Episode 10: Founders Keepers – Why Founders Are Built to Fail, and What It Takes to Succeed

Foreign. This is Hugh Massey, the executive chairman and founder of DNA Behavior International. And I'm delighted today to be hosting our next Behavioral Economics Today podcast. And in these podcasts I've been trying to bring out interesting topics where psychology and economics intersect and how that can be applied to, to help us as, as humans work better, interact better, lead better, deal with money better. And today I'm delighted to have with me Rich Hagberg, who, who's written a fantastic book that really moved me called Founders Keepers. As a, as an entrepreneur, like many other entrepreneurs, we're always searching for how can we do it better? And what do we really need to keep our eye on? And as I've been growing my business, reading this book was quite seminal as far as I was concerned. And from my behavioral understanding, I agree with it. So, you know, Rich has got a long background in dealing with leaders at Fortune 500 companies and also with founders. He's the CEO and founder of Hagberg Consulting and he is a psychologist as well. So welcome Rich.

Thank you.

So Rich, why don't you just tell me a little bit more about your life and career background and how this great interest in founders came about and which led to the research.

Yeah, it's an interesting story. So I was trained as a psychologist and was a licensed clinical psychologist in California for 30 years. But the fact is that I've almost my entire career worked coaching and consulting with business, most of the time in Silicon Valley. Now it's, now it's a global practice. I'm in now in Washington state on an island. And when I first started out, I was recruited by a consulting firm that did pre hire assessment. And based on a two hour interview and an IQ test, they were asking those of us who did the assessment to write a profile whether or not of an individual and whether or not they would fit with a high senior executive position. And I really had serious questions about the validity of what we were doing. And after I had been there for about six months, I went to my boss and I said, you know, I really have serious questions about the validity of what we're doing. And this is in 1979 and I'd never seen a computer before. And I said, I think with computer technology we could probably do a better job of this. And he said, young man, you're not a properly deferential apprentice and go back to your office and do what I tell you to do. Well, knowing what I know about myself now, I'm a typical founder, you know, I'm a Creative, nonconformist, and I chase after ideas and I don't like authority telling me what to do. So within a few months I was gone. I left, and about two years later I started my first company. And since then I've started at least seven companies. So I'm a kind of a combination of, on one level, a psychologist who understands people and motivation. On another level, I'm a researcher because starting in 1986, I had enough data from 360s and personality tests that I could look at what differentiated best leaders. And so I was called by a professor at the local business school in Silicon Valley and asked me if I'd come and give a speech. And based on the data that I had, and I don't remember how much it was, but he said, well, after the, after the session he said, you know, I think you're really onto something, but it's sort of like it's, it's still the shadow of the ship in the fog. And. And he was right. So the researcher in me kept on going and gathering more and more and more data as I worked in Silicon Valley with both startups and big companies, the Hewlett Packards of the world, and started a consulting firm in 1984 that eventually morphed into a product company. And we had licensees all around the world. So we continued to gather information and finally added a culture assessment to the toolkit. And ultimately when we got bought in 2006 by Accenture, they bought us to get at our culture assessment tools, but the leadership stuff came along with it. Turns out they use the leadership stuff more than they use the culture stuff. And then I had data available to me from a global sample. And so I had really large numbers of personality and 360 results. And the 360 results we got evaluations from average of 12 raters and on 46 different dimensions. And the average person got 40 pages of comments on top of the numbers. So I had this treasure trove of stuff.

Yeah.

And when my sentence at Accenture was done after three years, I relaunched and this time focused on startups. And that's what I've been doing. I have some big company clients now too, but. And they're all over the world. I just got one in Azerbaijan, I have a couple in Norway, I've worked all over Asia. So that's my story.

Well, it's a great story and I think none of it's an accident, is it? You know, in terms of how you started, I think a question I have in there is, you know, from the research you've been doing, which is for a long time, and that's more than most people in this area. Have your conclusions changed in any way? What you started to see happening in the early 1980s to what you see the issues are today? And, you know, I suppose I asked that ahead of us getting into why do so many startups fail? But it's just sort of triggered by what you said in the, you know, with the research that you were getting. Is any of it changed?

