Tag Archive for: Founder

The Founder’s Guide to Making Tough Decisions

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Serial founders understand a fundamental truth: the faster you make difficult decisions, the better off your company will be. The phrase “fail fast” isn’t just about pivoting — it’s about recognizing when something isn’t working and having the courage to act.

Making tough calls is like anything else: the first time is the hardest, but practice makes it easier. As a founder, your decisions define the company’s trajectory, and the more decisive you become, the more confidence your team, investors, and clients will have in your leadership.

Here are three of the most critical decisions I’ve found most founders face — often sooner than they’d like. Each requires balancing short-term survival with long-term success.

1. Spending Wisely: Risk and Resources

Money is oxygen for startups, but how you spend it depends on your funding model. When you’re funding the business yourself, every dollar feels personal. This often leads to scrappy, creative problem-solving — a huge advantage when you need to stretch resources. But it also means constantly weighing every expense against its immediate impact on survival.

Many first-time bootstrapped founders hesitate too long before investing in key areas like hiring or marketing, only to realize later that strategic spending is just as important as managing expenses.

When we launched Restaura last year, for example, we made a big splash at the industry’s largest annual event to showcase our experienced team and innovative business model — a decision that has paid off significantly.

Alternatively, when your start-up includes outside funding, you’re not just managing cash —you’re managing expectations. Investors want aggressive growth, but they also tend to be less willing to invest ahead of revenue. The pressure to show traction quickly can lead to spending in ways that don’t always align with long-term strategy. Founders in this position must resist the urge to chase vanity metrics and instead focus on sustainable, high-impact investments.

Whether self-funded or investor-backed, the challenge is the same: knowing when to stay lean and when to go all in. The best founders develop an instinct for spending at the right moment, balancing caution with strategic risk-taking.

2. Choosing the Right Early Clients

The first clients of any B2B start-up set the tone for the business. It’s tempting to say ‘yes’ to every revenue opportunity, especially in the early days. But sometimes, the wrong client can slow you down more than no client at all.

Who are the best early adopters? They are…

  • Frustrated with the status quo and actively searching for a better solution
  • Eager to experiment because they believe in the potential of what you’re building
  • Open to providing feedback to make your product or service even better
  • Willing to share their experience with others

What types of early clients should you avoid?  They….

  • Don’t fit your long-term vision, despite their attractive revenue potential.
  • Push you to modify your core offering or customize features that won’t be repeatable
  • Create support or operational headaches that drain your team’s resources

Many founders learn the hard way that not all revenue is good revenue. Saying ‘no’ to a misaligned client takes discipline, but dilution of focus is a startup killer. I recently had to redirect one of Phoenix3’s operating companies away from a promising potential client. It was not easy, but it was absolutely necessary.

Early clients aren’t just buyers — they are the foundation of your flywheel.

Founders absolutely must treat early adopters like they are partners, be radically transparent with them, and deliver a notably exceptional experience. Those who do this well will build early adopters who aren’t just clients, they’ll be your champions.

3. Getting the Right People in the Right Seats

A startup’s success is directly tied to its people. Every hire carries weight and making a mistake can be costly. Skills are critical, but mindset and adaptability matter just as much — especially in the early days.

Founders often hold onto the wrong hires too long, either out of loyalty or fear of disrupting a small team. The best founders recognize that correcting a hiring mistake quickly is better than dragging it out. Remember, startups evolve quickly, and someone who was the perfect fit at one stage might not be later.

Every founder struggles with this, especially with small teams where letting someone go can feel personal. But the reality is that the wrong person in a key role slows everyone down. The best teams have a clear vision, aligned culture, and the right mix of skill and adaptability. A founder’s job isn’t just hiring — it’s constantly reassessing if the team is built for the challenges ahead.

Final Thought: Tough Decisions Make Great Founders

Every startup founder will face challenging decisions on spending, clients, and team members.

The first time, it takes courage. The second time, it takes confidence. The more you do it, the better you get. Tough decisions don’t get easier—but you get stronger and wiser.

Reach out to me at rschenkel@phx3.com if I might be able to add some perspective to tough decisions that you’re facing in this role.

New Year’s Reflections: Sentiment, Satisfaction, and the Power of Frontline Obsession

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The beginning of a new year is traditionally a time for reflection and planning – a moment to assess what worked in the past and to set ambitious goals for the future. Since I spent much of my time last year building and investing in new companies for the first time in quite a long time, I thought I’d share some observations about several nuanced changes I’ve noted, as well as the enduring principles that continue to shape successful ventures.

The Voice of the Customer

What hasn’t changed: Customer feedback is still the lifeblood of any business, and start-ups in particular. It provides valuable insights into user experiences, pain points, and expectations. By actively collecting and analyzing feedback, startups gain a deeper understanding of their audiences. Infuse Hospitality, a Phoenix3 portfolio company that provides corporate, commercial and specialty food and dining services, has leveraged feedback from building managers and end-users who are moving from remote to hybrid and in-office work to create engaging customized monthly promotions that serve each population’s specific dining preferences while maximizing profitability.

