Team and Strategy

I’ve been in board meeting blitz since the summer ended. Many of the companies I work with are well past the startup phase and are well into or even past the growth/scaling phase. And the thought that keeps occurring to me as I go from board meeting to board meeting is the key to success when you are past the startup/product market fit stage comes down to two things, team and strategy.

You have to get the strategy right and you have to have a team that can execute it without your day to day involvement. The CEOs that I work with that are struggling are usually running into issues with their team and/or their strategy. And the CEOs that I work with that are doing great generally have gotten the strategy set and have built a strong executive team underneath them.

This sounds so simple. But it is not.

Most of the companies I work with didn’t really start out with a strategy. They started out with an idea that turned into a great product that found a fit with a market. And they jumped on that and used it to build a company. Most of them wake up at some point and realize that a single product in a single market is not a strategy and they need to come up with a plan to get a lot bigger and build a sustainable and defensible business. I like to think that this is one place where a good investor group can help. If we are doing our job, we push our portfolio companies to work on their long term strategy and refine it to the point where it makes sense and is executable. But an investor group cannot give a company a strategy. It has to come from the founder/CEO and a small group of senior leaders. The smaller the group that is working on strategy, the better. Strategy is not something that can be done by committee.

The second thing, building an executive team that can execute the plan without day to day involvement of the CEO, is even harder. Most of the companies I work with go through a lot of hiring mistakes on the way to building this team. Some hire too junior. Some hire too senior. Some hire bad cultural fits. Some hire people that are nothing but cultural fit. And an investor or investor group can help with this but I believe that founders/CEOs need to learn how to do this themselves and make these mistakes. The best thing an investor group can do is to help a founder/CEO to understand when they have the wrong person in the job. Or help them understand that more quickly.

These are both areas where experience is huge. The CEOs I work with who have done the job multiple times get these two things right much more quickly. But even they can take a year or two to get these right. First time CEOs often take three or four years to get these things right. But sticking with founders who are first time CEOs through this process is usually worth it because they have a connection to the initial vision and mission that a hired CEO has a hard time replicating. There is not a good rule of thumb on this issue (who should run the company). Facts and circumstances on the ground will generally determine how that should go.

My final point on this is that once you have the strategy and team locked down, you should step back and let the machine do its thing. I like to say that CEOs should do only three things; recruit and retain the team, build and evolve the long term strategy and communicate it effectively and broadly in the organization and externally, and make sure the company doesn’t run out of money. When those are the only things you are doing, you are doing the job right. Very few CEOs get to focus on only these three things all of the time. Things break and you have to fix them. But when the machine is working and you can step back and watch it hum, it is a thing of beauty.


Comments (Archived):

  1. Rob Underwood

    “The startup business is ninety percent product-market fit. The other half is team.”Quote developed after the Mets AVC post from a couple weeks ago.

    1. JimHirshfield

      “I never said most of the things I said”

      1. William Mougayar

        Don’t go there. It’s too crowded.

        1. Jess Bachman

          “Don’t go there. It’s too crowded.” — Yogi Berra — William Mougayar

          1. William Mougayar

            William Berra said it.

        2. Vasudev Ram

          No one goes there any more. It’s too crowded.

      2. Vasudev Ram

        You did. You just disremember.

    2. Vasudev Ram

      “The first 90% of the project takes the first 90% of the development time. The remaining 10% of the project takes the other 90% of the development time.” – Anon.

    3. creative group

      Rob Underwood:Would they other half (Remaining 10%) is team?

  2. William Mougayar

    Lot of golden nuggets in this post. “an investor group cannot give a company a strategy”. Yes, it has to be their own native one, because they are the ones that need to execute on it. It’s part of the “all in” continuum of grit, and wanting to get there. If it’s not theirs, they would be executing in foreign territory, which means failing.

    1. Rob Underwood

      I spend my days just now doing basically two things – CS Education and startup advisory.In my startup advisory work one common thread I see is founders, CEOs, and leadership teams who struggle not just with strategy overall, but in particular customer and market strategy, especially route-to-market, sales, and channel strategy.For B2B companies and/or companies with larger order sizes/longer sales cycles, this component to strategy seems the one that’s least well developed. To put it another way, it too often seems like early stage growth hacking tactics for customer acquisition needed as a seed stage company seeks product-market fit have morph into the de facto sales and market plan of a now more mature, sophisticated company. That’s bad.This context in mind, last month I stumbled on this podcast by Meagen Eisenberg, CMO of MongoDB and have since been making it required listening by clients, especially those in the B2B space. Great insights on optimizing the funnel —

  3. Dana Jinaru

    I worked for the PE team of a large asset manager. Most of our capital was spent on investing in other funds as an LP. Within the first week, I’d learned the mantra “team, strategy and track record” (in that specific order) is what we cared about whenever we made the investment. Bottom line: I think your thoughts apply to many other aspects of business, well beyond startups.

  4. JimHirshfield

    Strategy is not something that can be done by committeeIOW, startups are not democracies.

    1. Jess Bachman

      Democracies aren’t even democracies.

      1. JimHirshfield

        I think The Donald said that.

        1. Pointsandfigures

          They aren’t. They turn into cesspools if govt gets to big-Republics on the other hand….. : )

  5. William Mougayar

    Another thing is that changing strategy is very hard, especially when the team has started executing on it. It takes a long time to change course when the company gets bigger. Iterations are no longer just product related, because the rest of the company gets dragged in these changes.

    1. Guy Lepage

      It shouldn’t take a long time to change course. That means your team is probably not in sync and some changes need to be made with the team

      1. Matt Zagaja

        Sometimes when you work in government or a volunteer organization you do not get to pick your team.

      2. William Mougayar

        Change takes time.

    2. Matt A. Myers

      This feels like the most likely reason for Yahoo!’s issues.