I think. Let me answer that in two ways. On one level, the ship is no longer in the fog. There's a lot more clarity. It's like we've been dialing in the focus and now can see things that I could not see at the time. I had a sense there was something there, but nothing like I have today. The other thing is, when I came to Silicon Valley, my father's generation was running companies and, you know, this is the World War II generation today. Today there's much more of an understanding of the importance of things like emotional intelligence and psychological safety and in general, social skills as critical. I remember my father was a CFO of a Fortune 200 company, and he actually wrote the first code for the personality test I use and for the. For the 360. Taught himself to program in basic in about 1985. But he looked at the 360 and he says, what's this thing called Buy in? And I explained to him, and he had no clue as to what this was. It was just foreign to him. The other thing that happened was we got a PR firm in about 1991, and we retained the firm on a Wednesday on the front page of the Wall Street Journal on the next Monday we were there. And it was simple research where we looked at introversion, extroversion over the. Over time. And at the time in 1981, and we went. We had data going back, you know, to the mid-80s, there were more CEOs who were introverts than there were extroverts. And that's the effect of, you know, technology.

Yeah, so that's. That. That, yeah. That's interesting. And I think we probably find that would be true today, I think.

Oh, absolutely.

And we can unpack that more as we go through. I don't want to steal your thunder with some of the conclusions in the book, but I think we will see that come out. So why don't we just talk about why founders are built to fail? I mean, that's the subtitle or part of the subtitle of your book, and I think it's the premise of all of this.

So back in 1986, we did factor analysis on the data and on the 360 data and we found that there were three clusters of skills. And we've redone it many, many times since then. And those three clusters hold up. We've actually changed the 360 dramatically and those 360s still hold up. We call that the clusters the visionary evangelist. You know, think Steve Jobs, Elon Musk. Most founders are visionary evangelists. You know, they're creative non conformists. You know, they have vision, they're, they have high IQ and low EQ, they're intense, they're stubborn, etc. Then there's the relationship builders. And they're best at things like building teams because they pay attention to people and interpersonal skills and dynamics, but they don't like confrontation. They want everybody to get along. And so they're not very good at holding people accountable. So they're good at creating buy in, they're good at keeping people informed, they're good at, you know, they're sensitive and, and then there's the manager of execution. They make the trains run on time. They put in place systems and processes that drive efficiency and, and enable scaling. Founders as an entire group are high vision, medium relationship, but the unsuccessful ones are low relationship. The successful ones are on the mean, they're right in the middle, but all of them are low on execution. And that lack of execution creates a problem when you start to scale because there's a tendency for founders to see systems and processes as bureaucracy and they're allergic to structure. Now this, this took us a while to figure out, but the successful ones are only on the mean at their average compared to executives on structure, systems and processes. But the unsuccessful ones are so low that it's, it's ridiculous. And when we dug into the comments, it became clear that they waited for things to break, whereas the successful ones reluctantly admitted that we needed to start putting some structure in place even though they didn't like it, rather than waiting for things to break. So there's a reactivity and a lack of discipline that the unsuccessful ones have that get in their way. There's a way around it if you're willing to let go of control and bring in a COO or hire managers of execution, you know, in key functions. But most founders blow up. I mean, you know, the failure rate is about 90% of all startups and even venture capital funded startups only 25% of them ever get an exit from either an IPO or a sale. So you know, it's, it's like most founders, many founders are ticking time bombs.

Because what I see, you know, and this has come from my experience of being in Entrepreneurs organization for 25 years, so around a lot of entrepreneurs. I think the issue that sort of we get presented to us a lot is that the founder might in some cases say yeah, we need to have some processes and hires that manager of execution and the manager of relationships or what, what can be called an integrator, you know, along those lines. But then they're so strong willed they just run roughshod over the top of them. And I think that's the psychological safety part that you were talking about before.

Yes.

And, or they just come in with a million ideas a minute and they work around even the manager of execution and just get a staff person to try, start doing something and it goes back to spaghetti pretty quickly.

Exactly, exactly. However, the unsuccessful ones are worse at that. They're more stubborn, they're more individualistic, they're emotionally reactive and so they intimidate people and nobody's willing to challenge them. And they create an environment because it isn't safe where the facts don't win. They want to win the argument, the facts don't win. All the best alternatives don't get surfaced. And that means that the unsuccessful founders reactivity and egocentricity and narcissism causes them to make bad decisions. And that's a big piece of why the companies fail.

Yeah. And patience is a big issue in that I think that, that, that the founders can be extremely impatient because they just want to see a result or, or ha. Have action happening regardless of what the action is. And that's right. Yeah, that, that's a problem.

