Are You a Start-Up, Scale-Up, or Empire Leader?

In this episode of “How to Sell More,” host Mark Drager examines the differences between start-up, scale-up, and empire entrepreneurs and how discovering your place within the spectrum can empower you to make more informed strategic choices and enhance your capacity for growth and success.

• Start-up leaders love the freedom to innovate and explore new ideas. They enjoy building a product from the ground up, continually adapting and changing to make it the best. 
• Scale-up are for those that enjoy taking an existing concept and scaling it for profitability. They understand how to put systems and processes in place so the company can run without any kind of dramatic oversight.
• Empire leaders focus on large-scale management and investment, leveraging their businesses as assets.

"Know what type of leader you are and lean into it so you can become the person you need to become." -- Mark Drager

Links to This Episode

• Apple Podcast
• Spotify
• YouTube
• Audible

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Key Takeaways

• Understanding Your Entrepreneurial Identity - Recognizing whether you're a start-up, scale-up, or empire entrepreneur is crucial for strategic decision-making. 
• Adaptability and Growth Mindset - Success at one stage of entrepreneurship doesn't guarantee success at the next; each stage requires different skills and mindsets.
• Strategic Focus and Role Clarity - Clarity about your role in the business lifecycle helps in focusing efforts where they are most effective.

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Top 3 Reasons to Listen

Knowledge is power: Understanding and embracing your core strengths as a leader can lead to more effective business strategies and overall success.

Don’t get too comfortable: Personal growth and adaptability are essential, as entrepreneurial roles and responsibilities evolve as a business grows.

What served you in the past will not serve you in the future: Transitioning from one entrepreneurial phase to another involves learning new strategies and unlearning some past practices.

More About our Host, Mark Drager

AKA the Badass Brand Architect, 5th Generation Entrepreneur, Host of The How To Sell More Podcast

When he's not podcasting, Mark's the Co-Founder & CEO of SalesLoop. He's a dedicated husband to his high school sweetheart, Jacqueline, and a proud father of four.

Mark didn't follow the typical route to becoming a sales & marketing expert. A connected figure in the entrepreneur community, Mark provides listeners with a unique mix of wit, insight, and straightforward advice.

Some of Mark's unconventional adventures include commandeering a Boeing 737-800 for a day, facing harsh criticism from a billionaire, and shedding 70 lbs in his late 30s. Though he never attended college, Mark stands as proof of the might of maintaining a student mindset and being ever-ready to seek assistance.

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A Transcription of The Talk

Mark Drager: Welcome to How to Sell More. Today, we are talking about the differences between a start-up, a scale-up, and an Empire business leader. I'm Mark Drager; let's get into it.

So, maybe you are like me. Over the years, and I'd say the decades that we've been in business, we've noticed that some people are just cut out for the role they're in like they are made for that role. Others can't seem to make anything happen, despite having all the tools and resources and seeming like they should be great for the role. But for whatever reason, nothing happens. There's no growth, no progress, they can't get things done. Have you ever noticed that? Because I have. And this is something that especially afflicts those of us who are entrepreneurs. If you are an entrepreneur, a co-founder, heck, even if you're a lead, a VP, SVP, or EVP, if you're a lead of a department, this can even happen to us. But I want to share with you a framework that actually kind of blew my mind when I came across it a few years ago. It was something I was introduced to by my good buddy, Nick Bradley. We had Nick on the podcast early on, when we launched. If you haven't heard the episode where he and I talk about scaling up, he's really a scale-up and exit expert. He comes from a huge M&A background. He's done a lot of work in that space. He has this great podcast called Scale Up that I was introduced to a few years ago. We've actually helped him rebrand and reposition and a few things like that. But in one of his early episodes, he shared this framework about the difference between a start-up, a scale-up, and the entrepreneurs who run them. This provided so much clarity to me, both in terms of the type of leader that I have found myself to be and also with the owner-operated, medium-sized organizations or the owner-operated organizations that I've worked with in the past as clients. So, I want to share this with you. Because I think that once you're aware of this, it will completely transform the way you look at yourself as an entrepreneur or business leader, and also help you prepare for your next level.