Remember that whether B2B, B2C, or B2B2C, it’s critically important that founders and executive teams recognize not all feedback is created equally. Be sure to prioritize feedback based on impact and feasibility. For example, a glitch in your product ordering system takes precedence over aesthetic concerns, such as tweaking the color scheme of an interface.

What has changed: Traditionally, customer satisfaction ratings have been the gold standard for evaluating success. For contract on-site foodservice relationships, that generally meant bi-annual surveys covering food quality, service standards, and a variety of other benchmarks. But satisfaction is retrospective; it measures how someone feels about a past experience. Today, it is imperative that founders leverage advances in AI and technology to capture how people feel in the moment. Real-time sentiment analysis enables founders to identify and address opportunities as they arise, rather than after they’ve become ingrained problems.

Waiting months to assess performance or customer satisfaction is no longer viable for any company – start-up or mega-conglomerate.

That’s why our Restaura team has built an industry-first resident sentiment analysis tool that analyzes comments, ratings, and team member inputs to tailor culinary experiences based on real-time input. Our talented technology team has created digital dashboards for our clients with real-time KPI tracking, including sentiment scores, so day-to-day decisions are guided by the most current insights. It’s game changing!

Ownership Involvement

What hasn’t changed: Since 1990, Bain consulting has analyzed the shareholder returns of public companies and found that companies with a founder still involved in the daily business outperform (by a factor of 3:1) companies that don’t have an engaged founder. This has been one of my core philosophies throughout my career as a founder, from start-up through acquisition, and carries through to my investment thesis at Phoenix3.

But here’s the thing I learned long ago. Being an engaged founder or business leader is really about creating a culture with a frontline obsession. You simply can’t succeed if there’s an ivory tower culture. The book Founder’s Mentality describes frontline obsession as a culture that keeps management laser focused on empowerment and respect for the team members who directly interact with customers. Founders who remain engaged in their business ensure this ethos is maintained by modeling frontline-centric behavior.

What has changed: We have all seen the dramatic shift in today’s workforce loyalty with employees more willing to change jobs in search of better opportunities or work-life balance. For founders this trend poses significant challenges, especially those in customer-facing industries where employee turnover can directly impact service quality and brand reputation.

There is a growing movement toward employee ownership models as a new standard of socially responsible business practice that can also drive company performance. Ownership Works is a nonprofit that partners with companies and investors to champion this approach which provides wealth-building opportunities for all employees, improves business performance and invigorates corporate culture.

I wholeheartedly believe that making frontline employees owners creates a win-win scenario. I have set aside over 30% of the equity shares in Restaura so all of our team members, from kitchen staff and servers to managers, have a personal stake in the company’s success. Providing ownership takes empowerment to new levels and fosters deeper engagement, accountability, and alignment with organizational goals.

Imagine what’s possible when the phrase “ownership involvement” is not just referring to the founder, it’s EVERYONE.

A Continuous Conversation

The future belongs to those who listen, adapt, and act. As we embark on this new year, let’s recognize that reflection and planning are no longer annual exercises but continuous processes. By embracing a frontline obsession and leveraging real-time sentiment analysis we can build organizations that are positioned for long-term success. Phoenix3 is actively looking to expand our portfolio with like-minded businesses. Click here to learn more about our ideal partner profile.

Let’s make it a year to remember!

CONFESSIONS OF A THIRD ACT FOUNDER

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I’m often asked about what drove me to become an entrepreneur and, lately, people are asking why I’ve decided to do it again.  So, I thought I’d share 10 words of wisdom and confessions on the topic of founder DNA….

Confidence

To be an effective founder, you’ve got to be comfortable in your own skin. Having confidence in yourself and your vision fuels the ability to make tough decisions and take risks.

Love it

You’ve got to love (not like) what you do. I can honestly say that I have never been in a situation where I hated what I was doing for work.

Bad days

There will be bad days – I’ve had more than I probably remember.  Don’t take out your bad day frustrations on your team. It’s a sign of inexperience and immaturity.

Input

Taking advice is helpful when starting a business but I find that too much input dilutes my direction and focus. You can’t have 10 different visions for success.

Time

I think I speak for most entrepreneurs when I say we tend to underestimate the time it takes to bring our vision to life. We seem to forget that you can’t change the world overnight.

Highs & Lows

When I think about the highs and lows, many seem to center around people. When you find great people who embrace the start-up culture, thrive with limited structure, and bring your vision to life, it’s incredibly gratifying. But it’s tough when you realize someone is not a fit and you have to make a change for the greater good, especially when the team is still small.

Instincts

I read the balance sheets, study the trends, and listen closely but I have to admit that I rely heavily on gut instinct. When it’s the right place, right time, right thing, it seems intuitive to me.