  6. Tom Deierlein

    Good one.I think you said a few years back – do three things:Set the Vision and StrategyHire the Right PeopleKeep money in the bankSomeone added an important fourth – meet with customers…

  7. Ana Milicevic

    I’d add that knowing when to call on a neutral advisor or consultant is also critical. This can often be the differentiator especially with younger, less experienced teams (ironically it’s entrepreneurs who’ve done it before that understand this keenly).

  8. Twain Twain

    Strategy is always made out to be neat like McKinsey 7S model.The reality is more like wrestling octopuses.Golden nuggets: “An investor group cannot give a company a strategy. It has to come from the founder/CEO and a small group of senior leaders. The smaller the group that is working on strategy, the better. Strategy is not something that can be done by committee.”Founder/CEO and their leadership team need to know how to navigate and steer (and avoid potholes and icebergs). That’s what they’re there to do so customers and investors get to Happy Lands. https://uploads.disquscdn.chttps://uploads.disquscdn.c

    1. PhilipSugar

      McKinsey has such nice graphs, powerpoints, and spreadsheets.The reality as you state is that for a small company they are meaningless. I like your graphic. That is the world.I don’t know if they work for big companies. Frankly I don’t know and don’t care (that’s not negative, just my reality)

      1. Twain Twain

        McKinsey & other mgmt consultancy frameworks don’t necessarily work for bigco’s either.If they did and were precisely predictive then … Financial Crisis 2008 wouldn’t have happened — the consultants would have been able to appropriately advise the banks not to do ABC, to implement in risk mgmt processes XYZ etc.Scientific Mgmt as a discipline arose because of Smith’s division of labor philosophy which got translated into Taylor and Winslow’s methods through Kotler, Peters, Clay Christiansen and so on.They’re a way of providing logic and order to the chaos and irrationality of people (especially as N increases) but they’re as imperfect and fallible as their human creators, aka us.

        1. PhilipSugar

          Common sense is not so common.The thing about really smart people is they put together great models and convince themselves they are right.Us commoners think, you are giving people a 110% LTV mortgage, on an asset that has just doubled because of easy credit, where they can only afford a negative amortization payment, with a proven record of bad credit, and think that is going to work out how?I told the head of mortgage backed securities for Morgan Stanley who I lived with when I was young after I sold my house and saw that deal go down. How can you literally put a pile of dog crap in a bag and say it doesn’t stink?He said oh, we have tranches, the top tranche is AAA rated. No a piece of poop is a piece of poop. You can slice it, dice it, do whatever. It still stinks.

          1. Twain Twain

            LOL, Philip. I have a nice little slide on this.As you know, they’re trying to teach the machines “common sense”.I read this from Cisco just now about Automated Writing:*…And had this thought:What’s going to happen when we lose the ability to read, write and do arithmetic (the 3R foundations of human learning and intelligence)?READ: text-to-voice and image recognition means Siri, Google, Alexa, FB’s version of Jarvis will read everything for us.WRITE: The bots will write the content and then Facebook, Twitter & Google’s AI will curate and editorialize. Bots will also write code that drive cars too.ARITHMETICS: The machines are already much much better than us at maths (see Tensorflow, Wolfram Alpha, Spark et al’s lovely maths libraries).@pointsandfigures:disqus @lawrencebrass:disqus @brooklynrob:disqus — The bots will do all the strategy and investment thesis too. https://uploads.disquscdn.c

          2. LE

            Dated a girl once whose brother (was a Wharton grad) had started a small hedge fund (after working at one) and was investing big in Yahoo getting bought by Microsoft (2006 roughly iirc). Would ask me all sorts of career advice and business advice questions however he didn’t care at all what I thought about Yahoo or whether the bets he was making were a good deal. I could see his eyes glaze over. He ended up losing out on that deal and another for some wireless company that never panned out and had to close down the fund. [1] Ended up getting another job at a different hedge fund and has been doing fine ever since. Doing the same type of work. According to Facebook has plenty of time to spend with his kids and traveling.To your point these (I think at least from the model I have put together) these aren’t detail oriented people. They simply don’t think to the level of what you are saying. For some of them that actually works out very well. The guy that I am talking about was good at math basically and finance.[1] And I lost out on that and learned a valuable lesson as well. I assumed that he must know something that I didn’t so I bought some of the stock as well. Not a great deal but enough to make it interesting.

        2. Lawrence Brass

          I have never seen the real long term benefits of management consultancy frameworks. They can give some apparent order to a chaotic medium sized organisation, but the reality is that many times it is just self serving overhead. Certification stickers and posters are cool though.I like lightweight frameworks based on agile methodologies better, but not religiously.

          1. Pointsandfigures

            For big co’s it’s expensive CYA in a lot of cases. When we were at CME changing it, we hired McKinsey and they actually were very beneficial.

          2. Lawrence Brass

            An external fresh and professional view is always beneficial I guess, specially if you get the real thing. But I think each organisation must adapt the principles learnt to their own cases and realities.

          3. Rob Underwood

            I worked in the strategy practice of one of thse firms for over a decade. It’s all utter bulls**t.The senior people spent more time on kerning and making the slides look nice. The junior people did the actual “analysis”, usually when they were either 1) hung over (9am to 2pm) or 2) drunk (5pm to 10pm) (2pm to 5pm was usually for meetings to plan for other meetings). The senior people did not get involved in the analysis because it was “beneath them”. I found I spent a fair amount of my time teaching Stanford and Harvard MBAs explaining what complicated things like “cash flow statement” and “balance sheet” were — I was utterly awed by how little they seemed to have picked up in school (the only thing more amazing was when the parents of 28 year old MBAs would call us to appeal the ratings on their performance views – yes, that really happens).It is a complete utter waste of money. I realized too late that management consulting is nearly always 1) a protracted therapy session for a middle manager of middling talent, 2) a way for said middling manager to have someone else do their job for them, and/or 3) an insurance policy for bad decisions or bad outcomes (clients can blame the consultants if things go wrong).Killer quote from this project — night before our final presentation the partner said to me “Rob, on slide 8 can you just put something quick about how Client X can finally beat Apple and Apple’s brand in the mobile device market.” I really wish I was making that up too, but I’m not. Insight was just more content fodder.In 2010 I worked on a piece of work for a large Asian consumer electronics company. Unlike any other project I was involved in, we actually attempted to make the financial models actually make some sense (other projects literally the numbers were just made up knowing no one would ever read our decks that had cost them several hundred thousand dollars to produce) – Asian electronics companies tend to care about stuff like, say, numbers. Even with a college try attempt some of our numbers did not work when cross-referenced. While the meeting in which this was unearthed was the most painful meeting I’ve ever been in, I was glad for it as it started me towards a very different direction in life.If you’re paying firms for those frameworks and models you’re literally pissing money away.

