There are hundreds of amazing companies that sell software and tools to data scientists and machine learning teams. In fact, many of the best companies in the last 15 years have been exactly that.

But outside of SafeGraph (where I work), there are almost no companies that specialize in selling data to data scientists.

Why?

Partially it is because it is MUCH easier to get to $10 million ARR by selling applications (traditional SaaS). Partially it is just tradition coupled with stagnation. Partially it is because venture capital firms have been wary of funding data companies. And, most convincingly, being a data-only business is less exciting to most entrepreneurs because data is a supporting role (see the last section on data and humility).

But selling data to data scientists is starting to be a big business. 

Selling data (DaaS or Data-as-a-Service) historically has not been a great business.  Outside of Zoominfo and a few others, there have been almost no pure-play data unicorns built in the last 20 years.

Check out the DaaS Bible — the ins and outs of running a data-as-a-service business (DaaS accounting, winner-take-most dynamics, and more)

That’s because very few companies had the ability to make use of raw data in the past.  10 years ago, only the most advanced engineering teams were able to make use of external data.  But that’s changing.  An order of magnitude more companies buy data today than did five years ago.  That’s because a good engineer with a tool like Snowflake can be as productive as a great engineer was 5-10 years ago.

This is happening across industries. 

One example is hedge funds.  Not that long ago, just ten funds were buying significant alternative data.  Today it is still under 100.  But there are 500-700 funds that are currently making the investment to ingest large amounts of data.

The number of hedge funds that buy significant alternative data is still really tiny … but growing pic.twitter.com/cAmVMVXj6b

— Auren 📚 𝐇𝐨𝐟𝐟𝐦𝐚𝐧 (@auren) January 13, 2021

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For those of you that missed the SaaStr SCALE conference last month, Jason Lemkin has a great overview including links to the top eight presentations.

The #1 rated session was an interview with Todd McKinnon, CEO Okta — it was excellent and I highly recommend it.

My presentation was the #2 rated session. Here is the full video:

And here is the full learnings:

(1) Avoid good opportunities

the MOST IMPORTANT advice I can give you is to avoid good opportunities.

avoid good opportunities like you work to avoid the coronavirus.

Good opportunities must be avoided at ALL costs.

this is true if you want to build a great company … but this is JUST AS true in life.

the more successful you become, the more good opportunities are going to come at you.  soon you will be swimming in good opportunities.

again, that’s true for companies and true for you individually.

let’s first dive into this advice individually and then show it applies to building a business. 

let’s say you are 22 years old and don’t have any money.  well then you are likely going to see very few opportunities to invest and most of them will be bad.  but as you gain wealth, you will see more opportunities to invest — and many of them will be good.  but even the good opportunities take time and effort to review — so it is in your best interest to do everything possible to wait only for the great opportunities.

this is even more true when running a company.  the possibilities of the number of things you can do to grow your business are endless.  you can launch new products, be better at recruiting, speak at SaaStr, and so much more.  my advice, have some sort of rubric that allows you to ID good opportunities and avoid them.

but how do I know when an opportunity is just good and not great?

my simple heuristic: if the opportunity has few obvious downsides, it is almost certainly NOT a great opportunity.  all great opportunities have very big and very obvious downsides.

of course, just because it has obvious downsides doesn’t mean it is a great opportunities — it still is more likely to be a bad or good opportunity … but if you see something with no obvious downsides, it almost certainly is not great.

this is also true with people you hire.  if you want to hire a 10xer, that person will almost certainly have glaring faults.  anyone that you can hire without glaring faults will, at best, be good — they will certainly not be great.

summary: avoid good opportunities like you avoid COVID-19

(2) Delegate things you are good at

most people advise us to delegate things you are not good at.  they advise to surround yourself with people that have different strengths and different weaknesses. 

this is the conventional advice.

maybe someone on your board already gave you this advice.

most of us have heard this advice many times over the years.

but this is terrible advice.  don’t listen to it.  ignore it.  take it outside in the backyard and bury it.  stab it and kill it.

do the opposite.

instead: Delegate the things that you are good at.

