Here's a little video on resource efficiency - an important concept to understand when thinking about how to finance your startup.
I’m a believer that the scope of the CEO’s role should narrow to roughly four facets as the company scales. One of the most important areas of focus centers around defining the culture. What are companies other than a long series of decisions? Since your culture in many ways will define how you make decisions, optimizing culture is of critical importance.
To me, the most productive culture for a business is one that I call “constructive disagreement”.
The concept of constructive disagreement centers around creating a dynamic where key stakeholders in an organization can and are compelled to disagree. The word constructive alludes to the need to raise issues, debate them and resolve them.
Getting Our Debate On
At the core of this philosophy is a focus on encouraging debate within your team. As humans we navigate the world wearing horse blinders; we interpret most dynamics based on the context of ONLY OUR perspective. For sales people, business decisions reverberate through a crowd of customer demands. Product leads see a decision colored by product simplicity and experience. Technologists compute the complexity of a given challenge. The fact that we see the world through our own lens is very limiting. And, left unchallenged, each and every member of a business’ leadership team would likely make different decisions tilting the company in favor of their respective responsibilities. The best companies, however, excel in all dimensions of their business: sales, customer service, product, tech and beyond.
In order to make decisions that reflect all of the various perspectives, stakeholders of each dimension of the business need to feel comfortable contributing their perspective to the decision.
While as individuals we all wear horse blinders, through our collective perspectives we can see the whole horizon.
Optimizing For Tension
The best way to set up this cultural paradigm is by facilitating a forum for disagreement. I want the leadership team at Kohort to disagree and debate as often as possible. So, how can I facilitate that?
The answer: a relatively flat hierarchical structure.
When I refer to hierarchical structure, I mean more than who-reports-to-whom. I mean who is given a voice at leadership team meetings. I mean weaving as many voices as possible into the key processes at the company.
To this end, at Kohort, each of our Team Leads:
- Reports directly to me,
- Participates on the daily leadership call as peers, and
- Is integrated in the highest level decisions across the company - product decision making and development process, the customer support process, marketing planning and beyond
These structures ensure that few Team Leads make major decisions in isolation. For example, our customer-facing teams debate the product roadmap with our product lead. Our product lead debates what and how we build features with our tech lead. And, so on. The output of those debates is more thoughtful decisions.
To highlight the significance of this, imagine an organizational structure where the head of product was subordinate in every way to the CTO (reporting to the CTO, not having a voice in the leadership meetings and having a limited role in decision making processes).
Would the product lead consistently engage in a healthy debate about their needs with their boss, the CTO? Probably not as frequently.
Would the demands of the tech team trump product consistently? Probably more often than if they were peers.
And, as you can imagine, over a volume of decisions, our company would have a tech-bias and a less-than-ideal product. I would conjecture that this model would hurt our company – since, simply put, we need to be good at everything.
This model also helps with ad hoc decisions that don’t have a clear owner. When I, the CEO, am faced with an obscure legal question or otherwise I ask the team of peers, each with their very different perspectives to debate the issue. Collectively this group is far more capable of making a sound decision than I might be able to in isolation. These ad hoc debates are only viable and productive though because the team is accustomed to discussing issues as peers. Evaluating ad hoc issues falls into their regular mode of operation.
In sum, your team has to be able to butt heads (frequently) to ensure that the broadest perspective is applied to each decision.
Keeping It Constructive
It’s easy to casually interchange the words debate and argument, but I think there is an important distinction. Debates are constructive in building toward a conclusion. Arguments don’t always get resolved. In debates both parties share a mutual respect for each other, keeping relationships in tact. Arguments often get heated and leave interpersonal relationships as road kill.
Here’s where the CEO plays an important role in building this culture. CEOs not only are responsible for leveling the playing field between stakeholders to ensure that they debate, but also for carrying the burden of acting as referee. As referee CEOs need to make sure that the nature and tone of the debates remain constructive in the short and long term. This means not only helping the team navigate each individual decision, but also facilitating conversations about how the team talks to each other to ensure that emotional scar tissue isn’t collecting within any stakeholder.
That’s A Wrap
There is no one-size-fits-all culture. But there are philosophies that should be consciously considered by CEOs. Figuring out culture as an afterthought is negligent and dangerous.
While there are lots of dimensions to culture, the culture of decision making is by far one of the most important.
