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Leadership

Leadership

Stop focusing on your startup valuation!

June 17, 2020

It never ceases to amaze me how hung up entrepreneurs get on the valuation of their startup as they raise money. It came up in a coaching session again yesterday.

In the abstract yes, valuation matters. It tells you how much of your company you are going to sell in order to raise money. It sets a baseline for you which you will (hopefully) exceed on your next raise. It’s a validation that your work has value.

But it is NOT a measure of pride, or ego, or size.

Your valuation, like a stock price, is a reflection of the perceived value of your company at the moment in time when you are raising money. There will be times when the startup market is hot and you can command more, there will be times when it has cooled because of an economic downturn, or a global pandemic, and your valuation will be lower. Or the market your idea is in is hot, or not.

What matters more than valuation is: Are you getting the right amount of money to give your idea life? Think about the next one, or two, major milestones you need to achieve to prove your idea will work and is scalable. Then figure out how much money you need to raise to get 90-120 days past the critical proof point. Add to that number to allow for the unexpected and that is how much you must raise. Once you have that you are looking for an investing partner who shares you vision and will be with you on the journey.

The other consideration is what value opportunity are you creating for your employees? The higher the valuation on funding the higher their option strike price and so the less money they will make when you finally reach liquidity. Now, if your company is a rocket ship, the difference between an option price of 50 cents or a dollar doesn’t matter, but at a later stage the difference can matter and when there is a preference stack on your company getting greedy can wipe out your employees’ opportunity. We’ve seen this happen with unicorns who achieved huge valuations only to have them come down dramatically on sale or IPO. So don’t lose sight of the need to make your employees money as well as yourself.

I have written before that all venture capital firms are not equal. Some are good, some are awful. The same applies to angels btw. I have seen short-sighted angels do more damage to young companies and entrepreneurs than I would have thought possible by focusing on their cut and not the long term health of the company.

It is more important to a) raise the money you need and b) find a long term investing partner than finding the best possible valuation. If you own 40% of your company but it is worth $20M at the end you have short changed yourself and the impact your idea can have if, instead, you own 15% and it is worth $1B.

Photo: Stone canon balls Jordan © 2017 Penny Herscher

Leadership

What impression are you leaving once you leave?

January 3, 2019

It can be a strain to be aware of your actions 24/7 but as a leader it is critical. You leave an impression every time you interact with anyone, and if you are a busy person you may be leaving the impression in a few seconds.

Think about when you enter a meeting room, realize you are in the wrong room and leave. What did you say? Did you come across as simply having read the wrong room on your calendar, or as a disorganized ditz.

How about when you have just given a talk and there is a line of people waiting to talk with you, but you are tired? Do you take the time, despite your fatigue, to greet every person, listen to their question and thoughtfully answer, or do you say “sorry, have to get to my next thing” and leave?

Or you visit a site in China, or India, and you are horribly jet lagged but to the employees who you are meeting with your visit is a big deal. Do you let on that you are struggling with jet lag and whine a bit or sit up straight and force yourself to be charming and attentive to them?

Then there are the times you go out with sales people to celebrate a big win or mourn a loss. Do you relax and have a few too many drinks because you are with the lads, or do you keep a watch on your own imbibing so as to not make a mistake and say something you’ll regret.

There are thousands of such moments when you need to chose how to behave and, as a leader, I believe you always need to keep the impression you leave at the front of your mind. For you the encounter may be minor and forgetful but for the people you are meeting with – employees, customers, peers, shareholders – it may stick with them for years, especially if you let them down or disappoint them in some way.

The more people who work for you, the more important every small interaction is because your time gets sliced thinner and thinner. When you have more than 20,000 people working for you, which you may do one day, every moment leaves an impression as the CEOs of the big companies are very aware.

I’ve watched dear friends in powerful positions struggle with this. The stock takes a precipitous tumble on one day and it can be hard not to lash out and be negative to the people around you. The company misses its number and it can be hard for the head of sales not to get drunk with his boys. I’ve fought hard not to be negative when grossly over tired and had to lecture myself in the ladies room mirror to stay positive. We are all human and being self aware and conscious of the impression you are leaving with the people around you is serious work.