          4. Lawrence Brass

            Some people may think these are isolated rants against the system but for people than can tell the difference, it is alarming. On the upside, it might be an opportunity.

          5. cavepainting

            You are very correct. Most of the times, the strategy firm either provides a) CYA for management / board to cover themselves for the strategy they want to pursue, or b) a way for management to gain broader buy-in. Which is why these firms continue to be in business, even though lot of people agree that the value in terms of content is questionable. It is like using an analyst report to backup what you are saying, except that this analyst will write what you want them to write.

          6. PhilipSugar

            I cannot tell you how much Iove this comment or people here will accuse me of a bromance and I don’t know you.

          7. Rob Underwood

            It’s all good. I am very bromantic.

      2. LE

        My guess is that that works for large companies when they are firing on all cylinders, profitable and simply taking advantage of the low hanging fruit of opportunity. When things go bad and/or are going downhill none of that shit works. They flounder and lose money by the boatload.Just read a story about GE in process (for some time now) transforming into a digital company. They have to pay salaries and compete now with Google and Facebook. (Imagine that top talent goes to a company that does what they do, what a shame). The only thing that will solve that problem is cold hard cash and other tweaks meanwhile they have to worry about not pissing off the legacy employees who get paid much less. (Requires careful social manipulation for sure..)…. https://uploads.disquscdn.c

  9. Tim R. Holcomb

    Could not agree with you more Fred. Pulling the strong on a bad hire, especially in a senior position, may well be the toughest decision a founder/CEO makes, but for reasons other than the difficulty in assessing that hire’s performance. It’s been my experience that most know what needs to be done, but still many of them struggle to take action when need.

  10. Guy Lepage

    Great post Fred. I’m a firm believer in what you’re saying. Team and strategy are key. But building a great team is super difficult and, as YC preaches, getting it right with the first few hires is critical to keep building a great team. Especially in the growth stages. Knowing this, wouldn’t you say that culture should be a key ingredient in acquiring the right team?

  11. Dan T

    Right strategy MUST involve tough decisions. If you have a great product with huge market opportunities, then you have to figure out where to focus first – and how to best reach your initial targets. This means you have to ignore part of the market at first. This is why I LOVE LOVE this book: Selling the Wheel.Imagine you invented this breakthrough product thousands of years ago – The Wheel – who can you sell it to first? how do you sell it?

    1. Hurstral Foollo Geze

      I just started a new job and it is going great , but I cannot share any investment tips with you people , because you probably have little dicks.

  12. Sebastian Aldasoro

    Fred, what do you think about cases when the CEO + her small group of leaders are building the strategy on the run (say throughout one year) but cannot reveal the whole thing to the team yet and, at the same time, need them to execute actions that will help them get there in the long run anyways?

  13. Amar

    As it so happens, I am in NYC this week and the book I was speed reading on my flight was “Execution by Larry Bossidy and Ram Charan” … I think that should be the bible for companies that have achieved PMF and are in the flourish stage.

  14. Andu @

    Impressed to see that years later you’re constant on the tasks a CEO needs to do:….

  15. Eric Friedman

    Great post. Building the machine that builds the business is one of the biggest challenges, and when you are in it feels difficult and impossible but once through it feels incredible.

  16. PhilipSugar

    I always say the CEO does five things (other than not run out of money, if you do that you are no longer a CEO)1. Find and keep the best people2. Orchestrate so no one department dominates another.3. Set a commitment system so people get their commitments done and nobody commits for another4. Visit and talk to clients and potential clients so you understand the market5. Set the strategy which is most importantly what you don’t do.If you do these right then you are correct you can be out of country for a week and there is no issue.

    1. Matt A. Myers

      I hadn’t thought of #2 until I recently heard a story of a team who raised $1.5mm based on a prototype with some traction. A significant amount of that money during their pitch for investment was earmarked for marketing. They decided to spend 90% of the marketing budget on development. The company has since folded because all of the investors pulled out/lost interest in the founder/management.#3 – Can you expand on this? It might be too obvious.. Thanks! 🙂

      1. PhilipSugar

        2 and 3 are related. Spend all your money on sales. You kill development. Spend all your money on development you build castles and kill sales.But if you let people make commitments for others then you have chaos.If you let sales commit they will promise anything (and I love sales)But finance is just as bad. They will make up a number and beat people over the head with it.Development will say it gets done when it gets done and nothing ships.No. You commit you do.

        1. Matt A. Myers

          Thanks 🙂

    2. LE

      If you do these right then you are correct you can be out of country for a weekAgree. And by 1 through 5 importantly you are saying that if you are needed to put out fires you are not doing your job. [1][1] Unless you are simply not large enough as a company to not man the hose yourself even occasionally.

    3. Sam

      “5. Set the strategy which is most importantly what you don’t do.”Strategy = choice. And choice is hard. Deciding what NOT to do is often extremely difficult for driven people to accept, but it’s a powerful way to clarify strategy for the organization. “That’s a good idea, but we’re not going to do it. We’re going to do this other thing really well first.”

