Disney was a fascinating person who captured the imagination of the world.
Two random insights from the book that are a bit non-obvious:
Disney was ALWAYS out of money
Much of the book is about how Walt Disney (and his brother Roy) were constantly searching for money. Everything they did was in the lens of needing capital. 100 years ago (when Disney started), it was REALLY hard to get capital. And capital providers were extremely controlling. And capital was really expensive.
Today, Walt Disney would have been able to easily raise tons of money at good terms. People would be lining up to throw money at him. We entrepreneurs today have no idea how hard it was for many of the early pioneers. Many of them had to get personal bank loans to keep their companies afloat. We have it soooooo much easier today.
Roy Disney made Walt Disney possible
Walt Disney’s older brother Roy was the steady hand at the company. While Walt was the creative genius, Roy was the person who made sure the company was operating. The brothers had a tenuous relationship and Roy is not given enough credit.
Reading the book, I kept thinking about Steve Jobs’s partnership with Tim Cook. Steve Jobs no doubt revered Walt Disney (he even sold his other company, Pixar, to Disney Inc). But to really make Apple shine, Jobs needed to rely on people like Tim Cook.
But while Cook will forever have a special place in history (Cook has become a great CEO in his own right), Roy Disney has been seen as more of an asterix (possibly because there is a cult and mystique of the founder).
number of employees of a well-run 100-person start-up that care about the long-term company: 60
number employees of a 10,000-person company that care about the long-term company: 6
this is why start-ups can win.
This is why they do win.
The biggest predictor of whether a company will be an important company in the next ten years is the raw number of employees that really want that company to win. Not the percentage of employees, but the actual raw number.
This is why organizations with a large shared mission do so well. Some large organizations that will certainly still be important in the future include Apple, Esri, and the U.S. Military. These large organizations are the exceptions as they have a true share mission.
But most 10,000 person organizations have, at most, a handful of people who truly care about the long-term outlook of the organization.
There has been a lot written about customer success (especially with the super acquisition of Gainsight by Vista).
Everyone has a sense of what a good customer success function does. It keeps customers happy, churn low, and looks for expansion opportunities. But little has been written about what a GREAT customer success function does. That’s likely because customer success, as a function, is rarely great.
Let’s work together to change that. Here’s what it takes to build a great customer success function.
Great customer success teams massively increase NPS.
A good customer success team should increase your product’s NPS score by 10 points. But a great one will increase NPS by 40 points.
Yes, 40 points.
That does not happen overnight. And it won’t happen by just giving customers good service.
Ultimately, the only way to increase NPS is to make the product better for the customer. That doesn’t mean that the product gets better for every customer at once. It probably won’t. The goal of customer success should be to make the product better for groups of customers at a time.
Delegation is really hard to figure out. But it’s crazy important if you want to move as fast as a startup needs to move to be successful. Remember, speed is everything.
To delegate effectively, you need to ask a few questions:
1. How do I know what to delegate?
2. How do I inspect what I delegated?
3. How do I create a system to better delegate?
The best things to delegate are actually the things you are really good at because you know how to hire people who can do it.
This is not obvious. Most people think you should hire people to do the things you’re bad at and don’t like doing. But how would you know what skills or attributes a person needs to do those things if you’re bad at them? The only way you’ll hire the right person is if you get lucky.
Hire people for things you are good at. This way, you’ll know exactly what to look for in a candidate AND be able to evaluate that candidate’s work meaningfully.
Here’s the non-obvious delegation chart for reference:
The other kind of tasks you should delegate are ones you can hand to an API rather than a person. Ideally, these are also tasks you’re bad at and don’t like doing, so you can get them off your plate. An API is far more scalable than a person … and usually can get better at a faster rate. Great delegators are Zapier masters.
If you are going to delegate to a person, they do not need to be an employee. You can hire someone on Upwork (or your favorite labor marketplace). The advantage of delegating to an employee is that you will need to spend less time writing the delegation docs. The benefit of delegating to UpWork is that it is much more scalable.
Building a delegation system eats your time on the front end, and spits it back out (and more) on the back end.
One of the hardest things about delegation is that it usually takes longer to delegate initially … and then the returns to your time come slowly. So, you cannot delegate everything at once.
