by Elad Gil
I *love* fyi emails when you send me something you saw, a customer anecdote, an article, some data, or something someone on your team did and if you write fyi in the subject or in the fwd I’ll know it’s for my information but *not* requiring response or urgent reading and I’ll do the same for you. FYI = no response required.
If you add me to a team email celebrating something that I somehow missed, I know that’s the signal to weigh in usually with “yay!”, so go ahead but don’t overuse it or in my experience people will think it’s meaningless.
Chat/ping
If it’s urgent/impt/timely or super short feel free to ping any time, even when I am “red.”
Short questions on ping are fine but I might be inconsistent in response times since I am often in meetings.
If it’s a long topic and not time sensitive, maybe just wait for our 1:1.
Overall, I like more communication rather than less and I like to know what’s going on with you and your team and that helps me do a better job for you. I don’t view that as micromanagement but if you feel like I am too much in the weeds, please tell me. Finally, I don’t believe I will create a lot of email volume and I’ll be the first to recommend we do a quick in-person sync to resolve something versus a long email exchange. Or better yet, you can be the first to recommend it, and I’ll be the second.
I also like plans that are documented. I don’t care if it’s slides or docs or spreadsheets but I expect detailed work has been done when needed and if you have WIP or plans, I love to be included early and often in their development *but* I’ll generally only weigh in when asked or on final review, even if I have draft access.
“I like a good laugh and to have fun with the people I work with.”
—Claire Hughes Johnson
Feedback
I like it. I like to give it and I like to receive it, particularly constructive. We’re in this to get better together. We’ll have a quarterly official session but I’ll try to be timely when I observe or hear something and please do the same. I also like to know how and what your team is thinking and feeling and I will do skip levels, office hours, etc. Remember, whatever I hear or see, I have your back and I’ll tell you when I’m concerned. Anyone who vents to me about you is going to get my help to tell you directly.
Management and people
I care a lot about you, your people, and all of your development. Please make sure we’re touching base on your team, building our teams’ skills as individuals and as teams constantly, and that I know when there are superstars and challenges so we can help people together.
Results
Let’s get good ones and know we did. Measure measure measure :)
Humor
Finally, I like a good laugh and to have fun with the people I work with.
Hope this was helpful and, again, I look forward to working together.
You are all welcome to add to this document and make it a little more “authorized!” :)
The changing cofounder dynamic
If you have multiple cofounders, one of the biggest executive transitions that will happen is a change of influence and role for one or more of your cofounders. At many early startups multiple cofounders weigh in on every decision. As a company grows you will need to define the boundaries of decision-making and roles more tightly.
There are basically three end points for most cofounder dynamics:
Some cofounders may move to individual contributor roles and are happy there (Steve Wozniak at Apple).
A cofounder may remain as a key executive and help drive the success of the company as CTO, president, VP product, or another role
One or more cofounders may leave if they feel they do not have enough influence at a company, if they want the CEO role and know they will not attain it in the short run, or if there is a mismatch between their skills and the role they want to play. Some may also leave due to family circumstances—a sick family member or needing to move for a spouse.
The change in cofounder status is driven either by (i) the need for there to be a single strategic direction and view point driving a company as it scales or (ii) the cofounder getting out of their depths or competencies relative to the scale of the company. As you grow employee headcount, people need to know who to go to for final decisions or the company will slow down and grind to a halt. You need to allocate resources to the areas of greatest need and value. In parallel, your cofounder may or may not have the skills and experience to play the role they want in the future of the company.
To manage the cofounder transitions:
1. Think through what roles your cofounder would optimally play for the next 12–18 months of the company. What functional role should the cofounder play (CTO versus VP Eng or an individual contributor on engineering)? What cultural role should they play (interview every candidate? Something else)? What are other ways you want them to be involved (public speaking or events that fit their knowledge or that you do not attend? Certain types of deals or partnerships?) And what input and decisions should they play a role in what are the key types of topics you should be discussing with them ongoing)? Remember that this will be an ever-evolving story as the company scales, so you do not need to think too far ahead—12 to 18 months may be enough.
2. Ask your cofounder to think through what they want to do. And have them write a job specification for themselves.
3. Have a discussion. You and your cofounder need to resolve differences between what the cofounder wants to do and what you as CEO think they should do. This will most likely be a series of conversations if there is a mismatch.
4. Enlist an advisor, investor, or board member you both trust to do the right thing for the discussion. If you and your cofounder are unable to resolve the role change together you many need to enlist a third party for mediation and help.
5. Once you reach agreement. What are the things you can do for your cofounder to help them succeed in this new role? Do they need a management coach?
