Earlier this month, I saw quite the thought-provoking tweet from Ashley Brasier.
“I took a cue from General Patton, who thought that the greatest danger was not that the enemy would learn his plans, but that his own troops would not.”
-Trader Joe (aka Joe Coulombe) on the need to sell to everybody – not just to your customers, but also to your employees
Whether it’s a function of confirmation and availability bias or lesser-known leadership secret, I saw similar themes pop up everywhere from Phil Libin of Evernote and General Catalyst fame to Kelly Watkins at Abstract to Colleen McCreary at Credit Karma. And because of that, I thought it was a topic worth double-clicking on.
There’s the age-old saying: Leaders lead. Managers manage. And a CEO is frankly a marriage of both. While there are the canonical examples of Musk and Jobs, a CEO both leads with her/his vision but also manages expectations.
“I think the most important job of a CEO is to isolate the rest of the company from fluctuations of the hype cycle because the hype cycle will destroy a company. It’ll shake it apart. In tech the hype cycles tend to be pretty intense. At mmhmm we are very much in the Venn diagram of two hype cycles. There’s a general hype cycle around video, which is going to be way up and down over the next few years. […]
“There is also a hype cycle around early and mid stage startup investment. It’s super volatile, now more than ever, because of potential changes in the tax laws, interest rates, and inflation. So you’ve got these two very volatile areas, video and startup investment, and we are sitting right in the bull’s eye of that. This means that my most important job is to isolate the team so that we don’t float based on the ups and downs of the current. Make sure we have enough mass and momentum to go through it, meaning we don’t change what we do based on the hype cycle.
“And that takes capital, which is why we have to raise some capital to do this. It also takes understanding of where you’re trying to go and knowing where you’re going is not based on the hype cycle. You have to have a long term conviction about that. You may be wrong. The conviction could turn out to be wrong, but you’re not going to know that based on day to day fluctuations of excitement or month to month. So have a clear direction of where you are going and then make sure the ship has enough momentum so it doesn’t matter what the waves are doing, you’re still going relatively straight.”
Kelly Watkins, CEO of Abstract, also said in an interview: “People might think the job of the CEO is to make a lot of decisions, but I see my job as setting the tone for the company. People look to leaders to gauge their own reactions in a situation. So if I’m running around like a headless chicken or my tone is on a really high frequency, people graft off of that.”
Similarly, I wrote an essay a year and a half ago. On Sun Tzu and how a leader’s job is setting the tone for her/his company. In short, your team follows you and is a direct function of:
How much they trust you, and
How well they understand a leader’s commands (the why, the how, and the what)
As a caveat, one might disagree with the what, and maybe the how, but a strong team believes in the same why.
In another interview, Colleen McCreary of Credit Karma once said: “Founders, in particular, are always looking to move onto the next thing, but people don’t come along the journey that quickly. So you have to slow down to be consistent, stay on message and tell employees how they’re going to define success. Because if you don’t focus on what really matters, people will hang their hat on an IPO or the stock price as being the determinant of success, and it’s just hard to unwind.”
And why does all this matter?
As Ben Horowitz wrote in his book What You Do Is Who You Are, “Culture is a strategic investment in the company doing things the right way when you are not looking.”
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There’s a saying in venture that: “A-players hire A-players; B-players hire C-players.” Your ability to grow a business is often closely correlated with your ability to attract and acquire talent. But what does it mean to attract and hire world-class talent? Especially for functions you, as a founder, yourself may not be an expert in.
“A-players hire A-players; B-players hire C-players.”
How does a first-time founder how to vet a seasoned sales executive? Or on the flip side, how does a non-technical founder learn to differentiate a good AI engineer from a great AI engineer?
While even the best founders, leaders, and managers make hiring mistakes, hopefully this post can act as a reference point as to what to look for. And while I have yet to master the craft, I’ll borrow 5 lessons from some of the best that has served as a guiding principle for me and for some of the founders I’ve worked with.
5 Lessons from 4 of the Greatest
Hire passion; train skill.
Desire/obsession > passion.
And, the ephemeral nature of passion.
Hire VPs who can hire.
Attract and hire intentionally.
On building trust.
On scaling yourself.
