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I was a CEO once. In my first real company, Feld Technologies, there were two founders – me and Dave Jilk. I was President (we didn’t use the CEO title then, but as the President, I was the “chief executive officer”) and Dave was Vice President. As we grew, other people had different titles, but the two of us ran the business.
I’ve been told that I was a good CEO, but after about ten people I didn’t like the role of CEO. But we stayed after it and built a successful company that was consistently profitable and acquired by a public company in 1993 for a few million dollars.
At the time it was acquired, we had 20 people. For the next nine months, I ran the consulting group of this public company. I reported to the two co-chairman and we quickly scaled up to 50 people in two offices. By the time we got to 50 people, I hated being the CEO of consulting group (I have no recollection what my title was, but again my role was the CEO role of this group.)
The parent company acquired a much larger consulting company – about 200 people – and I quickly handed the keys over to the new CEO (well, President) allowing Feld Technologies to become two of the branch offices of what ended up being AmeriData Consulting.
I have never wanted to be a CEO since. It’s a really hard job. Some people love it. Some people are outstanding at it. Everyone I’ve ever worked with in the role has struggled immensely at different points in time.
And some people grow to hate the role.
Recently, Rand Fishkin, the CEO of Moz, took an incredibly brave step. In his post Swapping Drivers on this Long Road Trip Together, he handed the CEO role over to his long time business partner Sarah Bird. As of January 15th, Sarah will formally become CEO and Rand will become an individual contributor on the executive team, reporting to Sarah.
We invested in Moz in April 2012. Rand wrote an epic blog on the financing titled Moz’s $18 Million Venture Financing: Our Story, Metrics and Future. It was so epic that the mainstream tech press didn’t really want to report on the financing since there was no new information they could discover, since Rand blogged every last detail.
Since that date, I’ve developed a professional love affair with Rand and Sarah. As an investor, I have no hesitancy to become close friends with the entrepreneurs we invest in. Rand and his wife Geraldine have become extremely good friends, and I have deep respect and affection for Sarah.
In the middle of 2013, Rand called me up and said “What do you think of the idea of me handing over the CEO reins to Sarah?” I reacted immediately with “That would be awesome.” There was silence – I don’t think Rand expected that reaction.
I knew Rand was unhappy as CEO. He was exhausted in his role. He had a strong senior team but carried around every ounce of stress and responsibility for all aspects of the business. He traveled constantly evangelizing Moz, SEO, and marketing. He loved certain aspects of what he was doing, but hated others. And many of the ones he hated were the ones that a CEO of a scaling business is responsible for.
I recognized this. It’s the same stuff I would hate if I ran a company the size and stage of Moz. It’s the stuff I hated when I was co-chairman of a 1,000 person public company and effectively acting CEO since the CEO we had recruited bailed after accepting the job, leaving us with a four month scramble to find a new CEO. It’s the stuff I remember hating leading a company of 50 people.
Now, Rand and I are different people. But he’s special. And magical. And amazing. And his special, magic, amazingness was being squandered as CEO, especially when he sat next to Sarah, who will be an awesome CEO while allowing Rand to be special, magical, and amazing in the next chapter of Moz.
I’m so incredibly proud of Rand for how he’s approached this, talked openly about it, and dealt with his own emotions, insecurities, and fears around this decision. And I’m extremely excited about Sarah become CEO and unleashing her talents on the new wave of growth at Moz, while Rand spends his time being true to what he loves in the context of Moz.
Building a company is hard. Being a CEO is hard. Working with people you trust, admire, and adore is a delight.
Phin Barnes at First Round Capital just nails it today with his post To get the most out of your investors, turn them into rubber ducks.
Go read it – I’ll wait and will be here when you get back.
I love Rubber Duck Debugging. I use this approach when writing, which I call “Writing with Yoda.” I have a little Yoda figurine staring at me at all times and when I stall out I just talk to him for a little while and then get started again. He always looks serene and wise and I almost always get going after talking to him for a little while.
Phin describes five steps to turn your investors into rubber ducks:
- Frame the problem you are facing: describe the challenge in enough detail that I can understand it without being an expert (because I am probably not an expert)
- Create context for an answer: Explain why this problem is a priority for you and the business and why you need to solve it now (because I am not involved in the day to day operation of your company)
- Propose a few solutions: Describe a few paths you might take and talk through how you would choose between them (this helps me understand the outcome you want to achieve)
- Be patient: Be open and engage deeply in the questions that I have and explain your answers with specific detail (even if it seems obvious)
- Be active: The goal is to debug the system and the builder is most likely to find the bugs we seek (and to see others along the way)
These are similar to how to engage a great mentor, which we teach over and over again in Techstars – both to the entrepreneurs and the mentors. If you’ve ever done a Top of Mind Drill with me, you’ll recognize the Rubber Duck approach with one twist – storytelling.
