This is the second post in the series…. the first one When to hire your first Chief People Officer is here).

While all CXOs are important to a company, the Chief People Officer is the one role you don’t want to get wrong because People Ops impacts every facet of a company. If you hire the wrong people—even one wrong person—you’ll regret it, and so will everyone else in your company. If you short-change the onboarding process you’ll create tons of work for others in the company to answer questions, teach people the systems, and help them get up to speed quickly—not to mention the frustration of the new hire. And of course, if you or your employees do anything illegal, discriminatory, or harassing, you’ll end up in legal trouble and you’ll lose—big time. So, it’s not enough, if you’re expanding rapidly, to “just get a Chief People Officer,” you need to hire a great Chief People Officer and I have found that great Chief People Officers do three things particularly well:

The most important characteristic or attribute of a great Chief People Officer is that they believe their function is strategic. In Startup CXO Chief People Officer Cathy Hawtrey wrote about the ways in which HR/People can be a strategic function and not just a tactical corporate function.  It’s true of most functions, but for whatever reason, (likely past experience), HR leaders frequently don’t view themselves or their functions as strategic, which is not only a huge missed opportunity but maybe says something more important about the confidence level of the Chief People Officer.  If that’s their frame of reference, then they will likely be tactical managers, they’ll keep the trains running on time, but you won’t be able to anticipate the changing talent landscape, much less be strategic about it.  If they believe they can move the needle on the business by improving engagement and productivity and efficiency, if they believe they can make the executive team more effective by helping you with team facilitation and coaching…they can do anything.

A second important characteristic of the Chief People Officer is courage—they have the courage to call you (you, the CEO) out on things directly and firmly when they see you doing or saying anything that is a bit off. It could be around language, inclusion, values, authenticity, or anything else, but they don’t let it slide or ignore it. The CPO, along with you, are the principal stewards of the company’s values and culture.  Even the best CEOs benefit from having a watchdog from time to time.

A third critical trait of a great Chief People Officer is that they think about investment in People in terms of ROI.  It’s one thing to run a killer recruiting function and fill seats efficiently, with high quality, as asked.  It’s an entirely different thing to start the recruiting process by asking if the role is needed, at that level and compensation band, or whether there are other people, fractional people, contractors, or shifts in lower value activities that could be put to work instead.  Only heads of People with deep understandings of the business can transform the function from a gatekeeper/”no” role into a business accelerator.

A great Chief People Officer is all of these things—strategic, courageous, and financially astute. Above all, great Chief people Officers know that they are the role model within a company and that their behavior, their language, their inclusiveness is setting the tone and providing a template for others to follow. 

(You can find this post on the Bolster Blog here)

Post 4 of 4 in the series of Scaling CMO’s- the other posts are, When to Hire your First Chief Customer Officer, What does Great Look like in a Chief Customer Officer and Signs your Chief Customer Officer isn’t Scaling.

You can engage with each person on the executive team one-on-one to understand what their issues and challenges are, but I’ve found that engaging with the CCO offsite with customers is far more productive and leads to a better understanding of the service organization than any other meeting time. I have typically spent the most time with or gotten the most value out of CCOs over the years doing the following.

In person at “Canary in the Coal Mine” customers. They don’t use canaries any more in coal mines, but the principle applies to companies: What are the early warning signs that you’ve got big problems looming? The earlier you discover those problems the better, and the CCO is usually the first person to figure out that something isn’t right with your product or service. I always find that the largest clients, the most demanding ones, the ones who push you around, the ones who are highly critical or you, are the ones who make your company a better company.  At Return Path, we had those types of clients over the years, from eBay, to DoubleClick, to Microsoft, to Groupon, to Facebook, to Bank of America—and that’s just the short list off the top of my mind.  The demanding customer is the one who breaks things and forces you to own up to your lack of scalability.  They also either take you to task or threaten to pull their business if you don’t clean up your act.  As painful as some of those meetings are, they are also ones I always wanted to attend in person with my CCO, both so I could eat whatever form of crow needed to be eaten as the Chief Crow Eater (which sends a very powerful message to the customer), and also because the CCO and I could experience the chirping of the canary in the coal mine and learn from the experience together.

While it’s important to engage with the CCO in the critical meetings with demanding customers, it’s also important to understand the base.  There’s an old saying from the hardware world that goes, “God was able to create the world in only 7 days because God didn’t have an installed base.”  The new world of Internet technologies, SaaS, and agile development is one where your installed base of customers is your biggest asset, not a millstone around your neck.  Some of the most meaningful experiences I had over the years with our CCOs was to be in market, spending time with all kinds of customers together in small groups and large, deeply understanding their needs and use of our product.