But if you want to be a leader it is critically important. You never know who is watching (particularly important if you are CEO of a public company). You never know what is really going on in the lives of the people you are working with and how much they may be needing you to lift them up that day. You cannot know how you may change their career choices with a few thoughtful moments.

So pay attention! I wish I had more than I did.

Photo: A pigeon hogging a Venetian water fountain © 2019 Penny Herscher

Leadership

Don’t argue in front of your customer!

December 7, 2018

We’ve all been there. You’re in a meeting with a prospect or customer and someone on your team says the wrong thing. You’re infuriated and your knee jerk reaction is to correct your teammate in front of the customer. Or get angry with your teammate. Not a good idea.

This can happen when you take a junior engineer into a meeting and she feels she has to tell the customer everything that’s wrong with the product. Or a senior executive who commits you to a schedule you know you can’t make. Or a loser sales person who can’t stop talking. Or a hungry, skilled sales person who is trying to pull a deal in earlier than you think makes sense. Or a tired customer support person who is down a cynical rat hole.

When these things happen, or the thousand other ways you can see the wrong thing being said in front of the customer it’s up to you to keep a cool head and manage through without getting angry or embarrassing your teammate in front of the customer. A customer is in the room with you to get as much out of you as he or she can to solve their problem. They don’t want to know about your problems. And they certainly don’t want you to air your relationship dirty laundry in front of them.

So how can you prevent or manage this?

First prepare. Hold a prep meeting and try to anticipate the issues and questions that may come up. Be as clear as you can what the pot holes could be and who is playing what role in the meeting.

Then, if your teammate is saying something you know is wrong, try to deflect by going on a tangent. Don’t say “John is wrong… we can’t commit to that”, instead ask a question of the customer to take the conversation in another direction.

If you are still on the wrong track let the issue go unless it is going to seriously damage your project or company’s future. There are not many issues discussed which can’t be changed with a follow up conversation. “I know John committed XYZ to you but when we got back to the office and did some more digging we realized XYZ is not the right answer (timing, service etc) for you.” Customers do that to vendors all the time!

And finally be sure to debrief with your team. Great coordination in front of the customer comes with practice, practice working together as a team. Learning who should speak on what issue, who has command of what topic. You won’t get it right the first time you work with your team, but over time you’ll build the muscle memory to navigate tough issues in front of the customer. But in the meantime, don’t disagree in front of her!

Photo: Tapestry in Sevilla, Spain © 2018 Penny Herscher

Leadership

Winning as a CEO takes courage – does your CEO have it?

April 24, 2018

It takes courage to be a great CEO and yet our world is populated with mediocre ones so how do you assess a company CEO before you chose to join his company, or whether you have the mettle to be one yourself?

The evidence is there if you know where to look. It’s not just about a CEO who can give a rallying speech (although it’s fun to watch a CEO like Marc Benioff do it). It’s not just about a brilliant technical founder CEO who can talk product and vision. Once the company is off the ground courage is needed for the big moves that set the future, and because they are big moves they are inherently risky.

Take a look at your company, or the company you are thinking of joining, and look for the signs of courage in the CEO. For example:

Buying a large company, spending a billion dollars or more takes real guts. It has to be for strategic reasons, product reasons, and make sense to the shareholder. But no matter how compelling the strategic and financial argument the CEO knows so many things can go wrong during or after the transaction and in the end it is the CEO who will take the blame if they do. The board will question (that’s their job) and weak boards won’t want to take the risk – it’s easier to do nothing. So they will look to the CEO for the final courage to make the move. I do, however, think M&A of small companies doesn’t take much courage. “Tuck-ins” as corp dev teams like to call them can be justified on financial terms and, unless you greatly over pay, don’t incur much risk. But the big ones take courage and conviction.

Changing  the business model – for example moving software to the cloud. The courageous CEO takes a stand and makes it happen. He tells the shareholders what he’s doing and how many quarters it is going to take and then he leads the organization to make the change happen fast. Transitioning a software business from a perpetual, on-premise licensing model to a subscription model in the cloud is really hard because it always causes the stock to drop in the near term (although it will recover and be stronger if you execute). There are always a thousand reasons why to wait – “customers are not asking, we’re not ready, our shareholders won’t tolerate it” – and it’s true that revenue drops and margins take a hit for 8-12 quarters. It takes courage to lead your employees and shareholders through the transition and to stay the course as your stock suffers – but in the end you have much more resilient revenue and higher multiples.