Well, let me, let me, let me make a comment on that. All founders are impatient, but the unsuccessful are more impulsive and reactive. The successful ones have managed to some degree to be a little more reflective and deliberate and they're more likely to run a disciplined decision making process. Maybe it's not great, but then the unsuccessful ones.

Yeah, and I think that's key and that's why having that right. Integrator type person in the business or the manager of execution and even a relationship person as well, I'm sensing there's really three people that are needed there at the top of the ship, you know, on the, on the. To, you know, to, to direct things, to, to allow those things to happen. Well, you know, one, for people to feel connected with, but also to run decision making processes, actually check whether the experiments have worked. You know, are all the steps being, being, being followed? So Richard, if we, if we go, so what makes the, the, the founder a founder? You know, what, what are the, I suppose the traits.

Yeah, yeah. Well, let me, let me divide these into some categories. Let's talk about how, how success, how founders in general make decisions. All founders are creative risk takers and they, they, they, they're a fountain of ideas and that's a strength and a weakness. It's a strength and then it helps them come up with the insights that gets the company going. Yeah, they, they also are persistent as hell. They're willing to keep going, keep butting their beating their heads against the wall until they get through. I, a venture capitalist once said to me when I asked him, well, what makes a successful founder? And he did this, he says that they're willing to hit the wall and hit the wall and hit the wall and hit the wall and, and hit the wall until they finally break through. But that same persistence in the case of the unsuccessful ones leads to a certain stubbornness and a belief that they are the only ones who have the answer. They also, founders in general can tolerate a lot of ambiguity and that's good because founder of startups are nothing but ambiguity and uncertainty. And if you can't deal with that uncertainty, it's going to make you very anxious and you're going to have trouble. But what that leads to is a lack of putting in place clear expectations, which gets in the way of accountability. I got my first360 in 1991 and my folks accused me of drive by delegation. And they basically said, you know, you throw us in the middle of the swimming pool and you expect us to swim and you don't even tell us where the, where the, you know, where we should swim to. Yeah, and I, and I realized that was true because I was independent. And all founders are very independent. In fact, the defining characteristic of a founder is they're very creative, independent, non conforming, they challenge the status quo. That's why they come up with ideas. But they lack focus on short term planning and prioritization. And when you combine that with a lack, with a high tolerance for ambiguity. They have the big picture vision in their head, but they don't communicate it. And people are wondering, well, where are we going and what do you want me to do? And in the beginning it's a free for all and everybody's wearing multiple hats, but as they have to put in Some focus and structure, it gets in the way. So from an intellectual style standpoint, that stands out. From a motivation standpoint, all founders tend to be workaholics. When people come to me and ask me, should I be a founder? I say, well, how important is work life balance to you? And if they say anything other than, well, you know, yeah, but I suggest that they really take a second look at it. And I think a lot of founders who have done a startup that either succeeded or didn't, when they get older and start having kids and there's more demands on them, they start thinking about is there a way to do this differently or do I really want to do it again?

Yeah.

So they're driven achievers, they're impatient, they have a high sense of urgency. Their score on time urgency, which is one of the things we measure, is very high. And, and they are, like I said, they're impatient. But the unsuccessful ones are also impulsive. They also tend to be aggressive people. They push, they take initiative and they push. From a social style standpoint, they tend to be loners and that gets in the way. When it comes to collaborating, the successful ones are somewhat better at collaboration. The unsuccessful ones think they're smarter and more capable. All founders think they're more capable, but the successful ones are more willing to admit they have shortcomings. What's interesting is that the founders have a level of insecurity that's underneath and shows up in the personality test. But the way their360 portrays them as they're seen by their colleagues is they're seen as being very confident, but there's this insecurity underneath. You know, they don't feel they're enough and they have to do something, they have to prove something. Also, from a social style standpoint, they're, they're not only independent, they're extremely non conforming and they don't like boundaries, they don't like being told what to do. They're very assertive, they want to be the one to make the decisions they have. They have real difficulty recognizing the importance of creating an environment where that surfaces the ideas that might make a difference in the execution of your. Whatever your original vision was. And the unsuccessful ones are very, very bad at listening, being open to input and working through others. All founders are independent, but the successful ones have learned somewhat better to work through others and let go of control. The unsuccessful ones really have trouble letting go of control because they're distrusting of people, they think they do it the best and others are not going to do it as well as they do. And they want to be in charge and they want to be the center of attention and they just won't let go of control. So, you know, if we, if we boil down the key differentiators and we use, we used advanced statistical techniques and discriminative analysis and some AI stuff, the big differentiator is adaptability. The successful ones are more adaptable and that means they listen, they're open to input. They create an environment where ideas can get worked on. They don't dominate the process as much, and so they make better decisions. The unsuccessful ones are more stubborn and they create unsafe environments where people are afraid to be open. And, you know, they don't know how to get buy in or even value getting buy in. They don't listen. They tend to see relationships as a distraction from getting things done. So the second thing is working through others. So adaptability, then working through others. And the third one is essentially putting in place the disciplines necessary for scaling. Like I said before, the successful ones are only, you know, on the mean, but they reluctantly put in place structure and process. If, rather than waiting for things to

