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Memo to CEOs: It’s about the team, stupid

6 min read


In one of the stranger inversions of the tech industry, failure has become chic. The founder of a failed startup, instead of feeling a little sheepish, now has bragging rights and a badge of honor. Indeed, one CEO of a failed startup recently bragged to a New York magazine writer that more people than ever now want to talk to him because of his failure.

There is certainly nothing wrong with learning from the experience of having tried and failed at starting an enterprise, and there is value in sharing the lessons of that experience. In the military, we refer to studying the outcomes of operations as “After Action Reports,” with an objective of honest self-reflection and developing an understanding of exactly what went right, what went wrong, and how to avoid the what-went-wrong part going forward.

But that’s not quite what this is. Instead, this celebration of failure seems more like an opportunity to spin one’s mistakes rather than coming to terms with them. In my view, it is part of a broader tech cultural trend of portraying the startup experience almost as if it is a personal journey of the founder. And I would argue that this very phenomenon — the startup as “my excellent adventure” — lies at the root of what haunts most start-up enterprises in the first place: the development of a dysfunctional company culture that celebrates the entrepreneur at the top while marginalizing the team that does the real work.

Tech startups in particular are usually founded by very smart people with an idea and a vision. The problem is that is where it begins and ends. The founder inevitably over-invests in his or her product to the detriment of managing the company. Then there’s the ego issue. Founders tend to believe that, because the process of founding a company and raising capital is hard — and make no mistake, it is — that somehow they are a breed apart, a superior sort of business guru entitled to a disproportionate equity stake and fawning industry press. (And yes, it is hard, but so are 10,000 other things people do without receiving outrageous compensation packages).

Founders can be more concerned with promoting their egos (even in failure!) than with empowering their teams. And that leads to a culture of autocracy and founder-entitlement that can drive start-up cultural dysfunction.

It’s one of the great ironies of the tech business that we attract many of the brightest minds on the planet to our industry, but then subordinate them to founders who exercise a monopoly over company vision and strategy; that rule their start-ups like feudal lords supported by serf-like employees (serfs with Stanford degrees).

These Lords of the (Silicon) Valley often don’t understand how to genuinely manage people or run a real company — what some might consider the basics of general management. Consequently, they ignore a fundamental principle of leadership: the need to empower your team.

As a naval officer on active and reserve duty over the last 21 years, as well as a technology entrepreneur, I have come to believe that teamwork is central to a mission’s success. In fact, empowering the team and executing well matters at least as much, if not more than, your product and enterprise vision.

A former commanding officer of mine once said to me, “Take care of your people and they will take care of you.” A simple but powerful maxim.

At the companies I’ve had the privilege to help lead, I’ve worked hard to create an environment where the team feels empowered, where the team members are free and enabled to excel in their work and see the results of their efforts, where risk-taking is encouraged and all front-line employees know management has their backs.

That of course doesn’t happen out of the box and requires a lot of tough work. Here are my recommendations for creating a culture that fosters teamwork:

  • Set a vision that inspires your people towards an important achievement, a disruptive innovation.
  • Hire a great team. Slowly if possible in the beginning; when you are growing fast, institute formal processes for onboarding and getting employees up to speed. I’ve found 50 employees to be about the number where you need to transition from informal to formal hiring and on-boarding processes. And by the way, when I say “Great Team,” I don’t necessarily mean a bunch of A-player prima donnas. I mean, first and foremost, people who understand how to come together and function as a team.
  • Give employees real skin in the game. Make them direct participants and owners (for example, with a meaningful employee stock program). At Kinetic, our entire team of 70 has equity. Everyone has more – in many cases, substantially more — than the industry average for a company of our size. Meanwhile, the ratio between the highest equity package and the most junior is the lowest of any company in our VC’s portfolio, and I believe, among the lowest in the industry. Translation: we’re all in this together, and we will collectively reap the benefits of our efforts. (We also have one of the lowest employee turnover rates I know of, which is not a coincidence).
  • Empower employees, then get out of their way. The military taught me to push responsibility and accountability down the channel. I have spent a lot of my service attached to Marine Corps units, and in my experience, they do this the best of all. Trust your team, allow for broad agency and decision-making, encourage risk taking, and then stand back and let the team do their jobs.
  • Hold the team accountable for the results you expect, around the vision you set. A good subordinate manager will welcome the accountability; it will help them reach their potential and grow as leaders in their own right.

There’s a myth that startups have the next great idea and magically come into existence. As you celebrate the next successful — or failed — startup CEO, remember that leadership and a team effort are at least as important, and perhaps more so, than the idea. In the final analysis, that is what will deliver real advantage and sustainable value.

Don Mathis is an entrepreneur and angel investor with several successful exits and 12+ years of experience in technology ventures. He is the co-founder and CEO of Kinetic Social, a data and technology company launched in 2011 with a core focus of marrying Big Data to social media for large brand advertisers. Don also serves in the active reserve of the U.S. Navy, where he holds specialties in expeditionary combat logistics and anti-terrorism.