Episode 118 – Founder Archetypes – The Creative Founder

May 15, 2024

Welcome to Episode 118, Founder Archetypes: the Creative Founder.

This is the second in a miniseries on founder archetypes, and this time I want to talk about the creative founder. Now, I was a little harsh, harsh, harsh on the finance founders in the last one, and that’s because, well, I know those big boys and girls can take it. I’ll be a little nicer with this one because quite honestly, the people are a little more sensitive. That should not surprise you and hopefully, this series is not pissing off too many of you. It’s meant really to be just an approachable toolkit of sort to boost your own self-awareness as a founder. And there really isn’t anyone out there on the internet podcast universe who’s really focused in on this. So that’s why I jumped all over because I think it’s really important. I mean, nobody enjoys the process of becoming more self-aware.

It’s painful. I went through it earlier in my career. Many tissues were used. I assure you that founders with heightened self-awareness, hire better, lead better, and they interact better with everyone in the industry.

Look, folks can smell the naive and unself-aware. How? Well these folks are the ones who often pretend that they’re a lot more competent and far, far too many disparate skill sets, or they simply act as if they intend to become such an omnicompetent, godlike person.

And to be honest, it makes other stakeholders nervous, especially investors because it’s not believable. There’s no such fucking person. It generates forced smiles at networking events and man, you do not want to generate forced smiles. Trust me, that is the networking kiss of death. It’s better honestly to generate rage than a forced smile. Nothing in this short mini miniseries is meant to criticize you or to get you to change your core orientation to the world.

If it happens to fit one of the archetypes that I’m describing, that would be a sad outcome to me, this is really about helping you understand the weaknesses that tend to accompany or strengths so that you can solve for those weaknesses with superb hiring and partnering or whatever it takes, training and coaching even. So I began this series talking about finance founders. I was a little harsh because these NBA dudes and dudets can handle it, and honestly, they need a lot more ice water thrown over them before they become self-aware. That’s my experience.

This time I want to talk about the creative founder and this archetype is honestly the most common in the premium end of consumer brand entrepreneurship. I mean, it’s the majority of the people that you meet at Expo West and Fancy Foods and all those whatever they are…events, shows.

What do I mean by creative? I’m talking about founders whose primary business orientation is to product innovation, not finance, not branding, not marketing, not sales. These are often category geeks who love making new items in their category. I mean, think of the chocolatier at Fancy Foods. These people love to make new stuff or folks who solve their own dietary health problem with their own DIY innovation.

Now, some of these creative founders are also professional health advocates who then turned into consumer brand founders. It was honestly more common 20 years ago than it is now, but they’re still out there.

Regardless of all these nuances, the creative founder is focused primarily on product and on their ability to generate innovation and on evangelizing that innovation to the entire world. And sometimes folks, evangelical thing gets a wee out of control. I’m just saying, yikes, yowza.

Creative founder has a set of weaknesses and blind spots unique to he or she, and I believe they need to be surfaced very quickly in the entrepreneurial journey. If you want to separate yourself from the pack and if that creative founder, if that’s you, wants to develop a focused fast-growing brand, you absolutely need to work on these weaknesses.

The first weakness is that the creative founder generally lacks business experience of any kind, not always, but it’s a problem and certainly almost always lacks experience in consumer packaged goods.

The second weakness is that the creative founder is an idealist at heart, nay, dare I say, a romantic. I’m not trying to knock idealists. I’m a reformed idealist myself, but the point is the creative founder is prone to dream. Aah, without alcohol involved, could be all day.

Now, this can be a strength, but generally leads to a lack of practicality that can literally kill a young consumer startup before it has even had a chance to attain minimal viable scale. Creative founder guy is often also not particularly well trained in finance, data analytics, or honestly, in my experience, anything related to quantitative whatever or math. Initially, this is going to produce problems primarily in putting together an accurate P&L. Woo. Later on, it can cause creative founder to avoid obtaining critical data with which to analyze the business and measure the health of early demand. I would go even farther and say that many creative founders have issues with finance and data, and especially data.

Did I mention data?

They personally have issues with those topics. It gives them the heebies jeebies. They prefer round corners and soft drop shadows to sales and Excel. The problem with all these blind spots folks, is that a creative founder person, awesome as they are, is operating in a very low net margin industry due to the various go-to market and promotional expenses that are required to grow anything in consumer packaged goods.

There is simply not a lot of margin for error, pun intended, especially in the early years. Shit, my own business has huge margin for error because it costs almost nothing to operate. Now, I’m not bragging, I’m just trying to point out that you have a very, very different business model than folks like myself. It is extremely brutal and that’s why I have so much admiration for those of you who are listening who are in it. It’s critical you accept the margin mechanics that you’re living. Critical.

If you get lost dreaming about missions in the next 17 UPCs you want to launch, you will get burned.

The first time that creative founder gets a distributor invoice payment for almost nothing due to MCBs, onboarding fees, distributor markup, they generally have a panic attack of varying links from hours to days. This is because as a creative person, they didn’t fucking see it coming at all. How the hell did this happen? They ask, who are these crooks? Finance founder guy, as much as I ragged on him or her last time, they asked a billion questions upfront and they saw most of it coming. Not all of it, but most of it, which is why finance founder guy, I suspect though I have not had the ability to put together the database to run the numbers. I suspect the finance founder guy makes it through the death funnel to 500 K in trailing gross sales primarily because of that instinct.

They have other problems like big problems. At least, that’s my anecdotal preset. This is why I basically beg creative founders to get training and P&L set up, accounting, go to market cost estimation markups before they ship their first fricking case. Plan on how much of your gross profits will get consumed and honestly plan for the worst case scenario, plan for Armageddon on your P&L then be surprised, pleasantly.

That’s a much better way to run a small business. Plan your production needs to exceed your revenue targets. I’ll say it again. Plan your production needs to exceed your revenue targets. Set a revenue target so you can be accountable to the cold, hard math of your business. You got to have a target or else how do you know how much more inventory to order?

Creative founders are very willing to take risks with innovative product. That’s why they have produced some amazing things in the last 25 years in consumer packaged goods. It’s honestly why they’re much more innovative than the average innovation team at a big company, which quite frankly is not allowed to do much that’s innovative. This is a cultural risk though. Primarily it’s the risk of being perceived as crazy by the wall American masses and even by a fair share of their friends in Maryland, right? So they’re ready to take that risk, but nobody should be taking foolish financial risks due to under-educated themselves when the information is more available to train yourself than ever. The cheapest antidote I know is to pay $200 to go to the Specialty Food Association Winter, Summer…don’t care…Fancy food show the day before. Take their basics class for 200 bucks. It’s all day. You don’t have to go to the show.

They do it twice a year. Like I said, it’s the smartest money you’ll ever spend and you’ll come away with a very well-grounded sense of all the issues around P&L pricing and the pricing waterfall from the shelf all the way to your gross profits and to your net profits, which is where most people get completely confused.

You even walk away with a physical manual. I have it in my office. I hope this helps. I really do hope this helps a bunch of you. Embrace your creative founder self, honor it, love it, but compensate for its weaknesses and make big strides to address them. So that’s all I’ve got this time. Be safe out there.