Posts from management

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.

Parental Leave

I am on the board of Etsy, which is now a public company, so I don’t blog about it much anymore. But I’ve been involved in a discussion at Etsy over the past few months that is both important and raises challenging issues. It is the subject of parental leave. Who should be entitled to parental leave and how much leave should be given?

Etsy announced to its employees today that it is making several fundamental changes to its parental leave policy. The new policy is:

Etsy employees will be eligible for 26 weeks of fully paid leave in the two years after they become a parent through birth or adoption, regardless of their gender, country of residence or family circumstance.

Etsy is not alone in making these changes. Other big tech companies like Facebook have made similar changes to their paternal leave policy. And so some of this is reacting to the competitive market for talent, particularly female talent. But our discussion at Etsy actually focused on other issues.

Etsy is a marketplace where creative entrepreneurs, many of whom are women, can create a more fulfilling and flexible way to support their families. An important goal of this policy change was to align the internal company values with the marketplace values.

Etsy is a global company with significant operations in countries with parental leave regulations that are more generous than what exists in the US. It was an important goal of Etsy to align its parental leave policies across the entire organization.

But most importantly, as Etsy’s CEO Chad Dickerson said to the company when he announced this change, “The well-being of employees & their families is not just good for people, it’s good for business.”

I fully support Etsy’s parental leave policy and am proud that Etsy is at the forefront of a movement in the tech industry for more family friendly employee policies.

However, I am not suggesting that all startups or all USV backed startups should do the same. It is easier to do this sort of thing when you have a workforce in the thousands or tens of thousands than when you have a team of four people working from a co-working space. Each company needs to decide when and how they can consider such a parental leave policy. But for those that have the scale to consider this approach, I am strongly in favor of it and share Chad’s belief that what is good for employees and their families is good for business.

Collaborating On A List

Every business has this situation, some many times a day.

Over the weekend, our team at USV was discussing an event we are putting together and people we might invite. One of us started the thread and suggested a dozen or so names. Replies started going back and forth with new suggestions. Many great ideas came out quickly via email. Then we decided to put all the names into a google sheet, which was obviously the thing to do to memorialize the suggestions and comments.

But then the discussion stopped. No new names were generated. The discussion ended.

Google sheets does generate an email when a change is made to a sheet, but it is not conversational the way a group email thread or a Slack channel is.

I suggested that we write a script that allows us to have the conversation in Slack and new ideas are autopopulated to the Google sheet. We could also do that in email but Slack felt like the better option.

I’m curious if other folks out there have had this same experience and how they have solved it. You want to database the list in a tool like Google sheets, but doing that seems to shut down the conversation that flows in an experience like Slack or email. It seems like the two functions need to be merged in some way.

The Retrade

Brad Feld has a post up about The Retrade. This is when you have a handshake or a signed term sheet on a deal (M&A or Financing) and the person on the other side calls you up a day or two before closing and tells you why they are going to have to change the terms of the deal. Go read Brad’s post, it is a good one.

My view on retrades is that they are part of the way the investment and M&A business gets done. You should not get emotional about them. You should not walk away over them unless you have a better option. You should simply accept them as part of the way the game is played and deal with them as best you can. You can often negotiate a retrade. You won’t get back to where you were before the retrade but you can often do better than what is being suggested.

In a market when retrades are common (private equity or the down cycle of the venture business), you should always negotiate more of a premium than you need or desire in the initial signed term sheet or LOI. That way you are building in a cushion for the expected retrade. If you are playing a game, you need to know how the game is played and act accordingly.

The thing about retrades is it is a signal about the person or institution you are doing business with. Sometimes retrades happen for legitimate reasons. A typical one is the due diligence shines a bright light on a problem that was unkown at the time of the signing of the term sheet or LOI. That is the most common explanation for retrades. But sometimes it is legitimate and sometimes it is not. Understanding all of this and how it reflects on the “retrader” is important. Because the one thing you do want to avoid is getting into business with bad people. Retrading is a potential red flag that the person you are dealing with is not a good person, but it is not definitively so.

As always, I suggest doing references, and as many of them as you can, on people you are thinking about getting into business with. If you hear that the person is a serial retrader, then you know that’s what you are dealing with and you might want to think twice about getting into business with them. If you have heard nothing but good things about the person or firm, then I would take the retrade in stride, deal with it, close and get on with things.