This is the biggest mistake most people make when they hire someone talented – they delegate too much, too quickly. Remember, each thing that you delegate takes your time (and the time of the person you delegated to).
Delegating a task well takes at least three times the time of the task to do. So, if a task usually takes an hour to do, it takes at least 3 hours to delegate. That adds up quickly, so be careful not to delegate too much at once.
And just because someone else is doing the task does not mean you do not have to inspect what they do. That takes time too.
So, if you delegate a task that takes you an hour a week to do, you might not break even on time until week 6. Of course, that is a fantastic return (thousands of percentages per year) in time savings … but it does come with an initial time cost.
And while some people have massive amounts of capital, all of us have a very fixed amount of time. So you need to use your time wisely to ensure your delegation investment has a high rate of return. You can only delegate in series, not parallel (or at least need to limit the number of parallel tasks).
Delegation means you need to be ok with things not done the way you’d do them.
Delegation is also an act of decentralization. At least good delegation is. The person you delegate a task to needs to have agency over the task’s goal and freedom to improvise.
If you want something done precisely to your spec, best to use a robot or API (see above). Otherwise, give humans space to breathe, change the inputs, and make mistakes.
Sometimes, the best alternative to delegation is not to do it at all.
Not all tasks need to get done. Many organizations create tasks just to keep their employees busy. Often their employees are creating reports that no one reads. If your employees are creating reports no one reads, eliminate the reports ASAP.
Part of your delegation system should include a filter that determines if a task needs to get done at all. This filter will save you a ton of time.
The biggest block to delegating efficiently is when you delegate entirely to your HR department.
Almost 100% of CEOs delegate to HR, and yet very few of them hire A-players for the HR role.
Too often, CEOs underweight HR and think it is an area about compliance. Of course, CEOs that feel that way end up hiring people that care about compliance.
HR isn’t about compliance. It’s about great capital allocation. The goal of HR is to deploy the company’s most valuable assets – its people. An HR leader makes investments in the company’s assets, grows the company’s assets, retains the company’s assets, redeploys the company’s assets, prunes the low-performing assets, and brings in more high-quality assets.
This, of course, is high-strategy. Outside of the core company strategy, this is THE AREA the CEO should be thinking about all the time.
If you are delegating to HR, make sure you’ve hired someone who is an A-Player in-step with you. Otherwise, you should take over this role yourself.
Summation: Delegate tasks you are great at and like to do, so you can hire the right person to do it. Build a system to delegate, with a filter for stuff that doesn’t need to get done at all. If you delegate to HR, make sure you’ve hired an A-Player.
There seems to be a lot of rumors, suggestions, and ideas floating around about secondaries but little hard data … so Tod Sacerdoti, Jeff Lu, and I decided to survey 100 founders (93 responded) of some of the largest tech companies about secondary transactions: and here are the answers.
Our hope from this survey was to help inform what the current best practices are.
On a personal note: I’ve never done a founder secondary transaction myself and likely never will (though one of cofounders at LiveRamp did a secondary). But if I did do a quality secondary transaction at LiveRamp, we likely would have never sold the company and instead took it to IPO (and thus have had a significantly higher return for our shareholders). So secondaries could add a lot of value – especially for founders without a significant previous exit.
As an investor, I have been an investor in many start-ups that have done secondaries. Meaning some of the old shareholders sold some or all of their stock. I have also participated in buying secondary shares of companies on many occasions.
In the first question, we got some requests for a sixth option for “early employees.” We didn’t want to change the survey in the middle to skew results, but we did want to flag that as some feedback. For the most part, it seems like everyone is open to secondary for a broad swath of stakeholders.
The next 2 questions go together. A little over half of the respondents have someone on their cap table who they regret having. Interestingly, in those cases, over 50%+ would prefer a new investor or operator/friend to buy the troublesome investors out vs. their existing investors.
One of the hardest things to do at a company is to kill off the parts that aren’t working. A company is all about building things, not destroying them. So it’s unnatural to go about tearing it apart.
But every so often, it’s necessary. To keep the business healthy, you have to take a hard look at operations and get rid of areas that are no longer important or contributing to growth.
And timing is critical for this. Killing off parts of your company is hard enough, but doing so early is truly difficult. That’s why one of the best times to take a hard look at what parts of the company you need to get rid of is during a recession.