break, do you think on the, you know, the understanding, the importance of the scaling, you know, a lot, I suppose a lot of founders would want their business to scale, you know, to sell as much of a product at as high a margin as possible with the fewer, fewer number of employees. And today we've got technology that allows us to do that. I would have thought that founders appreciate that point, but the issue really being is they actually don't know how to put the systems in place themselves.

That's logical and reasonable. And, and, and I think what happens is that their dislike of boundaries that prevent them from doing what they want and pursuing their creative ideas wins the battle.

Yeah, so, so in a way, it's their personality in a way that's crashing the truck here and, and, and getting ahead of them. It's not that they don't understand. Yes, intellectually, yes.

It's.

Yeah. And, and I think this pro delegation's a different thing. I think working through others, I, I had the, you know, you know, I sort of been listening to everything you've been saying and know I'm guilty as charged on some points here myself. I think delegation is something I learned because I had a corporate career before I became.

Yeah.

An entrepreneur and I had to learn how to do that part. That was the only way that you could succeed was to delegate. But I think if you're 20 years old and you're not had any experience with that and you're starting a business, it's problematic.

That's it. Yeah. And many of the people I coach are in their 20s and have never been a boss before, never had a boss before, have no idea what it means to be work in a company where you have a certain span of control and you're supposed to be delegating things to the other people and working through others. They've never seen it. They have no, they have no model. There's no pattern recognition.

Yeah, I mean I had to, I suppose when I was in my corporate accounting career in the 1990s, you know, I had to generate $2 million of revenue a year and work with 10 to 15 different people on any one day doing projects and ensure that what they brought back to me was right and we were, you know, providing compliant but complex tax advice. So, you know, I, I, I suppose that got learned for me, but I also, I also had that moment that I was considered too aggressive and forceful and demanding and putting people under time pressure, working all night, that type of stuff. And I got told one day, Hugh, you know, you're doing a great job technically, but if you don't modify how you manage people a bit, you're not going to get promoted.

Yes.

You know, to the next stage. Well, that, that, because I was ambitious and driven, achieving like you were talking about, that somewhat got me to change pretty quickly.

And it develops self awareness. And I mentioned the first three factors. Adaptability, working through others in systems and processes. The next factor is self awareness and a similar factor that's essentially emotional resilience. And startups are, well, founders are strong willed and they often don't recognize the impact that they're having on people. You got some feedback and that developed a level of self awareness. The successful founders have more self awareness than the unsuccessful. The unsuccessful do damage and don't even realize it. They create an intimidating environment where people are afraid without even knowing that or caring. Right.

Yeah.

So there's a level of personal grounding and self awareness that's required to learn from feedback that you get and modify your behavior. And the successful founders are more reflective, the unsuccessful are more reactive. The successful are more diplomatic because they're not being reactive and they have more awareness of their, of their weaknesses. An interesting one of the items on the personality test says I frequently reflect upon my past successes and failures. The successful founders strongly agree with that statement. The unsuccessful strongly disagree.

So yeah, interesting, isn't it?

Yeah, it is interesting. Um, the other thing is that startups are a killing field. They're super stressful. Um, my master's thesis was on meditation. My doctoral dissertation was on stress. And the emotional reactivity of the unsuccessful founders really reflects the fact that they're more insecure and they're more likely to be defending their ego and they get overwhelmed with what's happening and they're burned out and they don't deal with stress effectively. So on. We have a measure of resilience and stress management. The successful ones are more are higher on that than the unsuccessful.