There's a great book out there, 'What Got You Here Won't Get You There' by Marshall Goldsmith, something I read a number of years ago, and it's a fantastic book. If you're not aware of it, it basically just says, "Hey, whatever skill, whatever personality traits, whatever it is that you've done to get to where you are today has served you well; it got you to this level. But those skill sets, those personality traits, the things that have gotten you to where you are today, they will not be the resources or tools that get you to the next level. They will not help you break through to the next level. What served you in the past will not serve you in the future. And if you hold on to it too much. If you think, 'Well, my gut or this is who I am, or I don't want to change or this got me as far as I am. Why would I change horses midstream?' Is that a thing? Mid-race, midstream? Why would I change horses now? Well, what got you here won't get you there." So, let me share with you these three steps of the framework that blew my mind. Okay. So, start-up, scale-up, Empire seems pretty self-explanatory, doesn't it? Well, you know what, there are start-up leaders, start-up entrepreneurs, and this is an entrepreneur, this is an intrapreneur. This works in the corporate space, this works anywhere. You may be the type of person like me, who loves creating v1 of something, or even before that, just dreaming of what it could be. But if all we spent our time doing was dreaming, we would never get anywhere.

So, maybe you're like me, and you love creating version one of something. You love the excitement of reverse engineering things, figuring them out, creating something, testing it in the market, making continuous improvements, trying and trying, swarming and scrambling, and making it happen for people. This often allows you to move extremely quickly, be really agile and lean, and have amazing margins. This is a start-up. This is the start-up of a product launch, a company, and a new division. This is the start-up of anything that you do. We have an idea. How do we make it a reality? How do we test it in the market? How do we move really quickly and break things? How do we make things better? How do we learn and grow? And start-up is something that, frankly, most leaders are not capable of operating in. But if you are an entrepreneur like me or a business leader who has been able to take something from year one to year five and establish it to a place where you can start to get, let's say, predictable lead sources, predictable closes, predictable delivery, you can start to really create versions one, two, three of something, where you can start to, as I say, nail it and scale it. The first step of that is to nail it. If that's you, then you may find yourself being a start-up entrepreneur. The reason I say many people can't actually operate in this space is, that I've noticed that when you give people the possibility of anything, when you say we can do anything, they are often frozen by the fear of making a mistake, not knowing what the right move to make is, or what the most strategic or efficient move to make is. And when you're a start-up person, you don't care about that. Like, you know that running in any direction is the right direction. Because if you start running in any direction, you will quickly learn what's wrong, and then you can fix it. It's the greatest thing in the world, I think. But then, I have found myself being, for most of my life, a start-up kind of entrepreneur.

Now, what's the next step? Well, the next step to that is the idea of being a scale-up entrepreneur. And don't get me wrong, there is no right or wrong with this. Wherever you find yourself on the spectrum, there's no right or wrong. What is right is knowing what you are leaning into it, and then becoming the person you need to become. And what's wrong is ignoring this and thinking you can do anything, because I've seen a lot of people waste a lot of time and money being in the wrong role. So the second step is being a scale-up entrepreneur. This is an entrepreneur who's capable of taking that initial 'nail it', and then they scale it, right? They know the marketing, and the lead sources, and have predictable lead sources. Now, how do we move this to the next level? They know that they have some initial systems, SOPs, or tools. Now, how do we get more people to do this? They know that they can move out and maybe bring in some outside funding, or they can position the organization for sale in the future, or they can build it to a space where they can actually work themselves out of the business. They can move from being hands-on to being CEO, from CEO to being on the board, from being on the board to being the chair. This is a scale-up entrepreneur. This is something I've really struggled with. Because when I started my agency in 2006, it took me seven years to hit a million in revenue. I was 23 when I started; I did not know anything. So it may have taken you less time. But it took me seven years to hit a million in revenue. And then we were kind of stuck there for a few years. I think we spent four or five years just at a million dollars in revenue. And we were able to grow; I made some changes in 2016, and we were able to grow well past that. But by the time COVID hit, you know, a little over 2 million in revenue, 24 people on my team, it was a mess. I didn't have the operations, the systems, the bureaucracy, everything.

