Another Only Once Moment, Sort Of

I’ve never handed over the reins of a company before (no, I’m not leaving, and we aren’t selling Return Path).  But I did the other day, for the first time.  As many people know, last year we reorganized the company to focus entirely on deliverability and whitelisting and spun out Authentic Response, a company in the online market research business, into a completely separate entity. 

Since then, I have been CEO of both companies.  Although Return Path has had more of my focus — Authentic Response had excellent day-to-day leadership under Co-Presidents Jeff Mattes and Rob Mattes — I’ve still been working in both businesses.

Today, we officially announced the hiring of my replacement, Jim Follett.  Jim was formerly CEO of Survey Sampling, a larger company in the online market research business, and has over 20 years of prior experience as a senior executive in market research and information services companies.  While we still share the office in New York and I will stay on as Chairman, the percentage of time I can now devote to Return Path is now 100% — the first time it’s ever been that way (for the deliverability business).

I didn’t start Authentic Response, and I’ve never been deep in the bones of the business the way I am Return Path.  Even so, I definitely experienced a range of emotions at our all-hands meeting where we introduced Jim to the company that I don’t regularly experience at the same time:  mainly a mix of pride in the work the team has done on my watch, excitement for the business, and sadness at not working quite as closely with the nearly 100 people in Authentic Response going forward.

I’m sure someday, I will hand over the reins to Return Path.  No time soon, but that day eventually comes for every entrepreneur.  If this was a preview, it will be an emotional day.

But for now, I’m mainly happy to welcome Jim to the family, and I’m excited for the entire Authentic Response business as it embarks on the next chapter in the company’s journey.

The Social Aspects of Running a Board

I’ve posted about the the topic of Boards of Directors a couple of times before, here and here.  We had one of our quarterly in-person Board meetings yesterday, which I always enjoy, and one of my directors pointed out that I never posted about the social aspects of running a Board.  Since this is a critical component of the job, it is certainly worth mentioning.

A high functioning Board isn’t materially different from any other high functioning team.  The group needs to have a clear charter or set of responsibilities, clear lines of communication, and open dialog.  And as with any team, making sure that the people on a Board know how to connect with each other as individuals as critical to building good relationships and having good communication, both inside and outside of Board meetings.

We’ve always done a dinner either before or after every in-person Board meeting to drive this behavior.  They take different forms:  sometimes they are Board only, sometimes Board and senior management; sometimes just dinner, sometimes an event as well as dinner, like bowling (the lowest common denominator of sporting activities) or a cooking class, as we did last night.  But whatever form the “social time” takes, and it doesn’t have to be expensive at all, I’ve found it to be an incredibly valuable part of team-building for the Board over the years.

You’d never go a whole year without having a team lunch or dinner or outing…treat your Board the same way!

Collaboration is Hard, Part III

In Part I, I talked about what collaboration is:

partnering with a colleague (either inside or outside of the company) on a project, and through the partnering, sharing knowledge that produces a better outcome than either party could produce on his or her own

and why it’s so important

knowledge sharing as competitive advantage, interdependency as a prerequisite to quality, and gaining productivity through leverage

In Part II, I suggested a few reasons why collaboration is difficult for most of us

It doesn’t come naturally to us on a cultural level, it’s hard to make an up-front investment of time in learning when you don’t know what you’re going to learn, and there’s a logistical hurdle in setting up the time and framework to collaborate

So now comes the management challenge — if collaboration is so important and yet so hard, how do we as CEOs foster collaboration in our organizations?  Not to say we have the formula down perfect at Return Path — if we did, collaboration wouldn’t show up as a development item for so many people at reviews each year — but here are five things we have done, either in small scale or large scale, to further the goal (in no particular order):