The CCO role is one that is easy to ignore or put on the back burner if things are going smoothly at your company, but as CEO I feel that it is best to stay close to the market and engaging with the CCO with demanding customers and with the base is a good way to understand your company and CCO better.

(You can find this post on the Bolster Blog here)

Someone asked me the other day how things are going at Bolster, the new company I started along with a bunch of long-time colleagues from Return Path last year. My visceral answer was “I’m having a blast!”  I thought about it more after and came up with five reasons why. 

First, I am working with a hand-picked group of people. My co-founders, I’ve worked with for an average of 15 years – we know and trust each other tremendously. And for the most part, the same is true about our cap table. Almost everyone else at the company is also someone multiple of us have known or worked with for years. That may not last forever, but it makes things so much easier and almost friction-free out of the gate here. 

Second, this is the “second lap around the track” for a few of us on the founding team in terms of starting something from scratch, and even those at the company who haven’t done a raw startup before are super experienced professionals and many have worked in and around early stage businesses a lot. All this combines to cut down our error rate, reduce anxiety, and speed up the pace of work. More friction-free or at least low-friction work.

Third, after a 20-year run at Return Path, it’s great to start with a clean slate. No mountains of tech debt and legacy code bases. No installed base of customers with contracts or pricing we no longer like or offer. No institutional debt like a messy cap table, legacy people issues, leases for offices we don’t want or need any more.  This also points to low friction as part of what’s going on…and while that’s a theme, the next two areas are different. 

The fourth reason I’m having a blast at Bolster is that I love — and really live in — the problem space we are working in.  When we started Return Path, I was deeply familiar with email marketing and the challenges faced by our client set and had a good vision for the early product.  But as the years went on, the product got geekier and nicher — and even when it wasn’t, I was never a USER of the product since I’m not an email marketer.  In fact, at our peak of 500 people, the company employed one email marketer and therefore had one user of our own product.  At Bolster, we have three user personas — Member, Client, and Partner.  And I’m all three of them.  I’m constantly in the product, multiple times a day.  I’m deeply familiar with all angles of the executive search and board building process.  It’s MUCH better to be this close to the product, and the same is true for many of our team members.

Finally, the thing I was really worried about with starting another company from scratch — moving from a leadership role into an individual contributor role — has been nothing short of fantastic.  I love working with clients.  I love talking to members.  I love advising and coaching CEOs. I love being a pretend product manager.  I love writing marketing copy.  It’s just great to be on the front lines. (I still love working on strategy and leading the board and engaging with people internally — but those are things that never stopped being part of my day to day.)

I was trying to think if there’s some priority to this list. Almost all of these items are or can be made to be true in your second+ startup. But while four of the five can theoretically be true in your first startup as well, I don’t think it’s quite the same. So I’d have to weight “second lap around the track” a bit higher and also note that during your second lap around the track, hand-picking your team and cap table, appreciating a clean slate, and appreciating individual contributor work are that much easier and things you can appreciate a lot more as a repeat entrepreneur.

I Don’t Want to Be Your Friend (Today), part III

My first thought when my colleague Jen Goldman forwarded me a SlideShare presentation that was 224 pages long was, “really?”  But a short 10 minutes and 224 clicks later, I am glad I spent the time on it.

Paul Adams, a Senior User Experience Researcher at Google, put the presentation up called The Real Life Social Network.  Paul describes the problem I discuss in Part I and Part II of this series much more eloquently than I have, with great real world examples and thoughts for web designers at the end.

If you’re involved in social media and want to start breaking away from the “one size of friend fits all” mentality – this is a great use of time.

A couple of months ago, I was doing an internal lunch & learn for senior managers, and the topic came up as to “how do our VC firms work?”  In the spirit of deeply understanding our customers’ businesses in order to better serve them, I thought the same would be true of our investors and Board members – that educating our team on the inner workings and economics of our investors would lead to greater empathy of one of our other key stakeholders.

So with no small amount of help from my long-time investor and director Brad Feld and his colleague Jason Mendelson, whose book Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist I contributed to in a very small way by writing a series of sidebars called “The Entrepreneur’s Perspective” (that process led to my writing Startup CEO), I pulled together this presentation available on Slideshare entitled How Venture Capital Firms Work and Why You Should Care.

I redacted our cap table and pictures of our VCs, but otherwise, feel free to use it with your own management team, or even your whole company.

