No recipe for really complicated, dynamic situations. Nonetheless, there are tiny bits of advice and experience that can help with the hard things.
Avoid judging things at the surface. Until you make the effort to get to know someone or something, you don’t really know anything. There are no shortcuts to knowledge, especially knowledge gained from personal experience.
Most business relationships become too tense to tolerate or not tense enough to be productive after a while. Either people will challenge each other to the point where they don’t like each other or they complacent about each other’s feedback and no longer benefit from the relationship.
Product Strategy – figuring out what is right is the innovator’s job, no the customer’s job. The customer only knows what he or she wants based on her experience with the current product.
The secret to any successful CEO – the ability to make the best move when there are no good moves.
Avoid hiring for lack of weakness rather than for actual strength(s). – Common trap for consensus-based hiring practices. Combat by clearing defining in advance what you believe the area(s) where the position needs to be world-class to widdle down the pool. Next decide what weaknesses you are willing to accpet for a candidate with the right positive qualities / experience.
We take care of people, products, and profits – in that order. Jim Barksdale
Good organization – people can focus on their work and have confidence that if they get their work done, good things will happen to them personally and the company.
Bad organization – people spend much of their time fighting organizational boundaries, infighting, and broken processes. They are not clear on what their jobs are, so there is no way to know if they are getting the job done or not. When they get the courage to tell management, usually they (management) denies that there is a problem and defends the status quo.
Training – should be handled by the manager him / herself since it is so critical. Although it can be difficult to set aside the time to design your training program let alone administer it, training is one of the highest leverage activities a manager can perform and it should not be ignored.
Functional training – specific to the role / position. Setting expectations, defining what good looks like, etc. Make sure this type of plan is in place before any new hire is brought onto the team.
Management training – what you expect from your people managers. One-on-ones, performance feedback, objective setting, etc.
Good Product Manager / Bad Product Manager – by Ben Horowitz (slightly abridged)
Good produce managers know the market, the product, the product line, and the competition extremely well and operate from a strong basis of knowledge and confidence. CEO of the product, and measure themselves in terms of the success of the product.
A good product manager takes responsibility for devising and executing a winning plan taking into account context. Avoid excuses.
Good product managers don’t get all of their time sucked up by the various organizations that must work together to deliver the right product at the right time. They are not part of the product team; they manage the product team.
Good product managers are the marketing counterparts to the engineering manager.
Good product managers crisply define the target, the “what”, and manage the delivery of the what. Strong written and verbal communication with the engineering team. No informal direction.
Good product managers create FAQs, presentations, and white papers that can be leveraged by salespeople, marketing people, and executives.
Good product managers take written positions on important issues – competitive silver bullets, tough architectural choices, tough product decisions, and markets to attack or yield.
Good product managers focus the team on revenue and customers. They think in terms of delivering superior value to the marketplace during product planning and achieving market share and revenue goals during the go-to-market phase.
Good product managers think about the story they want written by the press, and assume that the press and analyst communities are really smart.
Good product managers err on the side of clarity. They define their job and their success.
Good product managers send their status reports in on time every week because they value discipline.
Difficulty in moving from a big company into a start-up. Big company execs are used to being prompted for action, In a start-up you have to be more proactive since nothing will happen unless you yourself are the catalyst. There can also be a skills mismatch.
Big company skills – complex, high-stakes decision making, prioritization, organizational design, process improvement, and organizational communication.
Start-up – adept at running a high quality hiring process, have terrific domain expertise, understanding of creating processes from scratch, and be extremely creative when it comes to initiating new directions and tasks.
Screen for mismatches by asking:
- What will you do in your first month on the job – beware of answers that overestimate learning. Look for candidates who come in with more initiatives than you think are possible.
- How will your new job differ from your current one? Look for self-awareness, and be cautious of candidates who think there are many similarities.
- Why do you want to join a small company? Beware of equity being the primary motivation. More appealing is someone who wants to be more creative.
CEO – must hire and manage people who are competent at their jobs than you would be at their jobs – that is people running functions that you do not have expertise in. How do you avoid problems?
- Avoid hiring based on someone looking the part, not having any weakness (versus having specific strengths),
- Formally write out the strengths you are looking for and the weaknesses you are willing to accept to get those strengths. Develop questions to flush this out.
Metrics / Measurement – automatically creates a set of employee behaviors.
QA – cannot build a high quality product on it’s own, but can tell you when your team builds a low quality product. HR can serve the same purpose when evaluating the quality of your organization’s management.
HR – Key responsibilities:
- Recruiting and Hiring
- Training and Integration
- Performance Management
Key Characteristics – process design, diplomacy, industry knowledge, ability to serve as CEO’s trusted advisor.
Avoid rewarding behavior that is not directly tied to advancing your business.
The Right Ambition – Andy Grove definition – ambition for the company’s success with the employee’s success coming as a by-product of the company’s victory. Especially critical for people managers.
Screen for the right ambition when hiring. Lookout for people who make everything about them. Seek out people who are more interested in strategies for winning and company success.
The Peter Principle – people will continue to be promoted until they reach a level when their work / output no longer warrants it, thus leveling them out at a place that lines up with their ability.
