The Great CEO Within: The Tactical Guide to Company Building [Part-1]

This week’s insights come from the book The Great CEO Within: The Tactical Guide to Company Building. This is Part-1.

Total Reading Time: 30 Minutes

Reading Only Highlights: 5 minutes

20 INSIGHTS

The internet was going nuts, so in 1999 I chose to start my own company called Totality, which maintained private clouds for customers. My co-founders and I raised $130 million and hired 280 people within the first eighteen months. We eventually sold the company to MCI/Verizon, and it is now called Verizon Business.

While I made enough money that I never needed to work again, I realized that Totality was an operational mess.

I started coaching young tech CEOs to see if I could apply the answers in the books to the real world. Amazingly, the solutions worked beautifully.

I repeatedly see the same core issues in nearly every company

There are many reasons to create a company, but only one good one: to deeply understand real customers (living humans!) and their problem, and then solve that problem.

Product-market fit (PMF) is the milestone of having created a product that customers are finding so much value in that they are willing to both buy it (after their test phase) and recommend it.

PMF has been achieved include revenue, renewal rates, and Net Promoter Score.

There is no magic metric, but for a B2B company, it’s hard to imagine PMF at anything less than $1 million in annual recurring revenue.

The reality is that your first product should always be viewed as a prototype. You are using it to gather customer feedback only. And that feedback will inevitably vastly alter what your product is, usually to the point of it becoming a completely different product.

Startups don’t usually fail because they grow too late. They usually fail because they grow too early (i.e., before they have achieved product-market fit).

WHAT IS THE ROLE OF A CEO?
Great companies are made up of great individual performers who work well together as a team. As CEO, you are both the architect of the culture and the central hub in the wheel of information flow that enables the team to function effectively.

Your efficiency determines the efficiency of the team. Therefore, the first thing to optimize is yourself.

HOW TO GET THINGS DONE?
From Allen’s Getting Things Done (GTD) system:

Daily: Next Actions, Waiting For, and Goals. 

Weekly: Someday/Maybe, Agenda, and Projects (Projects are a combination of actions to be done serially)

I also recommend that you put the above reviews in your calendar. Daily reviews are typically five minutes, and weekly reviews are about fifteen minutes.

I recommend checking your inbox only twice a day (once in the morning, once in the afternoon).

If it takes more than two minutes, write down a next action for it (according to the steps in chapter 3), and then place the email in its correct location (Next Actions, Waiting For, Someday/Maybe, or Reference).

DO THE MOST IMPORTANT STUFF FIRST IN THE DAY
Greg McKeown, who wrote a phenomenal book on productivity called Essentialism: The Disciplined Pursuit of Less, boils this down to one key concept: Schedule two hours each day (i.e., put an event in your calendar) to work on your top goal only. And do this every single workday. Period.

Research shows that we have more decision-making and thought-processing energy early in the day when our brain is freshly rested. Take advantage of this high-quality brain functioning by doing the important stuff first.

APPRECIATE OTHERS AND BE GRATEFUL FOR WHAT YOU HAVE
It turns out that we perform our best when we are having fun and feeling good about ourselves.

Start cheering positively for the team that is losing, with specific compliments to specific kids: “Great pass, Jimmy.” “Way to be in position, George.” When a kid takes a shot but misses: “Good idea, Joey, it was the right thing to do.” Within five to ten minutes, the tide of the game will start to change toward the team that you are giving specific compliments to. (I have done this many times. And it has worked every time!)

So how do we take advantage of this knowledge to generate a good feeling in ourselves? We ask the right question: “What is good about this situation?” “What is good about this team member?” “What is good about my company?” “What is good about my life?” Or we simply fill in the overarching statement “I am grateful for ________.” Be as specific as possible: names of people, actions they did, and so on.

I do it first thing every morning. To remember to do it, create a trigger for yourself.

When you see it each morning, you say the phrase “I am grateful for ________” five times with a different ending each time.

The key is to be as specific as possible when you declare what you are grateful for.

Bring an attitude of joy, as opposed to desperation.

Appreciation is simply an outward extension of gratitude. In gratitude, you speak to yourself. In appreciation, you speak to others. The content is the same.

HOW TO BECOME INSANELY CONNECTED?
In a First Round Review article titled “How to Become Insanely Well-Connected,” Chris Fralic of First Round Capital says that he reserves one hour each week for follow-ups and outreach, most of which include appreciations. I recommend that you do the same.

Just as with gratitude, giving appreciation should be as specific as possible, as in this example: “John, I appreciate you for writing down our sales process and adding it to the wiki. Thank you.”

And when receiving appreciation, there is only one correct response: “Thank you.” Do not feign humility by downplaying the act with statements like “It was nothing, anyone could have done it.”