My recommendation: Hire really smart people who know their respective fields very well. Encourage them to debate constructively. And, get out of the way.
Seeking: Frontend Web Designer / CSS / HTML
We are seeking an expert Web designer with excellent HTML and CSS skills to join our team. The right individual will have experience designing consumer facing web applications, a strong foundation in modern design principles (semantic markup, grid systems, prototyping in browser, OOCSS, etc.), and will be as passionate about building great designs as they are about creating them.
The front-end designer has primary responsibility for making sure the features we dream up are executed with the best possible user experience.
This is a full-time, on-site job. No telecommuting.
- Frontend Web design and development in CSS and HTML
- Work directly with PHP Developers and Web Designer to ensure the frontend interface works and looks as designed and specified
- Markup ninja - you can explain the difference between <article> and <section>
- Understanding of OOCSS and familiarity with Sass
- Must be able to hand code HTML and CSS
Other things we care about:
- You are passionate about modern design best practices
- You have a github profile
- You have strong opinions and an open mind
- You have experience working with developers in a fast-paced agile environment
- You pay attention to detail, but understand how to ship code
- You're curious and love learn
Email a resume or letter expressing your interest in the position to email@example.com
A shiver goes down my spine when I hear a VC refer to a portfolio company as “my company” or a CEO as “my CEO.” The implicit suggestion is that VCs are kings and the lowly founder is the grunt that exists only to humbly serve their capital-holding master. Ugh.
And, it goes both ways. It’s not uncommon for a founder to poo-poo the importance of investors since they’re not operating day-to-day.
As both an entrepreneur and a VC – I deeply believe that these perspectives are not only wrong, they’re foolish.
As a VC, I do understand why VC’s might claim seniority. After all, VCs typically join the boards of their companies and boards have the ability to fire CEOs. So, don’t CEOs work for them?
Furthering the confusion are the rights granted specifically to holders of preferred equity. VCs might be able to veto a sale or the issuance of any new security, so doesn’t the buck stop with them? Well…sometimes it does.
But hang on, entrepreneurs can easily point to another set of facts that suggest they are the heirs to the throne:
- Founders typically own far more of the company’s stock than any single investor.
- They often represent half or more of the board, meaning that they’re the real bosses of their CEO-selves and equals to investors in the board capacity.
- And, founders usually have the loyalty of the team – meaning that they hold much of the fate of the company in their hands.
One could argue that this fact pattern makes founders the rulers of their startupland.
So, here’s the thing…when you zoom in on the complex relationships that founders and investors typically have, it’s really hard to tell who is actually the boss. Each party holds different types of leverage in different situations. It’s a carefully crafted relationship designed to protect both parties from risk factors there are specific to their role in the company.
So if arrangement between VCs and founders makes sense and there are mixed rights assigned to each party…why are we trying to figure out who is more important? Why do we care?
Perceptions of seniority or subordination by either party are just…well…perceptions. They’re useless and they don’t affect how the company is actually managed.
The reality is that investors and operators are PARTNERS in a venture. They’re each contributing different assets, with different rights in order to achieve a common objective: the creation of shareholder value.
All of the hubbub about seniority and subordination from both sides is a weak attempt to selectively looking at fact patterns that support egos. But, business isn’t about egos, it’s about progress.
So why is this an issue?
The main reason is that egos can make for bad work environments and unproductive relationships. Entrepreneurs don’t want to be insulted or talked down to by their investors. And, investors want entrepreneurs to respect their input and support their objectives. Egos can get in the way of true collaboration.
So what can an entrepreneur do?
First, you need to understand that all of your investors want and deserve your respect – they’re your partners after all.
Second, when you’re picking your investors you should seek capital from those that understand this concept. While taking capital from “bosses” can be a big downer, there is nothing better than obtaining the building a bench of highly supportive partners.
When you’re setting out to hire sales people it’s important to know what type of sale you’re making. While there are many distinctions in the types of sales that companies make, one noteworthy paradigm is what I call the Pro vs. Bro sale.
A “Pro” sale means selling to a professional audience in a professional way. Whether a small or large corporation, the rapport developed with the client centers around the quality of the product or service, the company’s reputation and the pricing. Generally, these are more professional settings and feel a little stiffer in style.
