Why Senior Managers make great Founders and how they can improve

On why and how senior corporate managers can to disrupt her/his industry with a lean startup process, great product and technology.

Older founders are usually wiser, more focused on achieving sales metrics than on building forever “the best product ever”, they work silently, don’t attend as many startup conferences and without any surprise: Over 40’s tend to achieve more.
But what should they be careful of?

Indeed at Altar.io and 10kStartup we’ve had a longstanding belief that older teams of founders are wiser, more connected, know how to sell, have more access to capital and better poised to succeed. Now there is data to prove it and a method to guide seasoned founders to defeat their quirks and achieve more.

Two 18 year old’s started their (now)billion dollar worth startup in a garage so the story goes. The word “Startup” is even today connected to the mental image of Steve Jobs and Steve Wozniak being kids launching Apple 1, Steve Jobs with Windows over 30 years ago and notably Mark Zuckerberg launching The Facebook from his dorm room in Harvard.

The future of tech has a bit of grey hair

Young, white, male and technical/geek is the stereotype of the high performing startup founder, even reinforced by notions that people over 35 need not apply such as Y Combinator’s founder Paul Graham famously lamenting his bias “I can be tricked by anyone who looks like Mark Zuckerberg. There was a guy once who we funded who was terrible. I said: ‘How could he be bad? He looks like Zuckerberg!’.

New reasearch in the US from the National Bureau of Economic Research and from the MIT now show that accumulated decades of professional experience in a given sector do help out founders into being effective Startup Founders.

Source: NBER

More so, people who had been previously employed in their startup’s industry sector were not 10% or 50% more likely to see either high growth or a successful sale of their own startup but rather a whooping 125%!

On another interesting study we also verify that in the US nowadays a full 40% of founders were before leaders in the corporate world. Close to 29% were previously ranked anywhere from Director to CEO according to Harvard Business School.

Prejudice against older founders now has now a plethora data against it. In essence it is now proven that having 15+ years experience in a sector and starting up a tech enabled solution to fix its perennial issues and deliver better solutions to clients sounds right and is right.

The Disruptive 40s

Being 40+ is indeed great when it comes to starting your own business. Although founders may try to achieve Invention — as in (higher achievement/materialization) products of imagination (Merriam Webster) what actually is happening is a Disruption an industry with a new technology, a humbler version of invention or simply put: An incremental development by placing the use of technological development at the service of of an existing industry.

For younger founder, as Azoulay points out, the advantages of youth in technology and innovation is that young people are sometimes argued to be cognitively sharper, less distracted by family or other responsibilities, and more capable of transformative ideas this resonate’s with with Max Planck’s Principle, whereby younger people may be less beholden to existing paradigms of thought and practice (Planck 1949; Dietrich and Srinivasan 2007, Weinberg 2007).

However, more senior founders have significant advantages when it comes to access to social capital (network) and financial capital but also pragmatism. Younger people certainly lack a notion of empathy and knowing what customers actually want (you get this with time) and certainly also lack experience in running companies efficiently, including the effective management of operations, marketing/sales, finance, human resources, and culture, and above all sectorial experience, a bit like having either a junior or a senior running a business.

Younger founders -> More exposed to tech in general. Hence the name “Digital natives”.

Older Founders -> More accrued exposure to their sector, managerial techniques and.. increasing exposure to new tech.

As older founders get cozy with the cloud, salesforce but also instagram and quantified self apps to track their lives, the edge that those new kids on the block had vis-a-vis professionals with 10+ years of experience is starting to diminish rapidly.

Structured, experienced.. And now building the way to be great in Tech

Seasoned founders are by nature more ponderate, relaxed, also hard working but not as hustlers but rather with seamless efficient time and effort management built into them. They have their own families and know well what risk means hence mitigate it at every step of the process.

Young startup founders benefit hugely from being digital natives, meaning that they can see how things are and see right away how things should be “if there was an app for that”. Their impatience and fresh sight/lack of experience is both their biggest win and biggest loss.

Another big sap is the fact that 20 somethings might have worked together in university for a while but have close to zero experience of actually working together and are about to learn workplace and technology teamwork dynamics from scratch.

A group of founders move from being senior managers into becoming founders is a planned ahead move, usually with either an own deep savings pocket or investors backing and a runway buffer in the region of years instead of months.

