Two key deficits of the founder CEO…

source: GigaOm

source: GigaOm

… when compared with a professional CEO”. I had to complete the sentence because some of the founder CEO’s go on to become great CEOs but they don’t always start that way. I finished reading the book “The Hard Things about Hard Things” over the weekend and the last chapter captured the essence of where Startup Founder need help and how Andreessen Horowitz Venture firm was created to solve that. According to Ben Horowitz the two key deficits are:

  1. The CEO skill set – Managing executives, organizational design, running sales organizations and the like were all important skills that technical founders lacked.
  2. The CEO network – Professional CEOs knew lots of executives, potential customers and partners, people in the press, investors, and other important business connections. Technical founders on the other hand, knew some good engineers and how to program.

I think this is spot on in terms of the technical founders that I have worked with in the past. In addition to the above, I have seen investors who put money on technical founders with absolutely no idea of how to resolve the above two deficits and they expect magic to happen with the startup. I cannot imagine investing in a company and not knowing how I was going to help the startup founder in some tangible way to bridge the above two deficits. Ben goes on to explain the question that he and Marc Andreeseen tired to answer through their new venture Andreeseen Horowitz Ventures,

How might a venture capital firm help founder CEOs close those gaps?

http://a16z.com there is a story behind the URL as well. Go get the book, it is a must have for startup founders and investors alike.

Coming back to our small island north of the atlantic, what is lacking in Iceland is a venture firm that has the core mission of trying to solve the challenges entrepreneurs and startup founders have here in Iceland. I have written about this a while back when I had been working with the Team at CLARA.

What if a venture firm in addition to investing capital at all stages of the company development also provided the kind of mentorship that would accelerate the learning process for the founders? Also, what if the venture firm also systematize and professionalize the network and made the connections and helped build bridges from Iceland? That is exactly what Andreeseen Horowitz Ventures has done. This is not very different from what Brad Feld, Jason Mendelson, Ryan McIntyre and Seth Levin have done in Foundry Group… here is an excerpt from Foundry Group’s website:

What We Do

As true early-stage investors, we are comfortable making small seed investments (as little as $250,000 – $500,000) to help promising entrepreneurs get their ideas off the ground. We are equally comfortable participating in larger, more traditional Series A venture financing rounds. Regardless of the size of our initial investment, the size of our fund allows us to continue to support our portfolio companies through their entire financing lifecycles.

In addition to providing the necessary venture capital to get a company up and running, we are committed to leveraging our experience in starting and growing companies, our expertise in the technology industry, and our network of relationships to help great entrepreneurs turn great ideas into great companies.

How We Do It

We believe that success comes from building a collaborative and supportive relationship between Foundry Group and the entrepreneurs and executives in whom we invest. Having walked the proverbial mile in the entrepreneur’s shoes, we understand where we can add value—such as helping build out a management team, thinking through strategic business development and growth opportunities, or providing advice on exit strategies—and we aren’t afraid to roll up our sleeves and get our hands dirty.

Rest assured, however, that we also know the difference between being value-added investors and being micro-managing investors. As venture capitalists, we believe our role is to identify, help build and support the team that will make our companies successful, not to run those companies ourselves.

We also believe that, in early-stage investing, it is critical we maintain a direct relationship between our entrepreneurs and our managing directors, rather than using junior professionals to manage the work load. Foundry Group’s team structure, fund size, and investment process have been intentionally created to ensure this philosophy guides our interactions with all of our investments.

In most cases, Foundry Group will be the first institutional investor in the companies that we back. Because of our active engagement with our companies, we typically will take a correspondingly substantial ownership position in our investments and will join as a member of the company’s board of directors.

We recognize that sometimes the best ideas aren’t ones that generate broad investor consensus. Though we are happy to co-invest with other venture firms as part of a syndicate, we look to our own evaluation and interpretation of an entrepreneur, a market opportunity and a company’s prospects to guide our investment decisions. As a result, we view ourselves as “syndication agnostic” and are entirely comfortable investing in an early-stage company as its sole investor rather than seeking the validation of co-investors.

Would it not be great if we could combine the Andreeseen Horowitz and Foundry Group’s “How we do it” philosophy and have that firm based in Iceland to invest in Icelandic Startups? If you have read this far then it is not difficult for you to connect the dots… :) keep watching this space for more news on this.