The other type of sale is what I call a “Bro” sale. Bro sales are done through more casual and social interactions. In order to do this, the sales person needs to meet the client somewhere casual, let their guard down and be much more of a genuine person (and less of a suit) to the customer. This allows them to develop a personal relationship with the customer. The bro sale comes from the heart.
Ultimately, the distinction between these two approaches is a function of the degree of interpersonal relationship developed with the customer.
While I naturally gravitate toward the latter (as it always feels better to me to get to know the people on the other side of the table) both approaches can work. What’s important is understanding what type of sale is going to be appropriate with your customers. If your customers are rigid and not open to developing a personal relationship with vendors, you should hire people who can navigate a pro sale. If your customers are people first and customers second, hiring a team of bro-sellers can pay big dividends.
When I was in High School I taped a picture of the next guy I was going to wrestle to my bathroom mirror. I stared him down as I scrubbed my teeth every morning. I was on a mission to beat him physically and mentally. It was a winner-take-all world, and I never learned to like losing.
My preparation for a match wasn’t unique. Frankly, I stole it from a cheesy over-watched 80’s movie. I’d bet that 20% of the homes on the block had a similar photo taped to the mirror. One of them probably was a photo of me.
That competitive perspective is beat into many of us, whether athlete or not, from a young age. We’re consistently setup in winner-take-all games in life. You get promoted or he does. You get the A or she does.
Our society figured out long ago that people are self-interested, making competitive dynamics effective at driving performance.
This is why when entrepreneurs land in the founder role they typically start staring down their competition.
While focusing on winning is good, real life is full of shades of gray. In the real world few systems have zero-sum outcomes – many players can succeed or fail simultaneously. For those of us trained to think myopically about conquering our opposition, we might miss an important nuance; while it’s important to out do your competition, their existence and their success is typically good for you and your company.
Put another way, you should try to beat your competition at the same time that you cheer them on. (Who said life isn’t complicated?)
When your competition succeeds they can help you be more successful. Here are some examples:
- When your competition teaches customers how to use the new type of service, they make it easier for you to sell.
- When your competition validates the business model, it can be easier for you to raise capital from investors.
- When your competition achieves liquidity (through the public markets or otherwise), they might want to buy you.
And…there’s another reason. When your competition scales, they’ll likely become bureaucratic making it easier for you to out-maneuver them. If they’re not going to wake up one morning and leave the market so that you can acquire all of their customers, you might just be better off if they succeed to the point where you can beat them.
I just came across this TED talk. Very interesting thinking about human psychology that has implications for product and pricing decisions.
Any plan to transform an entire country into a thriving startup ecosystem is a lofty goal for a mere mortal. Despite that, Fernando Napolitano has set out to do just that.
Fernando organized a conference in Rome that took place this last Friday. This one-day event was a call to the government, captains of industry, academia and entrepreneurs to come together to transform Italy in three years. While the mission seems daunting, he garnered support from many of Italy’s most prominent leaders. Through the course of a single track of speakers and panels he brought four ministers of the Italian government (Trade, Education, Foreign Affairs, etc.), the CEOs of the eight largest corporations in Italy (AlItalia, Enel, MediaSet and others), Presidents of Universities and the US Ambassador to Italy.
My role in the day’s events was to speak about how community is a key ingredient of a startup ecosystem. Drawing on my experiences with the Columbia Venture Community, the New York Venture Community and what we’re doing at Kohort, I tried to impart two bits of wisdom:
- Communities are essential as they provide peer education and they help would-be entrepreneurs overcome their fears of taking risk.
- Communities need to be built by entrepreneurs.
While it seemed everyone in attendance was excited about the mission and the massive support that the event garnered, there were a few folks at the event who expressed their skepticism about the viability of such radical change.
While I suspect that Rome will not transform into Silicon Valley over night, Fernando is already having an impact. Through his Fulbright BEST program, he has already incubated several dozen startups.
The skepticism is not unfounded, however. In order to change an entire country it will take the effort of more than a few. But, if other people stand up and follow the lead of Fernando, change can happen.
If you’re reading this and want to stand up and help carry this mantle, let me know – Fernando and I are working on parallel paths. It is my hope to spread the model we built for the Columbia Venture Community and the New York Venture Community to every university and region that will take it (including those in Italy).
If we act, we can drive change. Don’t be afraid.