What makes a good founder?

PayMongo CEO Francis Plaza

It was two in the morning in Manila. I was on a Zoom call with my fellow founder-CEOs during a Y Combinator workshop for companies that recently raised their Series As. Broken out into smaller groups, we were tasked with completing a certain number of things. One of the prompts said, “Show us something you have made recently.” Though it was simple, a minute into the session, we were staring at each other—through our screens—thinking deeply about what exactly have we accomplished that week.

It is easy to get caught up with the idea that we’ve done so much. (And, no doubt, I am sure that we have.) But that prompt itself sounded beyond merely asking what we may have accomplished that week. Instead, it seemed more like the questions which I often find myself asking: Am I doing any good in my job? Did I earn my role as a CEO? Am I a good founder? And if so, how would I know? How do we measure what makes a good foun­der? What most startup founders find themselves grappling with, especially during the earliest stages of their companies, is that reasonable level of doubt as to whether they are on the right track to success. It is made more complicated by the fact that that report card almost always never comes.

Founders do not have a syllabus in which we can allocate specific points based on how we do in the company. There are, of course, business metrics that we can use as signals. But which ones? Do we look at revenue? Growth rate? Net revenue rate? And, if so, what do those say about our performance as a founder? Also, those metrics change a lot. The company can choose to focus on different underlying metrics at varying stages of the business.

‘Rock star’ founders

When you search on Google for “what makes a good startup founder,” you will get these listicles often enumerating qualities of what they consider to be “rock star” founders. These articles will tell you about traits like passion, communication and vision. But almost none of these resources comes close to telling you how we can measure success for a founder, what makes one great and how we can know if one’s doing well.

Probably the most common way that startups, and in turn, their founders, are measured are valuation that venture capitalists and investors put on companies.

Intuitively, if we use this as our unit of measure, do startups that raise at higher valuations have better founders? Or, are those that raise more often do their job better? What about those that raise no funding at all because their companies are so strong on their own? This way of evaluating startups hits close to home. PayMongo has raised historic seed and Series A rounds in record time for the Philippine market.

To an extent (and kudos to our team), we’ve built a strong reputation and clout early in the company. Does this validate how well we’re doing as founders? Maybe or maybe not: it’s mostly too early to tell. And yet, it’s easy to think that perhaps we’ve already made it. We’re still a long way from building a success story. History will judge how successful we’ve made PayMongo.

Acknowledging that every day is day one is very important, especially for hot early-stage startups. Doing so sets the culture and tone of how hungry your company will be in driving more innovations. No company succeeds by being too comfortable at the top.

Flawed measure

Another severely flawed measuring stick that people use to evaluate founder success is the amount of publicity they get.

Some founders tend to spend more time doing public relations (PR) that you’d think they do publicity better than actually running their companies. It’s no surprise. Being a founder of a startup is extremely hard. The validation one gets after a ton of PR can feel like a void is getting filled. But it doesn’t last, and it certainly does not solve any inherent problems in the company. A lot of companies earn a ton of hype, yet a lot of them fail.

It does not mean that companies shouldn’t do any publicity at all. Startups must deliver their messages consistently and tell their story to the public, but they also have to find the balance. Overdoing publicity, and most especially thinking of it as a measure of success, is deeply misguided.

Many in the startup community found the tragic demise of Tony Hsieh, founder and CEO of Zappos that eventually sold to Amazon, shocking and untimely. An inspiring figure who touched the lives of many, he built a culture at Zappos that continues to serve as guiding principles on how companies are run, including ours at PayMongo.

A few days after his death, Forbes came out with an article painting a different picture of Tony and revealing the dark side of his life and his mental health struggles. While it doesn’t change him as this excellent example of a founder, it did give us a glimpse of the side of startup founders we may often never see in public.

Earlier this month, Salesforce announced that it signed a definitive agreement to acquire Slack for almost $28 billion. Stewart Butterfield, Slack founder and CEO, is someone you would consider a success story of Silicon Valley. I look up to Stewart, and he’s a great inspiration on how to lead a company through extreme pivots.

This sale is by no means a small amount to brush over and certainly a big win for him. But many skeptics argued that maybe it was a signal that Stewart couldn’t succeed running a much bigger business.

Big picture

These stories remind us that we can never see the entire picture when it comes to startup founders, not even those we come to know as inspirations. It is hard to understand how well a founder is doing, more so if you are evaluating yourself. But if we can’t use traditionally accepted ways to assess a founder effectively, then how should we do it? Or should we even bother at all? I am convinced that there is no consistent rubric that we can use to judge the leadership of a startup. But it is still important to acknowledge and celebrate those who are making a dent in society through their companies.

The founder in me hopes that even without a measuring stick, we continue to remain optimistic. After all, knowing that there is no consistent way to evaluate a founder is a reassuring reminder that no one starts as great. And in the absence of a report card, you can write your own chapter of a startup success story.

On the question of what we’ve made recently, my fellow YC founders and I—though it took a while to respond—eventually settled for making a good cup of coffee. —CONTRIBUTED INQ

The author is CEO  of PayMongo Philippines