In this clarifying episode, Scott Ritzheimer, Founder of Scale Architects, shares why asking the right question about your current stage matters more than chasing the next one. If you’re unsure which level you’re in, feel stuck pursuing the wrong growth, or worry you’re building something you won’t want to lead, you won’t want to miss it.
You will discover:
– How to decide whether to optimize your current level or evolve to the next one
– Why knowing your exact Founder’s Evolution stage prevents wasting effort on the wrong next level
– What each stage truly requires so you can thrive where you are or prepare for transition
Episode Transcript
Scott Ritzheimer
Hello, hello, and welcome. Welcome once again to the Start, Scale, and Succeed podcast, the only podcast that grows with you through all seven levels of your journey as a founder. I’m your host, Scott Retheimer, and today I want to talk about one of the most important lessons that I’ve learned, and that is, in particular, the value of asking the right question, you see, we waste an enormous amount of time as founders, as leaders, even as entire organizations, trying so hard to find the right answers to what is ultimately the wrong question, and arguably the most glaring example of that is the most common question that I’m asked, particularly by coaches that I meet for the first time, and this is, of course, outside of how old are you, because I still look like I’m 22 but that’s that’s another thing for another time. By the way, if you’re not watching this on video, we’ve got video options, not just on YouTube anymore, but also probably in your favorite podcast player. You can choose the video option in Spotify. You can also choose the video option here in Apple Podcasts, or one of the first podcasts to release this option in Apple as well. So, check it out if you’re in your player, there’s a little video option in both Spotify and Apple Podcasts.
Some of your other favorite shows might be that way as well. It’s a cool experience, and, and one that I think you’ll enjoy. So, back to this really bad question, this fundamentally flawed question. Are you ready? Okay. So, the question is, how do I get to the next level, and we ask this in a lot of different ways. We’re actually going to address several of them over the course of this series. This is the first in a what will be a seven part series. We’ll talk about that in a moment, but how do I get to the next level? Now you’re probably wondering, like, what, like, why is that such a bad question, and, and a big part of the reason why is that it usually means, especially when it’s asked in those words, it usually means that the founder doesn’t actually know what the next level is, and, and more importantly, and almost certainly they don’t know if that next level is right for them, you see. This matters because founders find answers. It’s just what we do. We will find an answer where everyone has given up, like 17 years ago. There’s a stubbornness, a determination, a cleverness, a resilience, a just recalcitrance in founders that forces us to find the answer, and that’s why it’s so deeply important for you to ask the right question, because otherwise you’re going to find the right answer, or at least an answer, hopefully the right one, but it’s whether it’s right or not, it doesn’t matter, because it’s an answer to the wrong problem.
And then, what do we do? We then go and build an organization, and I can’t tell you how many times I see this happen. We build an organization that we don’t actually want to lead. We end up doing something, either as an organization or in our individual job within that organization that we don’t actually want to do, and truth be told, the honest truth of it is you probably won’t make any more money doing it, and that’s such a big driver, especially culturally, is like I’ve got a blank because why, because that’ll make me more successful. What does that mean? Because I’ll be making more money, and while it might be true, especially within the context of the founders’ evolution, that that you might be able to generate more revenue in a later stage, it’s not even close to true that that more revenue, more of that revenue will make it to you. In fact, I think you can not only enjoy the right level more, but if you optimize for the right level for you, most of the time that’s also the same level in which you’ll make the most money yourself, and we’ll unpack that a little bit as we go throughout the series, but, but that is what this series is about. We’re gonna do a full solo series, just you and me, it would be a lot of fun. And the series is going to be called Should You Really.