1. We celebrate collaboration.  We have a robust system of peer awards that call out collaboration in different ways.  I will write about this in longer form sometime, but basically we allow anyone in the company to give anyone else in the company one of several awards (all of which carry a cash value) at any time, for any reason.  And we post the awards on the Intranet and via RSS feed so everyone can see who is being appreciated for what reason.  This tries to lower the cultural barriers discussed in the last post.
2. We share our goals with each other.  This happens on two levels, and it’s progressed as the company has gotten more mature.  On a most basic level, we are very public about posting our goals to the whole company, at least at the department level (soon to be at the individual level), so everyone can see what everyone else is working on and note where they can contribute.  But that’s only half the battle.  We also have increasingly been developing shared goals — they show up on your list and on my list — so that we are mutually accountable for completing the project.
3. We set ourselves up for regular collaborative communication.  Many of our teams and departments use the Agile framework for work planning and workflow management, including the daily stand-up meeting as well as other regularly scheduled communication points (see other posts I’ve written about Agile Development and Agile Marketing).  Agile takes out a lot of the friction caused by logistical hurdles in collaborating with each other.
4. We provide financial incentives for collaboration.  In general, we run a three-tiered incentive comp program.  Most people’s quarterly or annual bonuses are 1/3 tied to individual goals achievement (which could involve shared goals with others), 1/3 tied to division revenue goals (fostering collaboration within each business unit), and 1/3 tied to company financial performance (fostering at least some level of collaboration with others outside your unit).  This helps, although on its own certainly isn’t enough.
5. We provide collaboration tools.  Finally, we have had developed reasonably good series of internal tools — Wiki, Intranet, RSS feeds — over the years, all of which are about to be radically upgraded, to encourage and systematize knowledge sharing.  This allows for a certain amount of "auto collaboration" but hopefully also allows people to realize how much there is to be gained by partnering with other subject matter experts within the company when projects call for it, alleviating in part the "you don’t know what you don’t know" problem.

So that’s where we are on this important topic.  And I’m only finding that it gets more important as the company gets bigger.  What are your best practices around fostering collaboration?

Why I Love My Board

Fred may be the only one of my directors who has done something this dorky, this publicly, but quite frankly, I could see any of us in the same position.  Guys, next meeting, we’re having nerd olympics.

The Good, The Board, and The Ugly, Part II

Much has been written of late on various VC and entrepreneur blogs on effective management of a Board of Directors, Board materials, running good Board meetings, and the like.  A couple years ago, I even wrote out a few tips for those things myself.

But here’s one critical ingredient of a good Board you won’t find in all those posts:  have fun!  This picture was from today’s Halloween Board meeting at Feedburner…as one of Dick’s colleagues labeled it, The Dawn of the Living Costolos.

Happy Halloween!

I’ve posted a lot over the years about feedback in all forms, but in particular how much I benefit from my 360 reviews and any form of “upward” feedback.  I’ve also posted about running a 360 process for/with your Board, modeled on Bill Campbell’s formula from Intuit.

I have a lot of institutional investors in our cap table at Return Path.  I was struck this week by two emails that landed in my inbox literally adjacent to each other.  One was from one of our institutional investors, sharing guidelines and timetables for doing CEO reviews across its portfolio.  The other was from one of our other institutional investors, and it invited me to participate in a feedback process to evaluate how well our investor performs for us as a Board member and strategic advisor.  It even had the Net Promoter Score question of would I recommend this investor to another entrepreneur!

The juxtaposition gave me a minute to reflect on the fact that over the 18 years of Return Path’s life, I’ve been asked to participate in feedback processes for Board members a few times, but not often.  Then I went to the thought that all of my reviews over the years have been self-initiated as well.  Just as it can be easy for a CEO to skip his or her review even when the rest of the company is going through a review cycle, it can be easy for investors to never even think about getting a review unless they get one internally at their firms.  I suspect many CEOs are reviewed by their Board, if not formally, then informally at every quarterly Board meeting.

It’s unfortunately a rare best practice for a venture capitalist or any other institutional investor to ask for CEO feedback.  I bet the ones who ask for it are probably the best ones in the first place, even though they probably still benefit from the feedback.  But regardless, it is good to set the tone for a portfolio that feedback is a gift, in all directions.

Counter Cliché:  And Founders, Too

This week, Fred’s chiche is that "the success of a company is in inverse proportion to the number of venture capitalists on the board".

I’d argue that the same statement is true of founders or management.

Boards help govern the company and watch out for shareholder interests.  Boards give outside perspectives and strategic advice to the company’s leadership.  Boards hire and fire the CEO.  And — more and more every day with large public companies — boards keep management honest.  How can these critical functions occur when a Board has too many members of the management team on it?  They can’t.  We’ve had outside directors at Return Path from Day 1.

