I have a 2x2 matrix in my office (which I have mentioned in a previous article as well). On the X axis is “ignorance to knowledge” spectrum; and on the Y axis is “arrogance to humility”. While some fall in the magic quadrant of knowledgeable yet humble, some clearly are in the double negative quadrant of both arrogance and ignorance (not knowing much but thinking they know it all).
I know investors and entrepreneurs who fall in both categories. By definition, if you are in the ignorant/arrogant category, you are not aware you are that way. As a human being, and especially as a participant in the startup ecosystem, I believe one has to know one’s strengths and weaknesses. That introspective gap analysis, which I will term the art of being “self-aware”, is the crux of this article.
When I speak with an entrepreneur or a potential investee, one key criteria I look for (both explicitly and implicitly) is whether the entrepreneur and the extended senior team are self-aware. Do they know their strengths and weaknesses? Are they willing to acknowledge what they know and what they don’t–and, as proxy, admit to perhaps some gaps that might exist in their ability to perform their role as the company scales?
Practically speaking, when I speak with the CEO of a startup, I look for a genuine answer to the following question: “Do you see yourself as the long-term CEO of the company?” Don’t get me wrong. With that question, I am not implying upfront that I don’t see the founder as the long-term CEO.
There are plenty of examples of founder CEOs who stayed on as the company took off. What I am probing is whether the answer is an un-thoughtful, yet emphatic “yes, of course”. Or is it more a thoughtful, introspective, “well, I would like to think so. But my goal is to have the company be a long-term success. And if that means getting a more seasoned CEO at some point, I am open to that”. An answer of that nature indicates both aspiration for long term CEO-ship and also flexibility (hopefully authentic) to bring in seasoned management as and when appropriate.
Most entrepreneurs in Silicon Valley (and everywhere else for that matter) do aspire to be CEOs for the long term with the likes of Mark Zuckerberg, Travis Kalanick or Elon Musk as their idols. That aspiration is important, and one could argue a necessity, to succeed as a startup. But, what self-awareness brings is knowing when one is letting ego, pride and perhaps a perceived stigma of stepping down as CEO become a hindrance to the company’s success.
Believe me, a certain level of humility actually sends a strong message to the broader team and employee base, especially if positioned as a strength (hey, I have gotten the company to a fantastic stage and now it’s time for me to hand the baton to someone who can take it to a different orbit; and someone who has been there, done that, and someone I can learn from). A key example of that is someone like LinkedIn’s Reid Hoffman, who happily handed over the leadership of the company to become president and chairman after four years.
The perpetual CEO syndrome
Entrepreneurs, especially founders, are great at multi-tasking, rolling up their sleeves and managing through the early chaos of a company. But taking a company from $0 to $10M is different than scaling the company from $10M to $100M, especially for first-time entrepreneurs. There are several counter-examples, no doubt. Clearly, when one looks at the high-flying unicorns in India, almost all of them are still being run by founders. But I have been directly involved with companies where the board has brought in seasoned management (with the founders’ enthusiastic consent) with positive results.
This is a topic that is very near and dear to me. The downstream and unintentional effects of the perpetual CEO syndrome are several. Often, the organisation becomes hierarchical and the CEO tends to hire people who are mediocre (to intentionally or unintentionally maintain intellectual seniority). Remember, I said unintentionally. No one wants the company to fail, least of all the management/founders.
But there can be a “god” syndrome, where founders who have scaled companies beyond a certain threshold (let’s say Rs 100 crore) are placed in a higher orbit, which then feeds the ego or pride to stay in that orbit, rather than work on and implement a succession plan with world-class talent.
I am also a big fan of trying to create world-class companies born in India and spreading globally. What I do run into, however, is a divergence in the definition of what it means to be “world class”.
I was recently in a conversation with a CEO who felt he had built absolutely world-class systems and processes for his scaling startup. I knew, having some experience with similar companies in Silicon Valley, that there was an order of magnitude difference in the quality of the end product. The issue was that the CEO was comparing himself to his local competition and feeling really good, rather than benchmarking with global standards.
The importance of advisors
By the way, the above is much easier said than done. It is very difficult to be self-critical. But that is part of the maturation cycle, not only for the individual but the entire venture ecosystem as a whole.
One of the trends that has now become the norm in Silicon Valley for entrepreneurs and VCs is the idea of a “life coach”. It’s important to have a life advisor who can constructively help an individual identify gaps, and help create a path to bridging those gaps, both personally and professionally.
What self-awareness brings is knowing when one is letting ego, pride and perhaps a perceived stigma of stepping down as CEO become a hindrance to the company’s success
A classic flaw of type A personalities is that they feel they are in complete control and either know what they need to do, or can learn quickly, usually on their own. Reality is different. The “know or learn it all” philosophy usually leads to complete chaos, and unintentional “over-promise and under-deliver” consequences. Not only does the person not know it all, he/she fails to delegate or hire properly (right caliber and timing) resulting in the company stalling at best, or sliding downwards.
The derivative effect is that the person feels he/she is working really hard but not getting the results that are expected. That frustration creates tension not only within and between the company/investors but also on the home front, often tearing families apart. The art of being self-aware is crucial to a healthy work-life balance, which is something that startup CEOs often struggle with.
Startup CEOs know it’s lonely at the top. But it need not be. A combination of having life advisors and doing a periodic “check-in” can prove surprisingly fruitful not only for the individual but for the company. That concept applies not only for the CEO but the rest of the founding management as well.
Founders' capabilities
India, more than Silicon Valley, has the Infosys syndrome of having several co-founders (four or more). One of the hardest conversations during the company’s life cycle happens when it becomes clear that some co-founders are less capable of fulfilling their role than others, especially as the company starts to scale. But, if the promise/expectation all along has been that all four or five co-founders are equal and will stay in CXO roles in perpetuity, that company is doomed to fail.
The sooner the founding team can realise their individual strengths and weaknesses over the long run, the easier the transition to appropriate seasoned management will be. The founding CTO or head of finance may not and likely will not be the right CTO or head of finance for a company in three to four years. Founders should be brutally honest with each other and themselves at the formation of the company to avoid significant headache and heartache downstream.
While India is rising quickly when it comes to tech entrepreneurship, I have a feeling there are and will be many tense conversations between investors and entrepreneurs and among founding teams about this topic (some fairly public events have already taken place).
The entrepreneur will feel that the startup is his/her baby and he/she knows best how to scale it, and that the investors “simply don’t get it”. The investors, on the other hand, want the company to scale and realise that the company doesn’t have the people, systems or processes to get there. Having a dialog upfront (perhaps at the time of investment) will reduce the tension at the right time. And having self-awareness will lead to a more amicable relationship between and among management and investors, and increase the company’s likelihood of success.
(Mohanjit Jolly is a partner at Draper Fisher Jurvetson.)