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Jul 30 2013 by

Startup CEO: The Book Every Founder Should Read (Exclusive Review)

Review By William MougayarStartup Management – (Founder)

StartupCeoStartup CEO: A Field Guide to Scaling Up Your Business is a monumental book that comes from the heart of Matt Blumberg. You can tell by the author’s self-effacing and genuine style that he had the reader in mind, as he pours it all for you. It doesn’t get more authentic than that.

Matt never put himself at the center of the book; yet he draws on the depth of his 360 degrees of experience, having founded Return Path in 1999, and grown it to over 400 employees, across 12 global offices, and $100+ million in revenues.

This isn’t just a startup CEO’s book. It’s a book that will specifically resonate with any first-time CEO who is about to scale their company, and hasn’t done it before. That was Matt’s experience, which he sporadically chronicled on his blog, Only Once, but the book isn’t about his blog.

Founder-to-CEO transitions are tricky. Every founder assumes they will become a successful CEO one day, but that’s not the case in reality, especially if you’re a CEO for the first time. Compound the typical risks of startup failures with the risk of CEO transition failures, and the percentage of successful founders that end-up being CEOs, and leading a successful startup dwindles down.

That’s where this book comes in. It is the book Matt wished someone had given him on his first day as a CEO of Return Path, 14 years ago. But this isn’t a book you will skim over. I thought I could do that, but I couldn’t. This is a book with close to 400 pages, so you will need to read it diligently, and “return” to it often.

The book is organized into 5 parts: Story Telling, Building the Company’s Human Capital, Execution, Building and Leading a Board of Directors, and Managing Yourself so You can Manager Others.

This is not a prescription book that tells you there is only one way to do this or that. Matt goes beneath the perceived simplicity or glamor of a CEO’s job, as he dives-in with original thoughts on 47 topics such as creating the company’s operating system, collecting data, managing in tough times, driving alignment, learning the lessons, competition, failure, decision-making, working with a coach, the importance of peer groups, staying fresh, taking stock of the year, and even tips for traveling. They all share the common context of managing and growing a startup, from 25 to over 400 employees.

The book doesn’t cover management and leadership in the traditional sense, but it resembles a pretty good self-awareness confession with high dosages of wisdom sprinkled along the way, and it paints the reality of a Startup CEO’s life: it is filled with ambiguity and uncertainty, but it demands discipline and guts to get the job done.

I liked the importance given to “Story Telling” in Part I, because your vision and strategy are the rudder for your company. “Stories have a main character (the customer or user) and a supporting cast (investors, employees, partners, competitors). They have a beginning (the problem), middle (the product), and an end (the solution). Stories take a jumble of facts (profit-and-loss statements, customer surveys, market realities) and give them meaning.”

It sounds whimsical, but it is good to keep a simple picture of how everything ties together.

The dream is part of the idea, and Matt chatters the myth that the founder or CEO always has the best ideas, as he recounts two real cases of very successful products at Return Path that originated from other employees, not him.

The CEO needs to become a “functional supervisor”, says Matt. That’s probably one of the biggest shifts from founder to CEO. Your people are your most important resource, so you need to spend a big part of your time with them.

“First, Perfect the Model. Before you can think about the trade-off between growth and profitability, you have to get your business model right. Not just on your first Lean Canvas, but on your second, and your third. Get out of the startup phase and into the revenue phase. During this phase, you have to focus on neither growth nor profitability, but rather on frugality, on staying alive until you get to the point where you’re ready to start scaling your business.”

The above paragraph comes early in the book, and I like it a lot because I’ve echoed the same thing; basically to let go of Lean as soon as growth and revenue are in sight.

Regarding the challenges of managing remote offices and employees, versus keeping them in one place as long as possible, here is some wisdom from the book: “It’s just as important to be close to your customers as it is to be close to your colleagues.” So obvious, yet so important.

On innovation; “If you don’t give your team permission to fail, you’re not giving them permission to innovate.” Yes, you need to continue thinking like a hungry startup, even if you have 400 employees.

On going global and preserving the company’s culture; “Beware of diverging cultures. It’s not just important to have a strong company culture; it’s important to have just one.“

Then, there is some drama as Matt takes us back to 2001 when he was still a fresh CEO, and they had just merged with another company. Fred Wilson who is on his Board suggested that Matt works with a coach, Marc Maltz from Triad Consulting because Fred felt that Matt could be “doing a better job in a few areas”. Matt grudgingly agreed, thinking he didn’t have a lot to learn, “the arrogance of youth”he admits. That particular relationship proved to be of critical importance, because Matt later acknowledged that Marc became one of his most valuable assets and advisers, even giving him credit as “one of a few reasons Return Path is still in business!”

One piece of advice given by Marc stuck with Matt: “The biggest risk for a CEO is to lose sight of the boundary between yourself and the role you fill.”

Peppered throughout the book are short takeaways from external voices, each narrating their own perspective on the Startup CEO’s job. These passages are well pointed, and include advice from Fred Wilson and Brad Feld (both on his Board), his executive assistant of 8 years, his CTO, and a slew of other key staff and outside experts.

Startup CEO is a wonderful book that alternates between story telling, lessons and best practices. It does a great job at letting you fill-in your particular context for your own take-away.