I’m a storyteller. I learned this from my dad. It’s part of why I love to write – it’s a way for me to think out loud and figure stuff out while telling stories. So – my favorite Rubber Ducks are the ones who can also tell stories, at the right time.
The risk of a Rubber Duck only approach as a VC is that you become overly socratic. We all know the VC who just asks question after question after question. The questions are often good, and they drive you deeper into the problem, but at some point you need to take a break. You need a breath from answering more questions. You need an analogy to relate to.
This is when the Rubber Duck should tell a story.
At a board meeting recently, the CEO looked at me and said “just tell me the fucking answer.” So I did. And that works also. But not until the CEO wants that. Until then, be a Rubber Duck.
Remember – the CEO makes the decision, not the VC. Unless the CEO explicitly asks. And – if as a VC you don’t trust the CEO to make the decision, you have that discussion with the CEO right now. And if you are a CEO who’s VCs aren’t letting you make the decisions, buy them some Rubber Ducks.
Matt Blumberg‘s amazing new book Startup CEO: A Field Guide to Scaling Up Your Business is out and shipping. The early reviews are great, including this detailed one from Tech Cocktail.
Matt’s book is already having an impact in my world. At Cheezburger, we just added Scott Moore to the leadership team. Ben Huh, the founder/CEO who I adore and love working with, send out a powerful email about how he’s approaching Cheezburger’s next stage of growth, and how he’s thinking about building the business operating system. He builds off many of the concepts in Matt’s book and told me I was free to blog this for the world to see.
Following is Ben’s email.
After recruiting our new COO & President Scoot Moore, I am shifting one of my major projects to on boarding Scott. I’m kicking off the process of building the business Operating System for Cheezburger. This is a super important item that I am thrilled to get started on.
It’s perfect timing for us. As COO & President, Scott has management responsibility for a huge area of Cheezburger. By building the metrics, communication rhythms, reports, etc. I can really help Scott get a feel for our business and where we stand as we plan for 2014. It’s one part communication, one part feedback process, and one part creating clarity.
A business Operating System is a simple idea:
- Using the company’s values (of Truth, Excellence, and Happiness)…
- create a set of consistent rhythm for communications, meetings, procedures and decision-making…
- which helps align everyone’s goals with the ultimate objectives of the company.
Put in other words: A business OS is how we consistently and clearly communicate, hire, make decisions, etc. that help us do more faster.
In practice, this comes down to some answers to questions like this: (examples)
- When do we plan for the next year? And who owns the process?
- How do I measure my performance against my, or my team’s goals?
- I need another person on my team to help better reach my team’s goals. How do I go about doing that?
- I’d like to send out a company-wide update on something my team did. How do I do that?
- How do I know what I am working on aligns with the company’s goals?
- What metrics do we report company-wide? And why?
- etc. etc. etc.
It’s an idea I first heard from another Foundry Group CEO, Matt Blumberg. In fact, he’s written a book based on those ideas.
One of the key improvements you should see as a result of this should be more consistency and clarity in communications and processes. This is one of the reasons why I push for a single IT system like Google Drive vs having two, and why I want you to post content for dissemination in our intranet. I hope that the OS will help you see the bigger picture. The opposite of having an effective business OS is a company that is confused due to lack of clarity and unable to move in the same direction together, therefore missing goals and opportunities.
There are 6 key areas that I want to structure the OS around (this will evolve as I work with Scott and the exec team):
- Company-wide communications and meetings
- Creating, aligning, and sharing goals
- Measuring performance against goals and metrics
- Establishing cadence, rhythm, and deadlines
- Clarity in decision-making process, transparency, and openness
- Well-functioning systems and operational processes
For you, the impact will be that I will be talking about almost everything in the context of our Culture/Values, Goals/KPIs/Metrics, and Systems/Processes.
Matt Blumberg’s new book, Startup CEO: A Field Guide to Scaling Up Your Business, is about to come out. If you are a CEO and haven’t preordered it, I recommend you go get it right now.
I had a chat with a CEO I work with who has had a challenging year scaling up his company. He – and the company – have made a lot of progress after hitting a low point this spring. After the call, he sent me the following note he has pasted on his desk.
