Your Startup is not your Horcrux
Your Startup is not your Horcrux
Guidelines for being a founder that I've learned, while serving as an (imperfect) 2-time founder & CEO, early-employee-COO, advisor, and investor.
Curate Your Tribe
“Founder-friendly” often means “we’ll do whatever it takes to win a deal, including offering excessively generous terms to the company and founders.”
These investors change their tune when markets turn. Seek those who are “founder-fair” in any environment. They won't overpay in a hot market but won't abandon you in a tough one.
Parting ways with resentful people will greatly benefit your culture. Just as contempt is irreversible in a marriage, resentment is irreversible in a working relationship.
Continue being the final round interviewer for candidates longer than you think. CEOs who stopped at 500 employees often regret not doing it longer.
Your partner at home can make you a 0.5x or 2x leader. Choose wisely.
There are three ways to motivate people: money (mercenary), purpose (missionary), or journey (pilgrim). Everyone is self-interested, but they differ in their source of fulfillment and meaning.
Generally: mercenaries are short-term thinkers, missionaries are long-term thinkers, and pilgrims are somewhere in the middle.
Pilgrims are typically more intrinsically motivated; mercenaries and missionaries are usually more extrinsically motivated.
To achieve PMF, optimize for hires who are “long-term greedy.” They think in years, not months, and this is critical to weathering the twists and turns in a startup. This probably means missionaries or pilgrims.
After PMF, hiring mercenaries occasionally is probably unavoidable — especially in leadership to find people who have “been there, done that”.
Mind-meld with your team
Write a user manual (e.g., “working with Claire”, h/t Claire Hughes-Johnson).
“Always speak last.” - Jeff Bezos
Early in your career, you might have been taught to “lead with the answer”. As a leader, you have to unlearn this quickly… or at least apply it selectively. You’re not supposed to have all the answers. If you do, you need to hire better people.
There are 4 types of discussions a CEO leads: "we should do this," "we should do this unless you convince me otherwise," "we might want to do this, what do you think?" and "I don't think we should do this, but I’m suggesting it in case any of you think we should." Make sure your team knows which kind of discussion it is.
If you're already thinking "we should do this,” don't ask your teams opinion -- just tell them. A great team will rally and get it done. On the other hand, there's nothing more demoralizing than asking for their opinion, and then overruling them with what you actually wanted in the first place.
A great way to create a safe space if you're smart, intense, and opinionated (like most CEOs) is to argue against yourself out loud. Saying "I think this is a dumb idea but I'm going to say it anyway," or "The reasons not to do what I said are..." makes it clear that your views are fallible like everyone else's.
It takes a village
Everyone who joins your company before PMF deserves to be treated like founding team. Be generous with them, especially if they were mission-critical.
"Founder" and "founding team" refers to a mindset, not a start date. Promote later hires who excel into those categories.
Offer early exercise. It costs the company nothing except some administrative overhead, but it can massively impact the taxes and financial burden on early employees.
There is no good reason not to offer restricted stock (instead of options) for your first few employees, early exercise for anyone who asks, and an extended exercise window for anyone who leaves on good terms.
Once your company is 7-8 years old with a $1-2B+ valuation, ensure employees can sell secondary shares in a compliant manner that doesn’t pose risk to the company.
Watch out for Price’s Law
50% of the work is done by the square root of the people on a team.
- Price’s Law
Price’s Law explains why companies move slower as they grow:
a 25-person org does sqrt(25) * 2 = 10 peoples’ worth of work = 40% leverage
a 400-person org does sqrt(400) * 2 = 40 peoples’ worth of work = 10% leverage
a 10,000-person org does sqrt(10,000) * 2 = 200 peoples’ worth of work = 2% leverage
One way to mitigate this:
Avoid creating a 100-person “team” (which would do the work of 20 people)
Break them up into 10 autonomous teams of 10, each independent of "stakeholders" on other teams. This allows them to achieve sqrt(10) * 10 * 2 = 62 peoples' worth of work.
This is embodied in many of Amazon’s tenets: 2-pizza teams, “every team must expose service interfaces and communicate only via those interfaces,” etc.
Own your title
The “Voice of the CEO” is real even if you don’t want it. People will (over)react to anything you say, except for the ones who have known you long enough to treat you as fallible. (h/t Waseem Daher).
Every CEO has an archetype -- CTO-CEO, CPO-CEO, or CRO-CEO. Know your archetype, and make sure your founding team complements your skills. The same applies to cofounders.
Forgive yourself for being intense. Almost every good CEO is. But learn to dial it back when necessary.
Hard decisions should always feel hard. If they don’t, you’re becoming too much of a sociopath. But the first time for hard decisions—giving rough feedback, firing someone, or doing a layoff—is the hardest.
Learn to give great speeches during all-hands. Limit them to 5 minutes, barring exceptional circumstances. If your team isn’t hyped after at least one all-hands per quarter, you might need to practice your public speaking.
Earn your title
The wins belong to the team. The word “I” should probably not appear in launch announcements or milestone celebrations.
The buck stops with you. Take responsibility for missteps and hard decisions. But avoid making them about you — your communications to your team, investors, or public should use the word “I” sparingly.
“(Co)Founder” is a technically-permanent title, but the moral authority and respect it bestows is not permanent. The best founders bring their A-game and earn their team’s respect — every week, every month, every year.
As a founder before you have a team, you probably built unassailable conviction after hearing 100 no's. When proven right, don’t become an egotistical asshole. You’re wrong just as often as everyone else. You were just really right about this thing.
As a founder after you have a team, you sometimes need to make gut decisions with the confidence you're right -- more right than everyone else. There is no room for impostor syndrome. But a good leader is low ego and quickly admits when they’re wrong. Striking this balance between abject humility and utter confidence is the hardest tightrope.
If you struggle with culture, get a coach to do a 360° review. You might not like what you hear but work your damnest to fix everything anyway.
Getting to PMF is the only thing that matters
Your product doesn't matter for product market fit. The quality of the problem does, and it should be painful enough to drag PMF out of you.
Your vision should influence how you build; but it’s usually a bad idea to let it affect what you sell or how you sell it.
Don’t build a large team — ideally not more than a 2-pizza team — before PMF.
Until PMF, do things that don’t scale (h/t Paul Gordon)
Post-PMF, your job is to allocate people and capital effectively
Too much money will burn a hole in your pocket even if you're aware of the risk (h/t Sarah Tavel). Constraint breeds creativity.
Zero-based budgeting is how the best executives make capital allocation decisions.
Great founders succeed by hiring execs smarter than themselves in specific domains.
Great execs succeed the same way — leaders should hire smarter people all the way down (in increasingly specific domains). Promising VPs often fail because they don’t hire better or more experienced people. (h/t Jason Lemkin)
After you have PMF, ask yourself — for the things that matter — “will this break if we scale 10x?” (h/t Alex Bouaziz)
Don’t make your startup your horcrux
Don’t make your startup your horcrux.
Put your soul into your company. But if your startup dies, a part of you shouldn't die with it.
If you’re shutting down after trying hard, take care of yourself and your team. Good investors don’t mind getting <1x back on their investment. Bad investors don’t matter.
Read these: Venture Deals, High Output Management, High Growth Handbook, The Messy Middle, and Influence: Science & Practice.
If you’re considering giving up, ask yourself: “if my company disappeared tonight, would I wake up and choose to start it again?”
If the answer is no, it might be time to sell or wind down.
Until then… sell broomsticks if you have to. (h/t Gil Silberman)