      1. PhilipSugar

        One of the best things I ever heard was put down your top ten attributes…….then rank yourself from 1 to 5. You can only average a three. For every 5 you need to put down a 1.Otherwise you are just an exhausted 3.

    4. Vasudev Ram

      >If you do these right then you are correct you can be out of country for a week and there is no issue.Right. But a lot of people instead just go from fighting one fire to the next (no prevention, no learning from the past). Been in a few companies that did that, big ones too.The Semco CEO, Ricardo Semler used to work from home in the mornings and go to his factory / head office only in the afternoons (after he had spent some years making many changes, after taking over from his dad, the owner and original founder of Semco. Semler is the author of the book “Maverick! : The Success Story Behind the World’s Most Unusual Workplace” – which is about how he started at Semco and the changes he brought about there, not top-down but with huge collaboration and consensus from all levels of workers (or associates, as they called them there).Fascinating story. Chock full of anecdotes too.…Excerpt from that Wikipedia page:[ Maverick! : The Success Story Behind the World’s Most Unusual Workplace is a business autobiography by Ricardo Semler published in 1993 by Warner Books. The book relates the management succession and increasingly unorthodox ethos of Semco, which grew to become one of Brazil’s largest conglomerates.First published in Brazil in 1988 as Turning the Tables, it became the all-time best-selling nonfiction book in Brazil’s history. Semler further described the unusual corporate transition in The Seven-Day Weekend: Changing the Way Work Works published in 2003. ](Edited to add a few points.)

      1. PhilipSugar

        I really like.

    5. cavepainting

      What you do not do is the most important of all. Strategy seems simple when you want to be all things to all people with infinite resources.Focus not on the large ocean, but a small pond with laser focus, and then the next bigger pond and so on.. until the ocean becomes a natural extension.

    6. JamesHRH

      Doesn’t someone say the job is: Set the Strategy; Buidl the Team; don;t go Broke? @fredwilson:disqus

  17. jason wright

    Hannibal at Cannae always comes to my thoughts when I read on strategy and team and execution.

    1. Girish Mehta

      You could do a lot worse than remember the battle that set a standard for military tactics for the next 2,000 years.Now, was Cannae about battle tactics or strategy ? Cannot cleanly separate the two (although ‘tactics’ is how Cannae is more commonly characterized).

      1. JLM

        .Cannae is all tactics all the time.Having studied it in military school, I can tell you you are absolutely correct — it set the tactical standard for the Germans, the Russians, and the Americans during WWII.The Germans executed many attacks on the Russians in which the pincers/double envelopment tactical approach was the cornerstone of the plan. On the round trip, the Russians returned the favor, in particular, encircling the Krauts in front of Leningrad (Field Marshal von Paulus).This was the work of von Moeltke (the Elder) moreso than Schlieffen but both were adherents.What made Cannae complex is that Hannibal gave way in the center to the Roman legions thereby creating his double envelopment/pincers not by forward movement but by giving ground in the center and then attacking from the flanks with his army launching from its original positions on the flanks.The Romans thought they were making progress but as the frontage was compressed, Hannibal’s resistance was gathering strength with the decreasing frontage.One could argue that the Battle of the Bulge developed along the same lines but by accident moreso than on purpose. The Germans were sucked in deep, stopped at Bastogne, and then punished from the flanks. A much bigger maneuver space.Eisenhower was the author of the term “battle of annihilation” which was a term of military art associated with a decisive engagement in which an army bear hugged its enemy until it was able to destroy the opposing army as opposed to seizing a particular terrain feature.A lot of WWII was fought over geographic objectives rather than destroying the enemy’s army.One could argue that the Yankee commander at Gettysburg foiled Lee’s attempt on the third day to penetrate the center in a refinement of the idea.It is estimated that Hannibal killed more than 60,000 Roman legionnaires in that single battle. One has to remember there was a river involved and that Hannibal used that river to reduce the Roman’s ability to escape.I would love to meet Hannibal and learn if he was that freakin’ brilliant. A lot of military folks forget how formidable the Carthagenians were v the Romans.JLMwww.themusingsofthebigredca…

        1. Girish Mehta

          “”Every ground commander seeks the battle of annihilation; so far as conditions permit, he tries to duplicate in modern war the classic example of Cannae” – EisenhowerYou can draw a straight line from the *awareness of* the Schlieffen Plan – which led to the five major powers jockeying around for the “peace” treaties in advance to 1914 (unintended consequence – the treaties ensured the war would happen). Once the Schlieffen plan was done in 1905, it was a question of what and when, not if.

  18. Mario Cantin

    “Strategy is not something that can be done by committee.”That sentence begs some unpacking, even though it might seem obvious on the surface. Perhaps in a subsequent post? … (unless you’ve already written about it prior to my “arrival” some 2-3 years ago).

  19. PhilipSugar

    There are so many good points in this post. Strategy, sticking with founder CEO’s just to name a few.The one point I violently disagree with is this:”The best thing an investor group can do is to help a founder/CEO to understand when they have the wrong person in the job. Or help them understand that more quickly.”If they need to do this either:You are unfit for the jobThey are meddling and will screw you up to no end.The LAST thing you want is for people to think that they need to impress/suck up to investors/board members.You know why? Because then they will feel their number one job is to impress/suck up to investors/board members and not get their real job done, which is to make customers happy.That guy that comes in with shorts, t-shirt, and sandals (me) should not give a shit what a poser things about their dress.

    1. Matt A. Myers

      My thought relating to the help Fred suggests, I took it as that you may not know how much should actually be getting done by people in different positions, perhaps even what sorts of things they should be making sure they’re taking care of. It’s much like why you’d have an experienced CTO (or highly technical person) to onboard and oversee a team of devs.I hope I never slip into a position where I’m trying to impress someone specifically. I want to do what’s best for the ecosystem, nothing less, nothing more; if someone is impressed then cool, hopefully they can help somehow.

