1. Be clear on your objectives
At the outset, there is always excitement and passion, vision and possibility. The lesson of history has taught me again and again, you simply cannot have enough discussions with your co-founders about the tough issues. Most important of all is "be clear on your objectives" and the boundary conditions that are likely to bring competing objectives into conflict.
Have you discussed with your co-founders your explicit end game objectives? Is this a traditional exit or does one of you want to remain working in this business indefinitely? Often the easier question to answer is, "what is our 5 year objective, say for an exit?" Target valuation? Potential acquirers? What will our revenue, profit, market cap and other key metrics be at that time?
Tougher to answer can be, what is a minimum level of success in 2 years, 5 years for us to persist? Who needs to earn a salary and by when? What would be unacceptable outcomes? Where are your moral boundaries and most importantly are you all clear on where you differ from one another? What will you do if one founders circumstances change and they want to "take their chips off the table", sell the business for a modest price and a quick trade sale, when another wants to carry on for a riskier IPO?
How will you terminate your agreement if things don't go well? What happens if a founder with a majority shareholding wants to pursue a different opportunity part way through reverse vesting? Have you put a reverse vesting shareholders agreement in place? Should the shares be distributed to the other founders or will you use them to hire management to replace the lost skills? Is this different depending on which founder leaves?
What are your codes of conduct to resolve conflict? Can you all be radically candid with one another regarding any topic? Do each of you reluctantly know there are some topics that are sensitive and can't be addressed?
2. Distinguish between your career objectives and your founder obligations
Are each of you clear about where your individual career aspirations stop and where your founder obligations start? Are you determined to remain CEO no mater what, even if it your cofounders thought there was a better candidate for the job? Sometimes it's easy to say at the outset "sure, I'd give up my role for a better candidate", but is part of your self esteem attached to the role? Is this your first CEO gig? Do you worry that your potential replacement might mess things up just as readily as you?
Everyone knows the stories of the famous founders who persisted or were called back (Steve Jobs, Mark Zuckerberg), but how many killed their businesses by not knowing when to hand over the reins?
One important lesson that I think is universal, is try to distinguish between your career aspirations and your obligations as a founder, to make the business successful (particularly if you take on influential and wealthy investors money). I still have a list of wealthy household names who I feel indebted to for ventures that were not successful.
I think it is powerful, if you can remain agnostic about whether you are the best person to be CEO. Trust that if you are the right person for the job, you will be.
3. Always hire better than you
Great leaders surround themselves with people that are better than them, particularly in areas that are not personal strengths. The leaders who naturally do this, end up being CEO, not because they are the best salespeople, marketers, growth hackers or technologists, but because they are the best leaders and can build high performing teams.
I often observe younger founders reluctant to hire older senior managers, because of perceived cultural differences. Equally, I see older founders fail to recognize talents of younger hires and err on the side of experience.
The key is to be objective, which is almost impossible to do perfectly. I am fan of Topgrading particularly for senior hires. Write a really results oriented job scorecard and then raise your sights on who the most qualified candidate might be. Your job is to sell a vision that gets a superstar to take your role for lower salary and a slug of equity.
The litmus test for me, is "does this candidate feel like they exert as much "gravity" (or more) than I do?", which translates as when they sit at a board room table do they impress more than me? If they do, then you are following best practice number two!
4. Do not assume the team knows what is in the founders head
Most founders make the error of failing to communicate their vision frequently to the team and to every new hire, particularly during periods of high growth.
What is the easiest way to do this - adopt a 1-Page Strategic Plan (1PSP)
Every team I work with ultimately hears me bang on about this tool, to the point that sometimes I joke that when "all you have is a hammer, everything looks like a nail".
A better description for a 1PSP would be a "Swiss Army Knife" - it is universally useful and an essential tool for a CEO to scale up their business and maintain alignment.
A 1PSP is not so much a plan as a process to keep your team aligned with the companies vision. Lead by the founders, but built by the team every quarter, it aligns what every team member is doing day-to-day, week-to-week (OKRs), with the quarterly theme, annual milestones, 5 year targets for exit and the Purpose, BHAG, and Core Values.
The key is not to be digitally isolated. Get your head out of Slack, huddle daily, problem solve as a team weekly, strategize monthly and plan quarterly.
This process keeps the team aligned and productively mauling quarterly milestones like a plague of angry locusts. More on this topic at my Path Forward post.
5. Recognize and concentrate on superpowers
Most founders have a superpower. Discuss openly with your co-founders exactly what you think your superpowers are and invite them to be radically candid with you about what they think your superpowers are, particularly if they have a different perspective! (See best practice number one above).
The best founders know their superpowers and build a team around them with complimentary superpowers (see best practice two above). Do you spend 80% of your week "in your wheel house" exercising your superpowers or are you running around doing lots of things (filling gaps) that you are not good at and don't enjoy?
The next bit is trickier - what is your kryptonite? Even if we quickly move past the assumption that "we are pretty perfect", it's actually hard to actively ensure that our weaknesses don't get in the way of our companies success. Remember the old adage "you don't know, what you don't know". Most of us think we are getting out of our own way, but I'd guarantee that there is at least one source of kryptonite that you don't recognize in yourself and holds your team back. What would you have to do to discover this?
The founders that have the best chance of answering this question have high drive and low ego.
6. Create an environment where you can deal with conflict
The best founders create an environment where there are "no elephants under the carpet". This means openess and trust. Can you raise any issue with your co-founders and your team?
