Nathan Hanks makes you want to be an entrepreneur after you spend 15 minutes with him. He has co-founded three impressive startups over the past two decades (ReachLocal, Music Audience Exchange, BrightAI) and has advised/invested in dozens more (iD Tech, SmartThings, Quartet Health).
Our conversation with him is the first one in a new series we are calling “ProFounders”. In this series, we will ask our founders what they wished they knew when they started their first companies. Our hope is that we can share nuggets of wisdom from our repeat founders that demystifies the secrets behind their success, along with their hard-earned lessons from some of their mistakes.
Nathan, among other operators in our portfolio, is someone who has been studying the craft of entrepreneurship over many years and companies. Building a company feels like a constant struggle, with tons of conflict and never-ending problems to solve. Speaking with Nathan was an awesome reminder that this is a marathon, not a sprint.
Treat your first team as if you are going to start a dozen companies together over decades.
Entrepreneurship is the ultimate long game. He didn’t realize this at the beginning of ReachLocal, but the core team he hired has gone on to work with him on many projects together. At this point, Nathan has over 150 people that have either crossed over from personal relationships to colleagues or have worked with him across multiple companies.
For instance, Steven Fulbright is someone who Nathan knew as a client going all the way back to his younger days as a recruiter in the late 90s. He then joined ReachLocal as an SVP, and is now the President of Music Audience Exchange.
“Founders need to understand that as teams win with you, they will want to continue to work together with you.” says Nathan. A team that has gone to battle together will operate much more efficiently the next time around. They’ll race through the early stages of forming a team and start performing immediately. This also reduces turnover greatly because you ultimately know what you are getting into from both sides of the table. This also applies to investors and board members. Imagine how much easier it is to say yes to Nathan once you’ve had success together.
A repeating pattern that Nathan continues to emphasize is that this is a long-journey, and your reputation as a founder will follow you for many years to come. This is a compounding superpower, doing right by your team grows their trust in you as a leader, and they will attract more talent to join the journey.
The board isn’t simply a reporting body, it is made up of peers who are there to help you win as the CEO.
Nathan truly believes that a board serves the company as a group of peers who can help the CEO strategically navigate the critical decisions as you build your company.
Nathan reflected, “In my early days, I viewed the board as the ones who have been to the top of the mountain, and that I reported to them. In reality, the best boards are more like partners to the CEO who are there to help realize the vision.” He believes that strong boards need other experienced operators who understand what it takes to deliver results.
Nathan seeks mentorship from board members – leaders who will push his thinking to make better decisions. This wasn’t obvious in his early days, but the composition of the board is as important as the composition of your leadership team. If not cultivated properly, it can cause massive strain to the company to deal with board-level conflict between management and shareholders.
If there is one thing Nathan wishes he stopped doing sooner, is the desire to make everybody happy. Conflict is inevitable, and it is important to realize that your job as the CEO is to ultimately be loyal to the company and the mission vs. a single stakeholder, no matter who that individual is.
Picking the right problem to solve is just as important as picking the right team.
Starting with a solution looking for a problem to solve is one of Nathan’s biggest pet peeves now. It’s obvious in hindsight, but picking the right problem to attack is a huge variable in determining success. A good team can waste away making a decent business attacking the wrong problem.
While a great team can build a successful business out of virtually anything, it is so much easier when you pick a problem with the right timing. He looks for this especially in companies he invests in. Picking the right problem means focus – it means that the founding team will be obsessively working to serve the overall mission instead of pivoting to the next shiny market.
In conclusion, be the founder you’d draft as a first round pick.
Entrepreneurship is a skill. While talent gets you started, it is constant learning and evolving as a founder that keeps you winning over many years. Nathan kept emphasizing this point, this is a skill you can master over years as long as you treat it as such. Our hope with Profounders is to learn from the best.
Nathan is still as energetic as a wunderkind who is starting his first company, albeit a lot more patient and a lot wiser. We are proud partners to Music Audience Exchange and can’t wait to see what’s down the road as they continue to serve artists and brands.
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