I’m not advocating that Boards meet 100% apart from senior management.  On the contrary, our most productive Board meetings at Return Path are the ones where we have lots of management participation.  But execs present and discuss — and don’t vote — and they generally leave the last 30-60 minutes of every meeting for just the Board to discuss issues in private.  I’m also not advocating that CEOs don’t sit on boards or that the CEO never hold the Chairman role.  I think both of those items are critical to unify the watchdog function of looking out for all company stakeholders — shareholders, employees, and customers — at the highest level.

But while the success of a company may well be in inverse proportion to the number of venture capitalists on the board, that same success is jeopardized by too many execs, too.

One of my top 10 scaling tips for CEOs as they take a business from startup to scaleup keys in on communication patterns. As your company grows from 0-25 employees to a place where you no longer work hands-on with most of the team, which is really >25 but gets more and more true at every step beyond that, you need to rethink how you handle employee conversations in many ways. My tip sounds confusing, but let me break it down.

Spend less time talking. The less you know about the day to day details of everyone’s job and experience, the more time you need to spend learning and keeping in touch with those details from others. The only way to do that is by asking questions, listening to responses and watching body language, and then asking follow-up questions. As I mentioned here in Inquiry vs. Advocacy, you know what you have to say…what you don’t know is what the other person has to say! The more you listen and learn as your company scales, the more effective you can be at steering the ship.

And yet…Spend more time talking. This isn’t as contradictory as it sounds. What I mean by this is that the further away you are from the front lines and the smaller the percentage of the team who really know you and have casual interactions with you, the more time you need to spend repeating key messages – things like what the goal is, critical metrics and progress, how each team and person’s work rolls up to the big picture. I always appreciate the “rule of three” around things like this, which is simply that people need to hear the same message three times before they start to internalize it. What that means for you is that just as soon as you get tired of saying the same thing over and over in various groups internally…it’s finally starting to hit home, and you need to keep doing more of the same.

How and when you communicate with the company may also change – the mix and frequency of 1:1 meetings, small group meeting, large group meetings, and email/written communications will need to evolve. But that evolution of the “what” is secondary to the above principles of the “how.”

One of the CEOs I mentor asked me the other day asked me this question:

I need to start making my organization think differently – more like a startup that needs to scale and less like a project. People need to start doing more specific jobs and not swarm all over everything. How do I get people to “get” this without freaking out?

Every CEO faces dilemmas like this all the time.

One of my management mantras over the years has been, “You have to bring people along for the ride.” Fundamentally, that means two things. I’ll write about one of them here today and save the other for next week.

First, bringing people along for the ride means you have to involve the people in the organization in the origins and design of the change you’re seeking to drive.

Let’s face it. No one really likes change. But what people really don’t like is change being IMPOSED ON THEM, especially where THEY DON’T UNDERSTAND WHY.

Without being disingenuous, you as a leader can set the stage for others in your organization helping you with changes — even if you generally know the changes you want to drive. Bring people together. Talk about the challenges you see that are related to the solution you’re contemplating. Get people talking, brainstorming, grabbing post-its and whiteboard pens. Talk a little bit – bring in your perspective and help shape the discussion. But also listen closely and be open to people’s ideas and let those shape the outcome as well.

Then, bring people back for a second and third meeting to then react to some of your idea distillation and even straw man plans. You’ll find that process not only produces a better solution but also makes people comfortable with the solution, because you’ve added more transparency to the equation and brought people along for the ride. Nothing done in the vacuum of the CEO’s mind achieves this same level of impact.

More thoughts on this to come in some related posts over the next couple of weeks around some geeky sounding terms like The Ladder of Inference, Inquiry vs. Advocacy, and Double Loop Learning. Next week’s post will be about how to think about transitions and the way to lead people through them once you’ve involved them in creating the transition. Its link won’t be live until April 20, but it’s here for future reference.

I wrote a little bit about the experience of being a multi-time founder in this post where I talked about the value of things like a hand-picked team, hand-picked cap table, experience that drives efficient execution, and starting with a clean slate. The second lap around the track (and third, and fourth) is really different from the first lap.

Based on what we do at Bolster, and my role currently, I spend a lot of time meeting with CEOs of all sizes and stages and sectors of company, as they’re all clients or prospects or people I’m coaching. Lately, I’ve noticed a distinct set of work and behaviors and desires among CEOs who are multi-time founders and operators that is different from those same things in first-time founders. Not every single multi-time founder has every single one of these traits, but they all have a majority of them and form a pretty common pattern. I’ve noticed this with non-profit founders as well as for-profit ones.