When we did our research on, on on Founders now and I, I did 500 founders and I had to have started a business and got to a million, and then there was a trail of them going up past 10 million. Resilience was the number one trait that came out. And it got strong. That's trait got stronger the bigger the business got.

Yes, absolutely. Because the demands get greater and greater. Which is why, you know, after the IPO, something like 3/4 of the founders don't go beyond the 3 of the IPO or not very far beyond it. They can't scale it, even though they may say to me when I first meet with them, I'm going to be the exception to the rule. I'm going to do this. Well, that's their overconfidence speaking and their lack of understanding of their own limitations.

And it's probably ego as well, because they want to be seen as the leader of the business that's IPO'd. And you know, an interesting issue that I've seen recently from some other research and work we were doing, we've been doing rich, is that once the founder, though, gets sidelined completely in the business or out of the business, and that happens a lot with pe, investors will do that pretty quickly. And I think we can understand why it happens for all the reasons you've talked about, lack of structure, they don't know how to, you know, manage a business beyond 50 people, that type of thing. But the soul of the business can also go when the founder goes, is something that I've been seeing. But there are very few founders that can go all the way. Not to be like Marc Benioff, who, you know, from what I can see is.

Or fred Smith with FedEx, you know.

Yeah, yeah, he passed away recently, you know, and I think that's the, in a way, the struggle in here. We want the founders there, emotionally intelligent, being adaptable to be the soul of the business, to remember why the business existed, what made it great, you know, differentiating it, but they've got a lot of work to do on themselves.

And that, that's a key theme in the book, which is essentially what got you here won't get you there. And the only way to make the transition is you've got to grow as a person and as a leader. And it's not just as a leader, because some of these leader behaviors are based on deep rooted personality traits that if you're not aware of it will be an issue.

Yeah. And I think before I ask my next big question, something you mentioned before, I think it's important in here for founders to recognize is meditation. And there's lots of different ways to meditate depending on, I suppose, how you, how you define it. But I suppose I call it being a very reflective person myself having, having quiet time, moments during the day where I can be in a different environment and allow the information packets to come down and not just as you said, react is important because to get that clarity of what to do next is important to sort out. You know, given we are by nature a bit skeptical and lacking in trust, which you, you said before, we could box at the wrong shadow and be suspicious of a person unnecessarily and then that translate to how we communicate and relate to them or how we deal with this situation. I just think that the meditation part has got to be a really big part of the coaching. And it's something I hope that founders take away from this discussion today as something that's important, even though it's seen as very soft. But it's not.

Well, the research on meditation shows that creativity and IQ go up.

Yeah.

I've been meditating for 50, almost 58 years, twice a day. And what it gives me, it's interesting, the clarity and the focus that comes from it has been really important. So if I meditate in the morning, I have more clarity. That helps me think through what's the best and highest use of the next, of the day, of the next hour, of the next few moments. But the other thing is, if I think about the ideas that I've had that helped me grow a company and sell that company for a lot of money, those ideas mostly came to me. The seed of those ideas came to me in meditation.

Yeah.

Now what, what I, I say to founders is the problem is the ideas that made a difference for me were often the 14th iteration of a half assed idea.

Yep.

And, and so founders are creative, but the successful ones are more likely to benefit from the input they get. And iterating that Idea. Because, look, product market fits, never over. And you have to keep making adjustments. As you get feedback from the market and from investors and from your employees, you need to make adjustments. And that may mean an outright pivot or subtle adjustments, but you need to be able to hear that.

I think that what you've just said has been exactly true for me, that the ideas I've had, you know, whether it's in DNA, behavior, some of the products, iterations of it, have all come through the meditation process. I think the other part that's, that's always come for me is my connection to people. Even though I'm, I'm. I'm very reflective, introverted, and may not connect to as many people as the outgoing extroverts, I somehow know when to do it. And that comes from the meditation, because I get a positive thought about somebody and I know to call them up. And like, last week I did it three times and they said, yeah, we've been talking about you for the last week. And it's like, okay, so that, you know, that leads to, to action. And I think this is where people could do a lot more of it to, you know, for the idea generation, the people generation. But also for me, it's a stress reliever. And, you know, as you said, Rich, being an entrepreneur, a founder, is extremely stressful, and you've got to find ways to relieve it, particularly if you're going to be that all in bulldog that's going to persistently pursue the goal.