Ego

While confidence is key, you can’t let your ego get in the way of reality. If the plan is sputtering and the vision is not playing out, know when to pivot or end it.

The Third Act

We named the company Phoenix3 to symbolize my confidence that there were unique opportunities in the market that I could address. Now that I’m older, I can put all my experience and resources to use to help a defined segment of growth companies succeed and avoid some of the pitfalls inherent in starting a new business.

Retiring

I don’t have any plans to retire. Why would I stop when I love what I do and am confident of the path we are on? That’s what it’s all about!

Culture Killers: The Hidden Threats to Your Company’s Success

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In the start-up world, where quarterly profit and operating expenses often dominate conversations, there lies an elusive yet powerful force that can make or break a company: culture. Often dismissed as corporate jargon, I firmly believe that culture is, in fact, the very lifeblood of an organization. It’s the invisible hand that shapes behavior, drives innovation, and ultimately fuels long-term growth. Yet, too many companies fall into the trap of viewing culture as a checkbox on a “to do” list.

If you think culture is just fluff, think again. It’s the difference between a thriving, dynamic organization and a house of cards.

Here are four common culture killers and how to steer clear of them.

1. Lip Service Over Genuine Action

I have seen what happens when culture is reduced to empty rhetoric—words on a career page or kitchen poster, a feel-good orientation message from the CEO. This lip service does nothing but breed cynicism and distrust. Culture must be a priority woven into every business decision, meeting, and customer interaction. It starts by clearly stating the company’s vision in ways that are very specifically relatable to the business. This month’s Harvard Business Review has a great article entitled, “Build a Corporate Culture That Works” that introduces “dilemma testing” to determine if your corporate values are actionable. For instance, to promote a culture of transparency and collaboration, Pixar’s values articulate “Regularly share unfinished work.” This type of framing provides leadership guideposts that bring the company’s values to life in corporate culture.

2. The Ivory Tower Trap

In distributed services businesses, the ivory tower mentality is a silent killer of culture. When corporate offices act as if they are superior, it demotivates frontline employees, creating a toxic divide. In my opinion, a corporate office should function as a support center with everyone, regardless of rank, committed to empowering customer-facing teams. The Four Seasons Hotels’ enviable culture is rooted in a philosophy called “Lead with Care” that directs the focus to the front line and empowers them to exceed service expectations. Remember, if the team on the ground interacting with customers isn’t delivering, no one will have a job! Bridging this gap can transform the entire organizational culture, fostering unity and shared purpose.

3. Toxic Talent

Nothing spreads faster and more destructively than a toxic hire. These individuals—the eye rollers, the naysayers, those who publicly conform but privately sabotage—can infect an organization with negativity, destroying collaboration and morale. I believe you can mitigate this issue by starting with rigorous hiring practices that prioritize cultural fit. I encourage founders to personally interview all hires until the company gets too big for you to do so (and then be sure your hiring managers understand your expectations for culture fit).

Author David Brooks has a thesis that, in any collection of humans, there are diminishers and there are illuminators. In his recent book, “How to Know a Person,” Brooks stresses the importance of hiring “illuminators” who uplift others with persistent curiosity and the ability to see things from someone else’s point of view. Of course, it’s not always possible to predict every hire’s true colors, so I believe it’s also critically important for leaders to act quickly and purge toxicity to safeguard the integrity of your culture.  

4. Cultural Atrophy

Culture is like fitness; it requires consistent effort to build and maintain. Leaders must stay vigilant, reinforcing cultural values in small daily interactions and major company decisions. I have seen what happens to organizations that come out of the gate with a strong emphasis on culture and then lose focus. Like muscle, it takes time to see the results but if neglected, culture deteriorates rapidly and can be incredibly difficult to rebuild. Trust me, ignoring this intangible yet critical business driver will lead to declining employee morale, lost clients, and reduced productivity.

Investing in culture is investing in growth. By embedding your mission and vision into the very fabric of your company, you create a roadmap that guides behavior and execution, fostering an environment where everyone feels part of a unified team. This is what sets great companies apart and paves the way for sustained growth and success.

Total Food Service Cover Story: Richard Schenkel Forecasts Evolution of Senior Care Dining and Hospitality

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Phoenix3 was founded on the principles of combining capital investment with industry expertise. With this in-depth cover story Richard shares that…..

His business philosophy is grounded in taking calculated risks – aligning companies around strong values on growth-oriented missions to achieve success and build shareholder value.

He explains that “It is a mistake to think that this issue is just about food. The current state of the market suggests a need for change, particularly in the integration of technology within senior living facilities.

The prevailing expectation of securing high-quality staff without appropriate compensation is unrealistic. A reevaluation of the current model is necessary to ensure that employees are adequately rewarded for their efforts without the reliance on gratuities.”

Read the full interview here...