The Law of Crappy People – For any title level in a large organization, the talent on that level will eventually converge to the crappiest person with the title.
Marc Andressen Title Attitude – they don’t cost the company anything and the employees want them, so give them out liberally to keep employees happy.
Marc Zuckerbeg Title Attitude – keep titles lower than industry standard, especially when bringing in external candidates. Avoids giving someone unproven in the FB world too much power right out of the gate. Also wants to make sure titles internally represent true influence. Finally, wants to make sure people on the business side do not get too far ahead of their engineering team counterparts with flashy ranks and titles. This strategy for titles works for FB because so many will accept it to work their, might not work for smaller less established companies.
Internal promotion versus external hire – do you value outside knowledge or inside knowledge more for that specific role? For engineering, deep knowledge of the code base is most critical – err towards internal promotion. For building out business functions – external knowledge can be very useful.
Executive performance management – judge based on: 1. Results against objectives. 2. Management 3. Innovation 4. Working with Piers.
- If we could improve in any way, how would we do it?
- What’s the number one problem with our organization? Why?
- What’s not fun about working here?
- Who is really kicking ass in the company? Whom do you admire?
- If you were me, what change would you make?
- What don’t you like about our product?
- What’s the biggest opportunity we’re missing out on?
- What are we not doing that we should be doing?
- Are you happy working here?
What a startup must do – build a product that is at least 10x better at doing something than the current prevailing way of doing that thing. Next it must be able to take that market before someone else does.
Issues to lookout for when a company is growing rapidly – drop-offs in communication, common knowledge, and decision making. Specialization, organizational structure, and process complicate things, but are usually necessary to support growth.
Organizational Design Principle – think of it as a communication architecture for your company. Do not fall trap to optimizing the organization for managers, putting individual ambition ahead of communication paths.
Process design – should be started and authored by the people currently managing the work via an informal process.
- Focus on output first – what should the process produce?
- Figure out how to know if you are getting what you want at each step – measurement criteria.
- Engineer accountability into the system
Herb Allen – investing in courage and determination is an easy decision for me.
What to look for in founders – brilliance and courage, weighted more heavily towards courage.
Courage development process – courage can be learned, and everytime you make the hard, correct decision you become a bit more courageous. On the flip side, each wrong decision makes you a bit more cowardly.
Skills for running an organization – 1. Knowing what to do. 2. Getting the company to do what you know. Most leaders either:
- Prefer to set direction for the company (1)
- Prefer to help drive the company towards peak performance (2)
Ones – love making decisions, comfortable with ambiguity. Strategic minded, less interested in execution details. Most founding CEOs are in this group.
Twos – prefer having crystal clear goals that don’t change. Less interesting in the strategic thinking process itself. Big decisions worry twos much more than they worry ones. THey can overcomplicate things, and drastically slow down the process.
The primary purpose of organizational hierarchy is decision making efficiency. As such the CEO generally speaking should be a One. Twos are very good at being functional heads.
Leadership Must Haves, All can be learned to a certain extent.
- The ability to articulate a vision – especially when things are going bad, need to be able to keep people on the team going.
- The right kind of ambition – need to get the right type of people to want to work for you. This is done by putting their interests at the forefront.
- The ability to achieve the vision.
Peacetime for a business – when a company has a large advantage over the competition in its core market, and it’s market is growing. The company can focus on expanding the market and reinforcing its strengths.
Wartime for a business – when a company is fending off an imminent threat. Competition, a macroeconimic change, etc.
Speed and quality of decisions – how management should be evaluated.
Management must have the courage to bet the company on a direction even though he / she does not know if the direction is right.
How to balance accountability with creativity? Have to hold people accountable, but don’t want to make the team so risk-adverse that it doesn’t flag issues or make proposals. To evaluate look at:
- The seniority of the employee – expect more (ie drive more accountability from senior employees)
- Look at the degree of difficulty wrt the specific issue
- Determine if the risk was worth taking
Technology Acquisitions – Can be broken down into three categories:
- Talent and / or technology – when a company is acquired purely for it’s technology and/or it’s people. These kinds of deals generally range from $5 to $50MM.
- Product – when a company is acquired for its product, but not it’s business. THe acquirer plans to sell the product roughly as it is, but will do so primarily with it’s own sales team. These types of deals typically range between $25 and $250MM
- Business -when a company is acquired for it’s actual business (revenue and earnings). The acquirer values the entire operation (product, sales, and marketing), not just the people, tech, or products. These deals are typically valued by their financial metrics and can be extremely large.
Sell your company or stay independent? Stay independent if:
- You are very early in a large market AND
- You have a good chance of being #1 in that market in terms of share
Professional CEOs (as opposed to founder CEOs) – what do they bring to the table?
- CEO Skill Set – the ability to manage executives, organizational design, running sales organizations, etc.
- CEO Network – know lots of executives, potential customers and partners, people in the press, investors, and other important business connections.
Hard things are hard because:
- There are no easy answers or recipes
- Your emotions are at odds with your logic
- You don’t know the answer and you can’t ask for help without showing weakness
Embrace the unusual parts of your own background – these are what should give you unique perspectives and approaches in business. These are the strengths you have that are specific to you and cannot be copied. If the keys are not there, they don’t exist.