Yes, exactly. Exactly. It's. For me, my morning meditation gives me clarity that takes me through the day. My evening meditation is like wiping the whiteboard clean. And, you know, when you're in a startup, stuff is coming at you all day long. It's like you're in, you know, in the middle of the train station and the trains are going, coming at you from in all directions and you're making decisions and having to react all day long. And it's like the whiteboard gets completely filled with all kinds of garbage. And yeah, cleaning that whiteboard makes a big difference and it allows me to.

There's a lot. There's a. Yeah, it allows you to sleep, which is again, another important thing here, because you're not going to be very good as an entrepreneur. You're not going to have that clarity if you're not sleeping. And so again, while we want to, you know, be all in, you've got to, you've got to take care of yourself biologically on the, on the way through. You know, so, so you know, to me, it does come back to creating the space for meditation. But there's, there's something important here, I think rich in what you've unpacked in that. And I'll let you confirm it perhaps so that I, so I drill right into it. The most important trait out of the research that you've done, you know, since 1979 is the adaptability.

Yeah, yeah. It's Darwin at work.

And so founders have got to be prepared to adapt. And I think that if we got specific on that product market fit is a big issue, that we all can be invested in our product idea and that we're going to create a category killer product out the gate and we've got our way thought out of how it's going to get executed. But the market doesn't like it. Whether it's just, whether it's for the branding structure, price structure, complexities of use. There's a million, there's a million things there. Or like I found with some of what we've done, been 20 years ahead of time and just being fixated on that. There is, there is only one way when then you've actually got to make modifications.

Yes, yes, I completely agree with you that I think adaptability, which is really rooted in a willingness to learn and be open to input, you have to be willing to take it in and consider that you might not be right. And that might be either facts you don't know or an alternative that might, that you haven't considered. There's research done by a couple of people called Lavallo and Siboney written up in the Harvard Business Review. They actually wrote an article with Kahneman. The guy won the Nobel Prize for his research on decision making. And they, they found that they, they looked one, one of the two of them, I can't remember which one it was, worked for McKinsey and I guess they had a database of over 1,048 decisions where they actually had data on how the decision was made. And having. Having the facts is important, but the impact of running a disciplined process of decision making that surfaced alternatives and facts and not be dominated by the leader was six times more important than having the right facts. And it created a dramatic increase in return on investment. And these are decisions for major decisions like should we enter this new market and, or should we acquire this company? So if anybody's listening to this, Livalo and Siboney's research is pretty amazing and it's, it's worth a read. In 2011, they wrote an article with Kahneman in the Harvard Business Review. But their original research is other businesses.

Yeah, I think that, that, that, that's right. You know, I look at this as the authority bias of, of the founder or even just in a, you know, Fortune 500 company of, of the leader of a team. How strong is that and how they managed in the decision making process is really important because if they're the one always speaking first, everybody else is just going to fall in line. And, you know, how is information reviewed, as you said, you know, how do you get the facts out, or at least enough of them out to make a decision and allow people's own intuition to work and to see what's going to come out? You know, I've built a process in our company to do that and our team today are working on an independent of me, you know, for, you know, a branding tagline for a new product we're going to release next year. Because if I just sit there and dominate it, it could well be the wrong thing. I'll give them some ideas, but, you know, a boundary perhaps, but that's, but that's it. But I think the other part of this also is, you know, from this type of research, we all as entrepreneurs want to innovate and if we can learn to trust our teams and build the relationships within our teams, you know, the psychological safety. The research also shows that the innovation can be 11 times higher.

Yeah.

And, you know, and I think that's massive. And I think that's a sort of a part of the point that you're bringing out in here is to be a great founder. You may not be relational, but you've got to allow that part of the business to flourish.

Yes. It's really a challenge. Do you want to be right and win the argument or do you want to get to the right answer? And this is where ego makes a big difference. I would describe most of the unsuccessful founders as ego driven, as opposed to driven by principle of a good business decision or a set of values. We haven't talked about values because part of personal grounding is having a moral compass.

Yep.

And many, many more than half of the unsuccessful founders were basically either extreme narcissists or sociopaths. And that's why we start the book Founders Keepers with the first chapter is all about all the founders who got indicted.

Yeah.