If you have a big enough company, you could even designate someone as CKO — a Chief Killing Officer. That person’s entire job would be to look at everything the company does and try to kill it.
Here are some areas you should look at closely during a downturn to see what you can destroy:
1. Take a look at your products.
In a downturn, a company should focus on what it does really well and let go of what it doesn’t. That’s why it’s essential to take a hard look at your products to see what you can kill.
For example, Uber has a lot of initiatives involving trucking and self-driving cars. Those might be really good investments or they might be distractions to their core businesses. This is a good time to really dive into them.
Imagine where your company would be if it outsourced everything it wasn’t good at and focused only on what it was good at. A recession is a great time to ask this question and see what you can lose.
“Being wrong might hurt you a bit, but being slow will kill you.” – Jeff Bezos
Last year I read a biography of former Air Force Colonel John Boyd. Boyd was one of the most decorated fighter pilots of all time (he flew in the Korean War). But he was most known for changing the way people thought about warfare — he pioneered the OODA loop (Observe, Orient, Decide, Act) — which is essentially about how to move quickly.
He realized that even underpowered planes could beat much better equipped flying machines if they got to take more actions. Maneuverability beat velocity. But the deciding factor was the number of actions a pilot could take in a minute. The F16 was built as an intentionally underpowered plane (it is one of the slowest fighter planes) — but it is super easy to move, has great visibility for the pilot (just one pilot unlike the very bulky F14 that was in the Top Gun movie), and is very small.
Moving fast and the ability to react and keep moving and changing is what wins wars. The Israelis embodied Boyd’s lessons in the Six Day War. Tempo wins.
This idea of OODA loops and Actions Per Minute will be very familiar to video game fans (where pace intensely matters).
The OODA loop is even more important in start-ups. Being slow WILL kill you. Pace is very important. Again, tempo wins.
“Good things may come to those who wait, but only the things left by those who hustle.” – Abraham Lincoln, Queen Elizabeth, or John Snow (no one actually knows who originated this quote)
This is not to underestimate thinking strategically and planning. The bigger the organization, the more important planning is. Big companies can only do a very small number of things … so it is really important to pick the things that they do.
Small companies’ only advantage is that they can move fast. So they should never give up that advantage by over-planning. Small companies ideally should know what their true north is (5 year goal) and have very fluid quarterly plans. Hard plans beyond a quarter are almost certainly going to be wrong.
That does not mean that planning is useless for start-ups. It isn’t. And as start-ups get bigger, they need to plan more. Overplanning is bad. So is underplanning. But if you have smart employees that are empowered and know the true north of the organization, underplanning is much preferred to overplanning.
The only way you can be successful while underplanning is if your employees are empowered. What happens in some start-ups is that they both underplan and the CEO insists s/he needs to review everything. That is the worst of all worlds because the CEO becomes the gate to getting anything done because one person can only do so much. If the CEO needs to make all big decisions, then you need to make fewer decisions (this is where planning is so important).
At SafeGraph, I try to deliberately make as few decisions as possible. I deem it a failure if I need to make a decision … because that means we are moving slower in that area. That does not mean I don’t make any decisions — I do. But those are failures I hope to improve upon in the future.
Additionally, you don’t want the management team making all the decisions. For instance, your VP Engineering should not be making most of the engineering decisions. The vast majority of engineering decisions should be made by the engineers (working with product and the other internal colleagues). Same thing with every department in the company. And again, that does not mean that the VP Engineering makes no decisions … but ideally she is only making decisions that only she can make.
Pace, pace, pace.
Increasing tempo is hard because it means sometimes you have to trade-off doing things right for doing things fast. It also means you need to trade-off features on things you don’t think are as important — and it is hard to make those trade-offs while moving lightning fast.
“Culture” is what makes a company look strange to others from the outside. It’s a combination of all the quirks, traditions, and personalities that make it unique. Ultimately, culture is defined by how your company is different from all the others, not how it’s the same.
A company’s culture should be like an Indian wedding.
If you’re American and have never experienced an Indian wedding, it will seem very strange at first. They are colorful, elaborate celebrations that can last multiple days. From choreographed dances during the Sangeet (the pre-wedding party) to the groom riding in on a horse, to the bride’s vibrant-colored Sari (there’s no white dress), they can feel otherworldly.