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Leadership and Courage

CaptainkirkAs I wrote in my previous blog post, I have been glued to the book “The Hard Thing about Hard Things” and watched the following video where Mark Suster interviews Ben Horowitz in Startup Grind. It is a great interview and I would highly encourage everyone who is a startup founder, CEO or investor to watch it.

One of the things that Ben talks about which I very strongly subscribe to in Startup Founders is the ability of Leadership and Courage. It seems a little touchy feely thing but IMHO this is the most important trait, technical skills you can learn, management skills again can be learnt, leadership skills not that obvious and it takes a lot of practice and mentoring and the more you get to do it the more it demands of you. I have written a lot about Leadership because I believe very strongly that Leadership is the X Factor of Entrepreneurship and if you can couple that with Courage to take bold decision and “Go where no-one has gone before” you have Captain Kirk like leadership. Remember that Courage is not absence of fear, but it is action to do the right thing despite fear. I have walked the path of startup founders in the last 5 years, I seen a lot of challenges that faces a startup and the teams that comprise a startup. The one single thread that keeps everything together is the trait of Leadership and Courage. Cultivate those traits, become obsessed with it and learn everything there is to learn about it, if you are an Entrepreneur or a Startup Founder.

Many of us included yours truly believed that courage is going into battle, but it is far from it. Courage is having the self awareness to ask for input from your friends and co-founder and your team. Courage is being vulnerable to the team with the notion that you don’t have all the answers. Courage is confronting your co-founder or Startup founder when she is going off the rails to give feedback and bring her back to reality. Courage is raising a red flag when whole team is telling lies and courage is raising the mirror and showing the entire team when politics starts trumping hard work, diligence and doing the right thing. These are hard things to do in a team environment. You need to factor the maturity, experience and the leadership capacity within the team to really push the agenda. Once again, I feel validated that my emphasis on leadership around building a leadership culture at all levels in the teams that I work with is the right principle. It may not seem obvious but it always pays rich dividends.

I am starting to watch the entire Star Trek Series starting from the first episode, as I believe Captain Kirk personifies a certain aspect of leadership and courage that is needed in a Startup Founder and Entrepreneur.

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The Hard Thing About Hard Things

the_hard_thing_about_hard_things__building_a_business_when_there_are_no_easy_answers__ben_horowitz__9780062273208__amazon-com__booksIf you have not seen the recommendation by Brad Feld and Fred Wilson to get the book “The Hard Thing About Hard Things: Building a Business When There Are No Easy Answers” by Ben Horowitz. Here are some exerpts that should motivate you to read the book. I have referred to Ben’s blog a number of times in my blog posts. I think Ben writes from his heart and it shows. I am about halfway through the book and I have to say I am hooked and I keep thinking about the book despite all the other things that I doing.

I have to say the best chapter in the book so far has been Chapter 5 – Take Care of the People, the products, and the profits – in that order. This chapter really resonated with me as I have been given feedback that I spend too much time taking care of the people, it was great to get some validation for my beliefs. There is a reason why I write a lot more about Leadership and Team Development in this blog because I feel we seem to have forgotten that a Company or a Startup or a Service is nothing but a collection of people and if the empathy, their dreams, trust, relationship and love is lost between the team member all other things fail. Here is an excerpt from the book

My old boss Jim Barksdale was fond of saying, “We take care of the people, the products, and the profits – in that order.” It’s a simple saying, but it’s deep. “Taking care of the people” is the most difficult of the three by far and if you don’t do it, the other two won’t matter. Taking care of the people means that your company is a good place to work. Most workplaces are far from good. As organizations grow large, important work go unnoticed, the hardest workers can get passed over by the best politicians, and bureaucratic processes can choke out the creativity and remove all the joy.

When everything went wrong from the dot-com crash to NASDAQ threatening to delist the company, the thing that saved us were the techniques developed in this chapter. If your company is a good place to work, you too may live long enough to find your glory.

Are you intrigued to read the rest of the chapter? I was and I am reading it as I type this. Go and get the book! it would be the best thing you did.

