Factories of Make-believe

Ben Horowitz recently published his book “The Hard Things, about Hard Things”. It’s no exaggeration to say I love it. As a third time founder having experienced many of the challenges first hand I wish that book was written 15 years ago when I tried to build my first company (although I’m not sure, I would have read it back then. Learning seems to be easier in hindsight).  One of the great things about Ben’s book is that it focuses on sharing the hard lessons, when it’s not all smooth sailing.

Inspired by this, I thought I would add some of the lessons from Tradeshift. Just like Opsware, Tradeshift is a company in wartime as are most B2B companies trying to break into highly entrenched software markets controlled by incumbents with massive cash moats. At Tradeshift we have been fairly lucky in our ability to attract high-level investors who believe in our vision and who want to back us for the long-term, but that doesn’t mean every single day isn’t a fight.

The topic I want to focus on is leadership. Three years ago at a dinner with Ben White and Stephen Chandler from Notion Capital I asked them what had been the hardest part of scaling their company, Message Labs, from startup to a 750m USD exit. They both replied without blinking – scaling leadership above a 100 people.

Curious, and still full of youthful arrogance, I asked why. “Isn’t it just a matter of hiring the right people?”

Stephen patiently explained to me it was not as simple as that. You need to build a culture, training and leaders and make sure communication is aligned all the way through the company. You can’t rely on your own ability as a founder to just stand on a soapbox and be heard and understood.

Talking to other CEO’s and co-founders it’s clear to me that lack of clear leadership across the organization is what kills most C or later stage companies. Having earlier talked about how we handled culture and leadership in the earlier stages of Tradeshift’s history
,
I thought I would share how we organize leadership at Tradeshift today and some my own beliefs in what makes for efficient leaders.

Two weeks ago we had a Global Leader Camp, which is our own new talent and leadership development program at Tradeshift. We invited 27 current managers or people who were seen as leaders in the company from their actions or roles, making sure to both include current leaders and the talent for the next generation of leaders.

The goal was to make this a generation of leaders that would help shape Tradeshift through the next three years and lead from the frontline.  We focused on leadership and not so much management (leadership is the job of setting direction and inspiring others, management is the process of getting shit done) as we already have a very strong results culture.  We wanted to make everyone capable leaders of product, people and vision in the diverse and challenging environment that is Tradeshift.

One of the reasons we started this program was to get away from relying solely on the founder signal – where leadership basically was me or my co-founders getting up on that soap-box and having everyone listen and be inspired. We needed leadership on the ground. We were seeing too many people feeling disconnected from the vision of Tradeshift and what it meant for them, too much cynicism (building highly complex B2B products in wartime will do that to you) and people who loved Tradeshift, but were starting to burn-out after three years of running at max speed. You can’t just wish these issues away or do an even more powerful speech to have them disappear. As a founder or CEO you need to go to the root cause and even more scarily hand over some responsibility to others in maintaining and building the vision.

The below presentation is what I used as a starting point, detailing my own leadership beliefs as a way to start discussion about what we all considered leadership.

 

As a leader you have to realize that the only real tool you have is yourself, your own experiences, beliefs and ability to execute. It’s an extremely exposed position because any failure point to flaws in what makes you who you are. It’s also extremely rewarding to succeed as you are growing personally.

So the first disclaimer is that what works for me, might not work for you and that’s ok – as long as you do believe something and use that in the way you lead others. I encourage everyone to find out what works for him or her.

So adding a little bit of context on my core beliefs:

Start-ups are factories of make believe
Everyone remember that scene from Peter Pan where he tells you that you can fly if you just believe it? Stepping out of that window and trusting it is a radical move is the same thing as working for a startup. A startup is only suspended by the collective belief of the people who work to build it, its investors and its customers.

That also means you always must to walk that fine line between hope and cheerleading and being realistic and critical. You can challenge direction of where you are flying, but never if it’s possible to fly (unless you want to crash badly). At Tradeshift we typically say it’s great to be critical, but sucks to be cynical (permanently not believing in anything).

Flying requires bold and visionary ambition
This next step is almost as important as believing you can fly. Make sure you have a bold and visionary ambition. People generally won’t risk their life (or time) on something that is not meaningful. Very few people will take that step into emptiness to make 1% better toilet paper. This goes for both your company and your team. Make sure the goals you set and the team is connected to the vision of the company and not just “make x 1% better”.

Vision without execution is just hallucination
It feels really nice, but doesn’t do shit. When you are challenging people to trust you, to take the leap into emptiness, it’s really easy to get called a liar if you fail. The only difference between being a liar or a visionary is execution. Once you have taken the jump, work your butt off to make sure that the vision becomes reality. You need to cross that chasm of disbelief and the only way to do it is by proving it through execution.

Lead from the front
In the second year of Tradeshift I was sitting together with a new colleague getting our board presentation ready for the next day at 1am. I felt really sorry that he had to spend his night like this and I told him that I was really sorry. He looked at me and said, “That’s no problem, and the difference between tonight and my old job is that my CEO would never had been sitting next to me.”

There are plenty of long nights, weeks, months, years in any start-up – remember that everyone is watching you and if you are the first to shovel shit – they will follow. 

Fight for your vision, always
Quitting is for pussies. This is Ben Horowitz advice for CEO’s but I think it’s valid advice for any leader pursuing an idea.  Any new idea that matters meets massive resistance so get ready to fight for it. The difference between a leader and everyone else is often how much they are willing to fight for their ideas.

Challenge conventional wisdom
Ben Horowitz talks about selection bias, which is what happens when decisions are close to 50/50 and leaders go with the group because they are afraid of being alone when they fail (better to fail as a team). This is not just something that matters between a CEO and his board, but all the way down in an organization. Leaders are leaders because they dare taking controversial decisions and stick to them, even when they go against the grain of the group. 

Be the first to change direction when needed
You have to fight for your vision and challenge the conventional wisdom. But you also need to be the first to change direction if your decision was wrong. Don’t cling to it because you are afraid of losing face. The ability to let go and move on is one of the most important skills of a leader.

Radical trust
If somebody fucks up the biggest thing you can do is help him or her, rather than blaming or yelling. Trust me, they will remember that a 100x more than you being angry. In Tradeshift we practice radical trust in the people we hire and give them a lot of freedom and when they screw up we don’t take it away. We encourage them to move on and learn.

Vulnerability is strength, not a weakness
I’m an insecure overachiever and I can be afraid that others will think that the incredibly skilled and experienced leaders working for me are better than me. But I’m not afraid of showing that vulnerability. Through the years I have learned it’s better to be real and flawed as a leader rather than trying to project a picture of constant perfection. Everyone will have an easier time relating to you and they will not abandon you the moment you fail (and you will fail many times).

These are the beliefs that have helped me navigate as a leader and what I shared with the next generation of leaders in Tradeshift. Together with an intense program of strength based leadership training, coaching, cultural leadership and working with real life leadership challenges I’m sure we have generated a strong generation of leaders in Tradeshift who will help lead from the trenches for the next three years.