Ask the expert: your questions on growing the business answered
FinTech Futures is introducing a new fortnightly column, Ask The Expert! The column is designed to provide readers with practical advice on how to grow their businesses.
Greg Watts is our resident expert. He is the founder of Demand Creation Partners, a London-based growth consultancy that helps fintechs and paytechs to scale. A visiting lecturer at the American University in Paris and regular industry speaker, he was previously head of market acceleration at Visa Europe.
QUESTION: When is the right time for a founder to take a step back from the business?
One important, but not often discussed topic is, when is the right time for a fintech founder to take a step back and bring in experienced managers who can take the business to the next level?
Before we answer that, let’s examine three traditional strengths of founders:
- Coming up with great ideas and developing a compelling minimum viable product (MPV)
- Raising investment
- Being the company’s Number One cheerleader
However, the reality is founders may not possess the skills, experience or desire to undertake other business activities such as running the operation, creating a high-performing culture, creating and closing commercial deals, or launching into new markets.
As a fintech grows, a founder or founding team often requires specialist and perhaps more experienced individuals to support them.
Here are some questions founders should ask themselves as their companies embark on the next phase of growth:
- When is the right time to make changes to the leadership team and/or operating model?
- What skills and behaviours are required from the new team?
- What will my role as a founder be going forward?
- How do I communicate these changes internally and externally?
In this column, we’ll provide suggestions to help founders make the right decisions as they position their companies for long-term success.
- Admit you need help.
Being a company founder means you have a unique connection to it. You might have devised the idea, built it from scratch and invested significant, personal resource in ensuring its success. Not surprisingly, deciding when to take a step back is one of the most difficult decisions any founder can make.
Often, ego comes into play. After all, you came up with the idea, built the MVP, signed the first partnerships and secured investment. Who better to take the business forward?
At the beginning of a company’s journey, required leadership skills typically include creativity, passion, inspiring others and micromanaging the business – because that’s easy to do in the early days.
However, once a business starts experiencing success, a different set of challenges come into play.
Founders need to create companies that scale, and that means that he or she cannot be involved in every decision. This is particularly true for fintechs, which often experience hyper growth early on – going from a few customers to thousands or millions in a short space of time.
Most founders are initially focussed on building compelling products. However, very quickly those products require selling and marketing, after-sales support and account management, finance and legal expertise, and investor relations. Then there’s the culture of the business, which usually determines overall success.
The truth is, driving a business forward requires skills that successful founders aren’t always equipped with – or enjoy using.
- Identify your skills gaps and create a plan.
Once you’ve recognised the skills gaps you have, you should develop a plan to address them.
For example, now that you have more customers, it’s likely you’ll need an account management or client success function. If you’re signing up new partners and clients, you might need to enhance your commercial function. And as you move in to new markets, you’ll need people who can lead and run those operations.
Meanwhile, investors looking for promised returns will be expecting you to prioritise sales. Some fintechs have appointed a Chief Revenue Officer (CRO) or Chief Growth Officer (CGO) who is responsible for the entire sales cycle from initial market assessment and scoping to after-sales and support. Such roles often incorporate marketing to support demand generation efforts and to ensure all resources and activities are focussed on generating and closing sales leads.
Then there’s the day-to-day business. Who is best suited to run it? A smart move for a founder is to hire an experienced Chief Operating Officer who sits alongside the CRO or CGO and assumes responsibility for all support functions.
To identify where you need support, start by reviewing your commercial objectives for the next 12, 24 and 36 months, and then map out your existing expertise and where you have gaps.
- Clarify your role in the next phase of growth – and stick to it.
You’ve now created a plan to bring in more specialist resources to support the business in its next phase of growth, but what does that mean for you as a founder?
Unsurprisingly, many founders struggle to step back from their baby – the business they’ve created from scratch.
Stepping back can take many forms. It might mean being less involved in day-to-day decision making in order to take a more strategic view of the company’s future. Or it might mean stepping back entirely and bringing in someone else to run the business. Sometimes this is a voluntary change, as a founder realises that the best thing for the business is for a professional CEO to take charge. Other times, investors may insist on a new CEO as a condition for investment. Therefore, it’s important to pre-empt these conditions and have a proactive plan in place.
Natural roles for a founder who is stepping back might be to spearhead investment, champion the business to overseas markets or develop the brand or product.
- Set up the new team for success from Day One.
No one likes having someone continually looking over their shoulder. Overcoming the mindset of “I can do it better” can be tricky for founders as they bring new leadership into the fold.
New leaders or leadership teams require time to get up to speed. For fintechs going through hyper growth, it can sometimes be frustrating for a founder to allow sufficient onboarding time as they “want to get on.” However, to do so is a mistake that will lead to failure down the line. It typically takes three to six months for a new team to come together, and before any significant results can be seen.
In the early days of a new team, founders need to strike a balance between being supportive versus being over-bearing or even obstructive. Perhaps start by organising handover meetings for the first few weeks, then have a weekly check-in session. Your goal is to move back from the day-to-day. Try and avoid the trap of stepping back into the detail if you spot mistakes or missed opportunities. That will not be appreciated, nor will it set the new team up for success.
Bringing it all together
Founders must put their egos aside, recognise their limitations and see the bigger picture of what’s best for their company long-term. Remember that only a few founders of leading fintechs – or indeed any major technology companies – have successfully stayed the course.
Stepping back, in whatever form is required, can be tough – but it can also be rewarding. It allows the company to achieve the greatness the founder envisioned while allowing a founder to discover his or her strengths and focus on where their genius lies.