Like United, the distinctive Silicon Valley companies will be shaped by leaders for whom working on products is the activity they most enjoy. For Sir Alex, that meant working with the United players and shaping their style of play. In California it might mean a founder who is fixated on the elegance of a chunk of code, the speed at which bytes are transmitted, the chemical and physical properties of a piece of silicon, the space in which data is stored or the size of a typeface. Like Sir Alex they will tend to leave to others the activities that don’t interest them. Hence the manner in which Steve Jobs ceded logistics and operations to Tim Cook, or the way Bill Gates spent little time worrying about the design of marketing campaigns.
The best of these corporate leaders will also shun distractions and apportion their time with great care. Not for them incessant speeches at conferences, television interviews, meetings with politicians or attendances at charity functions. For them, every moment not spent dealing with business (or, when they get a bit older, family) is a wasted opportunity. Look at the old photographs of a younger Alex Ferguson, appearing bleary-eyed after surviving on four or five hours of sleep a night, and you see the face of every young entrepreneur. The most extreme example of this blistering desire to concentrate on his business that I ever encountered was the young Bill Gates. After he had bought a television set so he could watch educational videotapes, he eliminated the temptation to watch shows or movies by disconnecting the tuner. He also removed the radio from his car, lest news bulletins or music prevented him thinking about Microsoft during his brief commutes or on trips to and from the airport. For Bill and for Microsoft, the ability to shut off the outside world paid enormous dividends. The helicopter rides that he took to save time when forced to attend social engagements, or the enforced solitary confinement when he decamped twice a year to pore over technical papers and books, both helped eliminate the noise. It took Bill until 1994, when he was 39, to partially abandon his first true love, Microsoft, and marry Melinda French.
Profiles of successful leaders invariably dwell on what is visible–the result of careful handling by publicists, staged appearances or simply the reticence of the individuals themselves. Success depends on what happens behind the scenes where the hard work–the 17- or 18-hour-long days and the seven-days-a-week ritual–is conducted. Sir Alex is a great believer in the virtues of industry and set the example with his own actions–not asking anyone to apply themselves with more resolve than he demanded of himself. Sir Alex’s world was visible for millions of viewers to see, and might have seemed effortless and spontaneous from the comfort of an armchair, but it was the result of relentless preparation. Behind every trophy there were dozens of Saturday mornings standing in driving rain scouting teenagers; behind every League trophy were thousands of training sessions; behind every triumph was a large, increasingly global network of individuals, whose sole task was to funnel youngsters into a system that ten, 15 or even 20 years later would have them making a critical pass or an important tackle.
I know Sir Alex would applaud the work ethic found among California’s younger companies, not to mention their counterparts in China, who sometimes make me feel that Silicon Valley is a retirement community. It’s why, in their formative years, companies like Google and Facebook had ‘war rooms’, where tiger teams of programmers were sequestered until they had solved a particular crisis, or ‘lockdowns’ where coders were forbidden to leave the premises until some calamity had been averted.
Sir Alex will be the first to say that much of the success he enjoyed was made possible by the setting in which he found himself–which, I suspect, is also responsible for the good fortune of many people in Silicon Valley. Sir Alex is not referring to United’s history and earlier association with success, as much as he is to the support he received from the club’s owners and board of directors, the ultimate arbiters of his fate–and, to a lesser extent, to the growth in the television market.
At both Aberdeen and United, Sir Alex did not have to deal with owners or directors who wanted to meddle in football affairs, or assistant managers who usurped his authority. Sir Alex was given what every leader deserves–control to shape his own destiny and that of his organisation. Having the time to establish a solid foundation and to, gradually, build towards long-term prosperity, is not a luxury afforded most football managers or business leaders, where the pressure to win or the need to produce quarterly earnings makes the quick fix almost irresistible. This freedom from the tyranny of immediate results enabled Sir Alex to constantly work on the composition of the club several years into the future, without worrying whether he would still be there if United had a bad losing streak. He was also granted the freedom to control his own realm. In Silicon Valley the founders of companies are also fixated on the importance of control. Today, they try to enshrine their position with all sorts of legal protections, which, for the weaker ones, means that they are doing themselves and their companies a disfavour. Nonetheless, the underlying impulse remains the same as Sir Alex’s–the conviction that, come hell or high water, their way is the best.