When an industry is going through a major transition does the CEO face it with courage and double down to get ahead of the change or stick her head in the sand? The automotive industry is facing its biggest challenge ever with the rapid adoption of electric vehicles, ride-sharing and with Level 4 autonomous driving only a few years away. Ten years from now we’ll look back and see which CEOs had the vision and courage to lead their auto companies into the new world and which didn’t, because some car companies will no longer exist. But in the short term pouring investment into new technologies to get and stay ahead of the rapid rate of change is a huge decision. At Faurecia (a $20B auto company where I am on the board) the employees are not confused. The CEO is direct with them about the need for tremendous change and he is showing significant courage investing and leading them through it.

Firing non-performing executives is another area that takes courage. When an executive is weak the employees know it. But so often CEOs are slow to act. There is an old adage that by the time you know you should fire someone you are probably already 6 months too late. So why then will a CEO know he has an executive that is not cutting it and yet wait? Because firing people is hard and carries the risk that you will not hire well – maybe you’ll make a mistake and hire someone who is no better? Or maybe you are just so busy you can’t face putting the time in to do the search for a replacement? Firing a B-player senior executive is risky but so necessary because their department/group/division will be populated with B players, not A players and so probably not as competitive or effective as they need to be.

And finally a more subtle one. The courageous CEO is accessible. He will answer emails directly from employees rather than hiding behind an admin. He’ll walk the halls and factory floor to really listen to what employees think. He won’t stay behind glass in mahogany row and limousines, he’ll make sure his customers and his managers can find him, talk to him, and most importantly bring him bad news without him shooting the messenger. It’s a subtle form of courage to truly listen, but it’s courage none the less.

Can you put yourself in your CEOs shoes? Do you see courage and the willingness to take risk to grow the company, to listen, to make the big moves? Take a good look and then make your own assessment of whether your CEO is going to win. And whether you want to be one yourself one day.

Photo: Florence © 2018 Penny Herscher

Equality, Leadership

It’s time for economic equality for women: WE2

January 4, 2018

Sometimes it’s just time. I am more deeply convinced now in 2018, than ever before, that the long-term path to a more sane, peaceful world is equality for women in society. The research is conclusive. Investing in girls and women transforms economies, and healthy, growing economies are more peaceful. But I am not a politician, I am not a Sociologist, I am a tech executive and so I need to practice what I know in order to do my part.

Women, and men, need to invest in women. Invest in education, opportunity, and advice. Put the time, focus and effort in to help women build businesses and careers that give them independence and equality so they can themselves invest in their society. And no more so than in the places where peace and hope and dignity are a daily challenge. Even in Israel, second only to Silicon Valley in startup funding, the statistics for women entrepreneurs are crushingly low.

I held a Salon at our home in the heart of Silicon Valley last Summer on Women Led Startups in Israel and Palestine (I choose different topics of interest to my  network of  SV women 3-4 times a year). The evening was a panel of four women in our garden: two entrepreneurs from Israel, one from Gaza and a Mercy Corps board member who has been focused on Palestine – followed by a discussion and Q&A. It was dramatic, inspiring and very thought provoking. The challenges of building a business as a woman in Silicon Valley have nothing on doing it in the Near East!

WE2 – Women for Economic Equality – was born from that evening. In a moment of passion I asked for volunteers to come with me to mentor women in Palestine and Israel and as a result we now have a delegation of Silicon Valley executive women visiting Tel Aviv, Gaza, Jerusalem and Ramallah in January.

It’s a mentoring delegation. We have a broad set of experiences between us as entrepreneurs, leaders, engineers, lawyers, recruiters and product designers and plenty of experiences, good and bad, to share. Together we believe women achieving economic equality is essential for sustainable peace. We’ll be meeting with female entrepreneurs, executives, VCs, board directors and business leaders, and supported by partners on the ground in each location. We’ll hold panels and small group mentoring sessions, one-on-one coaching and business plan reviews; we’ll share our career learnings and listen to the experiences and resource needs of the women we meet. And we’ll do it in the three, very different, regions of Israel, the West Bank and Gaza. We are not political, we just want to invest in women.

