Founders: Building a Product and Building a Company are Totally Different Things

The story is as old as Silicon Valley itself:

Brilliant engineer builds disruptive product. People love it. Engineer raises gobs of money. Company starts to grow. Engineer is now CEO of 20-person company and starts to feel out of his/her depth with all the managing, meetings, and public speaking. Company starts to falter. Engineer CEO gets replaced.

According to HBS Professor Noam Wasserman’s book “The Founder’s Dilemma” compiled from 10,000 surveys of high growth companies over 9 years, 65% of start-ups fail due to poor senior management, NOT due to problems with the product or marketing efforts.

The takeaway is this:

The skills that made you a great founder of a scrappy product-focused start-up are not the same as the skills you will need to make you a great CEO of a funded, growth-focused start-up with over twenty employees.

So, it’s adapt or die, mate. The good news is that I’ve laid out a playbook below to help you adapt to the new role that comes with your early success.

(Full disclosure: This was adapted from a previous post, and covers the soft-skills associated with leading and managing a larger team. It does NOT cover board management, burn-rate management, or growth, which have been written about at length in other places.)

1. TELL STORIES: Telling an Inspiring “Problem-Solution Story”

Believe it or not, at its core leadership basically comes down to storytelling.

Think of the greatest leaders of the 20th Century. Think of your idols. They didn’t just BUILD cool things. Long before and after that, they told compelling stories about how the things they wanted to build would make things better or different. They communicated a compelling enough vision to mobilize investors and followers alike.

If you’re like many CEOs, you’d rather let your product “speak for itself.” But, that’s a cop-out.

As CEO, you’re the chief salesman of the company. So, start selling — both inside and outside the company. Call it an elevator pitch, call it a vision, call it a crazy stream of consciousness that gets you and anyone who listens totally excited about your company, but just get talking.

  • What’s the problem?
  • Who is affected?
  • How much does it hurt?
  • How do you propose to solve the problem?
  • How much will things be better?

Some people call this THE WHY. I simply call it the Problem-Solution Story because that’s a little easier to understand. And the more vivid and compelling you make this story by placing the listener IN the story, the better.

Many people have a hard time with this. Especially when they are close to the product. You just LOVE your features and core technology, don’t you?

To get over this fascination with the details, find a friend who works in PR. Ask him/her to help you streamline your story. Ask them to help you focus more on the benefits to the user, and less on the features of the product.

2) SET THE BAR: Your Mood and Example Will Set the Standard

You need to accept that everyone is watching you. Why don’t they just leave you alone and work?! Why? Because you’re the guy in charge.

When you’re in a bad mood, so are they. When you’re disorganized, so are they. When you doubt your leadership skills, so will they.

This is something people who have spent their lives in leadership positions already understand. When they were captain of the track or football team in high school while you were at home learning Python, their coach told them they had to “lead by example.”

Now, it’s your turn. You’re the captain of the team now — of arguably a much more important one at that. So, set the example. Be your highest self every moment you can. Breathe through your frustration. Open up to all the people in your organization who want a piece of you and let them in.

If this is scary as shit to you, that’s ok. It should be. Ice skating is scary at first too until you get the hang of it. Yes, you will fall. Yes, you will want to give up. But just keep on skating. Eventually, it will feel as natural as walking.

3) APPRECIATE PEOPLE: Look Them in the Eye and Say Thank You

This is so easy, but almost no one does it anymore. Especially not in fast moving start-ups where you feel like you barely have time to breath, eat lunch, or go to the gym. How can you make time just to thank people?

According to Harvard Business Review, only 24% of employees report feeling engaged in their work. And of those that do, 72% report “recognition as having a significant impact on employee engagement.” What does that tell you? Well, that 76% of employees don’t feel engaged, and probably because they have had zero recognition since anyone can remember.

You have people working their asses off for you. They are working weekends. They are sacrificing their best years to help you realize your vision.

So, thank them. Engage them.

Not with money. Not with perks. Not with off-sites. Just walk up to them, observe something that they did well, look them in the eye, and say Thank You. This one act will deepen their loyalty to you and the company more than anything else.

If something about this feels insincere, ask yourself why. Are you truly not appreciative? Or is it more that you don’t see yourself as the kind of person who “holds the moment” like that with another person?

Well, you are now.

The first time I did this I was 23 years old. I had just been hired at the Executive Director of a start-up NGO, and I had people in their 40’s working for me. Squaring up with someone and sincerely thanking them takes guts. It takes an odd blend of confidence and humility. You are capable of both. Don’t be afraid to show it.

4) VALIDATE OTHERS’ IDEAS: Everyone Wants to Feel Seen and Heard

Ok, this might sound like mamby-pamby BS, but it’s true. There’s no faster way to drive people away than by making them feel invisible. We often make this mistake at work AND at home without even realizing it.

