Protect yourself from feeling overwhelmed in the wrong role
Reasons for starting a company
When asking first-time founders why they started their companies, we often hear motivations like changing the world and following their dreams of making a good living. If we are honest with ourselves, another attractive part is the positive label of a startup founder, which sounds sexy and describes nothing. A startup founder could be anything and do anything they like. Technically, the founder of a company just registered the company with the authorities.
Of course, in the startup ecosystem, the term founder coincides with the role of a managing director or similar, an individuum with the shared responsibility to build a company and grow a business. Specific keywords signifying authority and status exist in the complex world of startups, where no two companies can be treated equally. One might be total funding or the prestige that VCs bring. Another might be lighthouse customers, and yet another might be the title of founder. While these might be great heuristics on a broader sample of startups, as for any statistic, this information seldom adds value to the single person.
In this article, we will address the founder's identity and reflect on the comparison with the entrepreneurial identity. Over the years, we have found that many, if not most, early founders show only minimal traits of an entrepreneur. Still, we would consider the transition from founder to entrepreneur as crucial for the long-term success of organisations and the well-being of the founder/entrepreneur.
The founder identity
"Founder" is often synonymous with innovation, risk-taking, and entrepreneurial spirit. It is a label that many startup managing directors wear proudly. However, the role itself is often undefined and ever-evolving. While the founder title can be a powerful motivator and rallying point for startups, it can also come with its own challenges and implications for the individual.
One reason the founder's identity is so prevalent is its external appeal. It can serve as a badge of honour, signalling to investors, partners, and customers that the person in question is a driving force behind the company. This external motivation can be a boon for the business. Still, it can also lead founders to prioritise certain aspects of the company over others. For instance, founders may focus more on organisation, product design, and go-to-market strategies than financial responsibility and profit-generating. The belief that financial success will eventually follow can be a double-edged sword, fueling ambition but also blinding founders to the realities of running a sustainable business.
The transitive nature of the founder title, which connects the individual directly to the organisation ("founder of..."), has significant implications for the founder's identity. As the organisation evolves and faces challenges, the founder's self-perception and emotional state can become inextricably linked to the company's performance. This link between personal and professional identity can result in a rollercoaster of emotions and mental well-being, with founders experiencing extreme highs and lows in a short period.
In some cases, the founder identity can be all-consuming, leaving individuals vulnerable when the company experiences setbacks or, even worse, fails entirely. When a company defaults, the founder's identity may feel like it has defaulted, leaving them with a sense of loss and a gaping hole in their self-conception. This development can be a challenging and disorienting experience for those who have invested their entire being into the success of their venture.
From side project to company
Many successful enterprises begin their journey as a passion project, driven by the excitement of exploring new ideas and solving problems. At this stage, there is often little concern for profitability or scaling; the focus is experimentation and creativity. Some side projects might even already register as companies. Still, the operations and mindset remain rooted in the project mentality.
As the project attracts stakeholders like employees, customers, investors, and partners, it naturally transitions into a more structured entity - a company. However, this transformation does not happen overnight. It can be fraught with challenges, even for startups and small businesses with a significant number of team members. Two primary reasons underlie this reluctance to fully embrace the company mindset: the founders' lack of business experience and the fear of losing the unique culture nurtured within the project environment.
The shift from project to company tends to occur at different stages for startups and small businesses, depending on their financial priorities. Startups focused on scaling rather than immediate profitability may take longer to transition. Small companies operating in a competitive landscape with pressing financial obligations are more likely to evolve into companies more quickly.
Regardless of the timeline, this transformation requires founders to adapt their skillset and mindset, moving from focusing on exploration and discovery to one centred on management and leadership. This critical shift marks the transition from founder to entrepreneur.
To navigate this transformation, founders must:
Acknowledge the change: Recognise that the project has evolved into a company with increased responsibilities and a broader range of stakeholders. Embrace the need for a more structured approach to decision-making and operations.
