The (Multi) Million Dollar Question: Are You Building All-Stars, or Superstars?
Why The Most Dangerous Portfolio Companies Look Like Rocket Ships
In my latest Growth conversation with collaborator Lorraine McGregor and guest Frederic Vanduynslaeger, we unpacked a disturbing story: a $10 million ARR company that went on to lose $3.4 million in value during acquisition because of a deep-rooted psychological flaw.
That flaw came out in an answer the founder provided in due diligence. When asked how their “automated” ML models worked, the founder smiled confidently and said “I manage those updates personally. I have deep expertise, so I fine-tune everything based on my interpretation.”
That’s the moment the valuation died. Not because he wasn’t brilliant, but because he was irreplaceable.
I’ve Seen A Better Way
I’m happy to say, I’ve seen (and helped craft) the opposite experience many times over. The first time I lived it was as a creative at Palmer Jarvis Advertising.
Palmer Jarvis was a ho-hum Vancouver ad agency until creative director Ron Woodall made a radical decision. Instead of hiring rock star creatives the agency couldn’t afford, he built a system where every creative team had to show their work to everyone else for feedback.
Junior people rapidly improved, thanks to input from senior talent. Senior people stayed humble, thanks to feedback from juniors. Most important, anyone could step into anyone else’s shoes because we all knew what our colleagues were creating.
The result? Four consecutive Canadian Agency of the Year awards and a successful exit.
We couldn’t afford superstars. So we built all-stars.
The Messiah-Dependent Trap
As a revenue architect, I see this pattern everywhere: brilliant companies that accidentally build cults around a founder ‘messiah’, instead of cultures.
The warning signs are subtle:
Teams can’t answer detailed questions without glancing at leadership
“Standard procedures” are marketing descriptions, not transferable workflows
When the founder travels, productivity stalls
New hires can’t access institutional knowledge because it’s locked in someone’s head
Here’s the kicker: The teams know it’s a problem. They feel bottlenecked, they build workarounds, but questioning the system feels like questioning the messiah’s genius.
What PE Firms Miss
Our Growth show is targeted at investors and exit specialists, not ad people. But the learnings are universal.
Traditional due diligence uncovers financial risks and operational inefficiencies. But it often misses the behavioural patterns that make businesses fundamentally un-transferable.
Lorraine calls it multi-perspective diagnostics. After 35 years with 300+ companies, she’s learned you can’t fix what you don’t fully understand… and founders rarely have the complete picture.
Both Lorraine and I follow the same approach when working with companies we suspect might have a deeper issue than ops and finances. We systematically gather insights from every corner of the organization (and often outside, speaking with clients). Not to find blame, but to surface the gaps between what leadership thinks is happening and what actually drives (or kills) scalability.
The System that Sets You Free
If you know me, you know I love systems. They enable you to build on something that’s working, instead of reinventing the wheel.
I’ve never seen a founder who didn’t say they love systems. But often, they resist documentation (the first step in systemization) because they think it’ll slow them down (ever heard by the time I write it down and teach it, I can do it myself 3 times?).
But nothing could be further from the truth. Systems aren’t bureaucracy. They’re freedom.
A tight system gives everyone clear briefs to innovate within. It creates predictable outcomes while unleashing creativity. It lets founders focus on vision instead of being trapped in every tactical decision.
Most importantly, it makes the business valuable to someone other than its creator.
The Real Question
The companies hitting hockey stick growth aren’t the ones with better products or more capital. They’re building cultures where brilliance is a team sport, and bottlenecks are driven out.
So here’s what every PE firm (and founder, and, well, anyone running any form of organization) should ask: Are you creating all-stars, or attaching your future to a superstar? The former creates legacy, the latter creates limits.
And legacy commands premium multiples.
Worth exploring? If you’re seeing worrying patterns of founder-driven bottlenecks, we should talk.