Scott Ritzheimer
We’re going to talk about how you can figure out whether or not the next level is right for you now. Before that, some of you might be new, some of you might have been around for a little while, but there are there are two questions that we have to answer before we can actually get to that. Is the next level right for you? And the first of those questions is one that we’ve addressed a couple of different times. And that is what level are you currently in, so we’re gonna, we’re gonna lay just a little bit more context there, at least you need to know to get caught up, and that’s going to be a real helpful precursor to the following episodes in the series. The second question is pretty easy once you’ve answered the first one, so once we’ve answered the question, what level are you currently in, then the then the the next level is it’s kind of one of three options, the next level is either the next in progression up the chart, if you will, so from level three to level four, for example, that could be the next level, the next level could actually just be a better version of this level. It could be that you really genuinely learned to thrive in this level, and we’re going to talk about that decision. How do you know if the next level is actually stepping forward to the next level, or how do you know if the quote unquote next level for you isn’t actually the next level at all? It’s just an optimization of the level that you’re currently in, learning to embrace it, learning to thrive in it.
How do you know if that’s right for you? And again, we’re going to address this throughout the series. Now, there is a third option, we’re not going to talk about it in this series, but the third option might be, it’s kind of like I think about this every time I fly, I’m headed to see a client, or even better yet, headed home, and, and sitting on the plane, and they go through their whole exit spiel, and what do they say? They say the closest exit might be behind you, and that’s true in, in the founders’ evolution as well. Sometimes the right level is actually in your rearview mirror, sometimes we just breeze right through it, never recognize how good it really is until we’ve lost it. So, there is an option to go back again. We’re not going to address that in this series, but that’s a very valid option. And even the idea that it is back sounds negative, but it’s not. Better way of thinking about it, we just talked about this a couple episodes ago, is returning home right. Going home is not any worse than going to visit my client for the on the outbound journey. It’s just two parts of the same journey, and so going home isn’t a bad thing.
Going back isn’t a bad thing, but neither here nor there. In this episode, what I want to do is just, just do a quick run through of these different levels, because we do need to know what the levels are. That’s the easiest way to find out which one you’re in. We’re going to then go through and address each level one at a time for the remaining six episodes in the series. And yes, there are seven episodes, seven levels, and there’s only six episodes. How does that work? We’re actually going to talk about the transition point between each of the levels, so in the next episode we’re going to talk about how to navigate the transition point between levels one and two, and then the next episode after that between levels two and three. So there are six transition points in the journey, there’s no transition point out of level seven, except the way that we’ll all leave this earth, but that’s that’s another thing for another time. So, let’s go to this first question, What level are you currently in now? For those of you who’ve been with us for a little while, Les and I talked about this at length, believe it was back in episodes 303 101 I’ll check that afterwards, and whatever episode it was, I’ll get it in the show notes for you, so you can go directly to there.
Scott Ritzheimer
So, if anything about this episode is interesting, or you want to know more, we spent a lot more time on it back in, in a couple episodes in the past, so we’ll link those. You can go back to them, and and you’re welcome to do so, that’s all in the show notes. We also, for those of you who are new, or those of you who don’t know what level you’re currently in, there’s kind of an easy button on this. We have a quiz at Founders quiz.com that will tell you exactly what level you’re in. That link is in the show notes, as well, you can grab that. So, in either case, if you leave this episode and you have some kind of a question still about what level you’re in, there’s two easy answers there. You can go back and listen to a little bit more, that’d be cool, or you can jump into Founders quiz.com and just take the assessment, they’ll tell you, and it’s like 10 or 11 questions, it’s just really easy, all right. So all that out of the way. Here’s, here’s what I think is the easiest way, in 510, minutes, that you can tell what founders level you’re in. So I’m going to walk through these levels one at a time, and and here are the questions we want to think about.
So, level one, are you in level one? The first question we want to ask is, have you started your own business or nonprofit and gone full time, like it’s your primary occupation? If not, then you’re in level one. That, like, the vast majority of the population relative to the founders’ evolution is in level one. This is the employee stay. Just also the pre-founder stage, but particularly when it comes to the founders’ evolution level one is for founders different than everybody else, and and in the book that’s coming out, we’ll talk about that in a little bit, but there is, we spent a lot of time talking about this because there are a lot of people who just have bad jobs or don’t like their work, but for pre-founders and kind of frustrated employees in general, there’s this sense of being what I call a dissatisfied employee and what really like is the genesis of the difference between a pre-founder and just someone who’s frustrated with their job is that the pre-founder isn’t really thinking like, how do I make more money, although that matters, they’re not necessarily even thinking how do I get more freedom, even though that matters too, that’s not quite as much of a differentiating factor as it used to be. They aren’t thinking, how do I get rid of my boss, although that’s probably a factor as well.
