Speaker 2 (00:08.942)
Welcome back Stein. think we have a good topic today. think it's one that I have been talking with a decent amount of founders on over the past few months. And this is, I think it starts with earlier stage companies, but also applies to the medium sized as well. And it's really the topic of founder led growth. think...

As a marketer, right, if you can harness the power of founder-led growth, it can be an amazing tool to grow your company, get initial traction, get you on the map and send you up to the right in terms of revenue and profitability. But I think it can also be a bit of a crutch for a company as it matures, both in that it can actually limit the amount that

that a company can do just because there's only so much that a founder can do in a day, but also the company can become a little bit overly reliant on the founder and just expect them to close all the deals and make all the product decisions, right? And everything has to run through the founder, which can be a very hard habit for a company to break. So I wanted to talk through that topic with you, see if I can get your insights on

where we think it really helps those early stage companies and then where where the weaknesses may be in larger companies as they mature and how to break away from

Founder led growth is so powerful because the founder is the closest to why did we even create this company, this product, solution, right? Why did I, as a founder, care about this problem? Most founders are either really like subject matter experts, right? The dentist who builds a CRM solution for dental practices, or they are an engineer or someone who has a capability to build a solution.

Speaker 1 (02:06.392)
cares about a certain topic more than anybody else, right? But either are fine as a starting person who is so close to the problem, closer than anybody else. So that's very powerful because one of the things, especially now with all the AI tools at our disposal, I often talk, Brian, about the signal noise ratio, right? When you use not only AI, but also when you use more junior people in your marketing or you go to marketing, which often you have to when you're a small.

early stage company, where you cannot maybe afford people who've done this before. And then the more signal you can create versus the noise that could be added by using, for example, a generative AI to build content is great, right? Signs signal is almost unanimously coupled to what the founder brings when it comes to the articulation of the challenge, the articulation of what's important for the early customers, right? The customers who proved to the founder that this is a problem worth solving.

guide you to product market fit. So the founder knows this audience so intimately, often she or he is part of that audience or was at some point. So for that person to be in charge of connecting with that audience through at some point more scalable means, right? Channels, whether it's email or cold, that marketing campaigns that is extremely powerful. Of course, that can run its course over time when the founder is not necessarily as connected anymore or as

you know, empathic with your market, your audience as you grow that market, right? If you are going beyond your original ICP and you expand to other adjacent market segments, even if they look like the original clients, you your founder might be less, tuned with what those customers. So that's one thing that will happen over time. And the other thing that founders are really, are so great at kind of

self-starting, right? And creating a couple of really good pieces of content that are really meaningful and really caring about the quality, right? Because they, more than anybody, will make sure that the reputation of the company is pristine, right? All that. It also often holds them back from hiring people, managing people, letting people, empowering people to do things on little more scale, right? If people don't do it exactly like they did, right? It's a part of the founder mistakes, the way that they...

Speaker 1 (04:30.648)
did things that were successful as for the thing that will also be successful tomorrow. So there are a couple of downsides too, right? But I think that's kind of where founder led growth, founder led go to market is a really good starting point.

Yeah, I mean, we typically will suggest a founder led growth for a lot of early stage companies that we work with because it's to your point, nobody's closer to the problem than the founder. Nobody has the combination of problem and solution knowledge that they do. Usually nobody will speak more, more eloquently or passionately about the topic, right? They are a fantastic person to, to be the champion of the company, right? In early stage.

Just their ability to speak the language and usually actually that was the point. The credibility that they'll bring to the space is usually really hard to match. Often they have a history in that space. They've been a thought leader before either at a different company or for a slightly different cause and the following credibility that they have, it's very easy to transfer into the company. I guess the last note is that

It's much easier, I think, for people to fall in love with a person's message versus a company's message, right? So if you can tie a really charismatic founder with a lot of credibility to a company, right, that helps to really accelerate your brand awareness and adoption. But to your point, right, there's only so many hours in the day for a founder and usually the type of founder that will just...

pull themselves up by their bootstraps, right? And go out and do everything that needs to be done early stage. It can be very difficult to transfer that skill set and that mentality to a more mature company's management, right? You want a founder early stages that's almost a do-it-all individual contributor, right? They can do everything and that's usually where you can get the most initial success. But as a company grows, again, 10, 15, 20 plus million, the founder physically cannot do it all, right? And well,

Speaker 2 (06:32.94)
be successful by managing people, which is a very different skill set, right? And can limit a lot of the potential or just the ability to execute on the theory. You also, guess I wanted to ask you as well on the, you're investor, you work as an operator for search funds and investment groups. Have you seen any of this?