It's a slippery slope once you start, you know, distorting the truth or exaggerating. And there's an interesting item that many of the most narcissistic unsuccessful founders endorse. On the personality test it says some people deserve to be taken advantage of and they often say yes to that. So it's basically people are pawns in service of my self interest.

Yeah, it's pretty ruthless, isn't it?

Yeah, it is ruthless. One of the other things we found is that the successful founders were more likely to be driven by broader meaning broader impact. Not necessarily always mission driven, but not just focused on financial results only. They were trying to do something. And many of the venture capitalists I work with and a lot of my business comes from that, say that when they ask somebody what they're trying to create and they say well we want to create a billion dollar company or we want an IPO within X number of years, that is immediately a screen out question. Because they don't have the resilience and the personal commitment beyond just the money.

They're not fighting for a cause. I think is probably. And you know, I think my entrepreneurial career started to flourish when somebody did ask me one day, Hugh, you know, what are you really passionate about? Because you don't seem happy with what you're doing. And I had a wealth management business at the time and I said I want to help people all over the world become financially self empowered. And that changed after some reflection, a six months or so reflection on that. And what was I going to do with that? Because I knew it was powerful. That came from my subconscious, that changed my whole path.

Yes, yes.

And I've never given up on that. I mean I've changed course a little bit on how I've been getting it done. Not a lot, but you know, I suppose there's forks in the road like we've talked about and you've got to adapt and that's what I talk to people about today. Rich is the same thing that try and define your goal around a human impact goal. If you want a billion dollar business, well, how do you impact a billion, A billion people? Surely you can make a dollar a person. Right. And you know, and sort of there it is. But I have also seen that a lot of stress comes from entrepreneurs trying to measure themselves against somebody else. Well, that person got from 0 to 10 million and got XC capital or series A and B capital at this stage and they're a unicorn and I'm not. And I think that's a big mental torment for a lot of founders and leads to a lot of bad mistakes.

Yeah, it does.

There is no right timing in my view, at least for success or. And I'm interested in your View to sort of help wrap this up a little bit is when should you start becoming a founder?

Well, it's more like when you discover that it's in your DNA to be a founder. I mean, when I was told I wasn't a properly deferential apprentice, he was right. I probably could have learned more from him. But my need for independence and my creativity, I bubbled with ideas. I always have and I still do and I'm onto the next book. But if you have this, a streak of independence and you have ideas that just need to come out of you.

Yeah.

And you have this bias for turning those ideas into something tangible, then you may be an entrepreneur. Right. I remember I got recruited to come back and get my PhD, the department. I didn't know they had a hidden agenda. They wanted me to teach a certain class and I got to be a lecturer, so I got to attend the faculty meetings, which is a real mixed blessing. And I remember when I decided that it wasn't for me, for the fourth month in a row, they discussed a particular problem and somebody said, well, didn't we discuss that and solve that problem for the last four months in a not very politically astute way? I said, well, we've talked about it for four months, but we haven't done anything about it. And if you have that need to take your idea and turn it into something, then you might be an entrepreneur.

Yeah. I think it's interesting for me, my mother always said to me, from when I was age 3 onwards, she could see that was in me, that I was going to go and, well, I should go and be an entrepreneur. But there was a little bit of. Also the traditional way of thinking, go to university, get a degree, do something that's a meal ticket for your life. So I did that. And all my friends were going into accountancy and law, so I went and did that too, and went into tax law. But it. So. And I started dabbling in deals, you know, on the side. And, and, and that started to take up time and when you're expected, then still work 12 and 14 hours a day. On the, on the, on the main thing, it's a clash, but I can remember a conversation with, with a senior person at. Where I was working and he. And, and because he said, you know, Hugh, if you're going to progress, which you will, this is what you got to do. And I thought, no, I'm doing that. And when started looking for jobs and yeah, I got offered a couple of jobs at investment banks and whatnot, but I Thought, you know what, no, these, these are not a fit either. And I just got to go out on the street and figure it out and I set up a wealth management business and then that went from one thing to the next to, you know, to where I'm at today. It's a different path. Perhaps I didn't have that visionary idea right at the moment, but I was always told, I always had that mindset that there would be something that's universally applicable that you are cotton onto and that you could make a change in and that's where it will be, you know, the, the journey. But I needed to be free. I think this sort of the reflection thing of a 14 hour a day job to find where I could go and make a difference and bang my head against the wall a few times as well.

