Brad's Books and Organizations

Books

Books

Organizations

Organizations

Hi, I’m Brad Feld, a managing director at the Foundry Group who lives in Boulder, Colorado. I invest in software and Internet companies around the US, run marathons and read a lot.

« swipe left for tags/categories

swipe right to go back »

Trust Can Scale

Comments (491)

Following is a guest post from Chris Moody. Chris is president and COO of Gnip, one of the silent killers in our portfolio. Once the main stream tech press starts noticing Gnip, they will be blown away at how big they got in such a short period of time by just executing. Chris is a huge part of this – he joined Gnip when they were 10 people and has been instrumental in working with Jud Valeski, Gnip’s founder and CEO, to build a mind blowing team, business, and market leadership position.

Following is a great email Chris sent me Friday night in advance of the Foundry Group “Scaling Your Company Conference”  which we are having this week for CEOs of companies we are investors in that are on the path from 50 to 500 people.

Startups that experience success are typically built upon a strong foundation of trust among the early founders/employees. This trust has been solidified through long days/nights in small offices working on hard problems together.  The amazing thing is that the founders don’t always realize that their company is even operating under an umbrella of trust or that trust is one of their core values.  Instead, they just know that it feels easy to make decisions and to get shit done.

When companies try to scale, one of the biggest mistakes they make is trying to replace trust with process.  This is rarely a conscious decision, it just feels necessary to add new rules in order to grow.  After all, there are a lot of new people coming into the company and it isn’t clear who of the new people can be trusted yet.

A startup obviously needs to add process in order to scale, but if you replace trust with process, you’ll rip the heart right out of your company.   When adding processes, ask yourself the following questions:

  • Does this new process help us go faster?
  • Does this new process help us be more efficient?

If the answer to these questions is “yes” you are off to a great start.

Now ask yourself “Are we adding this process because we don’t trust people to make decisions?”  If the answer to this question even has a hint of “maybe” you need to stop and really consider the cost of that process.

Replacing trust with process is like a cancer that will spread quickly and silently throughout the company.  One day you’ll wake up and think “this place doesn’t feel special any more” or ask yourself “why is it so hard for us to get stuff done.”

Trust could be one of your most valuable company assets.  As a leader, you need to fight like hell to protect it.  If you are successful protecting trust, you’ll actually grow much faster and you’ll still have a place where people love working.

I’ve seen trust work at a 700 person company.  Trust can scale.

Enhanced by Zemanta

The Simple Formal Beginnings Of Feld Technologies

Comments (462)

My first business partner, Dave Jilk, emailed me our original partnership agreement for Feld Technologies. It’s one page.

 

We incorporated a month later as an S-Corp. It cost us $99 to do this – I remember using an organization called The Company Corporation - we called an 800 number, gave them some information, and the documents were automatically generated and filed. A short letter agreement specifying the equity splits and the boilerplate legal docs were the only legal docs we had until we sold the company in 1993.

As my partner Jason Mendelson told me after I sent him this the other day, “If things go well, it’s fine. If they don’t, it’s a fucking disaster.”  And he’s completely correct – in this case things went well so there were no issues.

I continue to try to do deals this way. I lay out the terms, will negotiate a little, but am clear about what I want. If it works, great. If it doesn’t, I move on. Once the simple terms are agreed to, I let the lawyers generate hundreds of pages of documentation to support the deal. I used to read every word on every page myself (I learned that from Len Fassler, who bought Feld Technologies). I still look through the documents, but I only work with lawyers who I deeply trust to do it right (like Mike Platt at Cooley) so I focus on the stuff that matters for the specific deal.

Trust matters more than anything else to me in a deal. Sure, I occasionally get screwed in a deal, but never more than once by the same person. And, for people like Dave Jilk and my dad, I’ll work with them over and over and over again because I trust them with my life.

Keep it simple. It’s much better.

Implied Suspicion Versus Implied Trust

Comments (51)

I just had an exchange with an entrepreneur that I don’t know.  It went something like the following via several emails over the course of a week.

Entrepreneur: I’m working on something really amazing that I’m looking for funding for.  Can we get together to discuss?

Me: Can you send me a short email overview so I can tell you whether or not it’s something we’d be interested in exploring?  I don’t want to waste your time if it’s not.

Entrepreneur: I’d much rather get together face to face.