Undoubtedly some of United’s success during this period rests on the way technological breakthroughs transformed the television coverage of football. United, and for that matter the rest of the Premier League, have reaped enormous dividends from a huge decline in the price of computing and communication. Satellite transmission, remote-controlled cameras, high-definition displays, flatscreen televisions, the proliferation of the internet, the rise of social networking and instant communications are what have allowed United to perform on a global stage. Sir Alex readily admits that he vastly underestimated the impact of satellite and cable transmission of football games, and the container-loads of money that trailed in their wake. Yet the crowds that began to gather in living rooms and pubs to watch United did so because of the entertainment that he helped orchestrate. Any time United slipped, or were eliminated from the final throes of the European Cup competition, it had an immediate effect on the club’s revenues. The revenues that flowed to United from the expanded television coverage were inextricably linked to the team’s performance. The results lifted United’s share of broadcast rights from an insignificant amount in 1985–86 to £60.8 million in Sir Alex’s final season.
Yet for all the tailwinds propelling technology start-ups, they too, like the Premier League teams, have to deal with cruel blows and rude reversals of fortune. I cannot think of one successful company that Sequoia has been involved with that did not, at some point, face the threat of extinction. Newspaper headlines and television anchors love to proclaim the arrival of yet another Silicon Valley ‘overnight success’ or announce the baptism of a young, newly minted billionaire. Set aside the fact that a good number of what today are known as ‘unicorns’ will fall by the wayside, the more noteworthy examples of the companies that have eventually beaten all odds have been started by people blessed (and, in many cases, haunted) by the same sort of inner drive, discipline and hunger that propelled Sir Alex and his most successful players. Look at Pixar, where it took 16 years of experimentation, corporate convulsions, dead-ends and lay-offs before the release of the company’s first full-length movie, Toy Story. Or there is Nvidia, a chip company, formed in 1993, which now underpins the video-game industry, but whose first product was an abject failure and nearly consigned the company to oblivion. Today, as each rides high, it is easy to forget that, at the dawn of this century, Amazon was running on fumes and Blockbuster refused to purchase Netflix for pennies on the dollar. LinkedIn, now known around the world for its 364 million strong online professional network, required one year to reach its first 100,000 members. In each of these cases it required extraordinary drive, self-discipline and conviction to stay true to the course.
These triumphs of force and conviction are not limited to small companies. In the mid-1980s Intel, whose original business in computer memory devices had been destroyed by Japanese competitors, was reinvented by Bob Noyce, Gordon Moore and Andy Grove as a designer of
microprocessors. Lou Gerstner’s astonishing turnaround of IBM in the 1990s demonstrates what an extraordinary leader can do to a company given up for dead. The greatest example of the power of conviction is the minutely chronicled turnaround of Apple by Steve Jobs–a mission given the shortest of odds by people such as Michael Dell who, in 1997, famously announced that he would shut the company down and return the proceeds to shareholders.
For each of these examples, the technology industry is littered with examples of companies that did not fulfil their original destiny, because those at the helm either lacked the combination of drive, discipline and conviction that is required to build anything great or because they were started by people who did not understand the vast gulf that separates theory from reality. For me, three examples loom large. The first, by a long measure, is Webvan, an online grocer that became our worst investment because we abandoned common sense in a haphazard pursuit of mindless growth. Another is Zappos, the online shoe retailer, which, though acquired by Amazon in 2008 for just under $1 billion (now worth over $6 billion), did not fulfil its promise because, try as we might, we failed to persuade its founder of all the things that are required to build a great, enduring company. Finally, there is PayPal, which was bought by eBay in 2002 for $1.5 billion, even though Elon Musk and I had implored the rest of the board not to sell the company. Sadly, PayPal is now worth about $40 billion–proof that conviction and patience, as Sir Alex says, are precious commodities.