I know this sounds really strange … so let me explain. 

the things that are the EASIEST to delegate are the things you are already good at.  you know how do those things really well.  you might already be an expert in them.  you can break down these things well.  you can also hire for these things. 

so delegating these functions will, for sure, have the highest success rate.

if you are a great engineer, who do you think you will be better at hiring — other great engineers or great salespeople?

the answer is obvious — you will likely hire super engineers and very mediocre salespeople. 

so the first thing you should always delegate are the things you are best at. 

I cannot stress this enough.

you even see it in all great companies – they rarely get great in things that are not traits of their founders. 

for instance, Marc Benioff is the world’s best software marketers.  he was an amazing software marketer ever before he started Salesforce.  he’s incredible.  he’s hired great marketers and delegated to them.  Salesforce continues to be great at marketing. 

but Marc Benioff is not a great UI/UX person.  while he’s been able to acquire great UI/UX people through acquisitions over the years (Stuart Butterfield, CEO of Slack, is one of the world’s greatest), the Salesforce product still suffers from having one of the worst UI experiences. 

and guess what?  it hasn’t mattered. 

it is better that Benioff focused on his strengths.

you should focus on your strengths too — you cannot be all things to all people.   focus on being great at just a few things.

let’s look at the napkin graph (above).

on the y-axis is things you are good and things you are bad at.  the x-axis is things you love to do and things you really hate doing. 

when you get a chance, try to fill out these quadrants for yourself. 

the easy thing is to delegate as much as possible on the things you are already good at.

build systems to make delegation easier.  hire super talented people and work on up-leveling them.

now you have two other buckets left.

for the things you like to do but are not yet good at … work on investing in yourself.  get a coach.  read.  learn.  try a few different things (and know that you will fail).   while it is unlikely you will ever become great at these things … you can get yourself to good.  once you are good, you can better effectively delegate (and hire). 

now there are things that you are bad at and you also do not like doing.  my advice in this quadrant is to do everything possible to get leverage through APIs or software … or maybe you do not need to do them at all.  remember, you don’t have to do everything to have a super company.  there can be many functions that you either outsource or just not do.

the great thing is that the number of vendors you can choose from is growing exponentially.  you have amazing choices. 

the number one skill to have in the next 20 years is the ability to select and manage vendors —  almost every company now has more vendors than employees.

(3) Do the opposite of “smart” people

take a look at what the smart people around you are doing … and do the opposite.

most smart people optimize for the mid-term.

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My name is Auren, and I am a low-EQ CEO.  

Most great CEOs have high EQ (Emotional Quotient) and Emotional Intelligence (also known as interpersonal intelligence).  While EQ’s importance is not as high as it once was, it still is extremely important, especially for leaders.  

So what to do if you are a low-EQ CEO?

Most successful leaders that don’t have high EQ tend to have off-the-charts IQ.  But what if you are a low-EQ leader whose SAT score was under 1590?  

This post is a self-help manual for those low-EQ leaders. 

The first half of this piece offers some ideas to improve your leadership skills as a low-EQ leader.  The second half provides insight into what it’s like to be a low-EQ person and how low-EQ correlates with other common character traits.  This piece should be valuable both for low-EQ leaders (I wish I read this myself ten years ago) and anyone that works closely with low-EQ leaders.

First, you are not alone.

If you are a low-EQ leader, the first thing to recognize is that you are not alone.  In fact, CEOs often have lower EQs than average.  

But that sugar-coats it — having a low-EQ is a severe disadvantage as a leader.  It is a real blind spot.

How to be a better low-EQ CEO.

There are five core things low-EQ leaders can do to help their relationships:

1. Telegraph your low-EQ abilities to others. ☎️
2. Rely on other high-EQ colleagues to be a translator.
3. Be explicit about the context of your questions. 🙋
4. Be honest and transparent.
5. Create a personal operating manual. 📕

Warning: this piece will be a lot more personal than most of the other things I write (personal sections in italics — feel free to skip … of course, high-EQ people tend to enjoy more personal stories 🙂 ).

