The Hard Thing About Hard Things, page 11
The other essential component of a company’s training program is management training. Management training is the best place to start setting expectations for your management team. Do you expect them to hold regular one-on-one meetings with their employees? Do you expect them to give performance feedback? Do you expect them to train their people? Do you expect them to agree on objectives with their team? If you do, then you’d better tell them, because the management state of the art in technology companies is extremely poor. Once you’ve set expectations, the next set of management courses has already been defined; they are the courses that teach your managers how to do the things you expect (how to write a performance review or how to conduct a one-on-one).
Once you have management training and functional training in place, there are other opportunities as well. One of the great things about building a tech company is the amazing people that you can hire. Take your best people and encourage them to share their most developed skills. Training in such topics as negotiating, interviewing, and finance will enhance your company’s competency in those areas as well as improve employee morale. Teaching can also become a badge of honor for employees who achieve an elite level of competence.
IMPLEMENTING YOUR TRAINING PROGRAM
Now that we understand the value of the training and what to train on, how do we get our organization to do what we want? The first thing to recognize is that no startup has time to do optional things. Therefore, training must be mandatory. The first two types of training (functional and management) can be easily enforced as follows:
Enforce functional training by withholding new employee requisitions. As Andy Grove writes, there are only two ways for a manager to improve the output of an employee: motivation and training. Therefore, training should be the most basic requirement for all managers in your organization. An effective way to enforce this requirement is by withholding new employee requisitions from managers until they’ve developed a training program for the TBH, “To Be Hired.”
Enforce management training by teaching it yourself. Managing the company is the CEO’s job. While you won’t have time to teach all of the management courses yourself, you should teach the course on management expectations, because they are, after all, your expectations. Make it an honor to participate in these sessions by selecting the best managers on your team to teach the other courses. And make that mandatory, too.
Ironically, the biggest obstacle to putting a training program in place is the perception that it will take too much time. Keep in mind that there is no investment that you can make that will do more to improve productivity in your company. Therefore, being too busy to train is the moral equivalent of being too hungry to eat. Furthermore, it’s not that hard to create basic training courses.
When I ran the server product management group at Netscape, I became extremely frustrated that everybody on the team I inherited had a completely unique and different interpretation of their job. Finally, I had an epiphany that nobody in the industry had ever defined the product management job. What follows was my attempt to do that and bring down my blood pressure. Amazingly, people still read it today. This taught me the importance of training.
GOOD PRODUCT MANAGER/BAD PRODUCT MANAGER
Good product managers know the market, the product, the product line, and the competition extremely well and operate from a strong basis of knowledge and confidence. A good product manager is the CEO of the product. Good product managers take full responsibility and measure themselves in terms of the success of the product.
They are responsible for right product/right time and all that entails. A good product manager knows the context going in (the company, our revenue funding, competition, etc.), and they take responsibility for devising and executing a winning plan (no excuses).
Bad product managers have lots of excuses. Not enough funding, the engineering manager is an idiot, Microsoft has ten times as many engineers working on it, I’m overworked, I don’t get enough direction. Our CEO doesn’t make these kinds of excuses and neither should the CEO of a product.
Good product managers don’t get all of their time sucked up by the various organizations that must work together to deliver the right product at the right time. They don’t take all the product team minutes; they don’t project manage the various functions; they are not gofers for engineering. They are not part of the product team; they manage the product team. Engineering teams don’t consider good product managers a “marketing resource.” Good product managers are the marketing counterparts to the engineering manager.
Good product managers crisply define the target, the “what” (as opposed to the “how”), and manage the delivery of the “what.” Bad product managers feel best about themselves when they figure out “how.” Good product managers communicate crisply to engineering in writing as well as verbally. Good product managers don’t give direction informally. Good product managers gather information informally.
Good product managers create collateral, FAQs, presentations, and white papers that can be leveraged by salespeople, marketing people, and executives. Bad product managers complain that they spend all day answering questions for the sales force and are swamped. Good product managers anticipate the serious product flaws and build real solutions. Bad product managers put out fires all day.
Good product managers take written positions on important issues (competitive silver bullets, tough architectural choices, tough product decisions, and markets to attack or yield). Bad product managers voice their opinions verbally and lament that the “powers that be” won’t let it happen. Once bad product managers fail, they point out that they predicted they would fail.
Good product managers focus the team on revenue and customers. Bad product managers focus the team on how many features competitors are building. Good product managers define good products that can be executed with a strong effort. Bad product managers define good products that can’t be executed or let engineering build whatever they want (that is, solve the hardest problem).