Understanding what is possible, setting realistic expectations and communicating them clearly enough to bring a team along with you, especially in a setting where everyone wants quick results, is one of the hardest leadership skills. It is easy to brim with enthusiasm, establish unattainable goals and leave everyone feeling deflated if the targets aren’t achieved. While at St Mirren Sir Alex learned about the consequences of making bold predictions of future triumphs, and thereafter was careful to build success one step at a time. The purposeful cadence of a relentless, disciplined march is difficult to maintain, but a long record of success is built one trophy (or one sales record, engineering release, or financial result) at a time. The consistent application of a well-tuned approach that does not shift with every passing fancy, but is supple enough to absorb and accommodate useful advances, is one of the distinctive characteristics of Sir Alex’s style. It is not an accident that Manchester United (without, under Sir Alex, ever resorting to the power of an overwhelming chequebook) was quick to change the composition of its squad as the Premier League made it possible for the best footballers in the world to ply their trade in Britain.
The goals designed for a young company to serve as a rallying cry tend to be more audacious than the ones Sir Alex so carefully set for United. The more inexperienced Silicon Valley founders are unable to trot out anything beyond the limp and oft-used cries that ‘We’re going to change the world’ or, ‘We’re going to make a difference’. The more thoughtful, conversely, offer something that, at first hearing, sounds completely implausible. That was certainly my reaction when I first heard Google’s co-founder, Larry Page, explain that he wanted to put the internet on a hard drive. It took me a long time to figure out the depth and subtlety of his remark.
Communicating what he wanted from staff and players always seems to have come naturally to Sir Alex. Part of this was born of inner confidence, part from the gradual accumulation of victories, but much came from the absence of any confusion in his own mind about what he wanted. Listen to any of his former players and they will tell you that, once they began to master Sir Alex’s heavy Scottish accent, there was no mistaking what he sought. His directions tended to be short and concise because barely anyone, whether they work in a hospital or steel mill or are part of a boy-scout troop, can remember more than three instructions. Long-winded monologues do not strike the target in the way that brief talks relaying precise and concise instructions do. I cannot begin to describe the number of presentations I have sat through where the words of the CEO have been hard to fathom, or where the message was so glib it had no credence. The best summary I ever heard of a business was from Sandy Lerner, the co-founder of Cisco Systems, who, in 1986, when the company had just eight employees, was asked to communicate her company’s purpose. Her answer was as terse as a Glaswegian’s: ‘We network networks.’ It sounded deceptively simple, but it served as the company’s north star for the ensuing 25 years. Sir Alex’s counter might well have been the message that he burned between the ears of every newcomer to the club, ‘At United we expect to win every game.’ In Silicon Valley they would call that a mission statement.
Plenty of organisations achieve one success, some notch up several, but few make it a habit of a lifetime. Manchester United, under Sir Alex, demonstrates how the taste of success gives people confidence that they can repeat the accomplishment; sets a standard that, at a minimum, needs to be matched; and, as an ever-expanding cadre of people experience triumph, begins to become self-perpetuating. Winners want to be around winners. That same formula applies in Silicon Valley, albeit with a local twist. Here it is most pertinent when young companies, during their early days, try to recruit engineers. If these fledgling enterprises attract the right calibre of engineers, the after-effects can last for ten years. Engineers tend to have a particularly acerbic view of the credentials of others and only want to make job offers to those who meet their standards. (It’s an attitude faintly reminiscent of the way Sir Alex views a person on whom he bestows the ultimate compliment, ‘a true professional’.) When this works, the prospects for the business explode dramatically–particularly today when well-written software can quickly touch hundreds of millions of people. If the recruiting machines sputter, or hiring standards are lowered, it is almost impossible for the company to meet the leader’s original aspiration.