1. Lead by example by holding myself and all accountable, no matter how hard.
2. Set the overall vision and strategy of the company and communicate it to all stakeholders.
3. Recruit, hire, and retain the very best talent and inspire them.
4. Makes sure there is always enough cash in the bank.
5. Be the advocate for the customer over the company’s short-term needs.
6. Drive the execution and evolve the operating system.
7. Champion the company and our mission to the world.
You might recognize #2, 3, and 4 from Fred Wilson’s magnificent post What A CEO Does. I give a talk for many of the Techstars CEOs called “How to be a Great CEO” and I focus the conversation around Fred’s points. Matt’s book also uses Fred’s three points as a framework. And when I think about how a CEO is doing, I always start with 2, 3, and 4.
I’ve come to believe that you can’t be a great CEO if you don’t do these three things. But, great CEOs do many more than just these three things. So – I view them as “price of admission” – if you can’t / aren’t doing these three things, you won’t be a great CEO.
I always encourage the CEOs I talk with to create a clear framework for what they are doing. What you are doing, and spending time on, will change over time based on the stage of your company. When you are 10 people, you’ll have a different set of priorities then when you are 100, or a 1,000 people. But having a clear framework for what you, and how you do it, is powerful.
I love what this CEO has done to make Fred’s framework his own. Notice that each sentence starts out with the imperative form of an action verb (Amy told me that – doesn’t it sound smart!) – basically a statement of action. Lead, set, recruit, make, be, drive, champion. Great words.
If you break it down, it also defines a value set for the CEO, and for the company.
Finally, you are going to hear a lot more from me about the Company Operation System (what you see in #6). That’s the essence of what Matt Blumberg has figured out in scaling up Return Path, and uses to define his approach to scaling a business in Startup CEO: A Field Guide to Scaling Up Your Business.
My experience with all of this is that it’s incredibly hard, breaks regularly at different points in the life of a company, and requires a great CEO to continually grow and learn from mistakes, adjust course based on new information, and work diligently at being honest with himself, his team, and his board about what is going on. But, if you get it right, it’s magical.
I’m doing a one hour CEO roundtable on an “about weekly basis” with each of the Techstars classes. Yesterday I did a face to face with the Techstars Boulder CEOs (they are across the hall from my office) and then I did my meetings with the Techstars Chicago CEOs and the Kaplan EdTech Accelerator CEOs by video conference.
This is a new experiment for me. I’m trying a different approach to mentoring the Techstars teams this year. I’m still a lead mentor for two of the Boulder teams (Kato and SnowShoe) but for all the other programs, including Boulder, I’m trying a weekly one hour CEO only session.
One of my big goals is to generate more peer interaction between the CEOs of the various companies. We do this aggressively within the Foundry Group portfolio and it’s one of the really powerful things about Techstars. But historically it’s been adhoc and random, rather than in an organized way. This is an effort to get the CEOs to really bond with every one of the other CEOs during the program.
So far the experiment is working great from my perspective. I’m stunned by the depth of the conversation and I can see the relationship dynamics being very broad as well as intellectually and emotionally intense.
Each of the three meetings yesterday were totally different, as Techstars Boulder is in week 8, Techstars Chicago is in week 4, and Kaplan EdTech is in week 2. As I was taking a shower this morning, I kept thinking about the rant I went on during the last 10 minutes of the meeting with the Techstars Chicago CEOs.
By week 4, a team is deep in things. The stress is showing. Everyone is tired and working at their max capacity. They’ve been exposed to a wide range of mentors and lots of conflicting data. Stuff is breaking all the time. Everything is uncomfortable and – in some cases – distressing.
In reaction to a particular conversation, I strung together quotes from three of my favorite books about entrepreneurship. The rant went as follows:
- “It’s not that I don’t suffer, it’s that I know the unimportance of suffering.” – John Galt in Atlas Shrugged
- “Fear is the mind-killer.” - the Bene Gesserit is Dune
- “Anxiety, the next gumption trap, is sort of the opposite of ego. You’re so sure you’ll do everything wrong you’re afraid to do anything at all.” – Robert Pirsig in Zen and the Art of Motorcycle Maintenance
I used the quotes as the anchors on a longer rant, but I did it extemporaneously. I hadn’t realized how nicely these quotes fit together until this particular moment, prompted by the particular situation. In hindsight, the only quote I forgot was my favorite of all time – “Do or do not, there is no try.” – Yoda.
And – it reminded me that three books should be on every Startup CEO’s reading list along with Matt Blumberg’s new book, Startup CEO.