Two days ago I had the honor of keynoting at the First Round Capital CEO Summit in San Francisco. The event was held at the Jewish Contemporary Museum. During my speech, I promised to put my notes up on my blog and so here they are.
My talk was about the 7 lessons I've learned on the journey from founder to CEO. First Round Capital invested in us when Bazaarvoice was under 10 people; they came in alongside Austin Ventures - where I am now a Venture Partner - in our Series A. First Round has been an incredible partner in our journey from startup to public company. Personally, I think they are the best first round investor in the U.S. with the portfolio to show for it. Josh Kopelman, a fellow Wharton grad, is especially strong and he has helped me many times along the way.
I started off my talk emphasizing that the journey matters most in your transformation from founder to CEO. It is both a beautiful journey and also at times a gut-wrenching one. As Kirk Dando, my CEO coach of four years, says, "the path to heaven goes through the road to hell". This couldn't be more true. You aren't born knowing how to either found a company or be a CEO. You aren't born knowing how emotional this journey can be. But it is a journey that I've cherished and, in my opinion, the most profound journey that one can take in a career. It is a journey that led to me being recognized as Austin's best CEO for the large company category last year. This doesn't mean I have done everything right or that I don't make mistakes (hopefully less of them are repeat mistakes).
So here are my 7 lessons on this transformational journey:
- The CEO must be the Chief Culture Officer. No one else has the power to do this but the CEO because the CEO is the synthesis point for all departments and the most senior executive at the company. A founder-CEO especially cares about the culture because they breathed the soul into a new being (the company) and like a parent they should care how that being evolves from child into adulthood. A company is like a person (and even legally treated as such)- and some companies have a great brain, fewer have a great heart, and even fewer have a great soul. The CEO should care about nourishing the soul. You can tell when a company has a great soul just by walking the halls and feeling the energy. Does the company give you energy or does it take your energy away? Nothing says more about your culture than who you hire, who you fire, and who you promote. The CEO has the most power to make these decisions. If the CEO promotes a brilliant jerk (one who performs very well individually but who no one wants to work with because of their attitude) then that speaks volumes about their company's culture. The CEO also has the ability to shape how the company serves its communities. I chose to establish the Bazaarvoice Foundation in our first year of our life. I was influenced by watching the documentary, The Corporation, and I encourage you to watch it if you haven't already. Today, the Bazaarvoice Foundation has taken on a strong life of its own and is led by Executive Director Kelly Ballard with the help of a steering committee. The Foundation was tops-down only in our first year of history because I wanted to set the tone. From that year on, it has been led by a steering committee of volunteers who have solicited constant feedback from the people of Bazaarvoice. After Bazaarvoice went public, Debra and I gifted a significant portion of our stock to help give the Bazaarvoice Foundation a boost. This is how much I have come to trust our people.
- The CEO must constantly work on self improvement and regularly take the time to reflect. After graduating from Wharton where some of my fellow graduates felt they had received the best business education in the world (and it was indeed quite good), I felt that my business education was just beginning. I had founded Coremetrics during my last semester and was now in the real, raw world of being an entrepreneur. I chose to read hundreds of leadership and management books in my first two years post Wharton to help me in my journey - given me the opportunity to apply what I read every day. I believe that books are read by leaders and magazines and newspapers are read by followers. This doesn't mean I never read a magazine or newspaper but keeping up with the 24/7 news cycle doesn't improve yourself like a book does. A book causes you to think more deeply because decades or centuries of knowledge are nicely summarized. The CEO should also constantly seek out mentors. The reason I gave this talk is both because of how much First Round Capital did for me at Bazaarvoice but also because "to teach is to learn" (a mantra I live by in my own practice of reflection). And I am the product of many mentors, and I have found that if you reach out to people fearlessly they will often respond to help you. This is deep in our DNA since 1776 as the U.S. is a country with 1/4th of the world's GDP and almost all of that wealth was self-created. When you reach out to successful people in the U.S., they may see some of their previous struggles and ambition in you and remember that they too were helped by mentors to become successful. I believe the U.S. is very unique in this way. Debra and I recently went to Israel for the first time and we found it to be very similar - because of similar circumstances for how the (modern-day) country came into being post World War II. Like the new Americans, the new Israelis had virtually no equipment to fight for their independence, especially right after the Holocaust. The CEO should also leverage a CEO coach, much like I leveraged Kirk Dando, who is now a very close friend. This was later reinforced by Scott Cook, the founder of Intuit who also spoke at the CEO Summit, when he said one of his biggest mistakes was not using a CEO coach for the first 23 years of his career. For our IPO at Bazaarvoice, I leveraged three additional coaches - one to help with Earnings Calls, one to help with investor Q&A, and one to teach me how to present to investors on the roadshow. I also talked about the importance of vacation in taking the time to reflect on what you have learned. I took 5-6 weeks of vacations every year at Bazaarvoice and I believe this made it a better company. Sometimes these vacations would give me the clarity of mind to let go of an executive that I had been holding on to for too long (perhaps due to loyalty even though they had scaled out). Sometimes these vacations made me sharper on strategy. Sometimes these vacations helped me focus our company more. It is easy to get defocused as a young company.