1. Telegraph your low-EQ abilities to others ☎️

If you are low-EQ, everyone you work closely with must know … because most of these people will come into any relationship with the expectation that you are adept at reading non-verbal cues.  If they know you cannot read their faces (reading faces is highly correlated with EQ), they will work with you to compensate in other ways.

It is also important to remind people that they will be less likely to read your face.  So they should not be assuming things from your nonverbal cues … because you are less likely telegraph your feelings consistently.  Yes, we all have tells.  But a grimace from a low-EQ person could actually mean that they are happy … so others should not read into these cues too deeply.

One leader I admire mentioned:

While telling people that you are low-EQ is a good step, it’s not really fair to put the responsibility of dealing with your low EQ on them.  Most people will not be comfortable being overly explicit and so you will need to draw it out of them by proactively ask questions (e.g., “how do you feel about what I’ve just said?”) and even make some assumptions (e.g., “I may be wrong (remember, I can’t read faces) but you look frustrated/happy/perplexed. Do I read this properly?”)

2. Rely on other high-EQ colleagues to be a translator.

If you were having a business meeting with someone that did not speak your language, you’d bring along a translator.  A good translator not only helps translate your words but also helps you observe and adhere to cultural differences, different norms, etc.  

Low-EQ leaders need to rely on translators in the office too.  They can entrust other executives with translation and interpretation.  So, find 1-3 people that can help you translate what others are thinking and explicitly enlist their help. They can tell you when someone does X, they really mean Y.

I’ve recently done this at SafeGraph — a few of the people on our leadership team have extremely high EQs, and they have helped me understand more complex situations.  Without their insights, I would have misread many situations.  

Of course, it is really important that these translators are trustworthy and do not use the situation to interpret things in their favor.  You want to find high-EQ people that also think clearly about the best long-term interest of the organization.

3. Be explicit about the context of your questions 🙋

When leaders (even those who have high-EQs) ask questions to others in their organization, their questions can often be interpreted as directives (even if they are just innocent inquiries).  

One way you can guard against this is to be explicit about what kind of question you are asking.  I learned this from Brian Gentile. I’ve been experimenting with five hash-tags that I now add to questions I ask (which could be live or in written form):

• Telling
• Selling
• Consulting
• Brainstorming
• Learning

The #Telling hashtag is when you want to be explicit that this is a directive coming from you.  This is very rare, but occasionally, it is important to be explicit about that.

The #Selling hashtag is when you are selling an idea to other people in your organization.  You think this is the right way to go, and you are working on getting their buy-in.  Of course, you are open to changing your mind, but you are coming into the conversation with a strong opinion about what to do.

The #Consulting hashtag is when you want to dive into a recommendation someone else has made and understand it better.  You’re in coach-mode.  You might be able to offer your advice on how to improve it even more. Or by understanding it better, you might be able to help another part of the organization.

The #Brainstorming hashtag is when you just want to brainstorm an idea.  You are coming in with few preconceptions and want another person or a group of people to help get to a good answer.

Lastly, the #Learning hashtag is just to help you satisfy your curiosity.  I often use #Learning when asking our VP Engineering about a specific technology decision or machine learning technique.  In this case, I’m curious and just want to learn.  

Since I started doing this, I have found that 90% of my hashtags are either Consulting, Brainstorming, or Learning.  I’m rarely Telling or Selling.  But, in the past, without being explicit about my inquiry, people at my company have misinterpreted my questions as being directives instead.

These hashtags are a very analytical response to being low-EQ.  But being analytical is often something that low-EQ leaders are good at … so use it to your advantage.

4. Practice honesty and transparency. 

Low-EQ leaders need to telegraph their thinking to others more than high-EQ leaders. This is because people are much more likely to think a low-EQ person is not telling the truth (even though there is no relationship between honesty and EQ).

