Aug 06, 2025
The road to scale is one of the toughest transitions any founder can face. It’s easy to get caught up in the initial excitement of building a business and driving early revenue growth, but once you hit that $5M or $10M mark, you’re no longer just running a business; you’re managing a rapidly expanding organization that demands different skills, decisions, and strategies.
I recently spent some time reflecting on this shift, and it’s clear that while many founders excel in the early stages, the skills that got them to $5M ARR may be insufficient to carry them to $25M, $50M, or beyond. So, what does it take to successfully navigate this transition, and what should founders be aware of as they scale?
The Founder's Dilemma
The classic scenario I often see is founders who still wear all the hats—chief marketing officer, chief technology officer, and chief everything else. This model may work up until $5M in revenue, but when you start reaching higher levels, the cracks start to show. The foundational skill set that got you here needs to evolve, especially when you're moving into the realm of managing a larger team and executing at scale.
At Edison, we love backing founders who can scale, but this requires more than passion and grit. As you scale, you’ll need to surround yourself with top-tier talent who can help you manage the complexity of a larger operation. This is where your first challenge lies: are you ready to bring in people who are better than you in critical functions?
The Evolving Role of the CEO
When you’re a founder, your job is to be the visionary, the driver of the culture, and the person making all the decisions. But once your business starts reaching new revenue milestones, you need to ask yourself: Is it time to hire leaders who have seen scale before? At Edison, we focus on backing founders who have the potential to keep leading at the next stage, but we know that sometimes, a transition is needed. A CEO who can take the company from $5M to $10M may not be the same person who can take it from $50M to $200M. That doesn’t mean you’re not capable—it just means the skills required at this next stage are different.
The key to successful scaling is being honest with yourself about the capabilities of your leadership team. Can you manage a larger team and execute a more complex growth strategy? If you’re not sure, it might be time to reconsider your team and, potentially, your role.
The Founder's Mindset: Passion Meets Commercial Reality
As you enter into negotiations with a private equity (PE) firm or consider taking on a partner, you have to shift your mindset from passion-driven to commercially driven. PE firms are not in the business of keeping the status quo—they are looking for businesses that can sustain growth, build scalability, and maximize value. This requires a mindset focused on measurable, rational decisions.
For example, one of the most common questions I hear from founders is, "If I sell control of my business, will you bring customers?" The answer is simple: that’s not how the process works. At Edison, we focus on bringing in the right talent to help your business scale, including ensuring you have the right leadership in place. PE firms don’t walk around with a roster of customers waiting to buy your product, but we do help you navigate the complexities of scaling—such as optimizing pricing, improving sales processes, and developing better systems.
How PE Firms Help Founders Scale
It’s also crucial to understand that PE firms are not there to take over your business or replace you as CEO, but to partner with you. This partnership is a shared journey, one that involves both financial and strategic support. The reality is, scaling requires a commercial approach to decision-making, including everything from sales and marketing to pricing strategy.
At Edison, we’re looking for founders who are willing to embrace this shift. It’s about being rational in your decision-making, particularly when it comes to running the business. If you’re faced with a situation where a PE firm suggests a price increase or altering your approach to customer acquisition, it’s important to consider the long-term commercial benefits. Holding onto beliefs or "mission-driven" ideals without a rational, market-driven approach can be a red flag for PE firms.
Are You Ready for Scale?
At the end of the day, scaling is not about what you’ve done; it’s about what you can do next. You need to ask yourself the tough questions: Do I have the right people in place? Am I ready to evolve as a leader? Can I make decisions that will drive sustainable, profitable growth?
When you start considering a deal with a PE firm, think about what you truly want for the next stage of your business. Do you want to maximize your payout, or are you focused on growing the business to even greater heights? The answers to these questions will guide not only your decision to work with a PE firm but also your ability to navigate the challenging and rewarding road ahead.
So, as you look ahead to your business’s next phase, remember: what got you here won’t necessarily get you there. But with the right mindset, the right team, and the right support, you can successfully navigate the shift from founder to CEO of a high-growth, scalable business.
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