All of that stuff felt like it would slow us down too much. And I was not interested in moving slowly; I was interested in moving quickly. But you know, being a start-up guy, moving quickly helps you when it's small, and you need to move quickly. But when people are counting on you, when people are counting on one another, when certain steps have to happen in certain orders by certain timelines to make the entire machine work, you better move yourself into a scale-up mindset. That includes more operations, more SOPs, more team members, tighter finance, tighter controls over expenses, and an understanding of how long everything takes. Maybe, in our case, project-level profitability or being able to run your different classes on your books, so you understand your profit centers and how to eke more out of them. I was at an event the other day where I heard someone who had taken their business, started in 2008, over 15 years, and built a home services company in the garage door industry. They installed garage doors and were able to build this into a $250 million business, providing $53 million in EBITA.

And they had mentioned during their presentation that when they got outside funding, the funding was important. He was still able to control the business and operate the way he wanted. But what they brought in was a level of sophistication on the accounting side that he had never had before. They looked at every truck they had on the road and questioned the right routes and whether they could save money on fuel. They looked at each call and determined that each call would take 23 minutes of time and if there was a better way they could go about it. They looked at all these different aspects of the business and, without sacrificing employee culture or experience, without sacrificing customer experience, and without lowering the quality of anything they did, they were able to find 7% savings of net profit on the bottom line. When you're running an organization with over $50 million profit, 7% is significant. Now, this would not be possible if you were like me, scrambling to run your organization all the time, because you just love putting out fires. I mean, we don't. There's this really great quote, and I think it might be attributed to Dan Sullivan over at Strategic Coach, that says, "Are you really good at putting out fires, or are you just an arsonist?" Because some of us have ADHD or are entrepreneurial and start-up people, we love the excitement of having to put out fires. And sometimes we're the ones running around starting them. But this gentleman, who's built this amazing organization over the last 15 years, scaled it up, gotten into mergers and acquisitions, started acquiring new companies, got outside funding, and they've been able to find 7% on this $50 million. That is very much a scale-up mindset.

You need more leadership, maybe EOS or some kind of operating system, the right people, the right systems, and the right processes, you need to measure all the data. If you don't have these things, you can't scale up a company. And the challenge is, people throw the word 'scale' around a lot; they mix up scaling with growth. First, you need to create version one of something and get it to a place where it's predictable. Predictable outcomes are what we're looking for. And then you're looking for growth, to grow that, but that is very different from scaling. Scaling is when you put systems and processes in place, so the machine as a whole can run without really any kind of dramatic oversight. That's when you're going to add funding, you're going to put fuel, you're gonna open up the tap, you're gonna throw gasoline on the fire, you're gonna really blow things up. That's the scaling stage. Now, you may find yourself being a scale-up entrepreneur. And that would be amazing. You might not find yourself being very successful in the start-up phase, but maybe you're gonna acquire another company, maybe you're gonna step into another company, maybe you're gonna partner with an existing company or someone like me, who's very comfortable as a start-up entrepreneur, and you're gonna come in and bring in your systems and your tools. Maybe it's as the president of the organization to come in and help us scale. A great way to think about this, is Nick Bradley, my friend who I've picked this up from, says, "You know, think about when you were young. And if you played Lego, if you were a boy, like me, or whatever it is you might have done. But when I played Lego, he said that he liked to follow the instructions, he liked to follow the instructions to the tee, and build Lego the way the instructions said. I'm going to be honest with you, I followed the instructions, and I did it. But I had way more fun when I was just making my own shit up.