Good product managers think in terms of delivering superior value to the marketplace during product planning and achieving market share and revenue goals during the go-to-market phase. Bad product managers get very confused about the differences among delivering value, matching competitive features, pricing, and ubiquity. Good product managers decompose problems. Bad product managers combine all problems into one.
Good product managers think about the story they want written by the press. Bad product managers think about covering every feature and being absolutely technically accurate with the press. Good product managers ask the press questions. Bad product managers answer any press question. Good product managers assume members of the press and the analyst community are really smart. Bad product managers assume that journalists and analysts are dumb because they don’t understand the subtle nuances of their particular technology.
Good product managers err on the side of clarity. Bad product managers never even explain the obvious. Good product managers define their job and their success. Bad product managers constantly want to be told what to do.
Good product managers send their status reports in on time every week, because they are disciplined. Bad product managers forget to send in their status reports on time, because they don’t value discipline.
IS IT OKAY TO HIRE PEOPLE FROM YOUR FRIEND’S COMPANY?
Every good technology company needs great people. The best companies invest time, money, and sweat equity into becoming world-class recruiting machines. But how far should you take your quest to build the world’s greatest team? Is it fair game to hire employees from your friend’s company? Will you still be friends?
First, what do I mean by “friends”? There are two relevant categories:
Important business partners
Friends
For this discussion, friends and important business partners are roughly the same.
Most CEOs would never target a friend’s company as a source of talent. As CEO, one generally doesn’t have many true friends in business, and raiding your friend’s company is a sure way to lose one. Nevertheless, almost every CEO will be faced with the decision of whether to hire an employee out of her friend’s company. How does it happen? When is it okay? When will it cost you a friend?
BUT THEY WERE ALREADY LOOKING
It always starts in the same way. Your friend Cathy has a great engineer working for her named Mitchell. Mitchell happens to be friends with one of your top engineers. Your engineer brings Mitchell in for an interview, unbeknownst to you, and he naturally sails through the process. The final step is the interview with you, the CEO. You immediately notice that Mitchell currently works at your good friend Cathy’s company. You check with your people to make sure that they did not approach Mitchell first, and they assure you that Mitchell was already looking and will go to another company if not yours. Now what?
At this point, you might be thinking, “If Mitchell is leaving, then logically my friend Cathy should want him to go to my company rather than to a competitor or a company with a CEO whom she doesn’t like.” Maybe Cathy will see it that way, but probably not.
People generally leave companies when things are not going well, so you should assume that Cathy is fighting for her company’s life. In this situation, nothing will cut her deeper than losing a great employee, because she knows that the other employees will see that as a leading indicator of the company’s demise. Even more damaging for Cathy is the fact that her employees will perceive your move as an act of betrayal—Cathy’s so-called friend is raiding her company. They will think, “Cathy is such an ineffective CEO that she cannot even keep her friends from hiring her people.” In this way, a logical issue quickly becomes an emotional one.
You don’t want to lose Cathy as a friend, so you assure her that Mitchell is the exception and that he came to you and that he will be the first and only one of her employees that joins your company. Generally, this explanation will work and Cathy will understand and appreciate the gesture. She will forgive, but rest assured, she will not forget.
Her memory of Mitchell will be important, because Mitchell will be just the first step in the demise of your relationship. Since Mitchell is a stellar hire, Cathy’s other strong employees will likely call Mitchell to understand why he left and where he is going. He will explain his reasoning and his reasons will be compelling. And suddenly they will want to follow Mitchell’s path and join your company, too. By the time you become aware of the situation, promises will have been made to prospective employees who approached Mitchell and offers may be out.
In each case, your employees will assure you that they were approached by Cathy’s employees and not vice versa. They will point out that the candidates have offers from other companies as well, so they will definitely leave and you might as well benefit from their restlessness. Cathy’s managers will almost certainly tell a different story. They will plead with her to get her friend to stop raiding their stable of employees or else they will never be able to meet their commitments. This will embarrass and enrage Cathy. In the end, social pressure will trump all your brilliant countervailing logic.
Here’s an easy way to think about the dynamic. If your husband left you, would you want your best friend to date him? He’s going to date somebody, so wouldn’t you want your friend to have him? It seems logical, but this situation is far from logical and you just lost one friend.
SO WHAT SHOULD YOU DO?
First, keep in mind that the employees are either extremely good or you probably won’t want them in your company anyway. So, you will either be recruiting top-notch employees from your friend’s company or you will be adding mediocre people. Do not assume the people you are taking will not be missed.
A good rule of thumb is my Reflexive Principle of Employee Raiding, which states, “If you would be shocked and horrified if Company X hired several of your employees, then you should not hire any of theirs.” The number of such companies should be small and may very well be zero.
