Posts from management

The Spillover Effect

The New York Times has a piece today about how bay area tech companies are giving the Phoenix Arizona economy a boost.

I think this is a trend we are just seeing the start of.

A big theme of board meetings I’ve been in over the past year is the crazy high cost of talent in the big tech centers (SF, NYC, LA, Boston, Seattle) and the need to grow headcount in lower cost locations.

This could mean outside of the US in places like Eastern Europe, Asia, India, but for the most part the discussions I have been in have centered on cities in the US where there is a good well educated work force, an increasing number of technically skilled workers, and a much lower cost of living. That could be Phoenix, or it could be Indianapolis, Pittsburgh, Atlanta, and a host of other really good places to live in the US.

Just like we are seeing tech seep into the strategic plans of big Fortune 1000 companies, we are seeing tech seep into the economic development plans of cities around the US (and around the world). Tech is where the growth opportunities are right now.

A good example of how this works is Google’s decision to build a big office in NYC in the early part of the last decade and build (and buy) engineering teams in that office. Google is now a major employer in NYC and the massive organization they have built has now spilled over into the broader tech sector in NYC. My partner Albert calls Google’s NYC office “the gift that Google gave NYC.”

We will see that story play out across many cities in the US (and outside of the US) in the next five to ten years. It is simply too expensive for most companies to house all of their employees in the bay area or NYC. And so they will stop doing that and go elsewhere for talent. That’s a very healthy and positive dynamic for everyone, including the big tech centers that are increasingly getting too expensive to live in for many tech employees.

The Rise Of Women Leaders

Although we are not where we need to be, it feels to me that we are entering a period where women will be increasingly the choice for leading our companies and our countries.

The rise of Theresa May in the UK is the latest high profile example of a woman being selected to occupy an important leadership position.

In the US, Hillary Clinton is currently the odds-on favorite to win the Presidency.

Imagine the power of the imagery of Angela Merkel, Teresa May, and Hillary Clinton meeting at an important event. That picture will tell a thousand words about the rise of women leaders.

In the tech business, women have rarely been in top leadership positions. But that too is changing. Women hold the CEO positions at IBM, Oracle, HP, Yahoo, and a number of other leading tech companies.

In the largest companies I work with, women hold many of the top leadership positions and these women are extremely talented executives and are likely to end up running companies someday soon.

So from where I sit, I feel we are on the cusp of a new era for women.

None of this changes the specific challenges that exist for women, the conflicts between family and work that are still more acute for women than men, the societal biases that still exist, and the muscle memory that will take time to unwind.

But as a husband and father of three amazing women leaders, it’s a great feeling to see the promised land emerging over the horizon. I am quite confident we will see real gender equality in the workplace in my lifetime.

Vacation Policy

I saw a discussion among our USV portfolio CEOs yesterday in one of the many communication channels we offer our portfolio companies.  The question was about vacation policy.

I was pleasantly surprised to find out that most of our portfolio companies offer unlimited vacation to their employees and that there is almost no abuse of this policy acros our portfolio companies.

Matt Blumberg, CEO of Return Path, linked to a post he wrote about his company’s Open Vacation policy a few years ago. It sums this topic up nicely.

When You Have Concerns

I hear this said all the time – “when you have concerns about an employee, it almost always means you will need to make a change.” I hear execs lament that they tend to wait too long to admit that they made a hiring mistake and act on it. I hear them wish they trusted their gut more. And it is not always a hiring mistake. It is often a case of someone doing great in a role or an organization at at time and then failing as the org or the culture changes around them. In this latter scenario, loyalty and appreciation for contributions made loom large.

And yet that conflicts with the idea that you can grow and develop talent and you can coach people to evolve and change.

A friend of mine told me yesterday that “you have to pay attention to the key moments” when you are evaluating an employee that you have questions about. She suggested that concerns always exist and it is not true that when you have concerns, it almost always leads to making a change. And she said that culture matters a lot and can’t be sacrificed when making these calls.

I don’t do a lot of hiring and firing personally, only at the highest levels. But I do observe executives in our portfolio companies struggling with these decisions and have gone back and forth on how to advise them in these situations. I tend to like action, decisiveness, and a willingness to make a mistake over inaction, pondering, and a desire to get everything right. And so I generally coach executives to make a call and move on when they have concerns.