Hopefully this is the first of many to different parts of the world where women want to build economic independence (so ping me if you want to participate in the future). And if you want to follow us you’ll find updates on this blog, and on my social media.

Leadership

Five tough lessons on being a mentor

November 10, 2017 Leave a comment
Coaching and mentoring is increasingly popular, everyone wants one, everyone has one. This is somewhat a result of the explosion in the number of startups over the last ten years, but also because the word is out that getting a good mentor can really help you grow faster at any stage of your career. And women want to help women!

I have mentored on and off for the last 20 years but in the last 2 years since I stepped down as CEO I have focused almost entirely on women, especially new CEOs and entrepreneurs. And I have learned some hard lessons in this process – all of which are obvious, but all of which can be easily forgotten.

1. Not everyone who asks for your help is a good match

The chemistry has to work. The mentee has to truly want your advice, and you need to enjoy being with her. Trust your gut. If you find the interaction tough on the first meeting then it is unlikely to get better (a bit like dating). If you find the mentee talks more than they listen take a deep breath and assess whether you can be effective (unless that is the issue she is asking for help on). If you are irritated, or even bored, in the interaction ask yourself honestly can you be helpful.

2. Trust is essential

And the trust needs be to two-way. You must trust enough to be truly yourself and give the honest advice you believe in as constructive a way as you can, and vice versa. If you start to believe that either of you cannot, or is not, being open and honest then gently end the relationship.

3. Again, trust is essential

Growth is hard and takes introspection and vulnerability; it takes the mentee having the ability to admit when she has messed up, or to hear difficult feedback. Only by facing mistakes can you get to the bottom of why it happened and then talk through a change in knowledge or skills to be pursued. If you are mentoring someone who has answers for everything, or who cannot admit their challenges, then again, gently end the relationship. Likewise if you don’t feel emotionally safe in the relationship.

4. Be clear about motivation, especially yours

Because coaching becomes a labor of love it’s important to be clear about what is motivating you in the relationship. I get asked many times a week to be a mentor and I have learned, the hard way, to pay attention to what is driving me. It’s not about making money (because even if you charge for your time as a consultant or take stock options there are easier ways to make money). It might be about responding to a friend who has asked you to help someone they are vested in in some way. But in the end the most productive relationships develop because you care; you care that she grows and becomes successful. I recently started mentoring a future star who was willing to pay for basic workplace skills coaching in her first job but I feel so privileged that she is genuinely seeking my help that I signed up and said “no I won’t take your money”. Sometimes I do, if many hours are needed and the company will pay, sometimes I don’t.

5. Have integrity about your standards

I’m passionate about women achieving economic equality. So passionate I am leading a delegation of women into a tough part of the world next year to help female entrepreneurs. But I am realizing equality also means no short cuts for women. Women leaders need to be held to the same ethical and legal standards as men, no matter now much I may want to cut a female leader some slack when I see bad behavior. And I need to hold myself to the same standards. So sometimes the process hurts because I want so much for women to win, but not at the cost of my integrity.

All that said, mentoring and coaching can be incredibly rewarding, especially when I work with smart young women who are becoming amazing leaders and I get to participate helping them in some small way (ladies you know who you are!).

Photo: Snippet of Caravaggio’s Judith and Holofernes, Rome  © 2016 Penny Herscher

Leadership

5 reasons it’s critical to truly understand your P&L

July 20, 2017 Leave a comment
In the last month I have had the experience of three small business leaders talking to me about their P&L in moment-in-time terms. Something like this… for this quarter (or this year) we’ll make $X, we spend $Y less than I thought so we’re $Z ahead. Usually followed by why $X and $Z are so great, and how they’ll spend those extra dollars they are ahead, or why their company is successful as a result. Naive.

Unless you have a steady business that has been the same for a while, is not growing and is profitable the moment-in-time view of your business tells you very little. It might make you feel good that your bottom line is black and not red, or not as red as you thought it would be, but all you’re getting is the warm and fuzzies – no insight.

