Why founders often fall & how they can get out of their own – Dr. Richard Hagberg

On the latest episode of The Small Business Show, we sit down with Dr. Richard Hagberg, psychologist, leadership coach, and co-author of the book Founders Keepers: Why Founders Are Built to Fail and What It Takes to Succeed. Today’s conversation offers a candid look at why entrepreneurial traits like vision, drive, and confidence, essential to launching a company, can quickly become liabilities when it’s time to scale.

According to Hagberg, founders are excellent at getting things off the ground but often struggle with sustaining and managing growth. In addition, he notes that only a few founders reach long-term success without significant adjustments in leadership. 

 "Founders are better at blastoff than they are at staying in orbit. Not many of them get to the moon, and almost none of them get to Mars."

Hagberg cites several examples where founder traits can backfire. A founder’s overconfidence, for example, can prevent them from listening to feedback or recognizing market misalignment. Creativity can lead to distraction by “shiny objects,” and controlling tendencies can result in micromanagement, bottlenecks, and even employee disengagement. 

The data is sobering: roughly 90% of startups ultimately fail, and 50% fail within the first five years. Hagberg’s research identifies adaptability and the ability to work through others as two of the most essential traits for long-term success. Founders who are unable or unwilling to delegate, empower their teams, or implement systems often get replaced by private equity firms or boards that bring in professional managers to run operations.

Hagberg categorized three styles of leadership:

1. Visionary Evangelists – About 90% of founders fall into this category.
2. Relationship Builders – Founders tend to be below average in this area, with successful ones slightly above average and unsuccessful ones significantly below.
3. Managers of Execution – The rarest quality among founders, but one that becomes critical as companies mature.

He highlighted Dropbox as a positive example, where the founders brought in Dennis Woodside as an execution-focused COO who eventually helped the company go public. “Founders don’t like boundaries, and they don’t like systems. But as the company scales, those are non-negotiable,” Hagberg said.

Another key point: founders need to know when to step aside or transition into roles like Executive Chairman or serial entrepreneur. “What got you here won’t get you there,” he said, quoting his co-author Tien Tzuo. Recognizing personal limitations and building a team that complements those gaps is essential.

In a moment of personal reflection, Hagberg shared his own story of hiring a COO who had begun as a receptionist at the age of 17 and later became CEO. That individual not only kept the business running but offered the kind of structured pushback founders often need to stay grounded. 

Founders who ignore such balancing forces risk creating what Hagberg calls a “reality distortion field,” where team members are too intimidated to speak truth to power. That dynamic can be disempowering—and ultimately, destructive.