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development, performance management, and culture management. It also involves
a change in mentality from a “loosey-goosey” entrepreneur doing this in an ad hoc
free spirited way to someone capable of being a true leader and developing
processes and systems.

Based upon more than 40 years of experience in working with entrepreneurs, my
best estimate is that of the 100% of entrepreneurs who are successful in stage 1
(not counting those who fail before stage 1), only 50% will be successful in stage
2, and only 50% of those will be successful in stage 3. The net of this is that no
more than 25% will be able to meet the challenges of stage 3 successfully! So the
odds of failure by stage 3 are 3 to 131.

What can we do the change the odds?

Many venture capitalists view The CEO of a new entrepreneurship like stage 1 of
the rocket—they are “disposable after launch”! They replace the CEO with a
seasoned manager!

Alternately, the CEO can be coached to understand the new role, skills and
psychological mid-set required of a leader of a growing enterprise. Travis Kalanick,
CEO of Uber, is a classic case. I have had the privilege of coaching many successful
entrepreneurs, including Howard Schultz of Starbucks, Brian Maxwell of PowerBar,
Herb Simon of Simon Properties, Yerkin Tatashev of The Kusto Group, and many
others. Those who are open to coaching will benefit from it greatly.

Assess and Strengthen the Organization

What can be done to strengthen the organization? A key first step is to do a
“comprehensive organizational assessment.” This is much more than just a review
of financial statements. It involves an assessments of the entire organization
including its business foundation (business definition, strategic mission, and core
strategy) as well as the key strategic building blocks that we have determine
account for long term organizational and financial success. A discussion of this is

31 For a discussion of the classic 7 key stages of growth, see Eric Flamholtz and Yvonne Randle,
Growing Pains: Building Sustainably Successful Organizations, Wiley, 2016.

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