Remember at all times that your cofounder took an early bet on the idea or company just like you did, and that they are a major equity holder (and potentially board member) of the company. While a lot of emotion is tied up into cofounder relationships (like any long term partnerships), it is critical to the success of your company that you find a solution.
If you and your cofounder are unable to reach agreement, you will likely need to negotiate the exit of that cofounder from the company. In some cases this may be contentious. Alternatively, your cofounder may be relieved that the company has reached a level of growth and success that allows her to leave without hurting momentum. If a cofounder is not playing the CEO role, she may eventually feel disempowered and want to go work on something where she is the final decision maker.
UNEQUAL COFOUNDERS
One of the big myths in Silicon Valley is that cofounders should be equal.7 However, if you look at the most successful tech startups of the last 50 years, many of them had a dominant cofounder. This includes:8
Amazon. Jeff Bezos.
Apple. Steve Jobs famously split equity unequally with Wozniak.
Facebook. Although Zuck had multiple cofounders, the website used to be called “A Mark Zuckerberg production” and he had many times as much equity and power as his cofounders.9
Instagram. Kevin Systrom was the dominant founder.
Intel. Robert Noyce led the company for seven years and then Gordon Moore for 12 years.10
Intuit. Scott Cook was the dominant founder.
LinkedIn. Reid Hoffman had multiple cofounders but was really dominant in terms of equity and control (despite hiring a CEO to take over pre-Jeff Weiner).
Microsoft. Paul Allen stepped down after a few early years, leaving Bill Gates as dominant founder.
Netflix. Reed Hastings took over as CEO from Marc Randolph early in the life of Netflix.
Oracle. Larry Ellison was the sole founder.
Pinterest. Ben Silberman has driven the success of the company.
<
br /> Salesforce. Marc Benioff.
Square. Jack Dorsey is primary cofounder.
Uber. Travis Kalanick was the primary force until recently.
WhatsApp. Jan Koum was the dominant founder and equity holder.
Most of these companies are examples where both power and equity splits between founders were unequal. In general, equal power sharing yields worse outcomes than having a dominant cofounder (or at least one who emerges as dominant once a company starts working). Founding a company is hard, and having a cofounder helps balance the work and stress of a startup. The key is to have clear decision making so that a single individual (the CEO) can set a clean path forward.
The set of counterexamples with more equal cofounding partnerships includes Google (cofounded by Larry Page and Sergey Brin, with a bit of a founder-like contribution by Eric Schmidt being hired as CEO early in its life). Having an equal cofounding relationship is not impossible, it’s just rare among the most successful companies.
* * *
7 See eladgil.com. [http://blog.eladgil.com/2012/02/how-to-choose-cofounder.html]
8 A number of private companies also do not have equal co-founding relationships or equity splits, but since these companies are not yet public it is harder to talk openly about them.
9 See link on eladgil.com. [https://www.buzzfeed.com/amygrindhouse/a-mark-zuckerberg-production-1qq?utm_term=.qfbBY80xEV#.su1OnjRzW7]
10 An underreported phenomenon is the number of times one cofounder is replaced by another as CEO. This happened at Intel, Logitech, and other companies.
CHAPTER 2
Managing the board
“Hiring” your board of directors
If your cofounder is like your spouse, then your board members are like your mother-in-law and father-in-law. You are going to see them regularly, they are hard to get rid of, and they can have an enormous impact on your company’s future.
The members of your board are among the most important people you will ever “hire” for the company. The best board members will play key roles in company strategy; sourcing, hiring, and closing senior executives and key hires; fundraising; operations; and governance. In mid-stage companies, they are often responsible for selecting/keeping/firing the CEO, and then holding that person accountable for deadlines, plans, and deliverables. Later in the life of a company, board members play more specialized roles through the various committees they may be part of. (I won’t cover public boards here.)
Your board will typically be composed of a few key players: VCs who invested in your company, independent board members, and members of the founding team (aka “common seats,” which usually include one or two founders, or rarely as many as three). If you have an external, non-founder CEO, he or she will also have a board seat (and in some cases an external non-founder COO will as well).
Choosing a VC partner who is right for your board
Most of your board members will be VCs who invested in your company. They may be brilliant strategists or operators, or alternatively just have a bunch of money that came bundled with a board role. I would always take a lower valuation in order to work with a board member or VC partner I really like, rather than a higher valuation and a lesser board member.11
Remember, when a venture capitalist invests in your company it is the fund investing, not the individual partner. This means that funds typically have the right to swap out the partner that sits on your company’s board. While you may start off with a senior partner, you may someday find a junior, wet-behind-the-ears, brand-spankin’-new VC as your board member. This junior partner will probably start attending as a board observer12 or just start showing up with the senior partner, who will say she wants to add “more bandwidth to your team from our firm.” If you do well as a company, this will indeed be the case. However, if you do poorly, then the venture fund has someone less valuable they can swap in to save the senior partner’s time. This junior partner will be less able to help you, and will effectively get trained by you and your other board members.
