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The 7 Habits of Highly Effective Founders

24th August 2019

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Over the past 10 years we have worked closely with around 40 tech founders and advised many others. Whilst some have built and sold great businesses, most are still in the fight. A few decided to hang up their boots. Do particular character traits influence these different outcomes?

Stephen Covey’s bestselling book The 7 Habits of Highly Effective People – Powerful Lessons in Personal Change was named the No. 1 most influential business book of the 20th century and has sold over 15 million copies.

Published in 1999, 7 Habits was required reading in the US technology business I was part of at the time. It had a profound effect on how I thought about my approach to life in the business world. Even though the language may have changed over the past 20 years, many of its insights are still as relevant today as they were then. A great synopsis can be found here.

Using ‘7 Habits’ as a template and reflecting on those dozens of entrepreneur relationships, I have highlighted what I believe are the most critical character traits in effective founders today. Whilst entrepreneurs come in all shapes and sizes, across the full spectrum of personalities, these are the core attributes that in our experience influence the most positive outcomes.

Habit 1. Be Proactive


Proactive People Take Responsibility. Proactive People Take Initiative. Proactive People Focus on the Things They CAN Do Something About.

Effective founders:

Effective founders take responsibility for their own effectiveness. They have a high degree of self-awareness and have a clear grasp of their own strengths and weakness. They seek out those that will bolster their shortcomings and those that will test their perceptions.

You could say this was just about self-belief, but I think that would miss the point. The critical thing is that they understand themselves and take action to find knowledge, support and insights that will plug the gaps and allow them to overcome the challenges ahead. And they do so openly – they turn ‘weakness’ into strength. They know what they’re good at but they’re also not afraid to ask for help. As a result they become great talent spotters.

Outspoken entrepreneur Gary Vaynerchuk, CEO of VaynerMedia, writes about self-awareness and taking initiative in his uncompromising blog. In his down to earth style he says, “Figure yourself out”. This is the modern-day equivalent of ‘Be Proactive’.

Habit 2. Begin with the end in mind.


To begin with the end in mind means to start with a clear understanding of your destination. It means to know where you’re going so that you better understand where you are now and so that the steps you take are always in the right direction.”

Effective Founders:

It sounds incredibly obvious, but this mindset truly separates effective founders from those that seem to lose their way. I can give you 2 specific examples:

(i) Effective founders have a milestone plan that divides the journey from startup to scaleup into natural phases. Not against time per se, as no-one can determine the absolute amount of time it will take at the beginning, but a path that leads through a sequence of gates. These gates act as funding 'way points' that are aligned with meeting investment criteria (Seed, Series A, Series B..). For deeper insights into this approach to milestone planning see my recent blog post.

(ii) Effective founders also make the funding strategy part of the business strategy. They don't wait until they have 6 to 9 months of cash burn remaining before they suddenly realise they need to raise capital again. They get ahead of the game as soon as they have closed each round and identify the type of investors and the investment criteria likely to be tested at the next round - and bake these into their plans. They set clear goals around this and make sure the whole team is aligned from the off.

Habit 3. Put first things first.


“In the end it’s all about prioritizing your most important things and saying “no” to other, less important things.”

Effective Founders:

Our priorities are often shaped by how we have been conditioned to plan and react in the past. This can lead entrepreneurs to make the wrong calls, blissfully unaware that in the formative stages of building their business they might be veering right off course.

Here lies the biggest trap for founders that come from a corporate background where the Product Development Model has for decades defined the approach for bringing a new product to market. This process evolved in the manufacturing industries and evolved to technology businesses in the last quarter of the 20th century:

Product Development Model

It’s a good fit when launching a new product into an established and well-defined market where the basis of competition is understood, and its customers are known. But few startups fit these criteria and this model often leads to failure – yet it persists!

The proven alternative is the Customer Development Model, as summarised in my earlier blog and articulated powerfully in Steve Blank’s book ‘The Four Steps to the Epiphany’. Thousands of scientists, engineers and MBAs at Stanford’s engineering school and U.C. Berkeley’s Haas School of Business—plus those sponsored by the US National Science Foundation—have deployed, assessed and enhanced the Customer Development process. It has since been implemented by tens of thousands of entrepreneurs, engineers, and investors worldwide.

Founders that espouse this type of approach have a deeper intimacy with their early adopters, understand more deeply the Problem they are addressing and gain greater confidence that the Solution they are creating will create a solid Product/Market fit. This is what investors yearn for.