To hire your best complements, ask people in your network 2 questions.
One of my favorite thought exercises to do when I meet with founders who have reached the A- and B-stages (or beyond) is:
“What will his/her company look like if he/she is no longer there?”
The Preface
While the question looks like one that’s designed to replace the founder(s), my intention is everything but that. Rather, I ask myself that because I want to put perspective as to how the founder(s) have empowered their team to do more than they could independently. Where the collective whole is greater than the sum of its parts. Have the founders built something that is greater than themselves? And is each team member self-motivated to pursue the mission and vision?
“Well, Mr. President,” the janitor responded, “I’m helping put a man on the moon.”
From the astronaut who was to go into space to the janitor cleaning the halls of NASAs space center, each and every one had the same fulfilling purpose that they were doing something greater than themselves.
And if the CEO is able to do that, their potential to inspire even more and build a greater company is in sight. Can he/she scale him/herself? And in doing so, scale the company past product-market fit (PMF)?
For the purpose of this post, I’ll take scale from a culture, hiring, operating, and product perspective, though there are much more than just the above when it comes to scale. Answering the questions, as a founder:
How do you expand your audience?
How do you build a team to do so?
And, how do you scale yourself?
And to do so, I’ll borrow the insights of 10 people who have more miles on their odometer than I do.
While many of these lessons are applicable even in the later stages of growth, I want to preface that these insights are largely for founders just starting to scale. When you’ve just gone from zero to one, and are now beginning to look towards infinity.
The TL;DR
Build a (controversial) shocking culture.
Hire intentionally.
Retaining talent requires trust.
Build and follow an operating philosophy.
Create, hold, and share excitement.
Align calendars.
Upgrade adjacent users as your next beachhead.
Capture adoption by changing only 1 variable per user segment.
What is the underlying notion that makes this product work?
It’s the question that almost every investor, especially early-stage startup investor, tries to answer when they’re entertaining potential investments. Some close cousins include:
What social, economic, or political trend is enabling this technology/business to work?
Why will people want to continue using this product? Consciously? Subconsciously? How much will they regret not being able to use this product?
Why is this idea crazy good, and not just crazy?
Is there a predictable road to traction? Product-market fit? $1M ARR? etc.
Is this a scalable business?
Needless to say, when I chat with founders, their business’s defensibilityoften comes up. Every business – small or large – needs to be defensible. Grandma’s cookies are just that good ’cause of that ‘secret’ brown butter element. Or Sally’s lemonade stand sells better than her neighbor’s down the street since she can keep her drinks cool for longer. Just like every good medieval castle has a moat, possibly filled with alligators, every good business has to have that one (or many) unfair advantage, as they call it in B-school. Not that I ever went, but I’ve heard from friends and professors who have. And this is even more true if you want to build a scalable business.
Those who have gone generally claim that their moat is their experience at X Fortune 500 company. Those who have a technical background often claim that their moat is their IP – patents owned and pending. Neither are wrong. And frankly, there are a multitude of factors that come into play when arguing for a business’s defensibility. And most of the times, it’s a permutation of the above and more. But the purpose of this post is to focus on an often discounted notion of brand as a moat. Both the company brand and the personal brand.
Disclaimer:
I should mention that before you even consider your business’s defensibility, and subsequently, brand, first, make a damn good product. I’ve seen too many founders take that leap of faith before they even have a product. They pitch the dream of them making a better world – the company vision – before they even figure out the first steps they need to take to get there.
The only ‘exception’ to this rule, at least from a fundraising and pre-PMF perspective, is if you have an amazingly robust personal brand. Though that may help with early traction, it won’t be enough to sustain a scalable business in the long run.
The startup brand
Your startup’s brand is a collective composed of the:
Company mission,
Company vision,
Internal culture,
And, the openness and responsiveness of the team.
The vision is that ultimate dream. The mission is what you’ll do now to get to that dream. Back in college, someone I really respect put it to me like this:
“The vision is the Sun. The mission is that ladder up. You can’t get to the Sun without building a ladder. If you only stare at it, you’ll eventually blind yourself. And if you just build a ladder, or else you might up on Mars instead, poorly equipped to survive there.”
