FQ: Musings on Founder Mentality

Naval’s tweet on Founder Mentality got me to deep dive & reflect.

Having run a company for 10 years, I have seen this as the most crucial element on why some companies

• continue to thrive against all the odds
• continue to excel due to team members with super founder mentality and
• how companies struggle to retain team members with super founder mentality.

Saar Gur has a fantastic post on Techcrunch on this, what he calls FQ: The Founder Quotient is an assessment of founder strength and founder/company fit. Similar to an EQ or IQ test, but for founder strength (hence FQ).

Here are his key points to assess founder strength:

1. Original product thought: Most founders copy
2. Psychological factors: What drives this person?
3. Authenticity: Does this company align with the founder’s beliefs and values?
4. Unique market insight: Do they have a unique insight
5. Intelligence: IQ, EQ, self-awareness, ability to hold convictions loosely, etc
6. Values: Are they honest?
7. Judgment: Product judgment, people and hiring judgment, etc.
8. Experience: Are they uniquely capable of executing?
9. Ability to recruit:

Another interesting book to read: The Founder’s Mentality: How to Overcome the Predictable Crises of Growth: Book by Chris Zook and James Allen

Book excerpts: That’s why a founder’s mentality isn’t just a nice to have, but a must-have. A founder’s mentality consists of three elements:
1. The insurgent mission.
2. The front-line obsession.
3. The owner’s mindset.

While it is undervalued, the incentive to have one is strong. New research by Bain shows that companies able to maintain a founder’s mentality as they grow large and complex — companies like AB Inbev, LBrands, IKEA, Haier, Google, or Nike — achieve three times the economic returns of companies that let these attributes erode. And more than 80% of top performing companies adhere to the traits of a founder’s mentality.

Founder Mentality is Not Just Founder(s)
Before you assume founder mentality is all about the founder alone, it is not! If you can recruit, build and grow team members with founder mentality, your endeavor makes a powerful impact.

However, retaining team members with founder mentality is equally challenging. You succeed, you can build an impactful company. You fail to retain founder mentality team members; it is a daunting task to growth.

Founder mentality is what makes a company thrive much beyond the founder’s departure and one /some of those ‘founder mentality’ team members taking the company to greater heights.

3 names that come to my mind:

Andy Grove did that for Intel.
Jack Welch did that for GE.
S Ramadorai did that for TCS.

I found a fantastic Q&A on AmCham Netherland site: https://amcham.nl/sites/default/files/tfm_press.pdf

How does a founder’s mentality motivate and retain talent in the era of Millennials and the gig economy?

Companies with the founder’s mentality at a high level like Google, Facebook, Nike, can appeal to the millennial generation for three reasons relative to other companies.
– These companies have a clear and special purpose for existing whose cause liberates energy –they are not just another job in another company. An example would be Google’s mission to organize all of the world’s information. They are simply more inspiring.
– These companies tend to have fewer layers and a shorter distance between senior management and the front line employees. Thus younger employees feel more connected to leadership and to the company, and they are typically given a bigger voice and more responsibility like with
Haier in China which is built around thousands of small teams with the CEO’s stated goal to reduce the distance from him to the front line employees.
– These companies tend to be more meritocratic, like AB Inbev. They give new employees more hope of promotion and getting ahead in their careers.

The result of these three things is a company that is more inspiring, offers better and fairer career prospects, and where young people are listened to early in their career and can have an impact.

How do you adopt a founder’s mentality if your company no longer is run by its founder?
The founder’s mentality is not about individual founders per se, but about the attitudes and behaviors that are common across the most sustainably successful companies with the most loyal and energized employees. While these practices (a clear mission, long-term perspective, or total intellectual curiosity about frontline details) are most strongly expressed by the greatest founder-run companies, they are traits that can be learned and fostered when the founder is no longer there as we still see at Apple after Steve Jobs, or as we saw renewed at Home Depot even after the founders.

The truth is that most founders fail. For instance, the United States has averaged 500,000 new incorporations every year, of these, only about 10,000 reach venture capital quality and get formal funding. Of these 10,000 only 1,000 ever succeed to grow to $100 MM in revenues, and only 30 grow to $500 million. The Founder’s Mentality is an examination of how the top founders built companies that did survive and achieve sustained success in the first place and the lessons that hold for how all companies should think about how they are built on the inside to succeed on the outside.