TO BE TRUSTED, YOU NEED TO BE CLOSE
Sales is critical to gaining trust. Trust dissipation is correlated with geographical distance. Humans are hardwired to trust their close friends the most, their immediate peers next, the people they meet in person after that, and the people they meet via videoconference last. By the time they’re meeting people over an email exchange, trust is a real issue to making a sale.

The amount of trust you need to make a sale scales with the price.

Enter a competent sales rep. They will smooth the way during the sales process. They will find the key decision maker, make sure that person is listened to, and build trust. They will make promises about the functions of your product, and your customer will always have someone to yell at if things go south.

If your company is like 99 percent of SaaS businesses, you’ll find that self-service doesn’t work. If we had relied on it, our revenue would have flattened and never recovered. As soon as we added a sales team, our revenue rocketed.

Sales might not be the most efficient thing in the world, but it works. And it will continue to work as long as humans are the ones doing the buying.

The good news is that sales is incredibly tried and tested; there are many books, tools, and successful examples you can use to pave the way. Don’t just respect sales, embrace it.

In my experience, the best person for this role has high EQ, medium technical understanding, and a fantastic work ethic.

You need dedicated support agents who will hand-hold your customers through the onboarding process, answer questions along the way, and be on hand for any technical issues that crop up.

COMPANY BUILDING IS ALL ABOUT HIRING
This will only work if you embrace and learn to love company building. Finding joy in career development, making that key hire, and putting structures in place so that people love their jobs—these are all things that you must learn to revel in and love. And this will take time, but if your heart’s in it, it’s all achievable. And if your heart’s not in it, think about hiring another CEO.

YOU ARE AIMING FOR $10 - $100 MILLION IN YOUR PERSONAL BANK
The general rule of thumb is that you should have no more than 25 percent of your net worth in “alternative assets” (illiquid assets).

Because your company’s equity is likely the majority of your net worth, your net worth is likely more than 95 percent alternative assets.

Most people at $10 million of liquid net worth have the feeling of safety. They breathe a sigh of relief. They are no longer at risk. However, once they sit with that number for a while (and start to raise a family), their mind begins to play through disaster scenarios of how that net worth could disappear completely. Once their liquid net worth grows past $100 million, the catastrophe scenarios dry up and a sense of abundance follows. This is what you are driving for.

As soon as your company’s equity begins to have significant value, start to sell secondary shares until you have sold $10–100 million.

HOW JEFF BEZOS MAKES DECISIONS
You create buy-in when you make people feel that they are part of the decision and that their input contributes to the final outcome. The more influence they feel they have on the outcome, the more they’ll be invested in the final result.

Jeff Bezos, founder and CEO of Amazon, requires that anyone who wants to bring up an issue or proposal must write up the item fully before the decision meeting (with someone else writing up a counterproposal if necessary). The meeting is then spent reading the write-ups. Once the decision-making team has read them all, a decision is made. If consensus is not reached, the pre-appointed decision maker makes the call. If there are still open questions, then the decision maker assigns one or more people to research and, of course, write the needed follow-up. At the end of the next meeting, the decision is made.

Someone may say, “I don’t know the answer.” It doesn’t matter. They should take a guess. Even if they have only 10 percent confidence that their answer is a good one. And they should phrase the proposed solution in very bold, directive terms (e.g., “Do this…”). This may seem aggressive but creates a flag in the sand that generates a much more productive discussion and a quicker decision time, which ultimately is more important than appearing to be humble.

LET THE JUNIORS GO FIRST
The most effective way to do this is to have people write down either their vote or their thoughts before you share your perspective.

Peter Reinhardt, CEO and co-founder of Segment, says, “Apparently at Amazon they require the most junior people to speak and ask questions first. [This] also becomes a great way to show off junior talent, give more senior folks a chance to observe and give feedback, etc.”

IF THE TEAM IS TOO BIG USE THE RAPID SYSTEM
RAPID Decision-Making - Emilie Choi, COO at Coinbase, introduced me to a tool developed by Bain & Company to make fully informed decisions with buy-in when a team has become too large to easily get all the needed voices in one room, or consensus cannot be reached within five minutes of discussion. It is called RAPID.

Here are the steps to this process: 
1. Someone identifies an issue or decision that needs to be made. They prepare a write-up with the following details: 

a. The issue 

b. The proposed solution 

c. The list of people needed to make and implement the decision: 

i. R (Recommend): The one who first proposed the issue and solution 

ii. A (Agree): Those people whose input must be incorporated in the decision This is usually the legal team, which ensures that no one is breaking the law!

iii. P (Perform): Those people who will have to enact any decision and therefore should be heard 

iv. I (Input): Senior people within the company whose departments and processes will be affected by the decision and therefore should be heard 

v. D (Decide): The one who will make the decision

2. The R then reaches out to all the As, Ps, and Is to solicit their input. Once their input is received, the document is ready to be reviewed by the D. The R schedules a decision meeting and invites the D, As, Is, and Ps. a. If the issue is urgent, the R schedules this decision meeting as soon as it needs to be. b. If the issue is not urgent, the R can use the next team meeting as the decision meeting. (This is much more efficient and should be done whenever the issue is not urgent.)