Culture is something that you can set at the beginning, but know it’ll be an evolving beast with every new hire and every new incident. What you let happen defines the new culture. Although I share my thoughts in a post earlier this year, Ben Horowitz puts it into a much better perspective in his book, What You Do is Who You Are: How to Create your Business Culture. Quite a story-filled read, especially when you’re looking for something to do at home now.
And, the above three culminates into how your team acts.
Do your current customers/users feel like their concerns are either addressed or at least, valued?
Do they feel they are a valued member of your community?
What is your customer satisfaction rate? NPS score?
How do you prioritize and act on customer feedback?
Are your users engaged? How do you reengage them, if they become inactive?
For apps, what are they saying on the App Store/Play Store?
And, how are new customers hearing about your product? What do they hear? What are their explicit and implicit assumptions when using your product?
Why it Matters
Together the 4 elements answer the fundamental questions:
Why would a potentially great customer want to use your product?
Why would a potentially great hire want to join your company?
In the past few months, many VCs have been shifting their investment focus from consumer and towards enterprise/SaaS. There’s the argument that consumers are (1) more expensive to acquire (increasing CAC; the average number of apps a person downloads a day is zero), and (2) harder to retain. (For a more in-depth explanation, I would recommend you to check out the “Consumer App Conundrum” section here.) Aka, it’s more competitive than ever in the consumer markets. When we get closer to perfect competition over a saturated market seeking attention, having a great product just isn’t enough anymore. When some of the most active and vocal consumers happen to be people on the younger spectrum (millennials and Gen Zs), to fight for their attention, you need a brand that resonates with them on causes they care about – whether it’s diversity or climate change or another social cause.
We see this notion affecting two other verticals: the public sector and enterprise.
The privatization of X (let X be education, healthcare, transportation, etc. for all that were empirically public sector functions)
The consumerization of enterprise
For the purpose of this piece, let’s look at the consumerization of enterprise. What does that mean? Before enterprise sales worked from a top-down approach. A founder of an enterprise/SaaS startup pitches to a senior executive at a Fortune 500 (or similar) company. And the executive makes the call and the budget allocation towards their team’s usage of said product.
Now, many startups/companies, like Slack, Trello, Lever, and Soapbox, are taking the bottom-up approach, garnering brand loyalty among the people who will be/are using the product itself. And I predict that’ll be so in the near future for Superhuman, the fastest email client, and Woven, my favorite calendar app, as well. After all, progress happens at the most junior level. If you take it in relation to a tech startup of 200 in its growth phase, the founders or executives can make a plan and set deadlines. But if your most junior developer isn’t working on it, the whole business halts to a stop. All this makes me quite bullish on products in the low-code/no-code space, as well as in towards the future of work.
Moreover, this has led enterprise products to be heavily personalized, constantly updating, and has paved the way to multi-modal business models (i.e. subscription and pay-per-use). All this maximizes user satisfaction, which in turn affects their productivity, and transitively, the business flow.
Although the job market looks wildly different now than it did 3 months ago, when I assume the average founder is looking for cash preservation over growth, you still should be cognizant about the latter going forward.
Your Personal Brand
Your personal brand as a founder, or just as a professional, really matters. If you are a founder or thinking about becoming one, start building a public voice. Get people excited about you and what you’re all about.
Why?
Personal brands are extremely scalable and have built-in virality. You put one post out. Some percent of your followers engage with your content by liking or commenting. Then either by social media’s algorithms or by their innate excitement, they’ll share your content with their friends. Subsequently, new folks discover you and your content. And this becomes a virtuous loop, or network effects, as we call it, that helps get you scalable traction. This is why celebrities, like Dr. Dre and Maisie Williams, and their ventures garner quite a bit of traction among consumers and among investors. This is also why influencer marketing has been so bullish over the past few years.
At some point in your company’s lifespan, your personal brand will become the company brand. And that’ll become either shining beacon or the downfall of your company. More than just the followers you have on social media and in public, you are judged by everyone constantly on your aptitude and behaviors. How open, conscientious, agreeable, extroverted, and neurotic are you? (Yes, I took the 5 traits from the Big 5/OCEAN test.) Each and more have an impact on your personal brand. If we look at the culture behind Facebook, we see how large of an imprint Zuckerberg has on it. For Apple, Jobs.