    2. JLM

      .Agreeing with you more than you agree with yourself.A CEO should have a reason why they hire everyone they ever hire. It should show up first on a dollar weighted org chart.If a CEO asks for some advice, then give it.Boards do not exist to hire people or to pass judgment over them. A CEO has to earn his spurs and ensure everyone is playing the correct role. Learning to hire and hire well is a CEO function and skill, not a board function.The exception is when a new CEO asks a seasoned CEO board member for advice or an intro.JLMwww.themusingsofthebigredca…

      1. sigmaalgebra

        All this sounds like building a well oiled, well maintained, solid machine for a specific objective. Here the top has all the good ideas, and the rest exists just to add muscle, skills, etc. to the good ideas.But it seems that this way, the only source of good ideas is the top and the potential of good ideas from the rest is lost.Also, it seems that with no more attention to details, there could be a lot of organizational in-fighting, goal subordination, kickbacks from suppliers, etc. Some such nonsense can actually hurt the achievement of the high end objective. E.g., what about morale, teamwork, trusting the guy at the next desk or down the hall?

        1. JLM

          .A competent and confident CEO hires people who are better functionally at certain things than he/she will ever be. That is also where the leverage of the team comes from.Easy to say. Hard to do.JLMwww.themusingsofthebigredca…

          1. sigmaalgebra


          2. PhilipSugar

            I say this: I can do everyone’s job. But I would fire myself if I had to do any one job.That is the true role of a CEO.

      2. PhilipSugar

        Better said than I did.

    3. LE

      “The best thing an investor group can do is to help a founder/CEO to understand when they have the wrong person in the job. Or help them understand that more quickly.”Not my area of expertise but talking human behavior (which is in part the basis for some of what I do) it’s entirely possible that the investor group is removed from the personal attachments that would prevent a CEO from making the hard decisions, no? And I would also think that in some cases the CEO might value some “bad” guy to be able to pin a decision on. Sure in a perfect world this shouldn’t be needed but when you are dealing with emotions and personalities sometimes it is.

      1. PhilipSugar

        No. We disagree.You never cop out on decisions. You own them.You never let somebody who is not down in the trenches make a decision on somebody who is.

    4. LE

      The LAST thing you want is for people to think that they need to impress/suck up to investors/board members.I would think that most higher level people (board members) know when they are getting sucked up to. I guess that isn’t the case.

      1. PhilipSugar

        They love getting sucked up to. The nature of the beast. As I say, you think your shit doesn’t smell.

    5. cavepainting

      Very very true. Some humility as to where they can and cannot help will do board members and their portfolio companies a world of good.Pattern recognition is helpful, but it comes with its own baggage. Every company’s circumstance is very unique and nothing ever translates exactly.Operationally, the only people who can help a company is themselves ( CEO, Founders, Team), for they are closest to their customers. If any one can understand what they need to do, it is them. As long as they are watching, listening and connecting the dots.

  20. Craig Malloy

    Absolutely, these are the three most important tasks of a growth company CEO. Took many years and four companies to figure this out on my own. And, much more difficult than recruiting and retaining is moving out people quickly who are not a good fit. Very easy to kick that can down the road hoping for improvement. Rarely happens and can be fatal while waiting.

  21. Pointsandfigures

    Many great observations. But, perhaps the best one is that the investor cannot give the strategy to the CEO/Founder. They have to figure it out themselves.

  22. Nicholas Osgood

    Great post. Agree with everything mentioned, especially as someone in the early/startup phase of a company. Even throughout the life cycle of a company, you realize how important key hires are that can execute and lead.

  23. TrustEnabler

    “Strategy is not something that can be done by committee.” Wow! So true.

  24. Matt A. Myers

    Fred, is it obvious if the CEO’s doing great knew their growth strategy beforehand vs. developed it completely fresh from the beginning? E.g. Was the CEO the main visionary (product too?) that guided marketing effort?Your ending paragraph sounds like a relatively lovely place to be.

    1. cavepainting

      Fred’s last paragraph where there is the right team, strategy and CEO is indeed a great place to be, at least for the period of time when you are in growth mode and the market is lapping up the product like hot cakes.But the journey to that place is tough and is a product of many decisions over the course of the path to PMF. Every startup situation has many fathers and mothers. Just that everyone is a parent when things work out, and no one claims parentage when they don’t.

  25. JLM

    .”Most of the companies I work with didn’t really start out with a strategy.”It is worse than that. In fact, most companies (entrepreneurs) have no idea what a strategy really is.Strategy is the view of the world from 30,000 feet.Tactics is the view of the world from 10,000 feet.Objectives is the view with boots on the ground.Strategy requires a bit of vision while tactics and objectives are simply the allocation of the desired results by department (function) and then by person.Vision begets strategy. Strategy is subdivided into tactics by function. Objectives is what an individual is going to do over the next month, quarter, half year, year.The hiring of team is simply the assessment of the necessary skills and the assignment of the objectives. It is really that easy.The ability to attract, hire, inspire, administer a team is a function of leadership.Once the team is assembled, it is necessary to ensure the objectives are assigned (SMART — specific, measurable, attainable, realistic, time constrained) and then the scorekeeping starts.Performance appraisal is the scorecard and it has to be administered aggressively.When one takes a systematic approach, this stuff is easy. As easy as learning how to drive a car. But, you aren’t born knowing how to drive a car.You have to be taught. I see this all the time in my work with CEOs. It is as easy as pie. But, you have to do the work and someone has to teach you what to do the first time.I am constantly surprised when I get calls from VCs asking me to spend a couple of hours with a CEO on this kind of easy stuff.Go read these blog posts:Strategy v Tactics v Objects for Startups — http://themusingsofthebigre…Business Strategy v Company Culture — http://themusingsofthebigre…Strategy v Tactics v Objectives 2 — http://themusingsofthebigre…Strategy v Tactics v Objectives 1 — http://themusingsofthebigre…Vision, Mission, Strategy, Values, Objectives — http://themusingsofthebigre…The fact I wrote so many blog posts about this is indicative of how often the subject comes up in my dealings with CEOs.I don’t think you can build a company without a coherent strategy. You can make a course correction whenever warranted, so it isn’t cast in stone.JLMwww.themusingsofthebigredca…

    1. Ronnie Rendel

      Reminds me of writing OpOrders in ROTC.