So, five reasons it’s critical you truly understand your P&L over time – to be able to answer what is your revenue, costs, profit/loss and collections every quarter (or month depending on the cadence of your business) for the last year and the coming 2 years?

1. Cash

Cash is Queen for a growing business of any size; it’s the fuel for growth and the security for longevity. So you need to see how cash flows every month for the foreseeable future. Unless you are selling products for cash in the local market, every sale comes with a delay in collection. Sometimes it’s when the credit card vendor pays you for your product, sometimes it’s 90 days later when your customer’s AP department pays you, but there is typically a delay. But you are paying your people anyway, and maybe opening up new offices, hiring etc ahead of being paid for your sales.

This means the collections line item in your P&L is critically interesting. What cash are you collecting every month, and so what is your ending cash every month after your expenses? You need to have this carefully modeled over the next 18-24 months, and intimately understand it so that as your business fluctuates and changes you know what it will do to cash flow. Combine this with a need to always have at least 6 months of payroll in the bank and this will tell you how much risk you can afford to take with your business at any moment in time.

I’ve seen businesses where the CEO is telling him/herself how great they are doing because of all kinds of positive indicators but the cash collections line is not changing over time, it’s not growing. You can’t hide from cash flow and so it’s a great indicator of the true underlying health of the business. Are the dogs eating the dog food and, more importantly, are they paying for it?

2. Measuring your progress

If your business is immature (less than 10 years old) then almost no matter what business plan you build for the next 24 months it will not be what you actually do. Something will change, you’ll do better, or worse, or differently than you thought. But having a 2 year outlook and then measuring yourself against it is how you’ll learn the nuances of the business and learn how to predict and measure the changes.

Going through the discipline of putting an 8 quarter plan together together to present to your stakeholders and your management team forces you to think through what assumptions you are making about your business. Don’t tell me you don’t know enough to do this yet – if you take someone else’s money, or even hire other people to work for you, then you are responsible, and that means you need to put your assumptions down on paper and fold them into a P&L model so you can measure your progress against your assumptions and course correct accordingly. You can’t correct your course if you’re not on one.

And don’t fall into the trap of comparing your business to last year’s business at the same time. While an interesting statistic it tells you nothing except whether you are growing. It does not tell you how you are doing against your plan and so how your top line and expenses are flowing into cash. See #1.

3. Learning financial management

No-one comes out of the womb knowing how to manage a P&L. Most students graduate college without ever learning how to read a P&L and a balance sheet (a crime I think) so no one expects you to just know it. If you are not a trained financial professional, but you want to lead a business team or be a CEO then you need to learn it. Step 1 take a class. Step 2 learn on your own P&L. Do the spreadsheets yourself until you understand the relationships between revenue and collections, costs and margin.

Yes you’ll need a CPA to do your books, but when it comes to forecasting the next 2 years of your business there is no reason you should not be able to build a simple model yourself. I despair of entrepreneurs who hand the financial modeling off to someone else, and never really grasp the financial dynamics and dependencies of their business.

4. Valuing your business

As I mentioned up front, unless your business is mature and not growing then how it is doing at any single point in time does not tell you much about it’s true value, except a low value such as 1X revenue, or 1X profit. If you want to establish and communicate the value of your business to, for example, a potential investor, you need to tell a story over time. Last year, and next 2 years at a minimum.

Except with mature businesses that generate cash, businesses are valued on their potential. How much revenue and profit will the business generate in the future? Is it growing, and so what does that mean for future cash flows? Should it be valued as a multiple of LTM (last twelve months) revenue or NTM profits?

Building, and deeply understanding, your business’ next 2 years of growth and being able to present it in a believable way (because you understand the dynamics so well) is how you establish value with an investor or buyer.

5.  Communicating with your employees

Your employees, or partners, are following you because they believe. Hopefully you’re paying them a fair wage, but they are probably with you because they believe in what you are trying to do. Even in a large company this can be true – people join a team because they believe in the mission.