What I see in, in those who are set up to be successful founders, right, who might be jumping into this journey the right way is they’re asking the question, isn’t there a better way? Isn’t there a better way, a better product, a better service, a better way of treating our employees, a better way of managing a team? That one not so much, but you’ll find out that it’s necessary in a little bit, but I we’re so level one is someone who’s thinking about that better way, and they’re wondering, Should I start my own business? Should I start my own nonprofit to pursue that? Should I go full time? That’s level one, and if that’s you, and you’re asking that question, and you haven’t fully answered it yet, or you’re just starting to ask it. Then the next episode in this series can be fantastic, because we’re going to talk about whether or not you should start your own organization. It’s amazing. So that’s level one. If you haven’t gone full time yet, that’s kind of the transition point. Level two, if you have started your own organization already, then you’re going to be somewhere else on the founders evolution. You’re gonna be somewhere between two and seven. So, how do we start to flesh that out? What’s level two look like specifically? Well, in level two, it might be just you as a solopreneur, it might be you and like up to a handful of employees, I know that’s very technical amount, but it’s different for different folks.
Scott Ritzheimer
Contractors fit into that equation as well, but you basically have a small, small team, might be just you and a couple of helpers, and you’re probably riding the entrepreneurial roller coaster pretty hardcore as, as a level two, what I call startup entrepreneur, and how you know you’re in this stage again, you’ve, you’ve gone full time, that’s a prerequisite, you don’t have more than a handful of employees, because that’s going to push you into a later level, but you’re probably sitting there asking yourself, what was I thinking, like why in the world before I made the leap, I thought the only thing I could ever possibly do, and the only way I could ever possibly succeed, was to start my own organization. And now that I’ve done it, I think that’s the stupidest thing I’ve ever done in my life, and I don’t know what I’m going to do now. That’s kind of how it feels now. It might not be true, it might be true. There’s lots of folks who shouldn’t have started their own organization, hence the next episode in this series. But the idea here is we’re in it, and it’s like three times as hard, takes three times as long, costs three times as much as we ever could have imagined. And that startup entrepreneur phase is pretty tough, but that’s level two. Level two is largely about you as an entrepreneur, and you might have a handful of folks around you that are just kind of there to help you, some assistance, maybe a tech or two, depends on what you do and what the work looks like, but that’s level two, relatively small scale. It’s not a, it’s not an amount of time. That’s an easy misconception.
You might be in level two your entire time as a full-time entrepreneur, as a full-time founder. For me, in my role, I’ve actually chosen to stay in level two. I’m intentionally resisting, at least for now, the pool into level three, so there’s no time limit on how long you’re in level two. You can stay there for as long as you want. That’s actually true with all of these levels. There it commonly takes at least a few years, though, so very few people move. Faster than that, it is possible you can have venture backing and get a couple early wins, need a bigger team, and zoom through level two into level three. That does happen from time to time, and that’s what we’re going to talk about now. So, level two startup entrepreneur, what was I thinking? Riding the roller coaster, you and maybe a handful of helpers level three, so to be in level three, you must have been in level two, which means that all of the requisites of level two, like namely you’ve gone full time, need to be true for level three as well, and in addition to that, you have to have hired more than a handful of employees, so what is this handful I’ve been talking about? It’s very technical term, I know, but it’s somewhere between five and 15, and it varies based on a whole bunch of circumstances, but here’s what’s the same across all those circumstances, somewhere along the way between bouts of pulling out your hair, usually you find yourself asking what is wrong with these people, like what is wrong with these people, because in level three you, this is where you experience all the joys said facetiously of being a reluctant manager. Welcome to the game.