If you are struggling with this, a crafty way to deal with it, is to encorage the team to adopt a core value that addresses this. It's harder to argue with core values. At one of my portfolio companies, they have a core value called "elephant radar". At another we have a value called "dissent and commit". Remember that having a core value on the wall doesn't work. The values need to be brought into your daily diet. Do they get mentioned at daily huddles and weekly meetings? If at the start of your daily huddle for the next six weeks you asked "has anyone got an elephant on their radar?" You might start to see the needle shift.
At Forward Partners we have recently sought to strengthen the way we operate as a team, by engaging in "radical candor" as a way to engage and resolve conflict constructively. With the help of our friends at Caffeine Partners, we are running a "superteam" program and are considering adopting "radical candor" as a core value.
It's important not to steam-roll dissent, even if the founder is certain that the views being expressed are wrong or unhelpful. Different views need to be heard. Rather than quickly explaining why different views are "wrong", ask the team members questions so that they can discover the answers for themselves - "ask don't tell". If founders create an environment where dissenting ideas are quickly stamped out, it sends the conflict underground and rather than making it go away it becomes passive aggressive resistance.
If you find yourself in conflict with a co-founder about roles and performance, the following is a process I used recently with a portfolio company:
1. Start by agreeing shared objectives (e.g. 5 year financial exit objectives)
2. See if you can agree on the capabilities you will need to build and the metrics you will need to deliver to be successful (e.g. two $100k enterprise clients by the end of the year). Which key metrics are you in danger of not delivering?
3. Reflect on the key roles and responsibilities to achieve these milestones. Who would you hire to do the work, if money was not a consideration and any candidate was available?
4. Next get each founder / senior manager to reflect on who in the team is best qualified to do these roles? Share with you co-founders what you see as the each team members strengths and weaknesses, including your own. Do you and your team members agree on the weaknesses and where you are falling short?
5. Ideally based on consensus, or alternatively based on the collective wisdom (a vote), make decisions about who should be responsible for delivering key milestones, and where it is identified that someone is not up to the task, propose adjustments. This might include changing roles, compensation, equity participation...
If the above is too diffilcult, consider using a trusted third party to mediate the discussion. Above all remember to "accelerate the crisis". Not dealing with these problems early (leaving the elephant under the carpet), generally results in "death by a thousand cuts".
7. Know when to persist and know when to pivot
None of these best practices are "easy", but persist and pivot is among the hardest. I often find myself saying that even if there is a "high probability" that it is time to pivot, it's hard to know what to do as the outcome (in reality) tends to be binary - it either worked or it didn't.
How do you know what to do?
The best answer is involve the team, listens, take counsel, but in the end, "trust your gut". Sleep on it. Check that is feels right at a gut level. Back yourself in. Explain your decision to the team and then act with confidence.
Finally, If you are generally one to persist long after ordinary folks give up, consider pivoting before you are ready. If you readily change your mind based on the latest influence, consider staying the course.
8. Be dispassionate without losing your passion
Passion is essential to purpose and drive and the great founders have this quality "in spades". Great founders have an energy that will get their teams to walk over hot coals. Like most things in life, this can be a double-edged sword and when when things get tough, passion becomes frustration, stress, dysfunction, conflict, aggression and other forms of bad behavior.
One of the great passionate female founders I know, went through a harrowing period when one of her senior team members became political and difficult. Her passion caused her to become preoccupied with the issue and unable to keep it in perspective. She was advised by one of her McKinsey mentors to "be dispassionate without losing her passion". The phrase has stuck with me ever since.
Again, easy to say, but harder to do - when things are getting difficult remind yourself that "this is business" and the best founders can "be dispassionate without losing their passion".
9. Be unreasonable about driving performance, but do it with a smile on your face
I think this might be perhaps the most important founder best practice. There are thousands of great ideas out there, but what distinguishes the companies that succeed from those that fail, is the ability to execute voraciously and at startup speed.
Start-ups are unreasonable places. What we attempt to do is ambitious and some would say foolhardy. Successful founders often reflect that if they had known all the risks and obstacles at the outset they probably would not have started.
It is also pretty much impossible to do it all on your own. It requires an aligned, focused and productive team.
Drive the team everyday to action. Those things that take a month can take a week. Those that take a week can take a day. Don't wait for more research before you contact a customer. Pick up the phone. Now. Give the team clear direction and then be unreasonable about focus and calls to action. Don't chop and change direction as this destroys productivity. Don't accept mediocrity, but don't be a tyrant. Remind people that we can do better, but don't lay blame.
Now the secret sauce, is to do all of the above with enthusiasm, good humor, perhaps a joke or a laugh. Stand back and watch your team tear it up and have a good time while doing it.
I have had a number of "unreasonable" co-founders and mentors. Some are unreasonable with a smile and others were just unreasonable. I have seen both models work. Only one model guarantees more fun than the other.
10. Be a multiplier not a detractor
Liz Wiseman's brilliant book Multipliers is a must read for founders leading a start-up team. Often founders are under considerable pressure to make quick progress and this can lead to being controlling and directive. When a founder puts a small box around their team, they can leave them feeling constrained and not able to freely deliver their full potential (detractors). Great founders set a bold vision and audacious milestones that stretch their team members, unlocking performance that is beyond what they themselves think they are capable of (multipliers).
The sobering news is, as founders and leaders we are neither multipliers or detractors. The two concepts are part of a continuum and most leaders demonstrate some multiplier and some detractor characteristics.
When you look at your team, do you quietly think to yourself you are the smartest person in the room. If so, you might inadvertently not be following best practice number 3 (hire better) and it's likely that at some level you feel you need to be in control.
Ask yourself, what is this team members superpower and how could I set them a target that gets more out of their performance than they themselves thought they were capable of? Remember, ask don't tell.