So given they are following you, you need to keep them updated on how the business is doing so they can both help you solve problems, and celebrate with you when things go well. I am a big believer in sharing the basic P&L of your business with your leadership team at a minimum, and with your employees once it stabilizes. If they don’t have a good understanding of the future of your P&L how are you going to enable them to fully participate in the building of the business? And how will you celebrate the wins with them if they don’t know whether you are making the plans you set out or not?

I don’t buy the argument that employees are not able to handle the numbers – that it will “scare” them. Yes you don’t tell them you are running out of cash, but if you are hiring college graduates you can at least share your top line plans with them and if they don’t understand the basics of a P&L you can teach them. They will thank you for it, and be much more vested in the end results of the business if you share progress with them. I recently put together a 2 hour class on the basics of reading a P&L for a friend’s business (where most of the employees have liberal arts degrees) and it was not only great fun for me and the employees, but it gave them a starting point to understand the terrific progress the company they are working for is making.

Bottom line – whether your business is wine or weather prediction, if you are leading a team with financial targets, or are the CEO of your own venture, you owe it to yourself to learn and truly understand your own business’ P&L.

Photo: Photo Frescobaldi Winery, Tuscany  © 2016 Penny Herscher

Leadership

The importance of being humble

July 16, 2017 1 Comment
Photo: At the Jordan river where Christ was baptized and Israeli and Jordanian soldiers watch each other, guns cocked
We’ve all met this person in our professional lives. Smart but self-absorbed, in love with their own success so far, or with the self-importance of their title, or the size of their business, or how attractive they are. Executives who are so used to everyone catering to their every need that they forget to be courteous. VCs who are so used to entrepreneurs beating down their doors they forget to be kind (or worse). Entrepreneurs with hubris who think because they have raised money they are already a success. Lawyers and bankers who have been making so much money for so long they think their time is more important than the people around them.The behavior is irritating, but why does it matter? It’s not my place to moralize in the greater sense but in my experience the behavior does catch up with most people in their careers, one way or another, in the end.

Unless you have fast runaway success, or true genius (very rare), or are the Zaphod Beeblebrox, you are going to need the people around you for you to succeed long term. If you are arrogant it is hard to get your peers to want to work with you, or for you. Weaker people will, but the strong ones will move on. And, in the end, you are only as good as your team. People might stay with you while the money is good – attaching themselves to your coat tails – but when your company/responsibility hits a bump in the road, or they don’t need you, they will leave you.

Being self-absorbed might not hurt you at work because you’re the man with the big, hard-driving job… but chances are you are hurting the people who love you with your self-absorption. Yes, I am speaking from personal experience here both as the one doing the hurting and the one being hurt, and now observing professional friends who, in their self-absorption, forget who they are hurting.

As a good friend (and mega-company CEO) once told me: for the smart, strong, over-achievers it helps to think about life as a three-legged stool and all three legs need to be stable for your life to be balanced.

The first leg is work. How you get intellectual satisfaction and earn a living.

The second leg is fun. Family, friends, good times. How you find pleasure and love.

The third leg is spirituality, whatever that means to you. How you remind yourself that this is a huge, mysterious world and you are (no matter how important you think you are) just a small part of the grand scheme of things.

When the world is beating a path to your door, the money is rolling in to you or your company and the people who want things from you reinforce how terrific you are… how do you keep the third leg planted firmly on the ground?

A shock might do it for you for a while. A project fails, you lose a customer, you have a health scare, maybe you lose your job, but if you’ve done well in the past chances are you will do well again, so how do you keep the humbling realization that you are not the center of the universe with you?

Me, I find it in many ways. Through understanding history where the complex, messy story of our world and our humanity puts my insignificance squarely in perspective. Or through nature by hiking into the beauty of the mountains or the desert where I am reminded just how small I am. For some it is their God and faith. For some it is volunteering to help other people in need. What is it for you?

In my experience of powerful business leaders the truly great ones stay humble. Yes, they have strong opinions and expect to be listened to, but they also never forget who they are. The great ones treat admins, junior staff and vendors with respect, they put time into their family, they vacation with their friends, they are far from the entitled, the-one-with-the-most-toys-wins culture. They are the ones that people follow from company to company and remember with a smile for the rest of their lives.