On the other side of the same coin is staff retention. I don’t mean to belittle the way Sir Alex inspired his teams to achieve more than they thought they were capable of doing; of building tremendous bonds of loyalty with players, many of whom he first came to know as young teenagers; and of perpetually needing to ensure that he had the best goalkeeper or midfielder on his team-sheet. At United it was very rare, at least while Sir Alex was at the helm, for an agent to convince one of his clients to try his chances at another club, and much of that was due to the fact that most of the squad, if they were appearing regularly, could not have imagined a better stage on which to perform. From time to time, there might have been posturing about a move elsewhere, as there was with Wayne Rooney in 2010 when the end of his contract loomed; but, for the most part, the last thing on the mind of a United player was a job with another club.
That is not the case in California, where people tend to work for Silicon Valley rather than for a particular company. Here there is a similar need to ensure that any business has the best possible management or engineering line-up, but the task is made significantly harder because of the hordes of recruiters who spend all their waking hours trying to prise alluring candidates from their perches. A lot of this is due to the richness of the job opportunities, since there are many more interesting slots in which top-flight people can ply their trade in Silicon Valley than there are for a star striker employed by one of the best six or seven European football clubs. The main reasons for the job-hopping tendencies in Silicon Valley are, for a minority, the dream of striking out on their own, or frustration with the ballooning size of their employer and, for the majority, the way in which stock compensation programmes are designed. At a young company an early employee is usually given a grant of stock that vests after four years. If the company is flourishing and the stock has enjoyed massive appreciation, many employees will feel that they are better off repeating the cycle by obtaining a new slug of stock granted at a low price. For the best Silicon Valley companies, it is often harder to retain people than to recruit them.
I marvel at what I learned about the way Sir Alex dealt with his players and inspired and cajoled his teams–a habit he refined
as the years went by. Not many Silicon Valley CEOs, perhaps because many of them are so young, can modulate their tones with comparable dexterity. Sir Alex could simultaneously play cheerleader, motivational speaker, shrink, confessor, piano-tuner, puppet-master, choreographer, teacher, judge and lord high executioner. As he grew older he became increasingly adroit at modulating the application of these skills and figuring out how to extract that extra 5 per cent–the difference between gold and silver–from individuals and groups of individuals. He learned to bolster players’ confidence when their spirits were down; he was quick to bring them down a peg or two when they were getting too big for their boots; he was bemused by some of their habits (like Eric Cantona putting salt in his socks before games, or Cristiano Ronaldo specially tailoring two pairs of socks to get the leg-coverings he desired); he stoked their hunger for repeated success and, most importantly, he made each understand (no matter how much they were getting paid or how often they appeared in advertisements or magazines) that the team was bigger, and much more important, than any individual–a cruel truth that many, in both companies and investment firms, have a habit of forgetting.
While Sir Alex, like most people, enjoys being liked, he never sought affection from his players, though neither did he want to paralyse them with fear. So while he tended to know most of them very well, particularly those that stayed at United for many years, he maintained his distance. Respect was all he sought because, once earned, it makes it so much easier for a leader to control an organisation and bend it to his will.
He also understood that one of the keys to an enduring organisation is to build from within, by helping youngsters gain their footing and become successful, rather than recruiting expensive guns for hire, like the leader of a band of mercenaries. It is a less risky and more predictable way to build an enduring organisation. This in-house development programme requires great patience, and takes a long time, but it is a process that breeds the sorts of bonds that only years of shared experiences can provide–stability, familiarity, trust and, eventually, life-long loyalty. Some will say that this is impossible in a world attuned to immediate results. I beg to differ. Every great organisation has the ability to adopt this approach if they have the right governance structure and leadership team. It’s a style of management for which I have great affection since, at Sequoia, I was the fortunate beneficiary of the same approach, and it is the one that we continue to embrace. We also have tried to do what Sir Alex did, after he fell into his stride at United, when he kept tuning his squad, making sure it was nicely balanced between the enthusiasm of youth, the strength of players in their prime, and the experience of those in the twilight of their careers. Sir Alex was careful to make gradual shifts to the composition of these squads, since wholesale change can confuse, disrupt and demoralise.
Leading: Learning from Life and My Years at Manchester United Page 31
