The Fork In The Road

Where Founders Should Go After They’re Done Founding

It is rare to find a founder who is visionary and can grow a $1+ Billion organization. For every Jeff Bezos, there are 100s of founders who create very good concepts and then allow their companies to miss their true potential because they don’t know how to move beyond being the founder, CEO and company rudder.

The best founders know whether they are the right leader for the next stage, when it’s time to have someone replace them, or even leave the organization. The second best version is the founder who has trusted advisors who can provide this outside guidance.

For the founder who chooses to leave the company they helped create, their next step depends in part on what brought them to become founders in the first place. For some people, it is as if they have no choice but to create over and over again. For others, founding their first company was based on happenstance. For example, Engine Yard received the funding that put it on the path it’s on today because VCs noticed other companies were using it to build their technology. Wildfire Interactive was created after its founders experienced the painful process of trying to create promotions for Facebook.

Three options are available outside the initial company:

1)   Move into a technical or business role in a related business sector. Yahoo and Google have been known to hire former founders. A large technology company could be a good fit because the founder’s technical skills married with the personality characteristics required to develop and launch a company (determination, organization and confidence) makes these people more likely than their peers to prove themselves and move up quickly.

2)   If the VC who funded the initial company sees potential in the founder’s skills and creativity, an entrepreneur in residence position may be offered. This gives the entrepreneur the opportunity to assist other startup companies by providing insight and subject matter expertise. This also gives the entrepreneur in residence a needed break in which they can cultivate their next idea.

3)   An often-overlooked option is moving into academia. It’s unfortunate that this isn’t considered more. Just as some founders have an abundance of determination, organizational skills and confidence, others are much more interested in the process of creating and perfecting new things. These people will be more focused on details than the big picture. The same characteristic that makes it hard for them to decide what is the best business approach and stick with it makes these people good academics because they want to examine and reexamine every possibility multiple times.

For founders for whom it is not appropriate to remain in any role at their company, what comes next could be uncertain and an ego blow. Two important things to keep in mind: (1) whether you are currently in charge or not, the prosperity of the company you founded is bigger than you and it comes first; second, you can find success beyond one company.

 

What’s Coming and What Could Hold Us Back

Last week, I attended Dreamforce, Salesforce’s conference. Like the now defunct TechCrunch 50, it is a great place to see a lot of very different companies; in this case with a thin layer of similarity. It is the common ground of Salesforce integration that makes the companies so ripe for assessment and comparison. 

I met some old friends, saw the next version of some familiar technology and had a few people lie to my face.

I’m not necessarily in the market for new vendors/technology, so for me it is a perfect time to skim the surface of new companies. There are definitely some interesting things happening.

Without a doubt, social has become more integrated into the mainstream consumer experience over the last 18 months and will continue to expand into the enterprise in creative ways. Having said this, the next significant wave seems to be new ways to leverage business intelligence and predictive analytics. This makes sense given both the technology evolution and the desire for companies to prepare for whichever direction the economy/business may go.

So getting back to the people lying to my face. Enterprise sales and marketing have often sold ahead of what is actually generally available. I get this. If you assume it will take at least two to three months to roll out new software that could push the software into the next release. With the increasing adoption of SaaS and PaaS, this is becoming less likely, but in many cases could still be a legitimate assumption. For startup companies with limited resources, there is also the development plan that builds what customers want, also called customer-sponsored development. If customers understand the timeframe of receiving newly-developed capabilities, this also seems a legitimate approach. I am not labeling either version of this selling technique as a bold-faced lie. 

Unfortunately, there are companies so eager to close deals, they promise features and capabilities that are several releases into the future. If prospective customers don’t know this timing, this can only be seen as intentionally misleading, and if the company in question is promising what it does not intend to deliver, it can be defined as fraud. This has happened throughout the history of business, but combatting it is more important than ever. 

Although the percentage of companies guilty of this might be small, their reach is large. Dreamforce is a good illustration of the reach of SaaS companies. Obviously, main companies around the world use Salesforce. Now these companies are starting to, or are about to start making significant investments with other SaaS vendors. If what they purchase does not meet baseline expectations, it damages the reputation of that vendor, the cloud computing sector and potentially the bottom line of the business that purchased it. “Bad seed” companies can only survive for so long, but it’s the potential for them to drag the rest of us down a peg or two on their way down that will hurt.

 I love startup companies and I love optimism. All I need now is a BS meter for the next conference. 

 

Employees Are In The Driver Seat Now

It seems everyone I know professionally is currently recruiting for a position or trying to help a friend who is recruiting. In the Bay Area, you can’t throw a stick without hitting at least eight openings. On the 101 corridor, we are also back to the flush times of billboards advertising that companies are hiring.

In short, the tech employee is king again, though not everyone realizes it yet.

Companies looking to hire today must balance finding the best candidate because they may not be able to find additional candidates later and not take too long to decide or their preferred candidate will be already hired somewhere else.

Even if a company isn’t looking to expand operations, they are still affected by the upswing in hiring. An unsatisfied employee is a short-term employee. This doesn’t even necessarily mean they’re unhappy, just not happy enough. Instead of asking “why would my employee leave?” they need to ask “what incentive have I given my employee to stay?” These could be two different answers. Beyond pay and potential equity, there is the position itself. Because what’s important to employees varies and frankly some people are too dense to notice, here is a quick list of possible factors driving your employee retention or employee churn:

Pay – do you know what the market rate currently is?

Stock options/equity –Do your employees have skin in the game? Most tech companies have at least some type of stock option program, but there are a few founders that don’t understand the value.

Respect – no one should ever be disrespected. Period. If you or your company doesn’t respect its employees, the exodus is already in the works.

Career Path Positive – if you hire a person to do what they’ve done over and over again before and there’s no growth potential, look for a person who wants a job, not a career path. This doesn’t mean they’re a bad employee. They could be very good at this particular role and very happy in it.

When I hire or take over a department, I ask each employee what his/her career goal is. It doesn’t mean their position is going to change to only accommodate their desires, but I do try to incorporate some responsibilities that will help them achieve their overall goal. For example, in one department I inherited, the database marketing manager said she would like to eventually be in product marketing and wanted to create content. We added creating the customer newsletter to her responsibilities. Interestingly, the first person to comment on her newly-displayed writing skills was the vice president of product marketing.

Lifestyle Fit – Speaking from personal experience, I work a lot. A whole lot. I interact with Europe on a regular basis, and in previous roles have regularly interacted with Europe and Asia. I usually start reading email at 5:30am and a few times a week have conference calls at that time. I also work until I go to bed. I’m perfectly happy with this arrangement because, frankly, I have trouble shutting my brain off. However, if I ever worked for someone who said I had to work 15 hours a day, I would be very unhappy. Other people have scheduling priorities they must meet. It’s a tricky legal line to walk, but finding and keeping employees that fit your companies priorities will help retain employees who are critical to growing your business.

The Perks – in some ways, the message the perk sends is more important than the perk. I was at Mashery during a technical rollout. The guys in engineering worked until 2-3am. Two days later, the company brought in a masseuse and sent an email for everyone to sign up for chair massages. It was a very classy thing to do. I’m sure it didn’t cost much, but the message it sent was “we know you worked hard and we value it.”

Behind an economic stall, the biggest threat to the tech sector’s growth is a shortage of qualified employees. We are already seeing it in Silicon Valley. In the New York area, there are companies trying to convince potential employees to work for equity only with promises that they will be rich in the future. This will only last for so long. Employees may not always need to feel loved, but they won’t be with you long-term if they don’t feel respected. Giving them a reason to stay should be the cornerstone of your employment policy.