Yes. You know, so well, that independent spirit was, it sounds like part of you and your mother probably recognized that.

Yeah.

And, and if, and if, if, if working in a big company and being told what to do feels like jail, then you might be an entrepreneur. Right.

And I was starting to get, I, I, I could see that I was going to get too creative for my own good with, with taxation, advice and planning and Yep, this is time to go and sort of it all came together. So as we wrap up Rich, you know, I think we sort of land the plane on. Adaptability is the number one trait for entrepreneurs. And you know, there's a lot of work you've got to do to be adaptables. A question I've had is I think the reflection point for entrepreneurs is do you do more work on yourself or on the business to succeed?

Yeah, I think you have to balance the work on yourself and the work on the business because the business needs to iterate and you need to iterate. You need to change and it needs to change. Your job is to lead change. All leadership is leading change. And that means both changing the business and helping people adapt because people are afraid of change. And a lot of the people who work for you are going to resist and you need to understand why they're resisting and help them get past that by painting a picture of what the promised land looks like. But you need to change yourself and that means you need to be teachable and you need to have this passion for learning and getting better. This desire to grow and learn is a real critical underpinning of success.

And be prepared to admit mistakes, certainly to yourself and I think to others. I think that there's a school of thought not to admit you were Wrong. But I think that being authentic as a leader, you do need to be able to do that. Whether it's in how you handled the person decision that you made, you've got to be able to do that.

And you're sending a message to the organization that people shouldn't let their ego drive and their need to be right drive their decisions. So you're modeling that when you're in a leadership role, everybody is always watching. There are no trivial acts. Everything you do makes a speech.

Yeah. There's no place to hide, I don't think, not internally or externally and certainly in today's world and with AI and technology media, that's all the more the case. So just as a concluding point, do you see AI, the proliferation of AI changing any of your research conclusions the way a leader needs to shape up and lead?

I use AI a lot in my research and what it's doing is it's fueling insights. I might sense that there's something there that guides me to want to explore something. And I can look at what the research has shown. It might have taken me a year in the library when I was going through graduate school and I can get it in 10 seconds. It also tells me that more and more the wisdom that comes out of the AI is really helping us define what best practices are. Because it's like having a Nobel prize winner in all fields available to me. And so I may have data that suggests something and I plug that in and it either agrees with it and expands or tells me I was off base and you know, I need to look over here. So for me it's, I'm like a kid in a candy store when I, when I get with either, I think

for the work that you do and I do, it's the greatest, it's the greatest liberator. And we can really put human, human behavior can be put on the map. But I also think that it plays into your point about adaptability that if a leader, whether, whether they're of a, you know, the founder led company or Fortune 500 company, can't be adaptable, you're going to be in big trouble because of AI. And I think it just reinforces it

well, that notion of that learning mindset. If you have a learning mindset, you see AI as an enabler of exciting things. If you're afraid of letting go of some idea or framework that you have that's going to prevent you from changing, if you're holding on to the way it was or the way you think it should be or the way you've always done it, then AI is going to be a threat, but you're also going to fail.

Yeah. So, Rich, just to conclude, please tell us about your new book. We've heard all about founders Keepers today and hope everybody that's listening to this goes and buys it. Because particularly if you're a founder or even just a leader of a company or working with a founder, in fact, it's going to really help you a lot. But your next book, which you can share with us now, is going to take this even further, I think.

Well, it's more about what goes on in the inner game of, of growth for a founder. From recognizing in the early stages that your idea of, of what this successful product was going to be was a hallucination.

Yeah.

And, and later on it may be that the company has outgrown you. And so it's, it's looking at all those points along the way, from, you know, the seed stage to the traction stage, to the fast growth stage, to the continuous growth stage that founders go through that really highlight the need for them to let go of something. So it's really what does the founder go through?

And they've got to let go of something in the business, you know, whether it's an idea, concept, product, but also let go probably, or something of themselves as well.

That's right. That's right.

While still celebrating their strengths, there's something that's got to be let go on the personal front, you know, within them to, to, to really flourish, I think.

And it may even be letting go of the job as CEO.

Yeah. But there's still other roles you can play and still be the soul of the business. I think that's the probably a big, a big point that, that we could do more work on. So, Rich, thank you so much for this great conversation. I know we could, could have gone on for, for a lot longer, but this is probably a good point to wrap up. So again, thank you.