Monday, July 5, 2010

Startup Teams Should Dip but not Skip

1. Dipping:
As a decision maker you rely on information being passed to you by the people who report to you.  You’ll get sales information from your VP of Sales, marketing information from your VP Marketing, tech information from your CTO and so on.  But as a CEO you can’t rely solely on this information.  You need to “dip” down into your organization and learn directly from employees at all levels and with all skills.

It’s not just a Reaganesque “trust, but verify” issue although that’s certainly part of it.  As a leader you need to have an intuitive sense of your business that can only be formed by hearing directly from staff in every corner of your businesses.  Think of it kind of like running a national chain of restaurants and occasionally stopping in to wait tables to have a more intuitive sense for your processes, work conditions and the quality of your products.

An obvious example would be in sales.  As a CEO you never stop needing to go on sales calls (or to work the phones in telesales or customer support) and ceasing to do this as your company grows because you’re focusing on investors, recruiting, PR or whatever is a mistake.  By going on sales calls you pick up directly the feedback of what customers want and also what they’re telling you about competition.  You’re also learning directly about the skills of your sales staff by observing them in action.  It might tell you that you need better sales training or to hone your key selling messages.  They will tell you directly which features they think are necessary to win more deals (take this information as data points rather than conclusions).

I also liked to sit in on sales pipeline meetings.  I didn’t lead the calls – our VP of Sales or country managers did – but I listened in to hear about deal specific dynamics so when it came time for forecasting between the VP of Sales and myself I had direct knowledge of the deals from having heard the sales reps talk about their individual pipelines.

Similarly I liked to keep myself apprised of the technical decisions we were making.  I had long ago ceded the knowledge and responsibility for making the detailed technical recommendations about platforms, databases, hosting solutions, etc.  But I knew that to be a good decision maker I needed first hand knowledge rather than just a summary from my CTO.  So I would go to lunch with our senior architect and ask 50 questions about the differences between Postgres, MySQL and Oracle databases.

At my first company we went with Oracle because it had better handling of “clustering” at the time where we could have multiple instances of databases that we could keep synchronized.  By the time of my second company MySQL was a much more robust solution and worked well when you had to read a lot of information but was less performant on “write” activities.  As a content management system we had lots of write activities and went with Postgres.

I helped make this decision by “triangulating” between our DBA, lead technical architect and our VP of Engineering (who had a better grasp of the financial costs & development costs of each decision).  I could never have been involved in this decision without “dipping” below my CTO to understand the details.  If my CTO would have given me his update much detail would have been lost in translation.

I provide this level of technical detail because I want to remind CEO’s that you need to own these decisions.  If your company is small then make sure you’re asking CTO’s of other companies how they made their decisions about whether to self host or go with Amazon AWS.  How did they decide whether to use RightScale or to manage AWS themselves?  You might be a business person rather than technical but for key decisions you need information to make the best decisions.

It’s why when I’m evaluating an investment I often ask the CEO lots of detailed questions about all parts of their business.  Attention to detail matters.

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