Founder capability, validated product market fit, and disciplined operational foundations form the trifecta that determines whether an early stage company can scale for Rich McMahon. As the former Chief Strategy Officer of Bed Bath and Beyond and now CEO of cda Ventures, McMahon has shaped businesses at every stage of maturity. His advisory work has supported early stage companies like ChalkUp and Radius8 through successful exits while guiding larger organizations through global expansion and digital transformation.
“The number one thing is really the individual or the leadership,” says McMahon. “A venture capitalist once told me that private equity invests in numbers while venture capitalists invest in people. I find that to be very true.” Early-stage companies evolve quickly, and the founders who thrive are those who can adapt as their ideas shift. McMahon recalls meeting teams whose original pitch looked entirely different a year later, yet their unwavering drive made the difference. “I look for the gut feeling that they have the ambition and grit to succeed no matter what,” he says.
He has witnessed this dynamic not only in startups but also in corporate environments. A candidate with the perfect résumé does not always outperform the one willing to “learn, be coached, and do what’s necessary,” as he puts it. The willingness to go beyond assigned tasks and to keep asking “what else can I do” signals the mindset required to build something lasting.
Balancing Speed with Foundation
Early-stage leaders often find themselves navigating the tension between moving quickly and building the fundamentals required for lasting success. While circumstances vary depending on market and competitive pressures, certain principles hold true. “You can’t build a house without a strong foundation,” he says. For him, that foundation comes from validating product-market fit early, establishing essential operational structure, and ensuring the business can reliably deliver what it promises.
The launch of Bed Bath and Beyond’s retail presence in Mexico illustrates his point. Although local partners pushed for speed, McMahon’s team chose a more measured approach. “We went a little slower to build the foundation. Once we had the right assortment, brands, and operational structure, then it was speed to go.” He sees the same pattern in early-stage companies: test, refine, build, then scale. Premature scaling remains one of the most consistent pitfalls he observes. Many companies pour resources into marketing before confirming that customers truly want the product. “If you get ahead of product-market fit, it doesn’t end well,” he says.
Building Toward a Future Exit
For founders who envision a potential sale down the line, McMahon encourages deliberate planning, but not obsession. “Most founders I work with don’t have a pure focus on an exit,” he says. Their energy is centered on solving customer problems and scaling responsibly, which he views as healthy. Still, he urges leaders to understand the different paths to exit early on. If a founder imagines selling in three, five, or ten years, it helps them determine the growth trajectory needed to reach that destination. Equally important is understanding whether the ideal acquirer is strategic or financial. Each requires different signals.
Strategic acquirers look for strong growth patterns and may not need a fully mature infrastructure because they can integrate the startup into their existing systems. Private equity buyers, on the other hand, want evidence of profitability or a clear path toward it. “They want the opportunity to throw gasoline on the fire.” To stay exit-ready, he emphasizes three essentials: “Keep your cap table as clean as possible, have your financials in order, and keep a clear view of who your potential acquirer may be.”
Letting Go and Listening
As companies grow, founders often become bottlenecks without realizing it. Reluctance to delegate can slow progress and burn out leaders. McMahon advises setting guardrails and empowering the team while staying connected to the organization’s vision. Above all, he believes the best early-stage companies share two traits. “The best startups are paranoid about their customers, and they’re obsessed with data,” he says. Companies that listen carefully, adapt based on real feedback, and maintain this customer-first mindset position themselves well for both growth and eventual acquisition.
McMahon’s approach blends strategic clarity with hands-on mentorship. He thrives at the intersection of people, product, and execution, helping founders build durable businesses rather than short-lived momentum. For those seeking guidance from launch through exit, he offers a reminder that success rarely hinges on one strategy or one milestone. It rests on the combination of grit, structure, and relentless customer focus.
Connect with Rich McMahon on LinkedIn or visit his website for more insights.
