Is the AI wave a bubble?

Dave Hersh, co-founder and former CEO of Jive Software, shares the real story behind bootstrapping Jive to $12M in revenue before raising venture capital and scaling aggressively. He explains how fear, comparison, and the pressure to "go big" drove him to abandon his profitable core business and pursue a new upmarket strategy that ultimately cost the company its soul.

After growing to $60 million, Jive eventually went public, but not without internal strain, personal turmoil, and ultimately the realization that the company had drifted away from what made it successful.

Dave discusses how overexpansion, premature scaling, hiring missteps, and market-chasing derail both VC-backed and bootstrapped companies—along with the psychological patterns founders rarely acknowledge.

He shares lessons from his book "Reignition: Transforming Stuck Startups Into Breakout Winners" on why most stuck companies don't need a new strategy—they need a wiser founder who understands their inner operating system and is willing to grow alongside the business.

Today Dave coaches founders, writes about the emotional foundations of leadership, and acquires underperforming SaaS companies to "refound" them with more clarity, connection, and human-first strategy.

Key Takeaways

• Founder Psychology Matters — Most stuck companies trace back to subconscious patterns, not strategy failures, and founders must address these to grow.
• Premature Scaling Kills — Expanding markets or teams too quickly dilutes the core and creates complexity most companies cannot absorb.
• Core Before Expansion — Winning in a beachhead and protecting the core creates more durable growth than chasing adjacent market too early.
• Better Growth Pace — Sustainable companies grow at the pace the market allows; forced hypergrowth often destabilizes otherwise healthy businesses.

Quote from Dave Hersh, Co-founder and Former CEO of Jive Software

"I realized that 90% of stuck companies and failed companies are not the reasons that we say they failed. Like they didn't have product market fit or they ran out of cash or the founders didn't get along. It's the psychology underneath. If you actually look at the source of those problems, It was these very consistent psychological patterns that founders run into.

"So hero complex, warrior, imposter syndrome, over identification with the company. It was all of these things that I kept seeing over and over again that led to the decisions that got them stuck. And so, yes, while it's true, they got out competed. Why did they go after the big market? What led them to do that? Why did they try to compete against these companies they were competing against?

"And then you start to tap into what's really going on and you see: They're trying to earn validation. They are trying to get redeemed as an entrepreneur. They're trying to live up to their parents, their older sibling, their peer group. And it was that desire that led to them trying to go after this big market and raising too much money that got them stuck. And so I like to work with the source material, which is, Why did you do that?"

Links

• Dave Hersh on LinkedIn
• Book by Dave Hersh: Reignition: Transforming Stuck Startups into Breakout Winners
• Dave Hersh website

This podcast is sponsored by Fraction. Fraction gives you access to senior US-based engineers and CTOs — without full-time costs or hiring risks. Get 10 to 30 hours per week from vetted and experienced US-based talent.

Find your next fractional senior engineer or CTO at fraction.work. You can start with a one-week, risk-free trial to test it out.

The Practical Founders Podcast

Tune into the Practical Founders Podcast for weekly in-depth interviews with founders who have built valuable software companies without big funding. Subscribe to the Practical Founders Podcast using your favorite podcast app or view on our YouTube channel.

Get the weekly Practical Founders newsletter and podcast updates at practicalfounders.com.

Practical Founders CEO Peer Groups

Be part of a committed and confidential group of practical founders creating valuable software companies without big VC funding. A Practical Founders Peer Group is a committed and confidential group of founders/CEOs who want to help you succeed on your terms. Each Practical Founders Peer Group is personally curated and moderated by Greg Head.