From the investor side, are there any either KPIs or indicators that you've seen with a founder led approach that shows you that, they're using founder led growth and it's working really well, but be it scalable on top of it versus not?

No, I actually don't see that, Brian, because the type of investments I'm involved in are very different. We back searchers, our private equity organization backs searchers who buy a company from founders. So it's always the reverse, right? It's always, okay, the founder led the company for 10, 20, 30 years, and they've gotten it very far. It's very healthy. It's a lot of real good sort of foundation.

maybe the growth is stagnated, right? Because the founder formula, the founder recipe, the founder superpowers have maybe lost their traction. It's lost its momentum, right? And especially if these companies are now dominating often a specific niche, often a swell niche and the growth thesis of someone coming in and wanting to acquire the company, of course, you can go beyond that market or maybe try some new things with the product and the solution to sell more to that same market. But either and either...

scenario, you almost on purpose are going away from founder let go and handing it to someone who's really taking it in a different direction with some new capability, new superpowers. So it's almost the reverse. Yeah, so that's when you just ask me from an investor perspective, that's not something I look at really.

Speaker 2 (08:34.702)
Well, but even I guess the the and if you don't have it, that's fine. But even from the investors perspective, like that your investor thesis in those types of companies. got it. Yeah.

Almost, yeah, almost that's why we buy those companies, Because we love the fact that a founder put their heart and soul into creating a brand, a reputation, a customer following a certain amount of sort of financial security, right? These companies have been around for a while. That is of course extremely powerful. And that's the reason we're interested in backing a searcher to acquire a company like that.

then to and tell me if I'm wrong, but then to add to that, you also see a future beyond that founder led growth approach, right? Build upon build upon their USPs build upon the traction they've gotten in the market, right? Are there is there any, are there any particular things that you'd like to look at in those types of companies, right? Where you say, hey, this person's built a great base, but I can take it farther with XYZ.

Yeah, you mean we do an audit either on the marketing or the sales or the customer success side of things. You usually see the same patterns. You see things like, my sales team is not really mature in the way they organize their funnel. And we have a parking lot of opportunities that get tended to whenever someone is the lead at that moment in time, right? All these very expected things. The marketing team not really having a lot of data to go on. Right. So a lot of it is basically done by.

by guessing and by kind of, this worked yesterday, probably will work again tomorrow. Customer success often is non-existent, right? It happens very organically because the founder is in charge and is so close to the customers, there's so much customer intimacy, right? There is almost an automatic customer success culture. It's also often the strength of these companies, right? That have been around for a while, customer loyalty, referrals, and getting clients through.

Speaker 1 (10:33.644)
sort of word of mouth is typically one of their strengths. It also means that the growth has never really gone beyond those growth levers, right? When it comes to addressing new types of markets. And that's of course why it's an interesting investment thesis, right? Is there an opportunity to take this into new?

parts of the world into new verticals and do something new with the same capabilities, technologies that solve the problem in a different way, that is interesting for a certain part of the market that can raise the price, etc.

Is there, I would imagine when you invest a lot of the time the founder is exiting as part of that investment, right? Do you have to worry about that key man, key person risk at all when you make those decisions?

Yeah, well, you don't worry about you. It's part of this is something that when you invest in these types of transactions that you kind of specialize in, right? How do you get the transition like that to go as well as possible? It's definitely not always easy. So it's a very important part of the, of the success of of a, an investment like this. Let me ask you, Brian, you took over from me. I was the founder at the Lungi and then you took over.

Talk a little bit about what you think was good, but also what was not so great.

Speaker 2 (11:50.466)
Yeah, Columbia is a example of founder-led growth, right? If you go back to our early days, you started us a lot with your reputation, in terms of contracts that we got, thought leadership that you put into the market, right? A lot of the methodologies that you used, right? I mean, you are a great example of founder-led growth.

and its ability to get traction, right? When you transitioned out, we did have some kind of backfilling to do, particularly on the ear mutants.

Yeah, we were stuck right Brian in multiple ways. let's call it balls and strikes. Under that growth model had run its course a little bit.

It did. mean, it gave us the early start that we needed. It gave us the traction. gave us, again, our methodology. But there came a point where, I mean, I'd love your thoughts on it too, but where your interests and skill sets had given the company everything that they could give them. And even from your perspective, you were more focused and happier on other pursuits. So there was...

there was definitely kind of a plateau that was hit, right? And we had to work our way through it. I think, you know, we were able to push through it a lot because of the... I think that the processes that we were able to put in place that kind of scaled your original ideas, but also the specialists and more, I guess, specific strategists that we were able to bring in around different disciplines that...

