"The founder of one of our portfolio companies created a company with approximately $200 million in revenue purely on instinct. The founder had spent a large amount of time around the products and relationships with customers, so that he could literally go out onto the production floor and identify the machine that would be broken down in a week, and he would reject a price recommendation from his financial staff because "it didn't feel right!""
"He has experienced each and every area of the business, and all of this collective experience produces a type of judgment that is faster and more accurate than any committee or group. It is not that the founder's instinct stops providing valuable insight. It is that it does not grow. Research by McKinsey states that 78% of companies that have successfully found product-market fit ultimately fail to grow their companies."
A founder built about $200 million in revenue by relying on deep product knowledge, customer relationships, and instinct, making fast, accurate judgments such as predicting machine failures and overriding financial recommendations. After acquiring another company and nearly doubling the business, the founder's instinct began to hinder operations, slowing decision-making over six months and preventing senior managers from acting. Founder instinct remains valuable but does not scale with organizational growth. Research shows a high proportion of companies that find product-market fit later fail to grow. Companies need formal decision frameworks, defined decision rights, and empowered leadership to make effective decisions without the founder.
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