Develop new skills: As the project grows into a company, founders must expand their skill set to include business management, leadership, and strategic planning. This may involve seeking mentorship, further education, or professional development opportunities.
Preserve company culture: As the organisation transitions into a more formal business structure, it is essential to maintain the core values and unique culture that defined the initial project. This will help keep the team engaged and motivated during the transformation.
Delegate and empower: Founders must learn to delegate tasks and trust their team members to make decisions. Empowering employees to take on more responsibility will free up the founders' time to focus on the bigger picture and long-term strategy.
Adapt to the entrepreneur mindset: Shifting from a project mentality to a company focus means adopting an entrepreneur's mindset that balances innovation with execution and creativity with practicality.
The entrepreneur identity
While "founder" often evokes a sense of creativity and innovation, the entrepreneur identity is more closely associated with creating value and driving growth or profit. Entrepreneurs recognise opportunities in the market and skillfully leverage them to generate value for their customers and stakeholders. Though founders and entrepreneurs can be the same, the distinction between these roles lies in their business approach and mindset.
Entrepreneurs tend to be more pragmatic and grounded in business realities than founders. They focus on key performance indicators (KPIs), such as growth or profit, and romantic or creative notions drive them less. This focus on tangible outcomes enables entrepreneurs to make informed decisions, adapt to market conditions, and move their ventures forward.
The entrepreneurial identity is centred around creating value for the customer. Entrepreneurs understand that their success ties to the satisfaction and loyalty of their customers, and they continually seek ways to improve their offerings and exceed expectations. This customer-centric mindset is crucial to a business's long-term success and sustainability.
Unlike the founder identity, the entrepreneur identity is not inherently linked to a specific organisation. This distinction is important because it allows entrepreneurs to maintain a sense of self and stability, even in the face of setbacks or failures. An entrepreneur's identity remains intact, regardless of the success or failure of a particular venture. They can apply their skills and experiences to new opportunities and challenges.
This detachment from a single organisation also contributes to the entrepreneur's more stable mental well-being. As their identity is not solely tied to the success of their business, they are better equipped to handle the inevitable ups and downs that come with running a company. This stability enables entrepreneurs to maintain a healthy perspective and bounce back quickly from setbacks or failures.
The journey from founder to entrepreneur
The transition from founder to entrepreneur is a critical and challenging process. Still, it is essential for a business's long-term success and its leader's well-being. Entrepreneurs are characterised by their heightened sense of responsibility and commitment to running their businesses in reliable and sustainable ways. To make this journey, founders must first free themselves from the constraints of labels and external attributes and then gradually adopt the mindset and skillset of an entrepreneur.
To begin this transformation, founders should ask themselves if entrepreneurship is a role they are suited for and if they are prepared to commit to the demands and challenges that come with it. This introspection will help them determine whether they have the necessary skills, passion, and resilience to succeed as entrepreneurs.
Next, founders must let go of the need to impress others and themselves, focusing instead on creating value and building a sustainable business. This shift in mindset requires a willingness to prioritise the company's long-term health over external validation and personal accolades.
Once founders have embraced these changes in perspective, they can begin to develop the entrepreneurial skillset. This process involves cultivating business acumen, leadership abilities, strategic thinking, and learning to manage resources effectively and adapt to changing market conditions.
The journey from founder to entrepreneur is demanding, and founders must start early. The founder should prioritise this transformation when the company has its first customer or employee relying on the business. By the time the organisation has customers who depend on its products or services and employees who are planning their future with the company, the founder should have developed a solid entrepreneurial skillset.
A practical litmus test for gauging the presence of an entrepreneurial mindset is to ask, "How do we carry on if we don't receive external funding from now on?" A sound answer to this question indicates a focus on sustainability and a readiness to face the challenges that lie ahead.
It is important to note that there is no shame in taking time to transition from founder to entrepreneur, and many startup founders only fully embrace their entrepreneurial identity in their second venture. However, considering this question early on benefits both the company's success and the founder's mental health.
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