In closing
The best thing about brands as a moat is that it’s effectively free! But both take years of work in building. As someone on the investing side, I love stellar brands. And it’s one of the elements of a business I weigh heavily on for its potentiality in network effects, summarized in the “Why you?” component of my NTY investment thesis (why Now, why This, why You).
Hmmmm, now thinking about it, personal brand may be the biggest reason I’ve been changing my handwashing habits in the past week… after watching Gordon Ramsay, Alton Brown, and Conan O’Brien‘s tutorials on it.
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I just started my second read of Ben Horowitz‘s new book, What You Do is Who You Are: How to Create your Business Culture. It’s a brilliant deep dive on what culture and virtues mean for a growing company or team. From the most successful slave revolution in history to prison culture to the samurai bushido, Ben draws parallels between those and startup culture, where you can get a snapshot here.
On page 31, Ben wrote “Create Shocking Rules.” Why “shocking”? So people will ask why. So people will pause, think, and remember them. What is “shocking”? In a time when raping and pillaging was the norm, Toussaint Louverture, the man who led the Haitian Revolution, forbade officers from having concubines. And he kept to that promise. When “shocking” isn’t the only game changer, you need uncompromising commitment to those rules. Weak follow-through is another fallacy in creating the culture you want. What you let slide will define the new culture, with or without your approval.
Sun Tzu and the Concubines
Rereading about Toussaint Louverture reminded me of a story my dad used to tell me by my bedside. About another brilliant general, who lived 2000 years prior to Toussaint during the Spring and Autumn Period, and best known for authoring The Art of War, Sun Tzu.
Through his thirteen chapters, dubbed The Art of War, he eventually earned an audience with the king of the State of Wu. Hoping to test Sun Tzu’s strategies to its extremes, possibly expecting to see Sun fail, the king asked Sun to test it on his harem of concubines.
After accepting the task at hand and separating the concubines into two companies, Sun had them all take a spear in hand and said, “I presume you know the difference between front and back, right hand and left hand?”
The women answered, “Yes.”
After explicitly explaining what “Eyes front”, “Left turn”, “Right turn”, and “About turn” meant, he issued his first order at the sound of the drums, “Right turn.” But, the concubines responded with fits of laughter. Sun Tzu proclaimed, “If words of command are not clear and distinct, if orders are not thoroughly understood, then the general is to blame.”
In another attempt, he called out, “Left turn.” His words met the same fate as the ones he uttered just prior – with laughter. This time, he said, “If words of command are not clear and distinct, if orders are not thoroughly understood, the general is to blame. But if his orders are clear, and the soldiers still disobey, then it is the fault of their officers.”
Subsequently, he ordered the heads of the two companies beheaded, whom happened to be king’s favorite two concubines. Seeing what had unfolded from his pavilion, the king sent a messenger to plead with Sun to keep his two favorite alive. But Sun did not relent.
After their execution, he immediately installed two new officers, and from then on, the concubines followed every order that Sun issued to the T.
Using the principles he shared and taught in The Art of War, Sun Tzu won many battles for the State of Wu, most notably, when Sun Tzu led an army of 30,000 to defeat an enemy numbering ten times more than the troops from Wu. As Jon Stewart, former The Daily Show host, once said:
“If you don’t stick to your values when they’re being tested, they’re not values: they’re hobbies.”
In Closing
In his book, Ben shares quite a bit how some of the best leaders in the world shaped their organizational culture. It wasn’t from catered lunches or having dogs in the office every Friday. Culture comes down to setting “shocking” rules, paired with a set of priorities, and more importantly, keeping them. Culture is what your team members remember about your organization and how it made and makes them feel 20 years down the road.
Though not perfect, my former swim coach instilled the same virtues in us. He was never a fan of tardiness. To him, it demonstrated a lack of character and commitment. And to enforce that, if we were late, by even a minute, to get into the water (not arrive at the pool), the offenders had to swim the entire warm-up in butterfly – the whole 2000 yards. And not one person escaped that law, not even him – not that I ever saw him late.