      1. JLM

        .Reminds me of writing 5-paragraph field orders in Ranger School and beyond. I wake up at night working on my 5-paragraph field orders always telling everyone where the “casualty collection point” is located.Because, after all, Rangers lead the way!JLMwww.themusingsofthebigredca…

        1. Ronnie Rendel

          That’s amazing, and you are so fortunate to have had this experience.

    2. cavepainting

      Your blog rocks, JLM, and it has helped to provide me the right framework for many things ! Thank you !

  26. karen_e

    “The key to success when you are past the startup/product market fit stage comes down to two things, team and strategy.” Funny, we say in marketing management that once you have a well-qualified opportunity to pursue, the key to success is two things: team and strategy.

  27. Michael Elling

    When’s the last time you wrote a piece on strategy or the important principles (and process) behind strategy? Also, as you say long-term strategy is a continuous process, but the reality is that it should also be communicated and articulated to everyone continuously. Your people are some of your best sounding boards for evolving long-term strategy. In fact, not involving your people coninuously is probably one of the biggest reasons teams fail. A good analogy is driving. If you keep your eye trained down the road as far as possible to see what’s happening ahead (and in between), you’re better prepared to react when you get there. Most focus on what’s immediately in front of them.

  28. LE

    I like to think that this is one place where a good investor group can help. If we are doing our job, we push our portfolio companies to work on their long term strategy and refine it to the point where it makes sense and is executable.I am wondering to what extent the USV ‘pitchbook’ talks about the value added benefits that you offer. Using concrete examples [1] of why taking your money is better than another firms. While I am sure there are cases where this isn’t necessary (or desirable) and recognize that you might even find it uncomfortable to have to sell yourself as a firm “our reputation stands on it’s own” I am curious if you perceive a benefit to actually promising what you can reasonably expect to deliver to companies that you fund. Old school even, do people you pitch even exit the meeting with anything printed that talks about the values and benefits of taking an investment from USV?[1] Concrete examples means just that. Not generalities (“we are always there for you”) but actual things that you do for people as stories or analogies (which is the way that I would approach this if I had to). Not in the way of a promise but a general approach to why your firm is better for the series A or seed stage.

  29. kevando

    I love this.> I like to say that CEOs should do only three(3) things; recruit(1) and retain the team(2), build(3) and evolve(4) the long term strategy and communicate it effectively(5) and broadly(6) in the organization(7) and externally(8), and make sure the company doesn’t run out of money(9).In other words, CEOs should expect to do 3x what people expect of you 🙂

  30. sigmaalgebra

    Nice. A keeper.Good advice? Priceless!Simple advice that is just as good? Even better!I’m terrified at the idea of reporting to a BoD.But, in contrast, in what efforts I’ve encountered, I’ve done well in team building. Things worked well with no visible challenges. But, I started with some pre-selected, good people.In my best case, I set it up, saw that it worked, walked away, and later learned that it had continued to work for years. Also, while I was there and still the leader, some really good things, really, about all the right good things, happened without my even knowing they were in progress until they were done and working!AFAIK, my main key assets were that I saw the problem, saw that it was important, saw a good solution, and clearly had the technical ability to get the work done. And in implementing the solution, I did much of the crucial technical work.In this way, I got into some serious fights with some quite powerful people and won easily. And the team I had readily followed my outline and then charged ahead on their own.I’ve seen some teams work very well and others that seemed determined to extract horrible defeat from the jaws of magnificent victory. My main candidate cause is just individual employee motivation.Agree, disagree? If agree, then what should/can a CEO do about ensuring such good motivation?At his Web site and at times in posts here, JLM has a LOT on such things. The answers to my little questions are likely in the collected military, BBQ, political, and CEO remarks of JLM!

  31. cavepainting

    One of the risks in attempting the transition from one-product, one-market to multi-product, multi-market is that a startup can lose focus on the original market where it started and established itself. It could happen because a) it really did not have product market fit yet and over-estimated its progress, and / or b) increased competition in the original market stretching resources and increasing cost.It is very important to hold your base strong while attempting expansion. Or you may end up in a worse situation than before, bleeding cash both in the new markets and the original market.

  32. sigmaalgebra

    To me, the mention of strategy was left with all ends loose:So, a CEO has had a good idea and built a good business. So, right, to make the business strong, lasting, and sustainable, maybe there needs to be some new ideas, some planning, some strategy.Well, building the good business was good. Doing that again or several more times? That sounds much more difficult! E.g., the existing success may have had a lot of help from Lady Luck, and she’s a bit tough to count on again in the future! E.g., winning at roulette is not good evidence of more winnings at roulette! In fact, there are some big applied probability theorems about that!What else can be said?E.g., Google was a one-trick pony. It was and is a very good pony with a very good trick and much better than the average pony. Then they did Gmail and Android and had some more, much smaller ponies. For the rest, e.g., the AI/ML and cars, I am not optimistic! E.g., to me, AI/ML currently are mostly just hype and some okay work but otherwise not very good down to poor down to a scam. And I don’t see that they have a good start on a good future for AI/ML.I don’t think that the C-level at Google is up to picking more good projects! Using C++ to program a Web site version of an old library card catalog subject index with results sorted by a measure of popularity — Page and Brin did fine, just in time.For much more, e.g., for a strategy, now, IMHO, the Google C-level doesn’t have the needed backgrounds, and then what there is left is mostly just luck. If they keep trying, eventually they will get lucky again, but the ROI on that effort, throwing darts, promises to be low.Net, to me, without most of the loose ends well tied off, my guess is that so far the strategy effort is a loser.Can we get some more ideas on how to get a good strategy?