If you’re smart, you hired problem solvers, not just doers. Problem solvers look at a situation and immediately figure out better ways of doing things. The longer they go feeling like their “optimized solution” is not seen or heard by the powers that be, the more dissatisfied they get.

While you are moving fast and breaking shit, it’s important to remember that you might be breaking good people in the process. While you’re busy thinking that your goal is Inbox Zero, you’re forgetting your real job — maximizing the performance of your team by keeping them engaged and motivated.

You can accomplish this in a few simple ways:

  • Open Door Policy — Many CEOs actively encourage everyone in the company to come to them with great ideas and better solutions. You might think this can get unruly in large organizations, but even Terry Lundgren, the CEO of Macy’s, a company with tens of thousands of employees, responds personally to emails from employees.
  • All Hands Q&As — If you have a decent culture and want to make it better, this can be a great idea. Note that if things are a little toxic or if you’re already known for not taking feedback well, all hands meetings can be painful. Be honest with yourself and build up to that if you sense your team isn’t quite ready for this.
  • Put a Bounty on Bugs — Many large firms reward members of the public who find bugs in their products. Make your company one of them, but reward any bug, whether it be in your product or internal processes. This brand of continuous improvement is called Kaizen by the Japanese — and it’s a cornerstone of their competitiveness.
  • Use the Socratic Method — Sometimes we hear ideas from employees are that are ill-timed, ill-conceived or both. Rather than being impatient and rebuffing your employees in this situation, why not ask a few innocent questions? Nine times out of ten, the faults in timing or logic will reveal themselves on their own without you having to be the bad guy.

5) DISCIPLINE WELL: Use the Strengthen and Correct Method

Perhaps the hardest conversations to have with employees are when you have to coach them or correct them in some way. I was pathetic at these conversations when I was first starting out. I had one employee who insisted that he worked better when high. It turned out that barking at him that we didn’t “employ pot heads” wasn’t the right way of addressing the issue.

When you need to correct someone’s behavior or set higher expectations, the best method is “Strengthen and Correct.”

First, strengthen your connection with the employee by showing your true empathy and appreciation. No matter how egregious the infraction or how poor their performance, they have chosen to give YOU their time and energy. Honor that. What’s gone well? What do you like about having them around?

Only then, after you’ve strengthened your connection and assured them that you SEE and APPRECIATE them can you enter into a constructive conversation about correcting their behavior.

Firing off angry emails will not work.

When you do discuss how they are not meeting expectations, be sure to own your role in it. Have you trained them well enough? Do they have all the resources they need?

Again, entire books have been written about having difficult conversations. If you’re stuck, I’m happy to discuss with you.

6) ASK FOR HELP: Have the Guts to Delegate

As you emerge from living your own “two guys in a garage” scenario, you must make a necessary transition from Chief Do-It-All Officer to Chief Make-Sure-It-Gets-Done Officer. This requires a certain level of letting go of control that may feel scary and counter intuitive.

“But Steve Jobs didn’t let go. He was a micro-manger until his last breath,” you might protest.

Bullshit, I will respond. Steve Jobs was a reformed micro-manager who learned after being booted from Apple and having a commercial failure at NeXT that micro-managing every aspect of the product and all of his subordinates’ time was a recipe for failure.

Did he provide final sign off and hold product decisions up to a very high standard? Yes. Did he sit next to Johnny Ives’s desk and guide every product design decision? Hell, no.

Letting go and trusting people shows maturity. It shows you know how much your time is worth. It assures your team and your board that you are worthy of your title.

“Asking for Help” doesn’t just mean delegating. It also means seeking guidance from outside your ecosystem. Consult regularly with a mentor — a board member, advisor, or coach — to get reality checks. Every great entrepreneur you’ve ever heard of has done this. So should you.

7) STAY CURIOUS: Curiosity leads to breakthroughs; judgment leads to dead-ends

The longer you hold off judgment, the more curious you remain, the closer you will get to a major breakthrough. CEOs who remain fixated on executing on “their vision” stop listening to feedback from the market and their team. This stubbornness is what the Ancient Greeks called Hubris, and is almost always what leads to the fall from grace in a Greek Tragedy.

Great CEOs stay curious and run experiments. They make decisions based on both intuition and market validation. They consult with their trusted advisors and coaches. They know what they don’t know and figure out how to learn it.

Having curiosity helps not just in product decisions, but also in dealing with people. People can be assholes. They can be emotional. They can be unreasonable. And most often, it’s best to remain curious about where those emotions are coming from.

The more you dig into WHY people are saying things, rather than fixating on WHAT they are saying, the more grace and level-headedness you will demonstrate as a leader — and the more loyalty and dedication you will engender within your team.