8 Startup Lessons From “The Founder” Movie

A version of this article previously appeared in Forbes.

Even when it was published on Netflix, I had no desire to see The Founder movie, as it was clear from the film’s preview that it was yet another, “businessperson gone bad” film. As a Professor at UC Santa Barbara, I constantly battle Hollywood’s stereotype of the rapacious, maniacal businessperson, by teaching my students that Honesty is a competitive advantage. Successful serial entrepreneurs know that their relationships are valuable assets worthy of careful nurturing – employees, investors, customers and suppliers are loyal to entrepreneurs they trust and trust is built on honesty and integrity.

Thus, I had little desire to watch yet another over-the-top depiction of a nefarious entrepreneur… and then I found myself on a five hour flight, with nothing worthwhile to read.

As I eased back into my seat, I realized that there might be valuable lessons to be learned from The Founder, despite its anti-business sentiment underlying Ray Kroc’s story. It turns out, I was right.

  1. Contrarian Innovation – In the late 1940’s, drive-in restaurants spread across the country, despite the underlying weaknesses of the business model (food often arrived cold, the atmosphere encouraged teenagers to loiter, eating in one’s car isn’t particularly comfortable, etc.). The McDonald brothers ran a successful drive-in restaurant for years, yet they shut it down for several months, in order to create the world’s first fast-food restaurant. As one of the brothers says in the movie, being different wasn’t enough, “… it needed to be better.”

Lesson: “To a contrarian like me, constant advice not to do something almost always starts me quickly down the risky, unpopular path.” Michael Bloomberg, American Entrepreneur and Politician

Challenge the status quo and improve and innovate upon it, even if customers currently accept substandard offerings.

  1. Create A Prototype – Decades before AutoCAD, the McDonald brothers spent hours designing their restaurant’s layout by drawing each workstation on a tennis court. They tested each design iteration by having dozens of teenagers walk through the motions of rapid food preparation. This hands-on approach surfaced numerous bottlenecks that would have been expensive to fix, if they had waited until the store was built to test their hypotheses.

Lesson: “The problem with prototypes is they don’t always work.” Laurie Anderson, American Musician

Spend the necessary time to prototype your solution and iterate on its design in a real-world setting.   

  1. Measure What Matters – The McDonald brothers were dogmatic about tracking metrics. For instance, they knew that their drive-in restaurant drove 87% of its sales from three items: hamburgers, fries and soft drinks. Thus, when they created the first McDonald’s, their menu consisted of: hamburgers, fries, soft drinks, milkshakes and coffee.

Lessons: “That’s the problem with so many organizations around entrepreneurship. They’re driven by metrics that don’t matter.”  Brad Feld, American Venture Capitalist

Just because you can measure it, doesn’t mean you should manage it. Going to market with a simple offering, typically results in faster adoption, as customers can readily understand and quickly gain value from your solution.

  1. Pull Customers Up The Learning Curve – When the McDonald brothers opened their first McDonald’s, it diverged from what had come before to such a large degree that customers were confused and ultimately rejected the concept. For instance, customers were accustomed to carhops taking orders at people’s cars and bringing the food to them. This caused people to pull up to the restaurant, sit in their cars and then become frustrated when no one came out to take their orders.

The format was too different and the McDonald brothers didn’t offer an adequate level of customer education. Eventually, they added the necessary signage and customers figured it out, including the fact that they (gasp!) had to throw away their own trash.

Lesson: “Your most unhappy customers are your greatest source of learning.”  Bill Gates, American Entrepreneur

Don’t assume your customers will properly divine your intentions – they probably won’t. The more innovative your offering, the greater extent you need to clearly communicate how customers can derive value from your solution.

  1. Be Smitten – Despite being a successful businessperson prior to meeting the McDonald brothers (the movie inexplicably portrays Ray as a struggling salesperson at the time he meets the brothers, which he wasn’t), Mr. Kroc couldn’t sleep after he was given a tour of the first McDonald’s restaurant. In short, he was smitten.

When an entrepreneur selects a venture, the idea should be all consuming. This doesn’t mean that entrepreneurs must surrender their personal lives to their ideas – on the contrary, a healthy balance of work and pleasure becomes even more important when you are obsessed with your idea. However, if you don’t find yourself consumed with your new venture at the outset, it’s unlikely you will have the tenacity to work through the inevitable setbacks.

Lesson: “Choose a job you love, and you will never have to work a day in your life.” Confucius, Chinese Philosopher

There is no substitute for true love. You know you’re pursuing the right venture when your long days don’t feel like “work.” If you’re not enraptured by your venture, your team and the impact you’re having on the world, find another venture.

  1. Tenacity Hast No Peer – It’s seductive to believe one can achieve great things via a lucky break. Unfortunately, most accomplishments, especially in the startup world, require a sustained and concerted effort. Though the movie characterizes Mr. Kroc’s tenacity as borderline psychotic, the depiction does drive home the importance of focused, relentless execution.

As Ray Kroc once said, “I was an overnight success all right, but 30 years is a long, long night.” In reality, overnight success is usually achieved after years of sleepless nights. Not surprisingly, Ray titled his autobiography, “Grinding It Out.”

Lesson: “The most difficult thing is the decision to act, the rest is merely tenacity.” Amelia Earhart, American Pioneer Aviator

The will to push through a startup’s inevitable challenges is born from a passion to solve a significant problem. Make sure you are solving a problem that matters to you.

  1. Give Others Their Due – Effective entrepreneurs know that when their venture succeeds, they should publicly acknowledge the contributions of their team. Mr. Kroc fell far short in this regard. Once the company became successful, he downplayed the McDonald brothers’ creation of the fast-food concept. Ultimately, his lack of gracious acknowledgment of the contributions of the McDonald brothers serves as the basis upon which The Founder’s screenwriters portray Ray as a bad dude.

Lesson: “It is amazing what you can accomplish if you do not care who gets the credit.” Harry Truman, US President

  1. It’s Never Too Late – All three of the original founders were middle aged at the time the corporation began to expand rapidly. Ray was 52 years old when he met the McDonald brothers, who were 52 and 45 years old respectively. Despite their ages, their collective efforts had a monumental impact on the way Americans, and later the world, consumed food outside of the home.

Lesson: “It is never too late to be what you might have been.”  George Eliot, British Author

Age doesn’t matter.

The Founder won’t be available on Netflix forever. If you were also turned off by the preview’s stereotypical depiction of the of Ray Kroc as a soulless con man, put on a big hat of disbelief, remind yourself it’s “just a movie” and check it out. Despite the caricature images, there are worthwhile startup lessons imbedded in the mostly fictional tale.

Image: Paco, via Pixabay

John Greathouse

John Greathouse is a Partner at Rincon Venture Partners, a venture capital firm investing in early stage, web-based businesses. Previously, John co-founded RevUpNet, a performance-based online marketing agency sold to Coull. During the prior twenty years, he held senior executive positions with several successful startups, spearheading transactions that generated more than $350 million of shareholder value, including an IPO and a multi-hundred-million-dollar acquisition.

John is a CPA and holds an M.B.A. from the Wharton School. He is a member of the University of California at Santa Barbara’s Faculty where he teaches several entrepreneurial courses.

Note: All of my advice in this blog is that of a layman. I am not a lawyer and I never played one on TV. You should always assess the veracity of any third-party advice that might have far-reaching implications (be it legal, accounting, personnel, tax or otherwise) with your trusted professional of choice.

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