Super exciting, reluctant manager, but that’s what level three is like. I joke about this often, but it’s just true. Like, I’ve never met a founder who launched their organization, did all the work of getting to and through level two with the hope and ambition of being able to lead a small team of people like that, that’s just I’m sure one exists somewhere, probably named Jeff, you know, and he probably did a great job. Well done, Jeff, but that’s just not the way that most of us are cut out, the internal wiring requirement that’s necessary to get from one to two is almost the opposite of what it takes to thrive from two to three, and we’re left with this question, What is wrong with these people? And that actually might be the right question for some of your folks. It’s almost certainly the right question.
Scott Ritzheimer
You’ve probably hired some of the wrong people, but whether you hired the wrong people or whether it’s just a you problem, either case, it’s a you problem. You need to, at this stage, learn what the right people are, so that you can hire them, and you need to learn how to manage those people, because they need to be managed in a way that you do not want to be managed, and to some extent you might not even be able to imagine wanting to be managed, but they’re, they’re different than you, they should be different than you, otherwise they’d be competing with you, and that’s not what we want, we want a team that’s working with us, and they need to be managed differently than us, so that’s level three, you’re asking, you’ve got a handful of people, you’re full time, and you’re thinking, what’s wrong with these people? They’re just driving you crazy, they’re driving you crazy. That brings us to level four. Now, level four again, it’s going to build on all the rest. So, we’ve gone full time, we’ve got more than a handful of people, we’ve actually got more than a handful of a handful of people, and to be in level four, you’re likely going to be somewhere between 15 and 45 people. Now that’s a pretty big range, given that the first range was like one to five, the second range was five to 15.
We get to a pretty big range here, 15 to 45 people, and a lot of things change in an organization during that window, and that’s not a literal window either. Some folks might not get there until 25 some might stay in it until they’re 7580 I’ve seen in level four. The these are just kind of guidelines, but it’s a, it’s a rough way of getting a sense for for where you might be, but basically, why that 15 to 45 matters is because what’s going on is that you’re trying now to lead through other leaders, that that’s that’s a different game, and you’re realizing at the same time, because of how challenging that is, and because of a lot of stuff that comes with scaling and growth, that that the whole growing and scaling thing is not anywhere near as great as you thought, and what’s so difficult about this stage, and it’s genuinely where my heart goes out the most, is level four folks, I enjoy working with them the most, because I feel the pain that they’re going through. For many folks, three is a really tough stage, but four is the worst out of all of them. Sorry, level, and here’s, here’s why, because so much about level four is so good, like, by, by most men. Measures that we would use to determine success. You’re more successful than ever. You probably have higher revenue than ever.
You have greater brand recognition than ever. You’re being celebrated externally more than ever. Your group of peers all envy you more than ever. Your folks have magazine articles written about them at this level. You might even be more profitable, at least in terms of dollar amount, than you have ever at parts of this stage. However, the disillusioned leader levels is level four that we’re talking about, that profitability tends to decline pretty rapidly somewhere in this this level and what’s going on there is a there’s a certain amount of illusion meant that that is necessary to approach and survive the earlier levels of this process, just honestly, if you’re going to go from level one to level two, you got about an 80% chance of failing at that. That’s pretty high, which means that you have to be somewhat illusioned to think that you’re the guy or the girl who’s going to be in the 20% right, like 80% don’t start that journey thinking that they’re gonna fail. 100% of us believe that we’re going to succeed, when in fact 100% of us would probably be better off believing that we won’t succeed, because that’s far more likely.
Scott Ritzheimer
Eight to two, and so there’s a, there’s an illusionment that happens there, there’s an illusionment that happens in level three, where we think, well, if I can just get to this point, this frustration stuff’s gonna go away, if I can reach my first $10 million or if I can make my first million dollar profit, or if we can open our eighth location, or if I can just have a better COO, or or something, there’s some milestone that we think’s gonna fix this thing, because while we’ll brag about how everything’s working inside, we kind of feel like it’s fundamentally broken, and and this is that that level four, and what happens here is we get those things and they don’t work. We do what we used to do and things get worse, and what happens is we start to lose those illusions, which sounds like a good thing, but it doesn’t feel like a good thing. Like when your hopes and dreams feel like they’re being ripped from your soul, that’s not a pleasant experience. And what it leads us to is this question, like, is this it?
