As a headhunter, a VC, a head of talent or as a CEO, I estimate that have interviewed about 2500 executives over the last 18 years, each interview lasting between an hour to 90 minutes to conduct. Because they are invasive, they are revealing. I take them seriously. For me, each of these interviewees becomes an important relationship, and over time a bit of an experiment; how and why are some executives successful? And why do some fall short?
Over the years, and across a couple thousand instances, patterns have emerged.
One pattern in particular relates to the importance of stage-specific capability. It’s a pattern that we pride ourselves in understanding at Mercato. My first lesson on this was when I was in my rookie year as a headhunter at The Diestel Group. We were retained to fill an SVP of Sales role at a hot startup with $50mm in recent funding from top-tier, Bay-area VC’s. We had narrowed the choices down to 3 candidates; two had early-stage, growth experience and one did not. But all of the candidates had killer industry and function specific experience. And all of them had a large and relevant rolodex (ie. great connections). Our firm - and the somewhat new CEO of this venture - argued heavily that one of the two executives who had startup experience should be hired. But one of the investors on the board, (who was so stoked about this company that he assumed the CFO role. He was an investment banker out of New York. He had all the most prestigious companies and titles on his resume…but he had NO startup experience.) aggressively argued for the one candidate who came from a large, well-known company, but who had never done a startup.
The CEO of that company is still a friend. We talk from time to time, and to this day he counts this decision in which he deferred to the investor-turned-CFO and hiring the “big-company” candidate for the SVP of Sales position as THE company-killing decision. The candidate simply couldn’t do the job. After hiring him, they realized that he had three executive admins at his previous job, and that he mostly played golf every day.
He was a big-company figurehead, and this newly VC-backed environment was like a different planet to the poor guy. He fell flat on his face.
(Over the years, I heard reports that he literally didn’t even know how to use Excel or how create a PowerPoint presentation.) And because the nuclear winter of the dot-com implosion occurred just six month later, the company was never able to fully recover. Investors lost millions.
I’ve seen some version of this story play out repeatedly over the last 18 years. In fact, it is pretty rare that a “big company” executive is a fungible talent in both an early-stage (1-100 fte’s), or a growth-stage (100 to 400 fte’s), AND a large corporate environment. There are so many things about these environments that make them fundamentally different than a late-stage company. The VP of Marketing of one startup who had come from HP said it well;
“In my startup right now, my entire marketing budget is $1.2mm. At HP, my roll-out budget for just one new product was $50mm.”
But it’s not just that it’s the same discipline with smaller numbers…It’s entirely different physics. Like jumping from Newtonian to Quantum or vice versa. Sometimes an executive can handle both environments, but in too many cases, expectations and learning styles are just too incongruous.
As a VC and a headhunter, I have watched a few hundred executives transition successfully - and unsuccessfully - between these environments. I’ve also operated in all three environments as a head of talent and a CEO. I offer the following to help executives who are endeavoring to make the transition from early-stage to large corporate, or from large corporate into early-stage.
TRANSITIONING FROM FAST TO LARGE
Quality, Then Cost. Then Speed.
If you want to look like a FOOL in the large-company world, then light some fires, try something new and don’t be afraid to fail. But conversely, if you want to be brilliant in the startup world then light some fires, try something new, and don’t be afraid to fail…in fact fail fast. Some will tell you that even in a large company environment, you should go fast and break things. And it’s probably true that doing so would be for the ultimate benefit of the corporation. But mark my words, it will be at the expense of your longevity in that firm. (But hey…you’re a startup person anyway…you don’t care about tenure.)
This one will be hard to understand, but functional depth and breadth of ability is invaluable in a startup…everyone is a Swiss Army Knife. But in the corporate world, functional and executional integration is very often not helpful if you are in an executive role. It is better to spend your energy coalescing with other leaders and delegating than to do some grass-roots analysis in the name of getting things done quickly. Really great startup executives are willing to do whatever it takes to get to an MVP, or a first customer, or traction, etc. They will spreadsheet or PowerPoint, or code, or use a soldering iron if they need to. In fact, this is part of the appeal of working in a startup…it suits an ADHD person quite will.
Don’t get me wrong…I’m not saying that large company executives can’t - or wouldn’t - do the same. They can and they may. I mean, this isn’t a dig on them. It’s a dig on you.
No matter how excellent you think your MVP is, it has holes…LOTS of them. You don’t even know what you don’t know about rolling products out, or conjoint analysis, or swim lane charts, or managing multi-departmental execution and communication, or all kinds of things that are needed to get something properly out the door in a corporate world. So, settle down, and collaborate and coalesce. The final outcome may not look like your brain child…but it isn’t about you.
The staff meeting isn’t for making decisions, it’s for affirming that which everyone already knows. In my experience, startup executives are much more willing to break new news in an executive staff meeting. It’s sort of the point of the meeting. In the corporate world, that is how you immediately draw multiple enemies in one moment and jeopardize all your efforts due to lost horizontal sponsorship. This isn’t just a large-company thing, its best practice: never introduce new information in a weekly or monthly executive staff meeting if it can be socialized for weeks prior thereto. But in a large corporation it’s a fatal error. Always pre-wire those meetings.
Generate buy-in and sponsorship. Then do it two more times, THEN present the information in a meeting (as though it were new information.)
