The Founder’s Dilemma

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What to Do When Your Business Outgrows You

Who’s the best CEO for your business?

In the Founder Phase—this first stage—it’s you. No one else will work harder for less. No one else will see your vision yet. No one else has skin in the game.

In the Farmer Phase, it’s still you. Though you’ll have to learn some new skills—like how to manage people, how to replace yourself with systems and how to track your money—you’re still the best person to sit in the CEO chair because you, and you alone, understand the vision of your company.

But then things get tricky.

To make it past $250,000 in annual revenue, you’re going to need help. You’ll have to hire people who know things you don’t. And you’ll face new challenges with far more on the line.

Are you still the most qualified to lead your company to greatness?

 

CE—Oh I Didn’t Realize That!

 

I was sitting on my mentor’s couch last October, and we were working through the team hierarchy for Two-Brain. We were performing a “team audit” exercise (Two-Brain clients learn how to evaluate and improve their teams step by step as they work through our Roadmap). I listed myself as CEO but gave myself only a “yellow” rating instead of “green.” Todd Herman, my mentor, asked why.

“Well, I’ve never owned a $5 million company before,” I said. “The learning curve has been steep!”

“So why don’t you hire a CEO?” he asked.

“Well, I want to clean up some stuff, make a few changes on the team, get our marketing plan in place, finish building our app … .”

In short, I wanted to make things perfect before I replaced myself as CEO.

“Dude, what do you think a CEO is going to do?” Todd laughed.

I realized he was right: I flashed back to my childhood and a brief period where my parents hired a cleaner to help out every second Friday. My mom, already buried in work, would clean the house from top to bottom on Thursday night after dinner so it would be clean and presentable for the housecleaner the following day.

 

Replacing Yourself the Right Way

 

I decided to start looking. Then covid hit, and I was presented with the opportunity—necessity—to step forward and lead. With the help of a really strong team, we were able to help thousands of gym owners navigate the crisis, and I was heaped with praise (and involved in a few misunderstandings).

I got lucky. For most business owners, the “founder’s dilemma” occurs when the skills needed to run a large company aren’t the same skills needed to coach people.

These skills aren’t developed in school (but an MBA helps). They aren’t developed in the military (though leadership training helps too, I’m sure). They aren’t developed by books, and they aren’t even developed in the trenches. For your company to grow past a certain point, you need an experienced CEO and a team to back that person.

I once heard the founder of a large company say this: “Next time I start a billion-dollar business in my garage, remind me not to fuck this up.” He was talking to a member of his legal team, and I can’t even remember the occasion. But I can picture of us laughing.

The thing is most founders really can’t afford to screw it up.

As you’re making bigger and bigger bets with your business, risk only increases if the hand at the tiller is inexperienced. In the Founder Phase, you bet on yourself. In the Farmer Phase, you bet on your vision. But in the Tinker Phase, you have to bet on people.

And I like sure bets: I try to replace myself with people who are better than me in their particular role. That includes CEO.

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