3. At the decision meeting, the D reads through the document. If the D has any questions, the D asks them. If the D’s questions can be fully answered in five minutes, the D decides. If the questions cannot be answered in five minutes, the D asks for another round of written responses on the document to answer the D’s questions. At the next team meeting, the D reviews these responses and decides.

4. Once the D decides, the D writes up the decision (or asks the R to do so) along with all the next actions (each with a DRI (Directly Responsible Individual) and due date). The D then publishes this decision to the company.

Each time there is a decision to be made, rate it as irreversible or reversible. If it’s reversible, allow one of your reports to be the D (the decision maker in the RAPID process).

IMPECCABLE AGREEMENTS GET DONE
Impeccable agreements are 

(a) precisely defined and 

(b) fully agreed to (which almost always means written) by all relevant people.

Precisely defined means that a successful follow-through of the agreement can be judged by an objective third party. 

For example, “expand to Europe” is not precisely defined. An impeccable agreement would be as follows: 

Decision: Expand to Europe 

Actions: 

The agreement is now precisely defined, with specific actions, DRIs (directly responsible individuals), and due dates.

Verbal agreements are not impeccable. We all understand words a little bit differently. To make this agreement impeccable, one of the participants writes down the plan and the other adds their initials and a +1 to note their agreement.

IF AGREEMENTS ARE BROKEN, YOU NEED TO FIRE

There must be consequences for breaking agreements. Implementing these consequences is a two-part process. The first time someone doesn’t meet an agreement, you point it out to them immediately. If they apologize, you respond that apologies are not needed, and all that is required is that they only make agreements that they can commit to and that they meet all the agreements they make, whether by adherence or by prompt communication that they need to alter the agreement.

If the person continues to fail at these, there is only one consequence that makes sense: they can no longer be part of the company.

Instead of asking “Who’s to blame?” conscious leaders ask, “What can we learn and how can we grow from this?”

CONFLICTS ARISE BECAUSE OF NOT FEELING HEARD SO MIRROR BACK THE COMMENTS TO MAKE THEM FEEL HEARD
Interpersonal conflict arises often. And almost always it is due to people (a) not fully sharing their feelings and thoughts and (b) not feeling heard.

When people feel distrust or dislike for each other, it is usually because they don’t feel heard. For me to respect you, I don’t need for you to agree with me. But I do need for you to hear what I have to say.

When I tell you my perspective (which I, of course, believe to be right) and you aren’t immediately convinced, then I assume that you didn’t really hear or understand what I said. If you start sharing your perspective, I will be uncompelled and unwilling to truly listen, because you haven’t been willing to consider mine. And the cycle spirals downward to distrust and dislike.

There is a simple fix. I only need to prove to you that I have “heard” you. And to do that, I only need to repeat back what you’ve said in summary form (by saying, “I think I heard you say…”) until you say, “That’s right!” Then you will feel heard. You will now be open to hearing what I have to say.

Here is an experiment that proves this principle. The next time you encounter a person who is repeating themselves, stop them and ask if you can state back what they’ve already said. They will say yes. You then summarize what they’ve said and ask if you got it right. If they say yes again, then watch to see if they continue to repeat themselves. They will not.

THERE ARE 5 FEELINGS
Anger (present) b. Fear (future) c. Sadness (past) d. Joy (present and past) e. Excitement (future) 2. In every major relationship that we have, we have feelings of anger, fear, sadness, joy, and excitement.

In my experience, when two people who previously felt hatred toward each other have shared their thoughts (and been heard) around all five of the basic emotions they feel toward the other, they create an understanding and respect for each other, even if they still do not agree with the other’s positions.

I THINK I HEARD YOU SAY… THE SECRET TO UNDERSTANDING CUSTOMER PAIN
Remember that you are not making a product—you are solving a customer problem. It is therefore critical that you continually live that customer problem. Only then can you solve it well. To live the customer problem, you must sit with the customer, ask them about their life, and observe their daily routine, on a regular and constant basis.

If you actively listen to your customers’ pain, they will trust you to decide which solution will best erase that pain. Use the phrase “I think I heard you say…” often. This will make the customer feel heard.

Build trust with your customers quickly by actively listening to their pain. Really imagine what it’s like to have their needs and frustrations. Voice what you perceive back to the customer (“It seems that you feel anger when…”). When your customer says, “That’s right!” trust will be established. You want this to be a group habit, so teach this methodology to everyone in your company, from sales to engineering.

Customers know exactly what pain they are feeling, and they know that they want relief. But they don’t know how feasible each solution is. You do.

RATE THE CUSTOMERS PAIN
After identifying all customer pain points, for each, rate the amount of pain that the customer feels and the degree of difficulty for you to solve it.

Then work first on the issues with the highest customer pain that are the easiest for you to solve.