TRANSITIONING FROM LARGE TO FAST
Don’t Say, “We don’t even have…”
When executives with large-company experience first enter the startup world, they most often are completely confounded. They are AMAZED at what doesn’t exist in the company. It doesn’t take long for them (and their co-workers) to learn that they are not in large-company-Kansas anymore. And so, in an attempt to cover their own situational inadequacy, they will often put down the team, the company, etc. It sounds something like; “It’s so bad here, they don’t even have [Fill in the blank….could be a conference booth, marketing materials, an HR department, a defined process. Whatever.] So here’s the thing; No duh…It’s a startup. Executives who have been through a couple startups – especially a successful one – know that there’s no end to what most startups DON’T have. But the implied rules of startup accountability do not allow someone to use the fact that there’s a dearth of resources, process, or direction as an excuse…for anything.
The problem isn’t THIS startup. This problem is endemic to all startups.
Startup “people” know this, and they are comfortable with it. If it’s truly needed, then it’s your job to make it, do it, find it, materialize it…whatever. But pointing out the fact that this company – and everyone in it – doesn’t have their stuff together is not an expose on them…it’s an expose on you. You are officially in the trenches of a brand-new war that has never been fought.
The fog of war is thick in this new war. Don’t blame the soldiers or the generals for not knowing exactly which trail to walk to destroy an enemy that NOBODY is even sure exists. Instead, pull an overnighter for your platoon and go on a recognizance mission by yourself, do some dirty work when the enemy is asleep, and then come tell your team about it….WHEN IT WAS SUCCESSFUL.
Otherwise shut your yapper about what you don’t have, and start making it happen.
Efficiency is Not a Thing...Yet
I believe that the fundamental difference between a startup culture and a large corporate environment is that startups are principally innovation-driven environments, and large companies are more efficiency-driven environments. (I know that’s going to offend a lot of you larger-company types. And I’m fully aware that some large companies have introduced discontinuous products to market. But it’s by far the exception. Large companies are not a vacuum of innovation, and startups are not a vacuum of efficiency…but they each tend strongly respectively.) An executive who comes from a larger environment often uses the language of efficiency to solve problems that necessitate innovation-driven thought processes. “We need KPI’s.” or, “we need to get an ERP system.” or, “we can’t build something when we don’t even have the requirements from a product team.” are all familiar gripes from the non-startup-native. Instead try the following: “In the last week I’ve been working until 3:00am every night to build a mockup of the product using Balsamiq. It’s rough, but I think this will meet our potential customer’s need”. Or try, “Since the product isn’t quite finished, and since we don’t have any leads, I spent the last week cold calling some of the key figures in [type of company/ industry you’re targeting for your product], and I have three CXO would-be buyers that said they would give their first born child if something like this existed, and they would be glad to beta test our product when we are ready.” So, although measuring KPIs is TOTALLY important, try to understand this company’s current context and find accretive ways to help accordingly.
One brief example. When I was CEO of Chargeback.com, I had to let go of a super talented person. This was their first run at a startup. On this employee’s last day, they thoughtfully spent time to do a hand off debrief. Their most significant endeavor prior to their last day was inventorying our office equipment to make sure that everything was accounted for. We were 18 employees, NEGATIVELY grossly profitable, and burning cash every month. Inventorying equipment would literally be the last thing I could possibly care about for the company at that moment. It was a confirmation for me that parting ways was the right move, even though this person was otherwise an impressive human being. (By the way, we turned that company around….but that’s for another story.)
Good, Better, Best…and Good Enough
If (said more strongly, “when”) executives in large companies become petty and start pointing fingers at each other, it often has something to do with how one of the other executives is not communicating adequately or has somehow skipped a sub-step of a sub-step of a step-step. “How dare they!” The essential root of the indictment; speed over quality. It can be a fatal error. But when executives in a small company get petty and start pointing fingers at each other, it will often have something to do with taking too much time…essentially over-prioritizing quality over speed. (Did I mention that a startup with <30 will often not have a QA person? All audit functions are the proverbial ugly stepchild of the startup world. Cough cough HR…cough cough.) This may sound easy, but if you spent 10+ years in a large corporate environment, and you have recently joined your first early-stage company, it’s incredibly difficult to see the forest through the trees when it comes to managing the speed-quality-cost paradox. You are from Mars and your new team lives on Venus. I wish I had some great advice about how to acclimate. I don’t.
Quality, Speed and Cost
“Ready, Fire, Aim-ism.” vs. “If You’re not breaking things, you’re going too slow.” These are two phrases that I have heard. The former is the characterization of a frustrated large-company, experienced executive that was made about a new acqui-hire talent from a small-company whose background was mostly earlier stage...and who was not performing well in the new large company. And the latter is a virtual mantra in the startup world, and a quote from a “unicorn” CEO. You can hear the nearly diametrically-opposite values in these two statements. The first disparages the swift execution at the expense of quality. And the second champions the “fail fast” mantra of the startup world.
Finally, if you are the CEO or hiring manager in either of these environments, it’s critically important that you make stage-appropriate experience an integral part of your job requirements for the role. I’ve seen too many early stage CEOs regret a key hire because they fell in love with a candidate’s resume cache (which so often comes from large, recognizable brands/ companies) and they didn’t consider the importance of exposure to THIS particular stage. I contend that stage-fitness is AT LEAST as important as functional experience. And since I also believe that learning agility is of greater value than existing knowledge, I’m convinced that stage fitness is more important than functional experience.