- The CEO should own the long-term vision of the company. The CEO should carry this torch and light the fires with everyone - investors, employees, clients, and partners. This will create tremendous energy - both for the CEO and everyone else. The CEO also decides when to sell the company or keep growing. This is aligned with the long-term vision. How bright is the future? Is it real or a mirage? What kind of impact do you want to make? As I mentioned in this Lucky7 post, we could have sold Bazaarvoice for $25 million after our first year in business. Instead, we chose to go long because our long-term vision was too attractive to sell at such a price and we built a company that had a much bigger impact as a result.
- The CEO should always treat recruiting as a top-three priority. This includes upgrading your team. For example, I hired three CFOs in six years. This isn't easy and again reflecting on vacation helped with this. As CEO, you will be defined by those that you choose to report to you. If there is dysfunction at the top, there will be a huge ripple effect throughout the company, causing dysfunction at the bottom. At Bazaarvoice, we relied on a rigorous recruiting process that mostly served us well (no recruiting process is perfect). I referenced this in detail at the CEO Summit, and instead of repeat it here I'll refer you to this Lucky7 post where I discuss our unique recruiting process in great detail. People are the raw material of your culture - and ultimately that means your performance. Rapid growth brings out the best - or worst - in people. It causes everyone to stretch and the pace is hard to keep up with. I have found those with the wisdom that I mention in #2 above scale the longest. Recruiting your Board should especially be a focus. It is much harder to fire a Board member if you have made a mistake. Don't get starstruck by pedigree. Spend the time to really get to know them and check their references.
- The CEO should choose to celebrate regularly at All-Hands meetings where vision, alignment, and transparency prevail. At Bazaarvoice, we chose the Alamo Drafthouse for our quarterly All-Hands meetings. This venue was tremendous because it was counterculture - at the Alamo, they have a sense of humor. Everyone arrived relaxed. Drinks - including beer - and food were available throughout the day. With it being a fun movie theater, most presenters tried to one-up each other with the funniest - but most informative - presentation. We had a film festival. We had a band. All metrics were revealed. Everyone knew how we were trying to be aligned and what our goals and progress were. These events were magical. Early investors that witnessed them were wowed. They were my favorite days at Bazaarvoice - second only to our Client Summits. Only the CEO can choose for the entire company to spend this time together. There are many competing priorities.
- The CEO should evolve systems to keep everyone aligned. I was very influenced by Marc Benioff's book, Behind the Cloud, where he discusses his V2MOM model. I chose to make this simplier and call it the declarative b, in homage to our b: logo (the colon stands for something profound follows and you can use it in many ways such as b: bold, b: changing the world, b: transparent, etc). The beauty of the V2MOM model is that everyone participates and forms their goals to be aligned with the corporate goals. It is a chain that goes from the top to the bottom to keep everyone aligned - and happier. If you know how you are performing and that it is indeed aligned with the overall strategy of the company - then your work will be more fulfilling as a result. And this allows the company to constantly measure and constantly improve. I only wish that I had discovered this model earlier - Benioff says it is the key to Salesforce.com's perpetual success, and I believe it.
- The CEO should embrace vulnerability. As the senior most executive, you are on the ultimate stage. Everyone is watching to see how you will behave - and, to a large extent, they will mimic your behavior. The CEO should have a growth mindset versus a fixed one. No book explains this better than Egonomics. If the CEO has closed their mind to learning due to their "success" (I put this in quotes because there is always someone that is more "successful" than you), then many others in the company will also choose to stop learning. Taking the time to reflect is incredibly important for learning - and a CEO is very hard to mentor if they don't practice reflection. A CEO is impossible to mentor if they cannot be vulnerable. At Bazaarvoice, we practiced vulnerability by reading books like Fierce Conversations and having training programs around them. I discuss this more in this Lucky7 post. We enabled individuals to regularly rate managers on whether or not we were living the core values. After all, are they just values on a piece of paper or are we - as managers - going to truly live them? If we don't, then the paper is worth as much as the cost of the ink to print it. We regularly ran Climate Surveys for everyone in the company to evaluate our overall culture - and we recently found a tool to benchmark against other companies to see how we rank. We participated in Best Places to Work surveys, where we were ranked against other companies in town. These are difficult practices. They require you to be open and sometimes what you learn is hard to change. But to not do them - and not make them a priority as CEO - is to turn your back on the voice of your people, which ultimately will affect not just your culture but your performance. The best speeches I have given at Bazaarvoice have been where I have been vulnerable. Like the time I hired an executive that didn't reflect our values and had to explain in front of the entire company how I had made a mistake. Or the time that we faced the Great Recession and stopped hiring to protect our people. We all had to work double-time and in hindsight we beat our goals and I wouldn't have stopped hiring had I known. But in hindsight everything is clear, and in going through the Great Recession everyone was very concerned about what the fallout may be. And it made us a much stronger company at the time to pull together like that. Note that those with a fixed mindset will sometimes hold vulnerability against you. But I'm a believer in karma and you should rise above it. Your people need you to be human.
I really enjoyed speaking at the First Round Capital CEO Summit, and I hope this post helps you be a better CEO.