Yesterday, I sat down with Aris Constantinides , founder and Investment Director of NBGI Ventures- a leading U.K. venture firm focused on investing in medical technologies. I wanted to get his thoughts on whether or not founders become bottlenecks in their own organizations. His response:
“Do founders often become bottlenecks? Actually, it’s the norm. The question is why.”
Find below Aris’s thoughts on why so many founders get in the way of their own success, including seven questions VCs and entrepreneurs can ask themselves to avoid sinking their own ship. Thanks Aris!
The primary reason founders become bottlenecks is personality. Many founders just can’t let go.
In the beginning, founders run all aspects of the company. What makes the good ones good is their ability to let their organization grow on its own. The founder himself is no longer the center of everything, but plays the functional role to which he or she is most suited. For example, a scientific founder may turn into a chief scientific officer or chief evangelist. More often than not, this is what occurs. It’s not that founders outlive their usefulness; it’s just that the role for which they are best suited often changes. Our founders are incredibly passionate about the technology and are usually the best people to have in the market. We absolutely don’t want to lose them.
We call this issue the “CEO question.” Can the founder of a startup become the CEO of a rapidly growing company? Do they have the skills? Are they capable of becoming an expert manager? Asking these questions is the duty of Board of Directors. The board has the necessary bird’s eye view. They should see where the bottlenecks are and take action. Here are seven questions we ask when evaluating a founder’s ability to grow with his company:
1. Are common tasks unduly delayed? It’s always troublesome to see a founder get derailed by minor details. As the company grows, it’s easy for a founder to get pulled in 1000 directions if he or she lacks focus or the ability to execute.
2. Does the founder have a clear vision for long term growth and a tactical plan to get there? Founders need to see past the initial product. The ability to leverage early wins into future victories is what makes a long term CEO.
3. Is the founder hiring to complement his or her weaknesses? We expect our technical founders to make strong technical decisions but we are have real confidence when they make strong hires in commercial, sales, and marketing.
4. How many direct reports does the founder have? Anything above five or six reports is suspect. What do you need more than commercial, finance, manufacturing, R&D, clinical, regulatory, HR?
5. Where is the founder spending his or her time: managing/delegating or inventing/marketing? Investors sleep better at night if we know that our founders are also worrying about hiring and building out the organization. Many founders are already off thinking about their next business before the first one has been executed!
6. Is the founder consistently hitting internal targets and milestones? If a founder can’t stick to his schedule in the early days, delays are only going to get worse as complexity increases. Has the company planned accurately and executed without significant delay?
7. What operations are outsourced? Outsourcing is a great way to grow the organization. Entrepreneurs need to do a serious self-assessment and ask themselves, ‘What do I do well?’ Everything else should be outsourced or hired into the company. If you want to meet targets, you need to focus your efforts on what you do best.