For a startup CEO, founder or co-founder with management responsibilities, it is up to you to take initiative on educating yourself so you can grow-up either by learning, by doing, by getting coached, or by getting supported in a peer group. And Matt shows you how he did it that way. Matt had the good fortune of relying on a good caliber of mentors, coaches, and venture capitalists that supported him, but his message is that you too, can carve your own luck and be inspired by how he did it.

As a side effect of the book, you get an inside look into Return Path and its culture, and it comes out as a pretty likeable company.

As a startup CEO, you will see yourself in the book, and you will relate to the stories Matt tells. This is a must-read for any startup founder or CEO who is about to scale from 25 employees and upward. Even if you haven’t hit your product/market fit or growth curve tipping points yet, it’s not premature to find out what will happen when you do.

As a founder, and especially a first time CEO or senior executive, you could ignore this book at your own peril. It will be released Sept 3rd 2013, and it’s available on Hard Cover pre-order, or Kindle version.


About William Mougayar

William Mougayar Small pic
 
Entrepreneur. Creator of products. Thinker of ideas. Critic of mediocrity. Herder of startups. Passionate about the right things. Advisor & Coach to CEOs & Founders on Strategy and Marketing.

Started 3 companies, pivoted 1 (Eqentia), sold 2 (CYBERManagement to Aberdeen Group, and Engagio to Influitive). Worked for 3 sizes of companies: 2 large (Hewlett-Packard, Cognizant), 1 medium (Aberdeen), and 4 small (startups). So, I’ve seen the whole spectrum. And in every case, each company was experiencing a high velocity of growth.

I also wrote 2 books, consulted for numerous companies, was a professional speaker and wrote a ton of articles throughout the years.

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Mar 7 2013 by

“Why the hell does my board act like that?”

Guest Post By Jerry ColonnaThe Monster in Your Head ( Professional Coach)

Jerry Blog

The phone rang at the appointed hour. My client, a software company CEO, was calling for his regular session. I picked up the phone:

“Hello”

“Why the hell does my board act like that?”

“Good morning, James,” I answered and we both laughed.

We talked through the upcoming financing. Some of the investors—folks who came into the company only in their last round—were already jockeying around terms and prices of the upcoming round. Some of the other directors—investors who’d been with the company since the beginning—were also beginning to draw a hard line around terms that they would find acceptable.

In a sense, while they were all directors, as investors they were beginning to play a game of chicken with the company’s financing—each holding fast to a position deemed best for the shareholders they represent and yet, as the negotiations would tick on, the company’s ability to actually raise the needed funds could be jeopardized.

After the session, I asked him he if I could quote him.

“Sure,” he wrote, “just let me know if I ever end up there with an actual video recording of me calling [the board member] a ‘fuckhead’ – it’s not that I’d be bothered by that, it’s just that I’d want to make sure I sent the link to all my friends.”

Jerry ColonnaA year ago I was sitting in the office of the CEO of a company on whose board I served. The recently elected chair and the CEO were screaming at each other and, as usual, I found myself trying to mediate.

“What you don’t understand,” said the chair rising from his chair and trying to tower over the seated CEO, “is that you’re here,” and he held out his right hand, palm down, “and the board is here,” and he moved his left hand on top of the right, again palm down, “and I’m here,” and he placed his right hand over the left.

Capo dei capi—boss of bosses.

My client’s question was spot on: Why does this happen? What is it that makes the relationship between board members, investors, and management so tricky? And, even when you remove the notion of director as investor (or investor representative) you can still end up with troubled relations.

The board/management relationship is tricky, complex, and nuanced. There are few structures within traditional businesses that are quite like it. Most businesses, indeed most organizations, are built on some variation of a command and control structure. Because of their inherent hierarchical nature, it’s often clear who’s in charge, who makes the decisions, and who’s ultimately responsible.

Even in enlightened business, as people like Warren Bennis have pointed out, where the power and decision making reflects not the pyramid of classic command and control but the inverted pyramid of the ways in which information, and therefore, accountability should flow, there’s relative clarity.

But when it comes to boards of directors, confusion is often the norm and, as a result, there’s often frustration and anger. For example, does the CEO work for the board of directors or the company? Does the Board “work” for the company? Who holds individual board members accountable for the actions? And what is the relationship between board and staff members?

And underlying all of this is the responsibility to represent the shareholders.

I’ve served on dozens of boards of directors; this includes public and private companies, for profit businesses and not-for-profit organizations and I think the core troubles stem from a misunderstanding of the key elements of the roles.

Directors aren’t quite like any other management position in an organization. They have power but often times lack the information to wield that power as well as managers. They have perspective—often times significantly more experience than senior management but, by the nature of their responsibility, they are disconnected from the day-to-day operations.

Directors need to remember they have a delicate balancing act of influencing without dictating, and engaging and sharing their experience and perspective by virtue of their gravitas as much as a result of their power.

Management, too, needs to remember that the task of being a director or a trustee is unlike any other job one has ever had. There’s an explicit accountability that goes along with the job and that fact, combined with the implicit lack of information, can cause most folks to feel terribly anxious and to act in awful ways.

Everyone on both sides of that divide need to take a step back, see things from the other view, and work towards making the board as functional as possible.

As my friends and colleagues are tired of hearing me say, I’ve never seen a board guarantee an organization’s success but I have seen it guarantee its failure.

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