I’ve always been a big believer in the consistent application frameworks for business thinking and decision-making.  Frameworks are just a great starting point to spark conversation and organize thinking, especially when you’re faced with a new situation.  Last year, I read Tom Friedman’s new book, Thank You for Being Late: An Optimist’s Guide to Thriving in the Age of Accelerations, and he had this great line that reminded me of the power of frameworks and that it extends far beyond business decision-making:

When you put your value set together with your analysis of how the Machine works and your understanding of how it is affecting people and culture in different contexts, you have a worldview that you can then apply to all kinds of situations to produce your opinions. Just as a data scientist needs an algorithm to cut through all the unstructured data and all the noise to see the relevant patterns, an opinion writer needs a worldview to create heat and light. 

In Startup CEO, I wrote about a bunch of different frameworks we have used over the years at Return Path, from vetting new business ideas to selecting a type of capital and investor for a capital raise.  I blogged about a new one that I learned from my dad a few months ago on delegation.  One of my favorite business authors, Geoffrey Moore, has developed more frameworks than I can count and remember about product and product-market fit.

But all frameworks can go stale over time, and they can also get bogged down and confused with pattern recognition, which has limitations.  To that end, Friedman also addressed this point:

But to keep that worldview fresh and relevant…you have to be constantly reporting and learning—more so today than ever. Anyone who falls back on tried-and-true formulae or dogmatisms in a world changing this fast is asking for trouble. Indeed, as the world becomes more interdependent and complex, it becomes more vital than ever to widen your aperture and to synthesize more perspectives.

Again, although Friedman talks about this in relation to journalism, the same can be applied to business.  Take even the most basic framework, the infamous BCG “Growth/Share Matrix” that compares Market Growth and Market Share and divides your businesses into Dogs, Cash Cows, Question Marks, and Stars.  Digital Marketing has disrupted some of the core economics of firms, so there are a number of businesses that you might previously have said were in the Dog quadrant but due to improved economics of customer acquisition can either be moved into Cash Cow or at least Question Mark.  Or maybe the 2×2 isn’t absolute any more, and it now needs to be a 2×3.

The business world is dynamic, and frameworks, ever important, need to keep pace as well.

Give the Gift of a 360 to Your Board of Directors

I recently ran our biennial Board 360, and I thought it would be interesting to share the details.  Attached are a few pages from, my book, Startup CEO:  A Field Guide to Scaling Up Your Business  which describe the process as well as share the survey I developed, which I adapted from one that the legendary Bill Campbell uses at larger public companies like Intuit.

If you’ve read this blog a lot over the years, you know that we are big on 360s for staff at all levels at Return Path , and at some point a few years ago, I thought, “hmmm, shouldn’t we do this for the Board as well?”

Most of our directors had never been part of one before as Board members, and they reacted to it with varying levels of interest and trepidation.  But all of them loved the output and the discussion we had afterwards.  Extending the level of transparency we have internally to the Board was a great thing and a great use of time, and I think making the Board members review themselves and their peers critically and then seeing the results sharpened overall Board performance.

The document also shares the survey we use, which we have each director take anonymously and compile the results to share in Executive Session at a Board meeting.  We also ask a few members of the senior management team to fill out the survey as well so the Board gets feedback from them, too.

OnlyOnce – The Car

Not really contemplating a brand extension to my blog — the book is enough, but my friend Bill Wise just saw this car today in Larchmont, NY!

5 Ways to Get Your Staff on the Same Page

[This post first appeared as an article in Entrepreneur Magazine as part of a new series I’m publishing there in conjunction with my book, Startup CEO:  A Field Guide to Scaling Up Your Business]

When a major issue arises, is everybody at your company serving the same interests? Or is one person serving the engineering team, another person serving the sales team, one board member serving the VC fund, another serving the early-stage “angels” and another serving the CEO? If that’s the case, then your team is misaligned. No individual department’s interests are as important as the company’s.

To align everyone behind your company’s interests, you must first define and communicate those goals and needs. This requires five steps:

1. Define the mission. Be clear to everyone about where you’re going and how you’re going to get there (in keeping with your values).
2. Set annual priorities, goals, and targets. Turn the broader mission into something more concrete with prioritized goals and unambiguous success metrics.
3. Encourage bottom-up planning. You and your executive team need to set the major strategic goals for the company, but team members should design their own path to contribution. Just be sure that you or their managers check in with them to assure that they remain in synch with the company’s goals.
4. Facilitate the transparent flow of information and rigorous debate. To help people calibrate the success, or insufficiency, of their efforts, be transparent about how the organization is doing along the way. Your organization will make better decisions when everyone has what they need to have frank conversations and then make well-informed decisions.
5. Ensure that compensation supports alignment (or at least doesn’t fight it). As selfless as you want your employees to be, they’ll always prioritize their interests over the company’s. If those interests are aligned – especially when it comes to compensation – this reality of human nature simply won’t be a problem.