One of the best ways to do that is to be honest and transparent.  

I personally used to keep things close and never telegraph high-level strategy to the company.  Today, I am much more open with everyone in the organization about how we should think things through … and am also much more open when I don’t know something or have changed my mind (which is often).  I send out an email to the team at least twice a month diving into a strategic topic and giving the team a lens into how I am thinking about it.

You can compensate for your low-EQ by clearly explaining your thinking to others. This takes out the “guessing game” for your co-workers.  Because people are more likely to misunderstand low-EQ people, you will need to go to greater lengths to show your thinking.  It’s like seventh-grade math where your teacher made you show your work (and not just the answer). You have to show your thinking and where it comes from.

Of course, high-EQ people should practice honesty and transparency too. They just don’t have to work as hard to do it.  Low-EQ leaders need to put in the extra effort to actually build systems around honesty and transparency.  

One CEO I admire told me: 

Another technique I’ve been using to great effect: tell people how I’m feeling. I realized that I’m not good at telegraphing my positive emotions — especially over Zoom. I’ve been making a conscious effort to say things like “I’m very happy with this”, “I’m proud of what you did”, “this makes me very excited”, etc. At first it sounds cheesy to say, but it’s been so helpful. Especially in terms of building up credibility for when I have to share a negative emotion like, “I’m disappointed with how this turned out.”

These systems become even more important in a large company. High-EQ leaders might find it harder to transition from a 100 person company (when you can know everyone) to a 1,000 person company.  Their high EQ might have allowed them to get by (at 100 employees) without formal systems to translate their understanding and empathy.  This is especially true in a world where everyone was in the same office (low-EQ leaders are at less of a disadvantage in remote-first companies).  

5. Create and share a personal operating manual 📕

When I first started working with my friend Jeff Lu, he suggested we write a personal operating manual and send it to each other.  I had never heard of this concept before but I now send mine to everyone that reports to me or I meet regularly with.  

An operating manual defines how people should work with you. It should clearly define your personality quirks so that others can get the most out of you.  For example, here is a quote from mine:

Opportunities over threats

Auren is wired to seek out opportunities and discount threats.  He is generally focused on what can yield the 20x return and can discount the 1x loss.  Auren can be dismissive of problems because he has high confidence they can be solved.

An operating manual is good for everyone to write and share with their colleagues.  But it is especially important for low-EQ people.  One thing I do in my operating manual is specifically call out my low-EQ:

Direct over indirect

Auren only understands points that are directly made.  Auren rarely picks up on indirect points (like non-verbal cues).  Auren has mild prosopagnosia — which means he is poor at recognizing faces. (Facial recognition has a high correlation with EQ.)

Another good thing to do in an operating manual is to share your results from personality tests that you think are relevant — for instance, Enneagram, Myers Briggs, and StrengthsFinder tests.

If you had a recent 360 review, it might be useful to provide a link to the review from the operating manual, so your colleagues can dive into more details to help them understand how to get the most out of working with you.

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Business building happens by a series of 1% improvement. But business domination comes with step functions.  You can build a very good business with just the first one.  But you need both if you want to build a great business.

One-percent improvements can build a solid company.

You can build a good company with slow, constant progress. By building through a series of 1% improvements, a start-up can grow to $8M ARR in year 3, $16M ARR in year 4, $26M ARR in year 5, and $40M ARR in year 6, etc. 

Here’s what that growth looks like: 

The nice thing about continually making 1% improvements is that they have a high likelihood of success and a high likelihood of helping the business.  One can follow a playbook from other similar companies about what to do and how to up-level and make investments.  And no company can be successful without consistently making 1% improvements. 

One-percent improvements add up over a long time.

Seventy-two 1% improvements results in a doubling of the output of the company.  The faster you make these 1% improvements (OODA loops), the quicker you get to the doubling.   It works, and it can work well over the long term.