Choosing an independent board member
Your independent board members will typically be other operators or entrepreneurs with relevant functional experience (e.g., a former CFO) or industry experience. While some series A investors won’t push for the independent seat to be filled for a while (or, in some cases, at all), others will push for a faster addition to the board. Please note: this will be one of the most important people you “hire”—and it will be hard to remove a director once you add one. Proceed carefully and deliberately through these critical steps:
1. Write a job spec. It bears repeating: this is one of the most important people you will hire. You should write up what you would optimally want in a board member by drafting a checklist or hiring spec. This should include:
Experience—which may include: Operating experience. Do you want someone who has operated a company at a certain scale or has started a company herself? Can the prospective director share process or management best practices with you? What can you learn from him or her?
Market experience. Is there specific domain or market expertise you care about at the board level? Is the prospective director in the information flow in ways that will give you a competitive advantage? Can she provide intros to people in the market who can help you?
Functional experience. Do you want specific functional experience (e.g., an ex-CFO or VP International Sales)?
Depending on your existing board and experiences as a founder, you may or may not care about market experience, functional experience, or operating experience. Or you may be willing to trade these off, as it will be hard to find the perfect person.
Involvement with other high-growth companies (optimally as a founder). People who have not seen a company go from two people in a coffeehouse to a multi-thousand-person organization aren’t used to all the bumps in the road that this entails. Things will always take longer and always be rougher than expected. Most startups face at least one moment, if not more, that feels like an existential crisis, where the company faces death from competition, excessive burn, government regulation, or other issues. And, unlike at a large established company, natural momentum won’t necessarily exist. At an early-stage startup, each bit of execution is an act of sheer will, rather than an act of momentum. As your company matures, this will shift and eventually you may have too much momentum, with a large, difficult-to-steer ship of your own. This is of course many years down the line, and is in some sense a good problem to have. In the meantime, you need board members who understand this journey. Optimally, if there is just one independent board slot, the independent board member would be a current or former entrepreneur. Other successful entrepreneurs will be able to relate more closely to a founder’s emotional state and provide advice based on their own experiences. They will understand the “newbie” nature of being a founder/CEO and be open to answering “stupid questions” without condescension or judgment. They will have firsthand knowledge of how to build a business and understand that the bumps along the way are inevitable.
Finally, successful entrepreneurs can serve as a counterweight to the VC board members in a way that benefits the company, and hence also benefits the VC. If an entrepreneur board member is successful enough, the VC is unlikely to have much leverage over them—they already have lots of money, strong personal brands, and others who will work with them. The VC cannot exploit a power dynamic to force a truly independent board member to side with them on contentious board business.
Raw intelligence. This is self-explanatory. Some folks, such as Marc Andreessen, Reid Hoffman, Mike Moritz, and Vinod Khosla, are known for their raw intellectual horsepower. Notably, the former two took board seats or made investments prior to becoming full-time VCs.
Business and strategic sensibility. Ultimately a high-growth company board will face a number of core business and strategic questions. Will they help you navigate the strategic landscape, understand how to use M&A at scale as a tool, or have deep insights int
o product pricing or other aspects of running a business? Many founder CEOs also need input into team management and operations that a business-savvy independent may provide.
Entrepreneur-friendly orientation. A number of VCs will suggest a “friend of the (venture) firm” as your independent board member. These people will often owe the VC more than they will ever owe your company, and when shit hits the fan they’ll vote with the VC. In other words, the “independent” board seat will in reality be an investor board seat, and you will lose control of the company (see “Avoiding a VC crony” below). To avoid this, you ideally want an independent board member who is sympathetic to your aims as an entrepreneur, not just to the VCs’ fiduciary duties. On the other hand, you do want to find someone the VC respects and will listen to. Optimally, the entire venture firm that backed you knows this potential independent board member. The best scenario is to find someone that your VC respects, but who you know is an entrepreneur at heart or who will at least be more entrepreneur-friendly. In the best case, you will have a preexisting, long-term relationship with this person, which will help you trust each other when the company inevitably hits a hard spot.
Respect of investors/VCs. Part of the independent board member’s role will be to remind VC board members that they should be voting in the company’s best interest (rather than each investor’s own best interest). He or she should have the confidence and insight to push back on the VCs when it makes sense to do so. The independent should help keep the VCs “honest.” This does not mean the independent should rubber stamp the founder’s every whim. Rather, he or she is there to do what is best for the company and to remind the VC members that their purpose should be the same. This is easiest to accomplish if both the VC and the founder respect the independent board member. Both of you should spend a lot of time with candidates for your board before adding them.