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Leadership Reboot

ceo-bootcamp-2014-twitter

I have mentioned it before I am rookie CEO. The leadership challenges of creating, building and scaling a company are not easy things to do. There is a reason majority of the startups fail, the reasons for failure are plenty. I have learnt in the last 6 years that success or failure of a startup has got a lot to do with the Leadership and the Team. Remember things don’t give up, people give up. The biggest challenge of a Leader is to see the path when everything is not that obvious and the whole environment looks like it is going to crumble and fall. A Leaders role is to serve, show and believe in the potential of his team so they start believing it in themselves that they will ride through the challenges. A lot of these things are easier said than done, so I believe everyone should invest in themselves to learn everyday on how to be a Leader. When Jerry Colona, one of my favorite blogger, executive coach and former VC announced last year that he was planning an exclusive CEO event called Leadership Reboot, I jumped on it to apply and I got selected but due to some personal matters I could not make it. The organizing team was generous to roll over my application to this year and I got the news last night that I have been selected as one of the CEOs who will participate in the event… I could not help but scream out with excitement. It is a fantastic learning opportunity and to connect with people who are walking the same road as I have been the past 18 months.

The role of a CEO is hard, lonely and creates a lot of monsters in your head. I cannot imagine how many times that I have tried to figure this out myself. I wrote about Leadership and  being a CEO, based on the blog posts by Ben Horowitz, reading about it is one thing but actually sharing, listening and understanding from your peers without the distractions of the day to day minutia is a valuable investment. I plan to blog this week about the role of CEO, I have learnt a bunch of lessons and I also found out from the organizing team of Leadership Reboot that they are planning an event in June this year in Tuscany, Italy… watch this space for more details of the event. I am really excited to get this opportunity to learn. Rest assured I will blog about the experience and share any and all learnings from this experience.

I encourage any and every CEO to take time to invest in yourself, it is a valuable life lesson of Sharpening the Saw.

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Strategy is always about Action

Garry Kasparov and I, Luxembourg Q1 2006

I joined the Executive team in Glitnir in February 2006. The bank had an event in Luxembourg called “Meet the CEOs” and one of the keynote speaker was Garry Kasparov. The title of his talk was about Strategy, being a Grand Master of Chess, Garry probably knows a thing or two about Strategy. What I distinctly remember from the talk was that he emphasized on the fact that Strategy is always about Action. A deliberate, calculated and result driven action. As an Entrepreneur or a Startup, we are always faced with numerous paths based on a deliberate product, marketing, sales or funding strategy. I talk to a number of startup founders and entrepreneurs, the striking similarities between all those conversation when it comes to Strategy is that they always have too many strategic priorities and try to do too many things at the same time. This IMHO is a failing strategy. At the very early stage of the product/service development it might work because you are prototyping and you have not figured out the product to market fit, so it is fine to throw a number of ideas into the market and see what sticks. Again, the Strategy is deliberate, you are trying many things because of a hypothesis that one of those ideas will gain traction. It takes a lot of work to focus on a single strategy and execute around that. If entrepreneurs can get this one thing right the odds of failure can be reduced considerably.
Being an entrepreneur or a startup founder is f#$king difficult, and getting disciplined to focus on 1 to 3 strategic priorities is even harder. Even Elon Musk the quintessential serial entrepreneur has been focusing only on the Electric Car and leaves all his other ideas and companies to be executed by others.
Do yourself a favor, ask yourself what is your Product to Market fit strategy if you are in the early stage, if you don’t have one, get back to the drawing board and get that straight without that your startup will fail or run out of money or both. After you have crossed the chasm of Product to Market fit, you need to go back to the drawing board and determine your business scaling strategy. Yes, building a company is hard and takes a lot of work but there is nothing more insane than trying to do the same thing over and over again and expecting a different result. You need different strategies for different stages of the company.
The founder/CEO of the company is responsible for the Strategy, the success of the company depends on the CEO who can morph into different modes depending on the stage of the company. Ben Horowitz, has a very interesting post about “Why Founders Fail: The Product CEO Paradox“. There are gems of advice for Product centric founders. Once you have a strategy then the mode you need to get into is action, tactics and expected results. Another one of the best of Ben Horowitz post is “The Struggle“, I wrote about it… one of the best paragraphs in that post goes like this:

This is not checkers; this is mutherfuckin’ chess – Technology businesses tend to be extremely complex. The underlying technology moves, the competition moves, the market moves, the people move. As a result, like playing three-dimensional chess on Star Trek, there is always a move. You think you have no moves? How about taking your company public with $2M in trailing revenue and 340 employees, with a plan to do $75M in revenue the next year? I made that move. I made it in 2001, widely regarded as the worst time ever for a technology company to go public. I made it with six weeks of cash left. There is always a move.