• They have an Easier Time Recruiting team members and investors. That may sound obvious, but there are significant benefits to it. They also tend to have Much Cleaner Cap Tables, because they lived the horrors of a messy cap table when they exited their last company without thinking about that topic ahead of time!
  
• They have a Big Vision. Once you’ve had an exit, whether successful or not or somewhere in between, you don’t want to focus on something niche. You want to go all-in on a big problem.
  
• They are interested in creating Portfolio Effect. A number of repeat founders want to start multiple business at the same time, are actually doing it, or are creating some kind of studio model that creates multiple businesses. Once you have a big team, a track record with investors, and a field of deep expertise, it’s interesting to think about creating multiple related paths (and hedges) to success.
  
• They are driving to be Efficient in Execution and Find Leverage wherever they can. One multi-time founder I talked to a few weeks ago was bragging to me about how few people he has in his finance team. At Bolster, our objective is to build a big business on a small team, looking for opportunities to use our own network of fractional and project-based team members wherever possible.
  
• They are Impatient for Progress. While being mindful that good software takes time to build no matter how many engineers you hire, repeat founders tend to have fleshed out their vision a couple layers deep and are always eager to be 6 months ahead of where they are in terms of execution, which leads me to the next point, that…
  
• They are equally Impatient for Success (or Failure). More than just wanting to be 6 months ahead of where they are in seeing their vision come to life, they want to get to “an answer” as soon as possible. No one likes wasting time, but when you’re on your second or third company, you value your time differently. As a friend of mine says in a sales context, “The best answer you can get from a prospect is ‘yes’ – the second best answer you can get is a fast ‘no’.” The same logic applies to success in your nth startup. Succeed or Fail – you want to find out fast.
  
• They are Calm and Comfortable in Their Own Skin. At this stage in the game, repeat founders are more relaxed. They know their strengths and weaknesses and have no problem bringing in people to shore those things up. They know that if things don’t work out with this one, there’s more to life.
  
• They are stronger at Self Management. They are more efficient. They exercise more. They sleep more. They spend more time with family and friends. They work fewer hours.

Anyone else ever notice these traits, or others, in repeat founders?

Fred Wilson wrote an iconic blog post years ago entitled What a CEO does. In it, he outlined three broad themes:

A CEO does only three things. Sets the overall vision and strategy of the company and communicates it to all stakeholders. Recruits, hires, and retains the very best talent for the company. Makes sure there is always enough cash in the bank.

I wrote a response in a post entitled What Does a CEO Do, Anyway?, in which I added some specificity to those three items and added three key behaviors of successful CEOs. I also added to Fred’s list when I wrote Startup CEO, CEOs have to build and lead a board of directors, CEOs have to manage themselves, and CEOs ultimately have to think about and execute exits.

But recently, as I’ve been coaching a few CEOs, I’ve answered the question differently, because the questions have been a little less about the broad themes and more about how to prioritize — how to know what NOT to do. So in addition to Fred’s wisdom and my other thoughts above, here’s the answer I’m giving CEOs these days:

• First, do what you MUST do. There are some things that are in your job description. Do them first. You have to run your board meeting. You have to pitch investors. You have to write performance reviews for your direct reports.
• Second, do what ONLY YOU can do. There are also some things that, while not in your job description, are things that CEOs and/or founders have special impact when they do. No one can call a team member who just lost a parent or spouse and offer support and sympathy like you can. No one can get on a plane and save a key customer from leaving you like you can. No one can congratulate a sales rep on a key win like you can.
• Third, do what you’re BEST IN CLASS at. Finally, there are things that may be in other people’s job descriptions, but where you’re the stronger executer. I remember reading years ago that Bill Gates, long after he even stopped being CEO of Microsoft and was Chairman, still got involved in some major technical architecture decisions and reviews. Whatever your superpower is, or whatever it was when you were in your pre-CEO jobs, there’s no reason not to jump in and help your team excel at (and ideally train/mentor them) whenever you can.

After that, you can fill in the rest of your time with other tasks. In the world of Covey’s big rocks, this is all the sand. All the other things that come by your desk or inbox that people ask of you. They are the least important. Hopefully this is another helpful lens on how CEOs should spend their time.