Speaker 2 (13:38.7)
that early days you were able to cover and push forward with high level theory, right? But there came a point where we really needed that specific expertise to take us to the next level. So I think it's similar to a lot of these SaaS companies in that the founder's time can only go so many different places and to be able to take it to the next level requires, you know, a

a really focused team that's really well organized and rowing in the right direction beneath, in this case, beneath the Founders' Vision.

Yeah. And what we also talked about earlier, a lot of founders, they're the chief sales officer, right? They close most of the deals, et cetera. I remember that I had to really learn to appreciate that when other people had to sell, it wasn't as easy. I think you put a lot of effort in that. were a CEO, also had to become a really good sales person very quickly.

I don't know if I've to point where you are, but we're working on it. Yeah, I mean it is.

It took time for me to let go, but it took time for you guys to find your way of doing it.

Speaker 2 (14:50.958)
And it was definitely one of those things where you could see the difference in you as the founder getting in the room, right? And the credibility, instant credibility that you'd get versus, you know, our other salesperson at the time, who was a great salesperson, but just didn't have the gravitas or the expertise, right, that you did and just would not be able to be near as successful, right? But as we grew, your time became more more, more...

condensed, right, and competitive, and it was more and more difficult to spend the time to use sales as example on the deals to make them work, to go through. yeah, it's a, we have our own mini case study that we're working through right now.

We talked about go to market more from a marketing and sales perspective. What about culture, Brian? What about the founder brings a certain amount of cohesiveness to the culture, right? Things like values. How did you experience that as you took over?

Yeah, I think, with again, using Columbia as an example, the culture that you bring is so strong, right? And so exciting for a lot of those early hires. And I think it allowed us to get a lot of our early talent, which again, founder-led growth, right? It gave people the excitement and the confidence to jump over from more mature organizations to this young startup that was kind of changing the game a little bit. And then when...

you left, right? There was a hole that needed to be filled there. think where we ended up going, I think was a lot more focused around, well, it's kind of just a natural evolution, of your core values, right? Like level up together became, well, level up together became kind of like execute for results, And like owning true ownership is now

Speaker 2 (16:44.43)
It's kind of our umbrella core value, but also, you know, operate as one team. I think we took a lot of your your core concepts and applied them just a little bit differently. But I think it's also.

from my perspective, the, it, could have been that it, that you brought it and it left with you, or it was just the natural evolution of the company, right? Of when you were in charge and going up to our, the first few years, it was very much a, culture of a young company, right? A very young company, very super scrappy. Everyone.

immature amateur

Well, that's it. But charging really hard, you get to wear a ton of different hats. Yeah, exactly. And that worked, right? It gave us a lot of really good client outcomes. It allowed us to grow. But I think when I came in and it could have been my talents versus yours, right, as the CEO. I think we started to break in certain areas when we would do that. And I tried to put a little bit more structure and discipline into where we pointed people.

Do before you think.

Speaker 2 (17:57.098)
what they were focused on and their skill sets. so again, depending, I think some of the people that we brought on in the beginning of the company thrived under, you your style, right? It allowed them to be really creative, to never get bored, all those things, right? And we still have some of that, but just not as much. And I think the focus, I think, has allowed us to kind of standardize, stabilize, right? And give ourselves a base to grow from. But...

It really, you know, there are, it really depends on the type of person that you're trying to attract, right?

I think it's really important to identify as you're sort of coming in what you really want to shake off when a founder approach has run its course. But also what you want to keep because there's probably things that make the company what it is, right? And make the people feel a part of a team, part of a mission. And it's really tricky how to do that. I think it's a really,

It's a really important transition that the company has to go through, right? Because of it's hard, that's why it's often being delayed, right? Like, sounders hang around too long, or they hang around too long in the wrong role, right? Often I think there's a place in the company where the sounder can stick around, but they can be really set up for doing what she or he really enjoys doing.

You always like to say you can't delay the pain. That is definitely true. But what I think for for Colunghi, what made us successful in that transition was that you did such a good job of, hey, I do think that the mission and vision that you set with us set us on a great path and still stands today. But also the the playbooks that you left us with.

