The ROI of 90%: A Founder's Guide to Letting Go

Matt Schaubroeck on Founder Mistakes, Scaling Strategy, and Team Alignment

How do leaders truly learn? According to Matt Schaubroeck, founder of Leverage Point Consulting, it comes from the mistakes made along the way. Schaubroeck speaks from deep experience, having co-founded, led as CEO, and successfully exited his first company, IO Airflow, in 2022. His journey provides a candid look at the challenges faced by first-time founders and the strategies required to build scalable, impactful businesses.

Leverage Point Consulting was born from Schaubroeck's desire to help other founders avoid the common, often painful, mistakes he encountered. His transition from politics and communications, through an MBA program where the entrepreneurial spark ignited, to leading a tech company through a pandemic pivot and acquisition, offers a rich perspective on translating vision into operational reality.

Key Insights from the Conversation

1. The Founder's Journey: From Idea to Impact Schaubroeck's path wasn't linear. IO Airflow started with a vision to reduce energy consumption in buildings, leveraging IoT and data analysis. The pandemic forced a pivot towards indoor air quality, demonstrating the need for entrepreneurial agility. This experience underscored a core truth: while founders often feel they are blazing new trails, 60-80% of their challenges are common to most entrepreneurs. Recognizing this shared experience can demystify the journey and encourage seeking effective solutions rather than "bludgeoning" through obstacles.

2. Bridging the Vision-Execution Gap Many visionary founders excel at big ideas but struggle with the day-to-day operations—hiring, culture, cash flow management. This disconnect can cause brilliant visions to falter. Conversely, strong operations without a clear "North Star" lead to stagnation.

• SMART Goals as a Roadmap: Translating an aspirational vision (e.g., 5-year strategy) into actionable steps requires quantifiable goals. SMART (Specific, Measurable, Achievable, Relevant, Time-bound) goals provide this roadmap.

• Cash Flow as the Starting Point: For founders intimidated by metrics, Schaubroeck recommends focusing on cash flow projections—hitting revenue targets and managing expenses—as an accessible entry point for founders unfamiliar with metric-driven management. Cash flow tells the story of the vision and how it will be achieved numerically.

• Regular, Honest Reporting: Consistent measurement and honest assessment (often starting simply with Excel) are crucial. Avoiding the temptation to "fudge" numbers allows leaders to identify what's working, make necessary small pivots, and prevent minor issues from becoming major crises. Discipline and ownership of reporting are more critical than the specific tool used.

3. The Critical Importance of Delegation One of the biggest mistakes Schaubroeck admits to making as a first-time founder was micromanaging and resisting delegation, believing he could do everything best himself. Effective delegation is crucial for scale:

• It's a Trust Exercise: Letting go allows others to rise to their potential and builds a team effort, moving the business beyond dependence on the founder.

• Enables Founder Focus & Well-being: It frees the founder from burnout and creates the possibility of taking vacations, knowing the business can run without them.

• Unlocks Team Growth: Delegating provides opportunities for team members to learn, succeed, and advance their careers, which is essential for retention in scaling companies.

4. Building Culture and Identifying the Right People Finding and developing the right team involves trial and error. Key considerations include:

• Capacity vs. Worldview: Decide whether to hire junior talent (requiring significant training time) or more senior/fractional experts (requiring careful alignment of worldview and expectations).

• Testing Fit: Using short-term engagements (like co-op students, often subsidized) can be a low-risk way to test the founder's ability to communicate vision and onboard effectively before making significant hires.

• Honest Conversations about Motivation: Understanding what team members want to achieve personally and professionally is crucial for creating win-win relationships. Supporting their goals, even if it means they eventually leave, builds trust and a positive culture.

5. Aligning the Team: The Power of "Why" Team alignment starts with clearly communicating the company's mission and vision (the "Why"). When everyone understands the broader goal, their daily tasks gain purpose, creating cohesion.

• Transparency Builds Trust: Schaubroeck shared being upfront with his team about cash flow constraints and potential layoffs. While stressful, this honesty ensured everyone understood the challenges and goals, fostering a collaborative approach even during difficult decisions like layoffs. He learned the hard way that avoiding transparency or outsourcing difficult conversations (like layoffs) can severely damage morale and trust.

• Consistent Communication: Founders focused externally (investors, customers) can easily neglect internal communication, leading to misalignment. Regular updates and ensuring the team understands the "why" behind decisions are vital.

6. Resource Prioritization: Identifying the Real Constraint When resources feel stretched thin, simply adding resources ("throwing money" or "throwing bodies") without understanding the root cause can worsen the problem.

• Diagnose Before Prescribing: Use metrics, especially cash flow statements, to identify where performance is plateauing or costs are rising unexpectedly. This helps pinpoint the actual bottleneck.

• Calculate Opportunity Cost: Frame resource needs in terms of missed opportunities. If a barrier prevents capturing $5,000/month in new revenue, the $60,000 annual opportunity cost likely justifies allocating budget to solve that specific problem.

7. Fundraising: Prioritize Sales Traction Schaubroeck advises founders, particularly in conservative investment markets like Manitoba, to prioritize achieving sales traction before aggressively pursuing equity investment. Paying customers are the best validation. Strong traction provides leverage for better valuations and terms when fundraising does occur. Raising multiple rounds requires careful consideration of dilution and finding investor partners who add value beyond capital and align with the founder's long-term vision—viewing investment as a "marriage."

8. Staying Motivated: Disconnect and Find Perspective To manage the stress of entrepreneurship, Schaubroeck emphasizes activities that use different parts of the brain: running, skiing, playing the cello, and reading non-business books help him unwind and maintain perspective.