But the conversation with my friend yesterday gave me pause. I wonder if my advice to make a call and move on is always the right advice. I am curious how the AVC community thinks about these things. Because these are the things that matter most of all in building, managing, and leading a business.

The Maternal Instinct

It’s Mothers Day, a time to celebrate motherhood and moms. I woke up thinking about the maternal instinct and it’s effect on business.

I was talking to a friend last night about the challenges of working on troubled or failed investments. We were debating whether it is even worth the time to try and save a troubled investment versus moving on and focusing on a new one. This is the endless debate in venture capital. It can be applied to managing people as well. Should you work to develop a talented employee who is struggling or just move on and find someone new for the role?

As we were debating the point on whether to fight for a troubled investment or just move on, the Gotham Gal walked by. And I turned to my friend and said “she never gives up on any of her investments and she has 10x the number that I do.” I’ve cautioned her many times that she can’t fix every company, every CEO, every business plan. But she just keeps trying. It’s why I love her so much.

There is something about the maternal instinct. It’s a powerful thing. It is about protecting and caring for someone or something. It is innate in women and they do bring it with them into the world of business. This is one of many reasons why gender diversity in a team is important. Men and women bring different perspectives and instincts to a situation. Debating it out and finding common ground can be quite valuable.

Surely there is a limit to the maternal instinct in business. You can’t make every hire work. You can’t make every project work. You can’t make every investment work. That’s what I frequently tell the Gotham Gal. But that doesn’t stop her from trying. And I understand why.

Happy Mothers Day to all the moms out there. You care for us and we love you for it.

The New Boss

I got an email from a friend who is starting a CEO job. He said to me “I’d love any thoughts or advice you have as a new CEO joining a company.”

I have reached out to a number of CEOs I know who have taken over companies recently and am compiling a list of suggestions.

But given the number of great CEOs in the AVC community, I would be remiss if I didn’t pose this question to all of you as well.

What are the one or two pieces of advice you would give a friend who is taking over as CEO of a new company?

I suspect this is going to be a great comment thread.

Don’t Kick The Can Down The Road

I’ve been using this term a lot lately – “don’t kick the can down the road”. There is always a desire to push the hard decisions out. I find myself urging entrepreneurs and CEOs to make that hard call today and take the poison and move on. It’s hard for leaders to make this choice largely because of fear of the other things that will come along with that hard decision.

Bill Gurley, who I find myself agreeing with as much or more than anyone else in the VC business, has a fantastic post up about the danger of the “structured financings” that are increasingly common in the later stage VC market today. In it, he says:

Many Unicorn founders and CEOs have never experienced a difficult fundraising environment — they have only known success. Also, they have a strong belief that any sign of weakness (such as a down round) will have a catastrophic impact on their culture, hiring process, and ability to retain employees. Their own ego is also a factor – will a down round signal weakness?  It might be hard to imagine the level of fear and anxiety that can creep into a formerly confident mind in a transitional moment like this.

This is so true. I have sat in and on countless meetings and phone calls with leaders who are afraid that the whole thing that they just spent three, four, five years (or more) building will come crashing down because they take a down round. I have been through dozens of down rounds in my career. At least thirty and maybe fifty if I really took the time to count them all. They are no different than a public company’s stock price taking a big hit. It is painful to be sure. Some people will leave but they are either weak in the knees or were half way out the door anyway. But I have never seen a down round destroy a company. And I have seen many down rounds save a company.

Another place where leaders tend to want to kick the can down the road is with talented but difficult employees. They cannot bring themselves to remove the person who is providing a ton of individual contribution but is also poisoning the culture. A founder of one of our portfolio companies once told our entire USV CEO group the following story. I am not saying who because I don’t want to expose him to any issues.

We had an engineer who was the most talented and productive engineer on our entire team. But he was also incredibly difficult to work with and everyone disliked him. We couldn’t let him go because we were fearful of creating a “hole” in our organization. Finally, the complaints got so loud that we were sure we were going to start losing people over him. So we did what we were afraid to do and let him go. And we did just fine without him. The morale of the story is you are better having a hole in your organization than an asshole.