Speaker 2 (19:50.57)
It's absolutely, it's the foundation of everything that we do, right? And with that, it makes it much easier for somebody like me to come in and say, hey, we already have the path. We just need to build the right team and execute against it for the short term versus you, you know, just going on a beach somewhere without any prep. And then we have to kind of find ourselves completely again. Right? I would say that, that

I was lucky in the transition in that there was a very clear direction of how to be successful. I thought that allowed us to grow into it.

The one thing that you sometimes end up losing, especially when you're a software company, the founder, when they were so close to the customers, had an amazing ability to turn customer feedback into, you know, evolving the company direction, right? The product roadmap, vision, the messaging, right? Refining the messaging, refining the positioning. Because they could one day learn something and the next day implement change, right? Which is a lot harder if you're the sales person.

person learning about a new need for a customer, right? Or someone in customer success will learn and get feedback. So that's something you often do lose and it has to be compensated by the things you win. Because it's really hard to not lose that if the founder is no longer talking with customers every day, right? That will absolutely change the amount of insights that she has in customer needs, et cetera. And that customer intimacy, I think the more you can hold onto that, maybe it's through different formats.

having a customer advisory council or something like that where the sounder is participating I think is really helpful.

Speaker 2 (21:27.798)
Yeah, I think the clarity of vision that the founder has in these types of scenarios are, is unmatched, right? And if they go away or don't have that pulse on the audience, it can be really difficult for a team, even if they're really skilled, but maybe they don't trust each other quite as much, or they don't work together quite as well, right? The things that can get dropped in communication between sales and product, or even like product marketing and product.

or the different little agendas that can pop up as the company starts to grow, all with the best of intentions, stagnate growth, can slow down innovation, right? It can make it really difficult to evolve with the market. I would agree.

The founder can make decisions on the discount or on a customer, special customer treatment much faster than an individual salesperson. A founder can very quickly sign off on content ideas or campaign budget requests, right? All of those things that will add friction if other people have to be involved.

Yeah, I think with that topic, so much, again, you wonder how much of that is the founder themselves or just being that early stage and agile. But particularly with the founder, right, the true head and the technical expert, right, they are able to just make snap decisions like that because they have all the perspective that they would need versus, you know, these larger organizations that may or may not have the founder in play. more of a, probably leans more towards the decision by

committee, right, which can really slow you down, can cloud judgment, etc. So I mean, either having the founder or a CEO that really knows the space, right, and knows what the customer needs is critical there. I would say that once, maybe question for you, as a founder's transition out, and maybe this has happened with customers that you've invested in or companies that you've invested in, how have you seen them be really successful, but stay with the company versus just take their paycheck and...

Speaker 2 (23:32.66)
payday and move on.

There's almost always some form of an earn-out where the owner who sells the business still has a responsibility to fulfill. Sometimes that's just a question of being accountable for a certain period of time if some surprises come out of the woodwork, there's nothing else that they need to do. But sometimes it's collected to them having a role to play, whether it's continuing certain commercial relationships or continuing the creation of the shipping or the finalization of product.

And or an ongoing role in the business where they actually get a new role, right? Where they're now the chief strategy officer and that actually has a specific set of responsibilities that nobody else does in the company. So in each of those situations, there will be a different way that they will get compensated for that often in this for large parts equity. And I think that's helpful. I think if a founder and someone acquiring the business really compliment each other and they can get a light on the vision and the mission of the company.

I think that's very-

there any themes that you've seen, I know that, you know, founders skill sets and the way that they compliment the incoming team very widely, depending on the founder, right, and the team, but are there any themes that you have seen in terms of just making that process go as smooth as possible, aligning interests as much as you can, right, being clear with the founder's new role and how it fits in? Is there anything you can tell us on that?

Speaker 1 (24:59.726)
I wouldn't say a theme. There's a word that I would use that one word that if you put that in bold capital letters on a sticky note on the monitor of both the founder and the person buying the business that I think will go a long way. And the word is curiosity. Be curious. I think if the founder is curious, really curious, really as in I want to really understand. I'm not just gonna listen, I'm gonna try to understand and comprehend and what the new...

team coming in, the new owners, the new CEO sometimes has to add. What new ideas do they have? What have they seen in the market that maybe I did not see after so much either looking through a certain filter or I just didn't have time to even look up and look around to work on the business instead of in the business, which is often used as a terminology.

And then curiosity on the other side as well, right? The new team, the new people coming in, really trying to understand why things are the way they are. Not just conclusions, pass judgment too quickly on, you know, putting templates or patterns that they happen to know from their own experience on the, on the business they acquire without like really trying to understand why things are the way they are.