You always have a move without strategy you will not know which one to take.

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Leadership and being CEO

PandoMonthly - June 2012 - Sarah Lacy intervie...

PandoMonthly – June 2012 – Sarah Lacy interviews Ben Horowitz (Photo credit: thekenyeung)

Instead of writing about what it means to be a Leader, I am just going to link to a bunch of posts that I read about the challenges of being a CEO. The classic one is “The Struggle” by Ben Horowitz, and I found a number of gems in this category in his blog. If you have not read my post about the Struggle, you should. When your startup goes through a metamorphosis of growing up there is always growing pains, there is politics and the team culture challenges. Building a world class team is hard, if this was easy or simple everyone would do it. I have been really digging deep into figuring out what makes teams tick and come together. I guess it is as different as we are as people.

  1. What is the most difficult CEO skill? Managing Your Own Psychology
  2. How to minimize politics in your company?
  3. Making yourself a CEO
  4. Lead Bullets
  5. Peace time CEO/War time CEO

All this being said, what a CEO will be measured on is quite simple actually:

Let’s not bullshit each other —- the most important characteristic of any CEO is to be a moneymaker. It is not particularly dignified to say it that bluntly but you can sugar coat whatever you want and it all comes down to “can you ring the bell?

—  The mighty comment blogger JLM in a comment to this post: A VC: What A CEO Does

What kills you makes the ecosystem stronger

I have been having so much fun watching Nicholas Nassim Taleb talk about Antifragility.

Source: Wikipedia, Hitrecord.org

Did I mention that I am big fan of his work? It is just brilliant the way he has simplified complex systems. I really like his perspective on Entrepreneurs and those who risk it all and have their skin in the game. His argument which makes a lot of sense to me is that having a lot of entrepreneurs tinkering with things is what creates science and not the other way around. The problem is that those who are practitioners don’t always write their habits and rituals and why they are able to improve on their experiments so that knowledge gets lost. This is changing in the Entrepreneurial community world wide because of the explosion of the work of Brad Feld, Fred Wilson, Mark Andersen, Ben Horowitz, Eric Ries, Steve Blank and many others fallen heros who have taken the audacity to show everyone how to fail, learn from the failure and increase our odds of success as a global entrepreneurial community. The reason we listen to the above list and to Taleb is because they have fallen, lifted themselves up and succeeded, would our learning be improved if all those who fail also shared their experiences and learnings? I think it would hence the title of the blog post… I would encourage everyone to create a blog and start writing about your fears, successes and failure, you never know what titbit of information you provide can help someone else in the global community. We are able to link information together and access it from different devices and from almost anywhere in the world, if we are able to create a collective conscious of entrepreneurs and tinkerers, it would be awesome to listen to this heartbeat… just stop and think about it. This is profound stuff if only you notice it.

Taleb talks about Convexity and how that skews every assumption we have about economic models and econometrics… I am sorry Dr.Carter Hill (my econometrics professor in Louisiana State University), I think the Central Limit Theorem does not work neither does the Bell Curve. Taleb has proved many times over and the stock market is proving everyday that none of these theories and empirical work is relevant in the real world.

Coming back to the notion of why we need entrepreneurs and small is beautiful, a couple of the themes in Talebs work. Both of these things are attributes of Iceland. Watch the video above, it is 1 hour long but it sooo worth it.