Taken in sequence, these steps are the formula for alignment. But if I had to single out one as the most important, it would be number 5: aligning individual incentives with companywide goals.

It’s always great to hear people say that they’d do their jobs even if they weren’t paid to, but the reality of post-lottery-jackpot job retention rates suggests otherwise. You, and every member of your team, “work” for pay. Whatever the details of your compensation plan, it’s crucial that it aligns your entire team behind the company’s best interests.

Don’t reward marketers for hitting marketing milestones while rewarding engineers to hit product milestones and back office personnel to keep the infrastructure humming. Reward everybody when the company hits its milestones.

The results of this system can be extraordinary:

• Department goals are in alignment with overall company goals. “Hitting product goals” shouldn’t matter unless those goals serve the overall health of your company. When every member of your executive team – including your CTO – is rewarded for the latter, it’s much easier to set goals as a company. There are no competing priorities: the only priority is serving the annual goals.
• Individual success metrics are in alignment with overall company success metrics. The one place where all companies probably have alignment between corporate and departmental goals is in sales. The success metrics that your sales team uses can’t be that far off from your overall goals for the company. With a unified incentive plan, you can bring every department into the same degree of alignment. Imagine your general counsel asking for less extraneous legal review in order to cut costs
• Resource allocation serves the company, rather than individual silos. If a department with its own compensation plan hits its (unique) metrics early, members of that team have no incentive to pitch in elsewhere; their bonuses are secure. But if everyone’s incentive depends on the entire company’s performance, get ready to watch product leads offering to share developers, unprompted.

This approach can only be taken so far: I can’t imagine an incentive system that doesn’t reward salespeople for individual performance. And while everyone benefits when things go well, if your company misses its goals, nobody should have occasion to celebrate. Everybody gets dinged if the company doesn’t meet its goals, no matter how well they or their departments performed. It’s a tough pill to swallow, but it also important preventive medicine.

Startup CEO “Bibliography”

A couple people who read Startup CEO:  A Field Guide to Scaling Up Your Business asked me if I would publish a list of all the other business books I refer to over the course of the book.  Here it is — I guess in some respects an all-time favorite list for me of business books.

• The Lean Startup by Eric Ries
• The Four Steps to the Epiphany by Steven Gary Blank
• Running Lean by Ash Maurya
• The Entrepreneur’s Guide to Customer Development: A Cheat Sheet to the Four Steps to the Epiphany by Brant Cooper and Patrick Vlaskovits
• Profitable Growth Is Everyone’s Business by Ram Charan
• The Innovator’s Dilemma by Clay Christensen
• The Innovator’s Solution by Clay Christensen
• Purple Cow by Seth Godin
• The Goal by Eliyahu M. Goldratt
• It’s Not Luck by Eliyahu M. Goldratt
• Blue Ocean Strategy by Chan Kim and Renee Mauborgne
• Crossing the Chasm by Geoffrey Moore
• Inside the Tornado by Geoffrey Moore
• Escape Velocity by Geoffrey Moore
• Climbing Mount Improbable by Richard Dawkins
• Topgrading by Brad Smart
• The One Minute Manager by Ken Blanchard
• Whale Done by Ken Blanchard
• High Output Management by Andy Grove
• Three Signs of a Miserable Job by Patrick Lencioni
• The Five Temptations of a CEO by Patrick Lencioni
• The Four Obsessions of an Extraordinary Executive by Patrick Lencioni
• Death by Meeting by Patrick Lencioni
• The Advantage: Why Organizational Health Trumps Everything Else in Business by Patrick Lencioni
• Hardball by George Stalk and Rob Lachenauer
• The Seven Habits of Highly Effective People by Stephen Covey
• The Eighth Habit by Stephen Covey
• Good to Great by Jim Collins
• Built to Last by Jim Collins

And here’s the list of books in Brad Feld’s Startup Revolution series other than Startup CEO:

• Startup Communities: Building and Entrepreneurial Ecosystem in Your City by Brad Feld
• Startup Life: Surviving and Thriving in a Relationship with an Entrepreneur by Brad Feld and Amy Batchelor
• Startup Metrics: Making sense of the numbers in your startup by Brad Feld (not yet published)
• Startup Boards: Getting the Most out of Your Board of Directors by Brad Feld and Mahendra Ramsinghani
• Venture Deals by Brad Feld and Jason Mendelson
• Do More Faster: TechStars Lessons to Accelerate Your Startup by Brad Feld and David Cohen

Unknown Unknowns