I like to just get a pile of Legos and just make my own stuff up. That was how I approached it. And that's how I approach business. The third type of entrepreneur is an empire entrepreneur. This is when you're, you know, 100 million plus in revenue. This is when you've moved to the chair seat. This is when you are operating maybe a family office or family practice. And frankly, you're moving much more into an investor role. Your businesses are assets, you need to leverage them as assets, and you move much more into finance, investor, or really this empire role. It is a totally different way to think and operate. I have a friend, who I've come to realize is not a start-up entrepreneur, and is not the Empire entrepreneur that they hope to be. I believe they're a scale-up guy. They were able to take someone else's business, a metal manufacturing business, and scale it extremely quickly. But when it came time to move from the first business, and they have a group of companies now, from the first business to the second, they just bolted on a new service: from metal manufacturing to wood millwork, from millwork to plastic, and so on. And each time they bolted on part of their business, in this scale-up type of mindset, it worked very well. But along the way, they were also given opportunities. Over the last 15 years, they've built up a very large and very successful business. So they have a budget, they have money, and people approach them with opportunities. Each of these outside opportunities, none of them have really ever gone anywhere. They'll buy an organization, it'll have a few good years, and then revenue declines. Or they might partner with another organization to launch a new product, they both pour money into R&D, develop the product, develop the brand, and take it to market, but it never goes anywhere.

Why might this be the case? If this framework of the start-up, scale-up, Empire entrepreneur is correct, then my friend is not really a start-up person. I don't think they're resourcing these new companies with the start-up leaders they need. And as a scale-up type of entrepreneur, I don't think they're focusing enough of their own time and energy on these extra businesses within their ecosystem. I don't believe that they're approaching it in the empire mindset, where they've acquired these companies or launched these new companies in the way that an empire entrepreneur would treat this as an asset or an investment. So everything's kind of just sitting in the middle, this group of companies where the main company is wildly successful, and they've been able to bolt on all kinds of new companies or new services for that main company because they're scaling it up. But they haven't moved to an empire position. So their other companies are failing. They're not a startup entrepreneur, so their other companies are failing. They're just left with these companies that aren't really doing anything.

Now, if you're like me, and you quickly identify what type of business leader, entrepreneur, or CEO you are, you're at ease. But we should also remember, as my good friend, Dr. Benjamin Hardy, the author of many books, including one of my favorites, "Your Personality Isn't Permanent," says, your personality isn't permanent. If you are a start-up entrepreneur, you can become a scale-up entrepreneur, you can work your way to an empire entrepreneur, you can work your way to any way you want to be. If you're a scale-up person, you can take on start-up traits. Now, it's not easy. Personality shifting and identity shifting are very challenging. But it doesn't mean that you're stuck there. So I think the real win for us is just to first identify which type of business leader or entrepreneur you are, figure out the playgrounds where you can make the most moves and do the best, go into those spaces, and make shit happen.

But then, if you find yourself looking off at these other roles, these other places, these other things, remember, what got you here won't get you there; your personality isn't permanent. So, you have a decision to make. Should you run much faster and much further in your comfort zone, the things that you do really well? Nothing wrong with that. Or should you take some time to try and grow into this new experience, this new level, and operate at a different level? It's not going to be easy, but there's nothing wrong with that either. I think what's wrong is if you don't take the time to figure this out, do nothing, and then scratch your head and wonder why nothing's working.

And with that, we will wrap up this episode of How to Sell More. If you want to get in touch with me, head over to LinkedIn. You can find my profile; my name is Mark Drager. Drop me a DM. Let me know what you think of this talk. I would love to connect with you. And as always, I'm Mark Drager, and I will catch you in the next episode.

Resources & Go Deeper

"Scaling up from startup to business empire"

This article discusses key strategies for entrepreneurs to scale their businesses. It covers growth strategies such as market penetration, product development, diversification, mergers and acquisitions, and strategic partnerships.

Scaling up from startup to business empire | Doodle

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"Decoding B2B vs. B2C Sales: Unveiling Strategies, Techniques, and Market Dynamics"

The article differentiates between B2B and B2C sales, outlining the processes and strategies involved in each. It explains that B2B companies usually sell products and services to other businesses to solve problems, while B2C businesses sell directly to consumers.

Decoding B2B vs. B2C Sales: Unveiling Strategies, Techniques, and Market Dynamics (amasty.com)

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"How to Adapt Your Leadership Style Depending on Your Business Goals"

This article discusses the Situational Leadership model, which allows leaders to adapt their style to the unique needs of different situations. It outlines four leadership styles: Telling/Directing, Selling/Coaching,

How to Adapt Your Leadership Style Depending on Your Business Goals (uschamber.com)