Habit 4. Think Win/Win


“Win/Win means that agreements or solutions are mutually beneficial and mutually satisfying. Win/Win sees life as a cooperative, not a competitive arena. Most people tend to think in terms of dichotomies: strong or weak, hardball or softball, win or lose. But that kind of thinking is fundamentally flawed. Win/Win is based on the paradigm that there is plenty for everybody, that one person’s success is not achieved at the expense or exclusion of the success of others.”

Effective Founders:

A key trait of effective founders is the ‘abundance mentality’. This translates into seeking new market opportunities that are huge and potentially untapped. In existing, competitive markets the cost of acquiring market share can be a killer.

The temptation is that in these well-defined markets the need is often very clear. However, displacing an incumbent that has a dominant market position can require up to 3x their marketing budget and if there are multiple existing players the factor could still be as high as 1.7x. Steve Blank digs into these factors in some detail in the Four Steps.

Effective founders seek to understand the real cost and time it will take to displace a competitor. They know this must align with the strategic value being sought from establishing such a beachhead and they must have the strategy and means to pull this off. Otherwise a smarter way must be found to deploy that precious investor cash before it's too late.

Habit 5. Seek First to Understand, Then to Be Understood.


“Most people do not listen with the intent to understand; they listen with the intent to reply. They’re either speaking or preparing to speak.”

Effective Founders:

Effective founders know what questions they need answers to and are also great listeners. They appreciate that in the formative stages of company creation they are on a voyage of discovery.

They are leading an experiment to dispassionately prove or disprove their business model hypothesis. This is the mechanism for delivering their Vision for the business. The vision is built out of an instinctive belief that they have identified an incredible opportunity and now they must test their idea.

The first step is customer discovery; What is the problem/pain? Who is experiencing this pain? Can I create a solution? Then the customer validation phase; Is my customer interested in the solution and will they pay money for it? How?

Early adopter intimacy is a high priority for effective founders, even before they have their minimum viable product ready. Then with the MVP they want to see first-hand how it is used, what works/what doesn't work. They want to hear the feedback with their own ears, with no interpretation by others. They spend a good deal of their time out of the office in the early stages, seeking to understand.

As a result, effective founders may modify the business model hypothesis, but they NEVER let go of the vision - once they do that, it's time to draw the line.

Habit 6. Synergise.


“The word SYNERGY comes from the Greek word for working together and it’s based on Aristotle’s theory that the whole is greater than the sum of its parts…. Synergy is everywhere in nature. If you put two pieces of wood together, they will hold much more than the total of the weight held by each separately….. One plus one equals three or more.”

Effective Founders:

Effective founders are artists at leverage – using small budgets to really punch above their weight. Gearing up an ecosystem of partners, advisers, press, suppliers, and supporters generally at large, all enthralled by the vision and thrilled to promote and be associated with the brand.

This is power networking, a drumbeat of communication and connection building way beyond the payroll that eventually reaches investors. Then the calls start coming in and they want to know more about your plans. Can we meet for coffee? When are you next looking to raise?

Habit 7. Sharpen the saw.


“Habit 7 is about taking time to ‘sharpen the saw’. It’s about self-improvement. It’s about continuous learning and growing. It’s about preserving and enhancing the greatest asset you have – YOU!”

Effective founders:

Being a founder can be super stressful and unrelenting. The highs will hopefully come, but this is a marathon we have embarked on and we must be fit for the race – physically, spiritually, mentally and emotionally.

Over the years I’ve worked with founders that found inner peace and calmness through all manner of ways: from religion to sport, from music to sailing, from their families to their pets. Everyone needs their thing where there is some other avenue for reflection and self-development.

I’m not going to prescribe answers here but just say one thing that I see as universally true. Find time for YOU.

If you do nothing else just know when to take a ‘time out’. I mean alone.

Go for a walk, breathe, sit, read, take stock. Find that place where you can regularly clear the mind. A place where you don't take your phone (sorry).

And most importantly, make it part of your routine.

Good luck.

About the author: John Hall is CEO and co-founder of Duet Partners. His 30-year tech career began with major US semiconductor and software companies, and was based in the Valley during the late '90's. Before Duet he was CEO of a VC-backed consumer electronics company, sold in 2009 following several rounds of capital raising. In the past 10 years since starting Duet he has advised dozens of founders on the startup to scaleup journey and is a retained Board advisor to a number of UK technology companies.

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