Me: Can you send me a short email overview so I can tell you whether or not it’s something we’d be interested in exploring?  I don’t want to waste your time if it’s not.

Entrepreneur: My idea is special.  Will you sign an NDA first?

Me: I don’t sign NDA’s.  If you are unwilling to send me a short overview that you are comfortable sharing, then I don’t think I’m a good target for you.

<time passes>

Entrepreneur: Following is an email describing my idea.  Since you won’t sign an NDA, you agree that by reading beyond this paragraph you are agreeing not to share my idea with anyone, forward this email to anyone, or discuss the idea without my consent.

Me: I have not read past the end of the first paragraph (“<paragraph copied>”).  I have permanently deleted this email from my inbox.

Entrepreneur: Why aren’t you willing to read my email?

Me: I’m unwilling to have an implied NDA applied to me via your email.  You seem to be operating from a perspective of “implied suspicion.”  I don’t work this way – I much prefer to operate from a perspective of “implied trust.”  Since you clearly don’t trust that I’ll behave responsibly, then I don’t think I’m a good match for working with you.

I’ve written about my “fuck me once” rule in the past.  In the book Do More Faster, I have a chapter about this – Wiley made me change the title to “Two Strikes and You Are Out” but the rule is the same.  I enter every new relationship from the perspective of implied trust and allow this trust to be violated once (where it’s my responsibility to bring up and address the violation.)  If there’s a second violation of trust, I’m done with the relationship.

I’ve generally decided not to engage in new relationships with people that approach things from a perspective of “implied suspicion.”  Yes, I know there are plenty of people in the world that behave badly, but I try really hard not to be one of them and when I do, I own my bad behavior, apologize, resolve things, and try to learn from the situation.  It’s easy to find out about me (both the good and the bad) if you are concerned about starting a relationship from a position of “implied trust” and – if you are interested in a relationship and unwilling to do the prep work to start from this perspective, I don’t really know what else to do other than disengage.

I spent some time thinking about whether this was an inappropriate, arrogant, or naive position from my perspective and decided it’s not.  I’m already completely maxed on “new relationships” so setting a certain type of expectation for the entry into a new relationship (namely one of “implied trust”) helps filter out relationships with people who I likely won’t connect with anyway since they have a 180-degree difference in their view of how to approach a new relationship.

I know there is an enormous amount of noise around the system about “how to protect your idea” and “how VCs behave around your idea” although in my experience the noise is completely disconnected from (and much louder than) the actual signal.  I’m curious what entrepreneurs think about this in the context of a first engagement with a potential VC investor that they don’t know.

More on Disclosure

Comments (200)

In response to my post The Dynamics of Full Disclosure, Jeffrey Kalmikoff – one of the co-founders of Skinnycorp (the dudes who do Threadless) wrote an add-on titled On trust, transparency and disclosureJeffrey came up to Keystone and spent Jewish Christmas with me and Micah Baldwin – we talked about a bunch of fun stuff, ate chinese food, and played a lot of Rock Band.  Good stuff Jeffrey.

Trust, The Healthcare System, and Saving My Dad’s Academic Life

Comments (5)

My father, Stan Feld, is a retired endocrinologist.  He wrote a beautiful blog post yesterday titled The Therapeutic Magic Of The Physician Patient Relationship: Part 1.  In it he tells the story of almost flunking out of first grade in the Bronx.  The punch line:

“There is no question in my mind that this approach to medical care and the therapeutic effect of the positive physician patient relationship saved my academic life.”

I’m left handed so I can completely relate to this story – I had an incredibly difficult time learning how to write legibly, although my parents (and teachers) were much more appropriate in how they chose to approach it.  My dad’s story, which is a powerful story for any parent to read, has several deep lessons it in, including ones around trust.

“The simple way to put it is medical care has and is being commoditized and dehumanized. These attributes are the common denominator to patients’ complaints about the medical care system in 2008. I cannot justify or condone physicians’ behavior.

Our healthcare system has to change. It must support the humanizing elements or the patient physician relationship. It has to nurture mutual trust rather than distrust between patients and physicians. A healthcare system that supports distrust, physician and patient penalties and adversarial interrelationships does not permit this princely profession to offer the kind of care physicians are capable of.”

I read my dad’s post yesterday before I wrote Valuing Competence vs. Loyalty.  While they address completely different contexts and circumstances, if you squint you’ll get the common thread between them both.  That thread is trust.

Build something great with me