If your company could get just 1% better every day for an entire year, you’ll end up 37X better after 365 days. Writer James Clear has a great chart for this: 

That’s the power of slow, constant improvement.

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SafeGraph has six core Values and one (“Judgment is the x-factor”) of them was basically lifted almost verbatim from the LiveRamp Values because it is the most important value to me:

Judgment is the x-factor. It is essential that every team member at SafeGraph makes key decisions autonomously, so that we move fast and limit bureaucracy. But as Voltaire (sometimes attributed to Spider-Man’s Uncle) said, “with great power comes great responsibility.” To make great and effective decisions at all levels of the company, we need to (1) clearly communicate the company’s strategy to all team members; (2) hire super smart teammates that work hard; (3) only hire people who have demonstrated sound judgment and are deserving of our trust.

It is really powerful to work at a company that exclusively employs people with good judgment.  It allows you to move faster. It builds trust amongst coworkers. It eliminates bureaucracy.

To do that one has to actively discriminate against people with bad judgment: which means you need to make this one of the core criteria during interviews (and through observations once someone starts).

The main reason that you want everyone in the company to have good judgment is so you can have fewer “rules” which allows you to move faster.  Much faster.  The more rules, the slower you will move.  The more you trust employees to make decisions, the more decisions will get made.  

I wrote in “Pace, Tempo, Speed, and OODA loops“:

“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 decisions.”

Of course, when you trust others to make decisions, it means they won’t always be made exactly the way you want them to be made.  You need to be ok with that.  That is a by-product of decentralized decision-making. 

As a CEO, you can still reserve the most important one-way door decisions for you to make … that way if you completely screw up the company at least you can only blame yourself 🙂  In fact, that is one of the reasons I love being a CEO — I have only myself to blame.  For instance, you’ll likely be extremely involved in hiring people (even if you ultimately empower the hiring manager) because having people with good judgment that your team can trust to run with the ball is so important.

While most of SafeGraph’s values are aspirational (and we can fail at them), judgment is an absolute must.  If we hired someone without judgment, we would have to terminate them … as people with bad judgment are a real cancer on organizations.  Because people with bad judgment create rules.

When we sold LiveRamp to Acxiom in 2014, the first thing I did was read the Acxiom HR handbook.  There were lots and lots of rules.  One rule I found particularly interesting was “you cannot do cocaine on premises.”  After talking with the SVP of HR, I found that yes, there was a story of someone actually caught doing cocaine in the Acxiom bathroom. Rather than just immediately firing the offender, they also thought it was necessary to add a rule.  But you cannot enumerate all rules (there was no written rule against heroin or meth … there was no written rule stating people must wear clothes to work).  One must eventually rely on people for their judgment.

Good judgment is the answer to lots of rules.  And lots of rules make decisions take longer which means the company would inevitably move at a slower pace (see recent scribe on pace).  Judgment is fused with pace.  All things being equal, a company filled with people with good judgment can outrun a company that is not.

Of course, judgment does not mean you need to stop and contemplate all your moves.  It should be ingrained in what you do.  It does not mean you never make mistakes.  It does not mean you never have a bad day or act in a way you regret.  But it does mean you don’t need a seminar to know that harassing someone is a bad thing. It means you don’t need a training to know you don’t discriminate on race.  Good judgment knows that one must act in the best long-term interest of the company.  

  clearly communicate the company’s strategy to all team members

It is really hard to act in the best long-term interest of the company if everyone is not in sync about the company’s long-term interests.  That is why it is really important to clearly and frequently discuss the company’s strategy.  The more you are all in sync about where the company is going in the long-term, the more you can rely on judgment of your fellow teammates to get you there.  Planning becomes less important with judgment because everyone knows where the company is headed.

One of the primary missions of the CEO is to help everyone in the organization understand the long-term strategy.  It is actually really hard to do that and I have frequently failed at it at SafeGraph, LiveRamp, and other organizations I have been a part of.