In order to avoid these sticky situations, many companies employ written or unwritten policies that name companies where it is not okay to hire without CEO (or senior executive) approval. With such a policy in place, you will be able to give your friend one last chance to save their employee or to object prior to you hiring them.
With that in mind, the best way to deal with these situations is openly and transparently. Once you become aware of the conflict between hiring the superstar employee and double-crossing your valued friend, you should get the issue onto the table by informing the employee that you have an important business relationship with his existing company and you will have to complete a reference check with the CEO prior to extending the offer. Let him know that if he does not want that to happen, then you will stop the process now and keep the process to date confidential. By speaking with your friend before making the hire, you will be able to better judge the relationship impact of hiring her employee. In addition, you may avoid making a bad hire, as often candidates who do well in interviews turn out to be bad employees.
CLOSING THOUGHTS
In the classic movie The Good, the Bad and the Ugly, Clint Eastwood “The Good” and Eli Wallach “The Ugly” are partners in crime. Wallach, a known criminal, has a bounty on his head and the two of them run a scam to collect the reward money. Eastwood turns Wallach in and collects the reward. Then Wallach is sentenced to death by hanging. As Wallach sits on a horse, hands tied behind his back and about to be hanged with a rope around his neck, Eastwood shoots the rope from a distance and frees Wallach and they split the reward money. This scheme works brilliantly, until one day Eastwood frees Wallach but informs Wallach: “I don’t think you’ll ever be worth more than three thousand dollars.” Wallach retorts, “What do you mean?” Eastwood informs him, “I mean, our partnership is untied. Oh no, not you. You remain tied. I’ll keep the money, and you can have the rope.” What follows is one of the great revenge pursuits in motion picture history.
So, when you tell your CEO friend that you don’t think she’ll ever be worth more than this employee, don’t expect to stay friends.
WHY IT’S HARD TO BRING BIG COMPANY EXECS INTO LITTLE COMPANIES
So you’ve achieved product market fit and you are ready to start building the company. The board encourages you to bring in some “been there, done that” executives who will provide the right financial, sales, and marketing expertise to help you transition from a world-class product to a world-class business. You see a few candidates that you like, but the venture capitalist on the board says, “You are undershooting. This is going to be a huge company. We can attract better talent.” So you aim high and bring in a super-accomplished head of sales. This guy has run huge organizations with thousands of employees. He has stellar references and even looks the part. Your VC loves him, because he has an awesome résumé.
SIX MONTHS LATER . . .
Fast-forward six months and everyone in the company is wondering why the sales (or marketing or finance or product) guy who has produced nothing got such a monster stock option package. Meanwhile, the people doing all the work have much fewer options. Even worse than not getting your money’s worth, now the company is in trouble, because you’ve been missing the numbers as your super-expensive executive sits on his butt. What the frak just happened?
The most important thing to understand is that the job of a big company executive is very different from the job of a small company executive. When I was managing thousands of people at Hewlett-Packard after the sale of Opsware, there was an incredible number of incoming demands on my time. Everyone wanted a piece of me. Little companies wanted to partner with me or sell themselves to me, people in my organization needed approvals, other business units needed my help, customers wanted my attention, and so forth. As a result, I spent most of my time optimizing and tuning the existing business. Most of the work that I did was “incoming.” In fact, most skilled big company executives will tell you that if you have more than three new initiatives in a quarter, you are trying to do too much. As a result, big company executives tend to be interrupt-driven.
In contrast, when you are a startup executive, nothing happens unless you make it happen. In the early days of a company, you have to take eight to ten new initiatives a day or the company will stand still. There is no inertia that’s putting the company in motion. Without massive input from you, the company will stay at rest.
SO WHAT HAPPENS?
Once you hire one of these big company executives, there are two dangerous mismatches that you will face:
1. Rhythm mismatch Your executive has been conditioned to wait for the emails to come in, wait for the phone to ring, and wait for the meetings to get scheduled. In your company, he will be waiting a long time. If your new executive waits (as per his training), your other employees will become suspicious. You’ll hear things like “What does that guy do all day long?” and “Why did he get so many options?”
2. Skill set mismatch Running a large organization requires very different skills than creating and building an organization. When you run a large organization, you tend to become very good at tasks such as complex decision-making, prioritization, organizational design, process improvement, and organizational communication. When you are building an organization, there is no organization to design, there are no processes to improve, and communicating with the organization is simple. On the other hand, you have to be very adept at running a high-quality hiring process, have terrific domain expertise (you are personally responsible for quality control), know how to create process from scratch, and be extremely creative about initiating new directions and tasks.
