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From consulting partner to startup CEO — Five lessons I learned in my first year
Jonathan | September 26, 2017
After 25 years doing the same job you get comfortable. When I decided to leave the comfortable life of a consulting partner to launch SnapStrat I knew there was an awful lot I was going to learn. One year and countless mistakes later I realize I was right – it has been the start of an amazing journey that has had equal parts challenge and reward.
Halfway through my first year I sat down and graded my own performance – a clear and honest “C-“.
At that point, I took the chance to rethink how I approached my role and began to understand that way ones must guide a startup is completely different from the set of principles that I built my consulting career upon. Inspired in part by Alli McKee’s blogging on her startup CEO experience (follow her!), I decided to codify my lessons learned from the first year of launching an early-stage startup.
1) Listen, no really, Listen!
In consulting, we were coached in “active listening”. Active listening is a wonderful tool to ensure someone that you are talking to feels heard. In reality, it is typically used as a way of ensuring that the speaker’s ideas are agreed to without the other party being an obstacle. As a consultant, that worked well for me because I usually knew the right direction that the client needed to take and they were paying me to have a strong point of view and guide them.
I eagerly trotted out the active listening skills as I started SnapStrat – got a bunch of opinions from the team, advisors etc., made the authors of those opinions feel valued and then did whatever I had thought was right anyway.
There are two problems with this approach: 1) As a CEO you can’t possibly be the expert in everything and failing to act on the suggestions of those around you is throwing away opportunity, 2) Startups win through innovation, not by being conservative and innovation is best powered by a diversity of ideas.
So, instead of “how can I make this person feel heard” listen with the intent of understanding “how does what this person is saying change my perspective?”
2) Avoid the “How can I help” trap
Ask many entrepreneurs about how developed their vision and they will tell you about the many potential investors, advisers, connectors and channel partners they talked to and how much great advice and access they got them (yes, we brag about that in our business plan too).
The problem is that among all those people you talk to a very small number will actually invest their time and energy in your success, and you will waste your time with those who don’t. The complication is that it is very unpredictable who will invest in your success: You will have very close relationships that won’t invest and relatively distant ones or new introductions that will. So how do you know which is which?
You can figure it out in a 30 minute conversation with a potential stakeholder. One of three things will generally happen:
#1: 20% will thank you for the conversation and hang up. These are great! No more time wasted!
#2: 75% will say “Let me know how I can help” Danger ahead! They feel like they are being helpful but they don’t really want to help. Worse they can take up a fair amount of your time as you give them things to help with. If they make introductions they will be lackluster.
#3: 5% will say “Here is how I am going to help you” and usually let you know what you need to do to make their support effective.
It is the third group that creates massive value for you. We have an advisor at SnapStrat who was at a client I spent time with. We had mutual respect but no close relationship and we didn’t talk after I left the client. I reached out to him on a whim when we were launching SnapStrat. In the first conversation, he explained how he would help us, insisted that we need regular weekly calls (at least 1) and gave us homework assignments. He asked nothing in return. He is one of a handful of individuals who I believe has given us the opportunity to be truly successful.
One “Here’s how I’m going to help” is worth all the “Let me know how I can help” in the world.
3) It only feels like Mt. Sisyphus
In management consulting selling is relationship based and you don’t need to take chances. On average any sales opportunity you are exposed to you have a > 50% chance of winning. Once you win, you do great work and deliver huge value and the rest is easy.
In an enterprise software startup, particularly one like SnapStrat that is creating a new product category, the sales process can feel like walking in high heels through mud with a gathering of evil gnomes throwing obstacles in your path. OK, I have never done that, but still….
It is a simple math problem. If you have a 50% chance of winning you need to see 2 opportunities on average to sell one. If you have a 1% chance, you need to see 100 opportunities. But worse yet, you it will take you a persistence to even sell to the 1%.
99 out of 100 times: Welcome to Mt. Sisyphus! (except with mud and gnomes). The problem isn’t with the product, the message or the potential customer. The problem is, unless you are dealing with a prospect’s most important problem (which is also bad because then they are talking to a lot of companies with a lot better track record than yours) you have a tiny portion of the mind-share of that customer. So, you must keep going back and talking to them, getting to know them. The obstacles will come from a myriad of sources but you just slog on.
One of our advisers, who founded an enterprise software company talks about how he had 7 different opportunities he pursued for over a year and had given up on for the most part. On one day, all 7 decided it was the right time.
Oh, and once you win? Do great work, deliver huge value and the rest is…. I will let you know on my next update, though I suspect the answer won’t be “easy”.
I don’t buy “culture eats strategy for lunch” but I do believe that great teams do great things. I learned a lot about great teams during my time at Bain & Co. where culture and team was a competitive advantage. One of the things that makes Bain culture unique is the emphasis on traditions. They happen at a global level, an office level and a team level. They range from events (a global soccer “world cup”) to cultural icons (each office has a “Bain band” that plays parody songs at their summer offsite) to language that is used.
Many of the traditions date from very early in Bain’s history, but there is something else unique about Bain teams: They develop their own traditions that exist for the life of the project. It might be a game that is played at a team meeting each week or an award that is given out or a team activity that happens each week.
When I started SnapStrat I ignored the power of tradition. We were a new company and I figured culture would come. Our team did not start really feeling like a team until we had our own set of traditions. Each week one team member creates a homemade ice cream flavor, we invented our own game and our own system of measurement. I don’t know the psychology of why, but when teams have shared traditions they just feel more like a team and when a team has a set of shared team values they are far more productive and supportive of each other.
5) Modulate your sine waves redux
I first wrote about modulating sine waves when I wrote about my 10 rules for a successful consulting career. I believed the ups and downs of consulting were jarring, and, to a point, I still do.
As high as the stakes seemed in consulting, they are order of magnitude higher as a startup CEO. Not only is the future of the company at stake, so are the careers of those who have chosen to put faith in you and your leadership.
I, who had learned in consulting to ignore the emotional peaks and valleys, had no idea what lay in store for me.
Each positive event, a high-potential lead or partnership opportunity, made me feel like we were for sure over the hump and that investors would be lining up to write large checks faster than I could turn them down.
Each negative event, the lead that turned out not to be so high potential, the contract negotiation that had a hitch, the VC that criticized our pitch, threw me into a depression sure that the long odds against success had caught up with me and the company would be lucky to last out the next month.
These events, particularly the negative ones colored my day and made me feel like “why bother?” But, of course, these events are routine in the life of a startup, they just don’t feel that way. So, what to do?
After some time of falling into this trap, one day I created a protocol for myself. Whenever I woke up feeling like everything was wrong I gave myself 5 minutes to marinate in it and then it was over and I would find 5 proactive things that I could do to move the company along. I turned myself from victim to in control and it made a huge difference in how I approached the work each day.
As you train your mind to modulate the ups and downs they stop feeling as significant and you are able to approach the job far more rationally.
It has been a great year. I have been blessed with an amazing team, advisers who believe in me and what we are doing, a fantastic launch customer and a product concept that has legs. I am far better at the job then when I started but with a long way to go.
But as long as I follow my first rule and keep listening I will also keep learning and adjusting.
Meanwhile I am looking forward to finding the next five rules.