    1. cavepainting

      A one trick pony with a loser strategy is worth $400 B. Are you kidding me ? Google has executed an amazing strategy to emerge as the #1 destination for consumers for search, mail, maps, apps and video, and has gotten a significant share of advertiser spending. Youtube at $1.4 B in 2005 was visionary. So was Android. Yes, many new initiatives have not worked out, but that is the nature of portfolio strategy and innovation. At the end of the day, you have to judge in the aggregate.

      1. sigmaalgebra

        I mentioned search, mail, and Android, that is, apps. I omitted maps and YouTube. Sorry.I doubt that so far either maps or YouTube are making them much money. I like both for myself, but I don’t see the money for the stockholders. E.g., with maps, I returned “to the street where she lived”, my high school girlfriend. That was really nice. I captured the images and kept them.IMHO, search and its ads and ad revenue are where nearly all the $400 or so billion is from.> Yes, many new initiatives have not worked out, but that is the nature of portfolio strategy and innovation.It’s also the nature of poor project selection.Again, for strategy along the lines we have been discussing in this thread today, e.g., by Fred, JLM, etc., more good, valuable ponies, I don’t think that the Google/Alphabet C-level has “the right stuff”.

        1. cavepainting

          Youtube is $9B+ in revenue per year and growing. I do not know if it is profitable or not, but that really does not matter as Google is managing profitability at the aggregate level and is able to invest what is necessary to drive revenue growth at youtube.Your understanding of strategy is not correct for you think every product needs to be profitable in its own right at every point in time. For Google, every property furthers its goal of aggregating user attention, increasing their understanding of users and then providing deep insight to advertisers to help them target users across devices, and across properties, and according to explicitly stated and implicitly derived intent. The fact that $400B of valuation is mostly related to advertising is not a bad thing. It could well be the intended outcome.This is not to say that there are not issues to be addressed. But you have to be smoking dope to call Google a failure in strategy in any context. By the same token, will you also say that Amazon is a failure ? It has been managing its aggregate EBITDA at close to zero for the last several years – save the last couple of quarters – for it is harvesting cash from some businesses while aggressively investing in others.Please do all of us a favor and do your homework before you offer detailed opinions.

    2. Lawrence Brass

      In retrospect, Google’s key move this century guided by their “get into mobile” strategy was Android, Inc. acquisition in 2005 and further development and positioning. Later buying Motorola to get ownership of their patents and challenge Apple.Masterful and perfectly executed transition to mobile. Now Google is on the way to be on the palms of almost 2 billion users and owning the real estate. Just a decade.At the time, I was sure that Microsoft would make it. Same strategy, bad tactics and execution.

      1. sigmaalgebra

        So, much of the Google/Alphabet success past Google search was some quite selective M&A. Okay.Now are making progress for this thread today: If have a good cash cow, then one approach to strategy is to wait, watch other companies, new or old, and see some good ways to expand around the edges of the existing business, ….Brass at the head of the class!