Usually these founders bring along time tested processes, decades of people management skills and choose a team who has previously succeed together which means that their organizational chances of success are comparatively higher to those of younger founders with little experience and a lot of mistakes and learnings yet to be done.

These older founders are not digital natives and do not “suffer” as much when stuck in queue where an app would suffice to fix it. Having passed their revolutionary teens and 20’s, their entrepreneurial drive is the “digital transformation” of a specific sector. Just imagine the world of possibilities in Real Estate.

Crucially, as said before, founders with a lot of previous sector experience tend to widely outperform those with little sectorial performance (+125%) meaning and this specifically so for B2B ventures on which older founders tend to invest more on with a more controlled Supplier/Buyer environment.

How seasoned managers can endure and thrive with a Tech Startup

Now for the rougher part: Seasoned managers are usually quite green when it comes to technology projects and need to quickly decide wether to insource or outsource their Product Development and Software Development efforts and that’s where usually we see the most execution risk.

Whereas a seasoned team is arguably great at Operations, Organizational and Financial Management and Sales, they often struggle with technology Product Market Fit, Continuous Product Evolution and Software Development Team Management. For the three topics fortunately there is one global answer: The Lean approach/methodology founded by Eric Ries.

 

What is the Lean Methodology?

Technology is different because it changes faster than other sectors and you need a method to work accordingly

In a nutshell the Lean Methodology recognizes the high cost of failure in Product and Software development and proposes an approach to mitigate the risk by dosing investments in to the minimum effort to achieve maximum validation.

The Lean Startup method teaches you how to drive a startup-how to steer, when to turn, and when to persevere-and grow a business with maximum acceleration.

This means that when you are building a tech product you should never start with 100% certainty that everything will turn out as expected initially from a super well defined business plan. Rather you should have Build-Measure-Learn feedback cycles where you test your initial assumptions with a small investment quickly by building a sample of your startup’s product, the MVP or Minimum Viable Product and keep investing more in small doses until until you’ve validated your product’s Product Market Fit.

1. Product Market Fit Study

The very first cycle should start with a Product Market Fit Study at the beginning of the journey that studies the problem you are solving, the solution you are creating and how to deploy and test with the target audience/persona to create a compelling Unique Value Proposition or UVP.
At Altar.io, we identified a methodology to achieve the prioritisation for the features that will help you testing your first product: read about the 123 MVP Method.

This means that you will have hypothesis of how to achieve a meaningful product at first that will solve a real problem for a well researched client persona. Then you test the solution with small but meaningful project development steps and youanalyse.

Crucially though, a well researched, well thought product must ensure a higher level of defensibility, innovation and staying power for more than just a few years vision.

Disclaimer: At Altar.io we offer our clients the Co-Founders Retreat, an intense week in Lisbon at our premises in which we help them in the direction of defining the Product Scope and Features Prioritisation for their Minimum Viable Product (MVP).

2. Continuous Product Evolution 

Is a mix of planned product development rollouts and Agile Build — Measure-Learn cycles that usually rely on product iterations every 2 weeks to help the company improve its offering and perfecting its product by relying on actual user adoption metrics (bottom up) instead of on risky guesses alone (top up).

Your business will be a KPI gathering machine so you can steer the ship in the right direction, take informed decisions and provide information to all your stakeholders, from clients to investors backing your business.

At this step it is important to ensure that the project stays ahead of the curve vis a vis the competitors and alternative solutions to the same problem via analysing metrics at all times. You know your competitors will do it too, so you must. Tech is a living organism always replenishing its cells and no one like to be a beep machine manufacturer in the age of the smartphone.

3. Software Development Team Management

Managing a clerical team is a whole lot different from the complex science that is to manage a software team complete with its own rituals, best practises and quirks such as the SCRUM jargon and routines.

That’s why there are so many software outsourcing companies that specialize on the delivery of software projects. Indeed for most brand new startups founded by highly focused (and pragmatic) seasoned founders what matters is to achieve the initial goal of achieving exponential user adoption and other relevant KPIs that show that you are on the path to sustainability and growth.

Pragmatic and Lean Higher success rate

On a final note, seasoned founders tend to see Tech as a means to an end and not as an end on itself. And seasoned founders see great Product as a crucial part of their business and mission, and rightly so.

On a final note, why I usually recommend seasoned tech founders to also go Lean on Software Development. That means focus on proving your KPIs first and on building your teach team later. Hire when your business is proven, cash is less scarce and you are in essence in a better position to discuss terms.


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