Is this as far as it goes? And if you feel that way, you’re far from alone. In my experience, for founders, this is the hardest level, but it doesn’t have to stop here, because the next level is level five, and this is what I call the chief executive level, and here’s the difference between level four and level five, outside of just how they feel. In level five, you finally have at least, and usually more than one true executive on your team. And for folks who’ve never had an executive on your team, it’s really difficult to articulate what that feels like, but every client I’ve seen go through this transition of having a bunch of leaders, a bunch of helpers to a bunch of leaders to getting that first like true bona fide like executive caliber leader on their team, it is night and day, it’s night and day, and it allows you to lead an enterprise larger than you ever could in level four, you’re not limited to 4555 75 employees, team members. There’s there’s not really a cap.
There’s some pretty freaking big organizations out there that are led by level five founders, and what’s really wonderful about this level as a founder is that not the weight of every decision is not on your shoulders anymore, and in fact you, your job really in a positive way shrinks to something like the three to five most important decisions that need to be made in a year, your job focus refocuses not on how do we solve the fires of this year to how do we set ourselves up for success next year and the following year, and the the the change, the dramatic change of the busyness and frenetic energy of level four gives way to a quiet office more often than you’d think, which leads to this really strange but deep question of Who am I. That’s the big question in level five. If I’m not necessary for every part of my organization to thrive, if it can continue to succeed without me having to drag it there. Like, what does that mean about who I am, and that’s a big question we have to wrestle with in level five. All right, I gotta move these a little faster. Level six, eventually the time comes where you don’t need to step back, that’s not the right language really at all for this transition. It’s time to step out. It’s time to step out of leading and hand the reins to another, and I’m going to be clear on this visionary with a fresh vision for a greater future for the organization. If you want to get to the richest experience in level six, that’s how we’re going to do it. It’s not the only way, but it is by far the best way. And at this level, you get to experience owning and not running.
Scott Ritzheimer
You might also sell the business and take on a different style of ownership, like ownership in other assets that are not your business, but basically this is the owner level, and in the owner level, when we’re not operating, we’re not leading, you thought you had time in level five, you’ve got time in level six, and it leads founders to ask the question, like, well, now what do I do, and, and so that’s the owner levels, where we’re investing, we’re managing a portfolio, basically, but we’re not doing all of the work ourselves anymore, or even leading the people that do, and then finally there’s level seven. It’s a visionary founder level, where you have all the financial and time freedom, so that you don’t need to work anymore. In fact, in level seven, we don’t even need an ROI, an ROI anymore. Instead, level seven, we are as close as possible to wholly invested in our legacy, because what we’re really doing in level seven is answering the question, what do I want to leave behind, and you’re doing that with a level of asset and richness that allows you to like make a really significant impact, so chew on those for a little bit. Hopefully, you’ve been able to narrow it down to just one, and and it is just one. You’re only in one level at a time, at least one level per enterprise that you lead as a founder, and and a couple things, you can’t skip a level, so again, what that means is we’ve killed two birds with one stone.
If you know what level you’re in, then that means you know what level’s next. And so the option really comes down to, do I continue to learn to thrive in my current level, or is it time for me to evolve to the next one? And that’s the question that we’re going to answer in this series, we’ve, we’ve spent another episode on, on this topic in particular, so for the sake of time, and to not over teach it, one of the big things we’re going to come back to a lot is just in general, how do you think about which level you want, and the answer is not the biggest one, right? Most of the time, when we see there’s seven levels, well, then obviously I want the seventh level, and that’s going to be true for something less than 1% of the population, both because it’s really hard to do, but also because it’s just not right for most folks, and so in episode 363 which is going to be in the show notes, there’s a whole episode on what I believe is the North Star for this decision for you, and that is what is your vision for the organization, so you want to build the organization to this, the lowest or earliest level that you can, while still meeting your vision for the organization, and, and so we’re going to talk about what that looks like in practical terms at each of these transition points. Let me end with this sneak peek at what’s coming, and how to use this series, because one of the challenges of podcasting in general, but being true to the model, is that really, if we do this right, only one of the remaining episodes in this series is going to matter for you. Now, you might gain something from all of them, you might have a lot of fun listening to them. We’d love to have you there. Send me messages about how much you love them. It makes me feel warm inside. I’m just kidding. But really, what you want to do is keep an eye out for the one episode in the series that’s coming up that applies to the transition point that you’re at. So, if you’re in level one, you’re going to pay attention to the next episode, episode two in the series, where we talk about whether or not you should really start your own organization, or if you can make life a lot easier by doing it through an existing one. If you are looking at getting into level three, right, so you’re in level two, thinking about level three, then episode three is for you.