The traditions are so specific at an Indian wedding that you find out quickly whether you like or dislike the cultural experience (I love it). This isn’t a comment on whether Indian weddings are better or worse than other kinds of weddings – they are just unabashedly different.
Company cultures should be like Indian weddings. They need to have key elements that make them distinctly different from other companies.
All the way back in 2008, I wrote a piece about why economic downturns are good for innovators and bad for pretty much everyone else.
As we face a recession in 2020 due to COVID-19, this is still true. The pressures of an economic slowdown actually benefit certain innovative companies that had trouble getting wide-spread adoption before the recession.
When the economy is booming, little pressure is put on expenses. Large organizations often penalized innovators…[and] companies are ok with spending more money on the same software, the same hardware, and the same advertising mix.
But…economic downturns force companies to reevaluate how they spend money. Companies need to cut expenditures dramatically yet are expected to have the same level of service as when times were good. This forces firms to look for alternatives to what they are doing.
Revenue pressure forces large companies to get creative. And it’s those smaller companies that are already innovating or can pivot quickly that take advantage. This was true in the Great Recession of 2008 and will be true in the recession forming in 2020. The only difference is where the innovation is taking place.
I recently wrote about why hiring is harder in a recession than it is during an economic expansion. But, just because it’s hard (it is always hard) doesn’t mean you shouldn’t try. You should always be looking for A-Players to bring onto your team.
Hiring obvious A-Players is really hard because everyone else knows they are obvious and they will be extremely sought over (and very expensive). That doesn’t change in a recession.
So, if you want to find the A-Players that are available, you can’t look for the obvious ones. You have to find the diamonds in the rough who don’t look like precious stones.
To find A-Players in a downturn, look for people that other people in Silicon Valley would discriminate against.
You want to find people that were passed over by other tech companies for reasons other than their talent and give them a chance.
You can start with women and minorities. They are still very much discriminated against. Of course, few people in Silicon Valley will outwardly state that they want to discriminate against women and minorities. And many companies even have active programs to reach out to them. You might not have an advantage in landing female and minority A-Players because there are a lot of other companies competing for this talent pool.
In addition to women and under-represented minorities, there are a lot of other categories of people who are actively discriminated against in Silicon Valley including:
Boomer generation (people born 1946-1964)
People that went to third-tier universities
Religious people (even slightly religious people)
People who are politically conservative
People with thick accents
People who are overweight
People who smoke cigarettes
People who are socially awkward
Let’s take a closer look at each of these categories.
Hire people over 55.
Tech companies tend to be extremely biased against people with grey hair. This is especially true of older people who are seen as “past their prime” or recently part of a company that crashed and burned. It is extremely rare for a tech company to hire an individual contributor that is over 45. And this trend is likely more pronounced during an economic downturn.
There are plenty of people who, in 2008, ended up taking the Director-level job at Digg instead of at Facebook (even though they had job offers at both). The ones who went to Digg are seen as past their prime and the ones that went to Facebook are living on their own private island and serving on the boards of directors of hot start-ups. Just because the person made a wrong financial choice 12 years ago does not mean they cannot add immensely to your company.
Hiring is always hard. And if you want to hire someone that is super talented, hiring is always really, really hard. And the stakes are high because the employees are the lifeblood of the business. They are what allows the business to compete. To improve. To grow.
Some people think that hiring and recruiting in a recession is easier than during an economic boom. But it might actually be harder.
Here are 5 reasons why hiring in a recession is harder than you think:
1. A-Players are harder to find because there are more C-Players looking for jobs.
While every employee is vulnerable in a downturn, companies usually let go of their C-Players to save money.
C-Players are the least-productive employees at the company and companies generally let them go in the first round of lay-offs.
A-Players – those employees who are 5-10x more effective than the average employee – are rarely let go during a recession. They are the company’s best employees. Management should be willing to do anything to keep them around (and if a company does lay-off their A-Players, it has made a huge error and will not thrive in the recession).
So, with a mass exodus of C-Players from employment and about the same number of A-Players available, the talent pool gets diluted. You are going to get a lot more C-Player resumes in proportion to A-Players than you would during an economic expansion. This makes it harder to identify and hire the A-Players that are available.