How do you or I become one of them? I think that along with all the professional skills and opportunities in the world it is critical to remember who you are, truly, in the grand scheme of things and stay humble.

Written for a dear friend who tells me he is working on it.

Leadership

When to tell your employees to take a hike

May 13, 2017 Leave a comment
 Small companies are like families. They are full of tension, tight relationships, dreams and disappointments and they form a culture all of their own. And when they are small how each and every employee behaves affects the culture of the company. What it is like to come to work every day, how people solve problems, how they interact and help each other, or don’t.

In every group of employees you hire you are bound to hire a few non performers, and it’s management 101 that you know you have to move the non performers out. That’s what having an accountable team or a performance culture means.

But there is a group of employees that is harder to move on. I’m sure you’ve worked with people like this. They are good at their job but they are like dripping poison. They talk about “this place” or “this company” in negative terms. They make snide remarks about the leadership or about their coworkers. They work for you because it’s a good job, but nothing is good enough.

Clearly if the behavior is egregious you can move on the employee and treat it as a performance problem, but what if it’s borderline?

One way to handle this is to invite your employees to leave.

The most valuable resource an employee has is their time. Especially when they are in the early stages of their careers. In terms of personal growth and future earning power every year before 40 is more valuable that five after. Your millennial employees are investing in your company with their time learning, growing, inhaling everything they can do to improve their future. So if they are negative why are they there?

I talk to many teams and my logic to invite people to leave goes something like this:

“If you love this company and our mission, if you love working here, then invest your time wisely. Pour in your passion, work hard to make the company and your career they best they can be. Be a part of creating a positive, winning culture. Share your observations with your leaders but bring solutions, not just complaints. Support your leaders – they are human too and doing their best. Be positive.

But if you are unhappy here, if you see all the things that are wrong and you feel a need to continuously complain, if you think your leadership is incompetent, or the work is too hard then please leave. Get out.

Because life is too short to work in a company or a job you don’t like for people you don’t respect. If you think things could be better then make them better or please leave.”

Sometimes I am even more direct – “There’s the door”.

Photo: Petra © 2017 Penny Herscher

Leadership

Startups and adrenaline are a potent mix

April 26, 2017 Leave a comment

Fred Wilson’s post a few days ago “Starting is Easy, Finishing is Hard” speaks to the grind going on for many tech startups today. He says the easy exit days feel as if they have gone and for many it is taking raw tenacity to finish.

And he’s right. When you are the CEO or in the founding team of a startup the years are long. It feels as if it will take forever to get to the next stage of product, or growth, or market development.

But the days are short, and it’s what makes the days short that draws in many founders. It’s the adrenaline. Yes they should have a vision, and passion to change the world (a passion to get rich typically backfires) but without a love of the adrenaline rush they would not last a year.

You feel the adrenaline every single day. When you close a deal, when you talk with your team about your dreams, when you pitch a VC (whether or not they bite), when you have a vision match with a huge customer, when you can feel the forward progress. Your heart beats faster, your hands may shake. It’s hard to come down (many startup CEOs I have known, me included, self medicate with a stiff drink at the end of the day), it’s hard to sleep, but it makes 5am exciting because you know the rush is going to start again the next day.

In many ways you need the drug (it’s a hormone) in your body. It makes your mind sharp, it increases your intensity, it helps you focus on exactly what you need to do second to second to win in each situation. And succeeding is all about having the tenacity to win against a million people/circumstances/barriers that want to stop you every day.

Getting a new company up and running and successful is SO hard that I don’t advise people to do it unless they simply cannot stand not to, and only then if they have the stomach for the stress and can manage themselves through it. I am working with a brilliant founder today who is swinging from the heights of heaven to the depths of hell as her company leaps forward and who has designed a swimming and yoga weekly schedule simply to help her manage the stress.

And what’s interesting about the adrenaline phenomenon is one day it all stops. I ran into a girlfriend at the airport this week who ran a hugely successful company, and is now retired, and as we compared notes she told me she just stopped enjoying the rush, and then she knew it was time. When you dread the 5am calls, and you dread taking another redeye, and while you can still get the rush in front of a customer, but not every day, then it’s time to hand the baton to the next woman who wants to change the world.