Scott Ritzheimer
Where we’re going to talk about whether you should hire and manage a whole team or if you can shift to higher leverage work and keep it simple. Then we’re going to go level three, and for those that are thinking about level four, we’re going to look at should you hire other managers or can you actually get the impact that you want with a small and mighty team of 10 to 15 people that you can easily lead on your own with just a few skills from a management perspective. The following episode, episode five in the series, is going to be on the transition from level four to level five, and so if you’re in level four, you’re really going to be asking the question, Should you scale, or even more specifically, should you scale your staff, because that’s where most of the complexity tends to come from, or can you lead an organization that really is just the right size to serve your market well, and and that’s the real question between levels four and level five.
Levels four and five. Level five, we will ask. This can be the sixth episode in the series, because we’re talking about whether or not you should go to level six right now, and that is, should you really step down and let someone else carry the vision, so you can chase something bigger. Do you know what you’re going to, or is the one organization that you’re already leading enough for you to thrive now, or for the next 345 years, at least. And then the final episode in the series, we’re going to talk about the transition from level six to level seven, and we’re going to say we’re going to answer the question, Should you really push, push past ownership, right? This thing that you’ve worked so hard to create, this wealth that you’ve created. Should we push beyond that being the milestone for you and start working on building a legacy that shapes the world you leave behind, or can you just fulfill that vision through the companies that you own? Because there’s no problem with staying in level six if you don’t need to get to level seven, so stay tuned. We’re going to be going through these. I, you know, to be honest, don’t know what the release cycle is going to be. We might stagger them, we might put them all in order. I don’t entirely know yet, but it’ll probably be about one a week.
And, and for those episodes that don’t apply to you, obviously, again, you’re welcome to listen to them, but what would be super helpful would be if you know someone who you think might be in that level, share it with them, like especially if you go back and listen to them, like, man, I wish I had this five years ago, 10 years ago, 30 years ago. Then give it to someone else who’s there now, it could change their life forever. Most of you know, podcast changed my life, and I hope that this, this can for you and, and your friend as well. With that, I know this episode went longer than usual, and I promise I’m gonna try and keep the rest of these as short as possible. But all that’s because you know your time and attention mean the world to us. I hope in this episode you got a little more clarity than you had before, and I can’t wait to see you next time. Take care.
Hey everyone, Scott Ritzheimer here. Thank you so much for listening to the Start Scale and Succeed Podcast. I hope this episode gave you exactly what you need for the level you’re in right now, if you want to discover what level you’re in, take our 10 question founders evolution quiz for free at foundersquiz.com. That’s foundersquiz.com It’ll pinpoint exactly where you are and give you tailored tips to move forward and reach that next level in your journey as a founder. If you got something out of today’s episode, don’t forget to subscribe, rate, or review. It helps us reach more founders like you. And let’s be honest, it means a ton to me, my team, and all our incredible guests. So, keep starting, scaling, and succeeding, and I’ll see you in the next episode.
Contact Scott Ritzheimer
Scott Ritzheimer helped start nearly 20,000 new businesses and nonprofits and with his business partner started led their multimillion-dollar business through an exceptional and extended growth phase (over 10 years of double-digit growth) all before he turned 35. He founded Scale Architects to help founders and CEOs identify and implement the one essential strategy they need right now to get them on the fast track to Predictable Success.
Want to learn more about Scott Ritzheimer’s work at Scale Architects? Check out his website at https://www.scalearchitects.com/
Connect with Scott through his LinkedIn at https://www.linkedin.com/in/scottritzheimer/