  33. creative group

    CONTRIBUTORS:All Company Board of Directors are not equal.It appears if an Angel investor, VC firm, etc provides the right capital or connections they are able to negotiate a Board membership. How effective can a Board member actually be when on fifty companies, running a company, etc. Just seems ridiculous. Does that benefit the ego of the Board Member who has all these appointments or the companies using the name of this Board Member for other motives.*********************************************************************Enron former board members and where they are at today. (Shocking they are anywhere) Review them in the advisory positions to Universities and Audit Committees.That should be the last place any of them should be overseeing anything financial.This is one of the many reasons Joe Main-street feels the system is corrupt.Enron board members at the time of its bankruptcy.Robert A. BelferThen: Chairman and chief executive of Belco Oil and Gas.Now: Chairman of Belfer Management. Serves on the advisory boards of universities.Norman P. Blake Jr.Then: Chairman and chief executive of Comdisco. A director of Owens Corning.Now: Retired. A director of Owens Corning and chairman of the audit committee.Ronnie C. ChanThen: Chairman of the Hang Lung Group. A director of Standard Chartered and Motorola.Now: Chairman of the Hang Lung Group. Serves on the advisory boards of policy institutes and universities.John H. DuncanThen: Co-founder of Gulf and Western. Founder of Gulf Consolidated Services. A director at EOTT Energy and Group 1 Automotive.Now: Retired.Dr. Wendy L. Gramm (Sen. Lindsey Gramm’s wife?)Then: Director of the regulatory studies program of the Mercatus Center at George Mason University. Former chairman of the Commodity Futures Trading Commission. Also a director of IBP, State Farm Insurance and Invesco FundsNow: Mercatus Center distinguished senior scholar at George Mason University.Paulo Ferraz PereiraThen: Executive vice president of Grupo Bozano.Now: Unknown.Robert K. JaedickeThen: Chairman of Enron board’s audit committee. Former dean of Stanford Business School. Also a director of the California Water Service Company and Boise Cascade.Now: Philip H. Knight professor and dean emeritus of the Stanford Graduate School of Business. A director of several private companies.Kenneth L. LayThen: Chairman and chief executive of Enron (reassuming the latter position after the resignation of Jeffrey K. Skilling).Now: He died on July 5, 2006, about six weeks after being convicted of 10 charges including conspiracy and fraud but before his sentencing.Charles A LemaistreThen: President emeritus at the University of Texas MD Andersen Cancer Center.Now: Retired.John MendelsohnThen: President of the University of Texas MD Anderson Cancer Center. A director of ImClone Systems.Now: President of the University of Texas MD Anderson Cancer Center, although he is scheduled to step down on Sept. 1.William C. Powers Jr.Then: Dean of the University of Texas School of Law.Now: President of the University of Texas at Austin. A director of the Forestar Real Estate Group and several academic organizations and other nonprofit organizations.Frank SavageThen: Chief executive of Savage Holdings, an investment company. A director of Lockheed Martin, Alliance Capital Management and Qualcomm.Now: Chief executive of Savage Holdings. A director of Bloomberg L.P. and Lockheed Martin.Raymond S. TroubhThen: Financial consultant in New York City. Joined Enron’s board in late 2001, a week before the company filed for bankruptcy.Now: Served as interim chairman of Enron from 2002 to 2004. Currently a director of Wendy’s International, Diamond Offshore Drilling, General American Investors and Gentiva Health Services.Lord John WakehamThen: Chairman of the Press Complaints Commission in Britain and chancellor of Brunel University in London. Also a director of Michael Page International, NM Rothschild & Sons and the VT Group.Now: Chancellor of Brunel University.Dr. Herbert S. Winokur Jr.Then: Chairman and chief executive of Capricorn Holdings, an investment firm. A director of the Natco Group and DynCorp.Now: Chairman and chief executive of Capricorn Holdings. A director of various companies, including Mrs. Fields’ Famous Brands.Other Enron board members in the years leading up to the company’s bankruptcy.Joe H. FoyThen: A former president of Houston Natural Gas and retired partner of Bracewell & Patterson, now known as Bracewell & Giuliani. A director of the Central and South West Corporation.Now: Retired.Ken L. HarrisonThen: Vice chairman of Enron. Chairman and chief executive of the Portland General Electric Company.Now: Retired as chief executive of Portland General Electric in 2000._____________________******Rebecca Mark-JusbascheThen: Chairman and chief executive of Azurix, a global water company formed by Enron.Now: Named one of the “luckiest people in Houston” by Fortune, she left Enron in 2000 and sold over $80 million of stock. (Ms. Mark-Jusbasche reportedly paid $5.6 million into the shareholder litigation settlement.) She now operates cattle ranches in New Mexico and Colorado._____________________Jerome J. MeyerThen: Chairman of Tektronix.Now: Retired from the board of the Stancorp Financial Group in 2009._____________________****Jeffrey K. SkillingThen: Resigned as president and chief executive of Enron after six months in 2001, four months before Enron filed for bankruptcy.Now: Sentenced to 24 years in prison and fined $45 million; case is on appeal and part of the charges against him were recently overturned by the United States Supreme Court.(According to the Bureau of Prisons, Skilling is incarcerated in FPC Montgomery, with an original release date of February 21, 2028.[42] On May 8, 2013, federal prosecutors announced a sentencing agreement that reduces Skilling’s sentence by 10 years, making him eligible for release in 2017. The agreement was approved by U.S. District Court Judge Sim Lake on June 21, 2013.[43][44])According to the Federal Bureau of Prisons, Skilling is scheduled for release on February 21, 2019_______________________John A. UrquhartThen: Adviser to the chairman of Enron and a director of TECO Energy and a number of private companies.Now: President of John A. Urquhart Associates.Charls E. WalkerThen: Chairman of Walker & Walker, a government relations consulting firm.Now: Retired.

  34. JLM

    .I like to say that “this generation didn’t invent sex or business” meaning they both have been around for a long time even though you may not have discovered either of them until yesterday.Attached is a graphic which I developed in the early 2000’s though it was the outgrowth of something I’d been doing more than 25 years from today. It was in my head when I saw Fred’s blog post. I couldn’t find where I’d filed it. I found it.Only the names have changed with the times.https://uploads.disquscdn.c…This shows how this stuff is supposed to fit together. And, no, my generation didn’t invent either sex or business. It was Peter Drucker.JLMwww.themusingsofthebigredca…

  35. Paul Sanwald

    Assuming we are talking about somewhat established (i.e. not early stage) companies here, what are some great examples of a CEO setting direction? Particularly where that direction is very different from the ‘DNA’ of the company or the current direction?IBM definitely comes to mind, but I’m mostly interested in examples of companies that are smaller. Like Ben Horowitz and OpsWare, what are some other examples like that one?I ask because this strikes me as by far, very far, the hardest thing on Fred’s list.

    1. Matt Zagaja


    2. cavepainting

      HP and the Leo Apotheker experiment is a good case study, but that did not end well as he attempted to make HP into a software company. It was too fast, too clumsy, and he paid too much ($10B) for a software acquisition that was later accused of accounting fraud.Yahoo is an example where may be the new CEO should have bet the farm on a new direction and did not.What GE is doing with digital is a pretty significant change. But.. they have time, customers and cash on their side.SAP and Oracle transition to SaaS is also a DNA change. But they have done this mostly through acquisitions and the existing revenue streams from on-premise software have not declined so dramatically as to make it an existential risk.Another example that comes to mind is Infosys, that is currently undergoing a fairly significant transformation, but is too early to say whether it is succeeding.There are also non-high tech examples like Tyco Security which is moving to selling security as a subscription service vs. selling products and equipment.In many industries, it almost seems like new DNA is created in startups that will eventually be acquired by Bigcos. Morphing DNA is very very hard.

  36. creative group

    CONTRIBUTORS:has anyone started using Google’s Allo or Duo? What is your experience? Not what you read. Turn off location.

  37. Douglas Crets

    This was a great read. I’m working on three initiatives that you could say are startups, because they involve internal people working on common goals and are all working to find a model. I have found what you said above to be true in all three cases:1. When strategy teams grow before the strategy is ready to be included among more than two or three people, things can begin to get lost in translation and organisational structures and behaviors become the norm rather than the exception2. If it can be explained, understood, and acted on quickly, and it makes sense to the customer, it’s the right model and it’s time to execute on it, right now. Not later, and not after people have had time to get used to the idea.3. And the product shaping cycle is different than any kind of managerial style, and the pace is different. If a CEO can work constantly with a group of people who continue that rapid pace of iteration and prototyping mentality in making sure all teams are aligned and moving forward, seems like you end up with successful ventures.