So curiosity, think both from a mechanical perspective, I'm making time for that, but also actually doing it with the right intent, really genuine curiosity, right? Really trying to learn and trying to understand. And curiosity just because they're in a new role, right? You're in a new role, you're in a new position, you're a guest often in certain parts of the business. It is an important word to always think about.

It almost makes me think of kind of maybe the flip side or complementary to that is just respect of both sides towards each other, right? The founder wouldn't theoretically have sold in these or allowed the investment if they didn't respect the vision of the incoming party, right? Or unless they did really want that retirement that they've been dreaming of. it really, mean, both sides have to really respect what the other team brings to the table and what...

Speaker 2 (27:14.53)
how they can help to take the company forward. think if that, if everything starts from there, right, then there's usually a very good path forward for everyone.

Maybe there's of course some, don't call my child ugly, effect when someone takes over a business from a founder. And there is like parents who have to, you know, give up some control when their child, their son or daughter meets their first boy or girlfriend, right? And starts maybe developing their own ideas about values and culture.

Well, it is the Founder's Baby.

Speaker 1 (27:53.294)
things that are important in their lives and are they giving enough room for that? It's a little part there's a founder and I don't know those are just old very vanilla comments so but no specific ideas.

Well, I don't, you know, I know not much about this, but I get is a two, but I do feel like with kids and companies, the founder, moving it back to the founders, the founder is, you know, you have to hope that the foundation that you give it and the direction that you set it off in, right, is really where it will take it into to where it needs to go, regardless of external influences, right, or new parties that come in.

So Brian, when you think of Columbia as an agency, you're supporting a company that wants to grow and their growth to market. How do you involve the founder? What do you think the best role is the founder can play as they, on the one hand, bringing in extra hands on the bat, right? To bring capacity to scale and on the other hand, they're still, I think, very crucial for what your team does.

Yeah, a lot of the times when we will encounter either encounter companies that are using this or encounter companies that have a really good opportunity to use this, a lot of the time what we'll try and do is give the founder the best of both worlds as much as we can. Usually we try and amplify, organize and amplify the founder's voice, right? They always have really strong views on the market, on their product, on the solution that needs to be solved, on...

what the status quo is that can be improved upon, all that good stuff. But usually what is lacking for them is their time and their organization, right? They're running a company. They have tons of stuff to do. And usually marketing gets pushed down to the bottom of barrel, which is both understandable and not really acceptable as you're trying to grow a company, right? Because you as the founder,

Speaker 2 (29:47.776)
are the voice. You should be the face of the company, the voice of the company, and should be the thought leader that the company builds its position on and all it's counting on. So what we like to do is if we can find a founder that is, you know, well spoken, has a strong viewpoint and has built the product in a really good way around that viewpoint is that we will try and amplify them as much as we can. Right. So we'll run interviews with them that are then, you know, transcribed and broken out into different types of content.

organize them around speaking slots, know, webinars and thought leadership, and really just try and get them out in front of the camera as much as possible while also conserving their time, right? They don't have to write the blogs. They don't have to run their social accounts. We can help them with scheduling and support materials and all, you know, follow up and all that stuff. And what we found is if we can do that, it gives the company

that true thought leadership that they usually have been missing until that point, right? Usually, we've talked about this in other episodes, but you know, AI has drastically increased the amount of noise in the market. And our general philosophy is that the way to cut through that is with real dialogue that moves the conversation forward that really adds value for the market, right? And usually that can come from the founder. So this allows us to both

produce that type of content straight from the founders mouth, but also gives our team a ton of background and knowledge on the topic that make us more effective marketers. So kind of a win-win.

I think what founders often miss is that as they care about the clients, they love to tell the stories, the experience of the client. They miss a professional to help craft those stories in a better way, where it shared them in a better way, scale without changing what the follower really cares about and how they tell those stories, for example, or how they engage with clients. For example, launching a podcast, right? Or you're writing a book. There's all these things that you can do to rescale what a founder brings that

Speaker 1 (31:54.368)
are usually not that they were not able to do themselves. Right. So that's why this is an example, think.

Yeah, I think it's either, well, partially it's ability, partially it's time, but also it's just, feel like without getting that extra push, founders just don't think, they think, you why would I write a book? You know, I'm, well, I am busy, but do I have enough to say on a particular topic? And usually they do, right? But they need that little push and the organization and help to get themselves out there, get their message out there, which I think is really important.