amazing conversations, but some common ideas resonated that might be valuable to share.

Post-pandemic, I am slowly remembering this. Life online can default to a transactional and hollow mode. We get lost in urgent, literal work and miss the magic that happens when people come together.

This is where our intuition pulls us into the conversations we need to have. We find inspiration in places that we would not think to visit. When people are in the same room, the ‘ecology of talent’ is visible and the collective power of the group that Brian Eno calls Scenius springs into life.

After all these years of making companies, it is still possible for me to believe that a perfect, smooth growth experience is possible. It isn’t. I finally accepted this at Peerless.

As companies grow, they reach a point where they can’t grow any further in their current shape. There are structural reasons for this. The right team for what we just did is the wrong team for what we need to do next. The cap table may misalign shareholders to adjust the strategy. Or we ran out of customers in the set where we found product/market fit.

There are many reasons. But all companies hit a conflation of headwinds at some stage. This requires recognition in the first instance, then a deliberate effort for phase transition.

What usually happens is one of these two things:

• Companies don’t see (or resist) phase transition and growth plateaus, or
• Companies find themselves in a forced phase transition.

In both cases, it hurts like crazy. It looks messy. It looks like failure.

But it isn’t. It is normal.

Let’s figure out how we sense an incoming phase transition.

Then accept it will hurt like hell.

Then get into it.

This is the work.

The ‘Founder’ and the ‘CEO’ are often the same person, especially in the early stages. But they don’t need to be. And sometimes they shouldn’t be. The CEO of a startup is an impossibly difficult task, and there is much personal development to be done so that the person grows with the company.

How do Founder/CEOs know that they are still the best person to be in the CEO seat? How are they measuring their own performance to take on new skills and capabilities or perhaps knowing when to find a replacement?

As one of the biggest shareholders in a company, the Founder’s first responsibility is to have the best person in the world leading the company.

Some ideas:

• CEOs accept they can’t do everything they need to do yet and need to establish a program for learning it. Like professional athletes, CEOs need to train. No matter how experienced they are.
• Find someone outside the company to share experiences with. The old cliche holds true that ‘It is lonely at the top’. Find who you can share experiences with to explore your own mind.
• If CEOs bring on a coach, consider that you might need a different coach for the different stages of the company. Coaches run out of ‘experience capacity’ as well as CEOs.

Neil Perry joined us to discuss how he has grown his food business, including restaurants, TV shows, books and the Qantas food service. His secret is an idea he calls the “Care Principle”.

We don’t think about that enough in venture and startups. We’re transactional, looking for every optimisation and efficiency and sometimes not thinking enough about how it makes the team feel and how that, in turn, makes the company perform.

He said at one point:

“I want everyone that leaves one of my companies to leave a better person than the one that walked in.”

It is easily said but non-trivial to do. How do you operationalise that? How is an encounter with a team member different every single time because this is a guiding principle?

If you care, what do you do differently?

He told a story about the price of fish at the market and a relationship with a supplier. If the market price is less than the price that has been agreed, do you haggle? Or do you acknowledge that that supplier goes to sea each day to catch the freshest fish that you rely on each evening in the restaurant, so you stay with the agreed price?

If you care, what do you do differently?

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I am a deep tech investor, and I’m building out loud. Subscribe here or follow me @philmorle

Originally published at https://medium.com on August 8, 2023.