Man I just love that one. It is so true and everyone who hears it shakes their head and chuckles and groans at the same time.

There are certainly many more examples of where leaders take the easy way out and defer a difficult decision because of fear of the consequences. My message to all of you out there is “don’t do that”. Kicking the can down the road is more harmful than helpful. Take the pain today and fix your issues and deal with the consequences. You will be better off for it and so will your company.

Community Moderation

The Verge has an incredible post up about “content moderation.”

I have always felt that the hardest part of running an Internet business was insuring the trust and safety of the users and I am thrilled to see some light being shone on this part of the business.

There is always so much talk about the product and engineering parts of the business and so little about the extremely difficult work that goes into policing the product. And yet when you look at churn, so much of it in a scale Internet business is a result of users running out of patience with spam, trolling, and worse. This comment by Dick Costolo from the piece is telling:

“We lose core user after core user by not addressing simple trolling issues that they face every day, We’re going to start kicking these people off right and left and making sure that when they issue their ridiculous attacks, nobody hears them.” 

Well as the post points out, that is not so simple. And, of course, there are free speech issues too. I constantly hear people criticizing Twitter for blocking users.

But trolling, as bad as it is, is not the worst part of this work.

A trust and safety team has to deal with the most awful kinds of people and actions imaginable. I often suggest that everyone should sit in a trust and safety organization for a week. Then a lot of the conversations we have about free speech, privacy, and the like would get a lot more nuanced. There are bad people out there doing bad stuff.

Sadly, as I have seen again and again, startups don’t understand how challenging these problems are going to be until some sort of situation forces them to react. Then they throw people at the problem but never their precious “engineering resources.” When trust and safety, fraud, compliance, and moderation teams start getting their own engineering resources, something that often takes years to happen, then you know the company is finally acknowledging the importance and seriousness of the work.

The people profiled in this Verge story are heroes in my book. They do hard work, are not paid as much as they should be, and they are working in incredibly difficult and dangerous (for their mental health) situations. It is high time we start acknowledging them and their work and investing in it.

Path Forward

Our portfolio company Return Path built a “returnship” program a few years ago to help stay at home moms and other men and women who have left the work force to take care of children, sick parents, etc figure out how to get back into the workforce. This program, which involves a 20 week paid internship and a bunch of training in new tools and technologies, has been incredibly successful at Return Path where they have run several cohorts and hired many of the interns into full time positions.

Recently Return Path started helping other tech companies start these returnship programs. They found that these companies had similar success with it.

So this week Return Path spun out the team, the systems, and the curriculum into a new non-profit called Path Forward. The Gotham Gal, who has written a lot about the challenges women face in getting back into careers they temporarily left, will be joining the Board and helping them grow this new effort. She wrote a bit about it on her blog yesterday. And Fortune has a great piece on Path Forward too.

This topic has been near and dear to our family for a long time. Our daughter Emily wrote her college thesis, Life Sequencing: A Viable Solution To Work-Life Conflict For High-Achieving Women, on this topic and her work has further encouraged us to work on this issue.

If you have a company in NY, CA, or CO (they are starting in those three states) that would like to start doing returnships, go to Path Forward and fill out this form. If you are ready to restart your career after taking time off, go to Path Forward and complete this form.

And if you think this is awesome and want to support Path Forward financially, go to Crowdrise and hit the big donate button.

Onboard Your Board

Many companies have onboarding programs for new employees where they familiarize the new employee with the business, team, culture, etc before they start working. But I have never come across a company (or institution for that matter) that does this for their board. I am sure it happens, but I have never encountered it.

I am working with a company right now that is putting a “board onboarding” program in place. It makes so much sense. How can you expect your board to give you the best advice and understand the business if you don’t help them do that?

So when you put someone new on your board, ask that person to spend a day or two at your company. Set up “one on ones” with your entire senior team, have them attend an all hands, have them sit in on the weekly management meeting, and spend some quality time with them (dinner?) during this process. That will help your new board members immensely. They will be “up to speed” on the business from the very first board meeting instead of having to spend a year or more figuring things out.

Managing a board is hard. It takes time and lots of communication. But you can make all of that a bit easier if you start off on the right foot.