Fearless

I remember very distinctly when I was gripped with fear and experienced the chill the runs down ones spine… I experience it constantly when I think of all the permutations and combinations of things that can go wrong with being an investor and entrepreneur, a husband, a son and a father. I continue to believe that there is always a thin line between fear and courage. Ben Horowitz wrote about it. I have faced the fear of personal kind and professional kind, it is usually the helpless feeling that trips one over. I remember very distinctly the fear of loosing my Father exactly a year back on this very day. My dad passed away last year on September 19… it was a huge blow to me personally. My dad was my mentor and taught me everything I know about being an entrepreneur and it was ironic that he would constantly encourage me to be fearless and here I was standing outside the Intensive Care unit in a hospital in Chennai literally with sweat dripping down the back of my neck with fear that I am going to loose my father. It was the toughest event that I had to experience and I am sure everyone faces situations in their lives that jolts us to the core. The post is not about that but what one does when one is gripped with this feeling. I have recommended the book “The Road Less Travelled” by Dr.Scott Peck, where he talks about fear. Fear is a form of laziness, the laziness to act.

As entrepreneur we all go through times when everything looks like it is going to come crashing down but I believe that is just our fear telling us stories. Courage is action despite fear, fear the feeling is internal, everyone feels it even the most courageous person feels the fear, it is primal and ever present… it is the action that follows that defines who we are. As Ben says in his post

In life, everybody faces choices between doing what’s popular, easy, and wrong vs. doing what’s lonely, difficult, and right. These decisions intensify when you run a company, because the consequences get magnified 1,000 fold. 

Every time you make the hard, correct decision you become a bit more courageous and every time you make the easy, wrong decision you become a bit more cowardly.  If you are CEO, these choices will lead to a courageous or cowardly company.

Over the past 10 years, technological advances dramatically lowered the financial bar for starting a new company, but the courage bar for building a great company remains as high as it has ever been.

I believe we focus too much on the mechanics of starting up, building technology etc but we tend to forget that it is always about the people, the team, the collective fears, ambition, success or failure. If as participants in this life journey if we can empathize and act courageously, we may not always succeed or win but at the least we know we gave it our best.

The Struggle

Ben Horowitz wrote one of the most important posts titled “The Struggle”, every entrepreneur needs to read it. I have been watching the olympics the last few days and it has been incredible. The winning, the tears, the national pride and sense of achievement, everything an athlete trains almost all their lives for. I have started to focus more on those who do not win, how do they take it? how do they face that life event? Especially the ones who are expected to win but don’t even finish in the podium. That is what it feels like when one goes through the Struggle as Ben put it. I had an interesting conversation with an entrepreneur yesterday and I know that he is going through the Struggle right now, I wanted to remind him that “This is not checkers; this is mutherfuckin’ chess

Source: London 2012 – Sports World Report, Jennifer Suhr upsets Elena Isinbayeva in Pole valut

This is not checkers; this is mutherfuckin’ chess – Technology businesses tend to be extremely complex. The underlying technology moves, the competition moves, the market moves, the people move. As a result, like playing three-dimensional chess on Star Trek, there is always a move. You think you have no moves? How about taking your company public with $2M in trailing revenue and 340 employees, with a plan to do $75M in revenue the next year? I made that move. I made it in 2001, widely regarded as the worst time ever for a technology company to go public. I made it with six weeks of cash left. There is always a move.

There is always a move! and I cannot emphasize enough how having the focus on what needs to be done to win rather than whats not working is paramount. I have written about The Excuse Department is Closed, I don’t want excuses give me solutions, how are you going to make it work with what you have, don’t focus on what new feature is going to bring customers in! focus on how you are going to hustle to get a customer who has said No to Yes… thats Winning. As Ben puts it while you are driving a race car, the trainers always hammer it into the driver that they need to focus on the road and not the wall, because if the driver focuses on the wall, the probability of the car crashing into the wall increases exponentially. Admit it you have done this, everyone goes through the Struggle, I am sure Steve Jobs, Bill Gates, Mark Zuckerberg and Larry Ellison have gone through the Struggle. It is not how hard Life hits you, its how you react to it and how hard you can get hit and keep moving forward… that is how winning is done! Struggle is a path to greatness, I have been reading and asking everyone who has made it as an Entrepreneur and everyone tells me that you have to go through the Struggle, it is a rite of passage. So,

don’t fight it,

don’t doubt it,

don’t focus on the wall and

don’t think it is all your fault

just focus on the small things that can be done to keep moving forward. Thats how you pass through the Struggle!