The importance of the founder – back the jockey, not the horse

6th February 2022
jockey - The importance of the founder - back the jockey, not the horse

Tom Matthews

At Pemba, we partner with ambitious founders to help turn their strategic vision into reality and take their business on an accelerated growth journey. In fact, we have completed over 200 partnerships with founder-led businesses over c.20 years.

What is a founder?

A founder is someone who has started their business from scratch. These are rare individuals who have not followed the traditional path of finding a job and working their way up a career ladder.

Founders represent a very small proportion of people that have taken the leap to build their own business and become a master of their own destiny.

What’s it like to be a founder?

Being a founder can be an extremely exciting and fulfilling adventure but it’s not without its challenges. Most founders put blood, sweat and tears into building their business, usually over many, many years. They’ve usually suffered setbacks and disappointment along the way. They’ve likely had moments when they came close to giving up.

Reid Hoffman, the founder of LinkedIn summed it up well when he described a founder as: “…someone who will jump off the cliff and assemble the plane on the way down.”

Back the jockey, not the horse

Many growth investors focus the majority of their time getting to understand the company they are investing in and not enough time on the founder and management team that they are backing.

Yes, it’s clearly important to ensure the company you are investing in is good quality, but of more importance is the founder and leadership team that will be working tirelessly with you on the next stage of the growth journey.

At Pemba, we have a minimum set of criteria we look for to ensure the company is of sufficient quality, but we spend a significant amount of time really getting to know the founders and management teams that we are going to partner with. It’s really important to us that there is both strategic alignment and cultural fit.

Challenges and difficulties are guaranteed experiences in business. Accordingly, it is also really important to us to build strong relationships with our founders and management teams to ensure we will all be able to pull together and maintain our productivity and performance even when things are not going to plan and the going gets tough.

Why is the founder important?

Founders aren’t your regular run-of-the-mill kind of people. They are made of a different DNA and their ability to think differently is what keeps the company nimble, enable it to innovate, take risks and create better products and services.

The goal and vision for a company are driven from the founder. The founder’s energy, enthusiasm and passion are critical to the success of the company. The company culture is also established by the founders, and it is that culture and vision that creates the employee drive.

There is plenty of evidence that supports the importance of the founder and that founder-led companies outperform the rest. In fact, the Harvard Business Review states that S&P 500 companies where the founder is still CEO tend to be more innovative, create patents that are more valuable, generate 31 percent more patents, adapt the business model, make bold investments to renew and adapt the business model, and demonstrate a certain willingness to take risks to invent for the future.

The common characteristics of great founders

At Pemba we have had the privilege of working with lots of different founders. Whilst every founder is different, there are a number of common characteristics that all great founders share.

  1. They dream big – A lot of people are scared to dream big because they fear failure, but the best founders dream big and know the sky is the limit
  2. They move fast – Great founders realise if they don’t move fast then someone else will or they’ll lose momentum and not capitalise on the opportunity
  3. They learn from reality – The best founders listen and learn. They learn from the best people and companies that do what they aspire to do. They also listen to, and learn from, their customers and adopt a customer-centric approach
  4. They are solutions-focused – Good founders are not the kind of people who say why something can’t happen. Rather, they are the kind of people who make it happen. They have a clear vision of where they want to get to and then create a massive action plan of how they will get there
  5. They collaborate without ego – The very best founders realise that no one succeeds alone and they’re only as good as their team. The hire the best people and empower and inspire them to drive the company toward their strategic goal
  6. They obsess about opportunity to make that strategic vision or dream a reality
  7. They maximise their strengths – Great founders don’t obsess about their failures and what they can’t do. Rather, they focus on their strengths and seek to minimise their weaknesses. If they don’t have the strengths that are required to realise their dream, then hire people that do and collaborate without ego
  8. They have grit – The best founders bounce back with passion. They view failure as a learning process and maintain their long-term commitment to a goal. They overcome setbacks, work hard and finish things rather than giving up.

What next?

If you’re an ambitious founder and are considering partnering with an experienced growth investor to help turn your strategic vision into a reality, then please contact me to discuss how we might be able to help.

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