[Video] Expert Talk: Noam Wasserman (Bestselling Author of The Founder’s Dilemmas)
Noam Wasserman (Bestselling Author, The Founder’s Dilemmas)
It can get lonely as a CEO or a solo founder. As a solo founder, you may struggle to find adequate support, and as a CEO, it can be difficult to balance presenting as a strong leader with getting the support that you need. In this talk, bestselling author, Noam Wasserman, draws on over a decade of research on founders to look at:
- Creating a succession plan as a CEO
- Finding support as a solo founder
- Using the knowledge of the last 20 years of entrepreneurship
- Splitting equity with a cofounder
Don’t miss the chance to hear from more experts like Noam at the many tech startup events at Founders Floor in San Jose.
Bestselling Author, The Founder’s Dilemmas
Wasserman’s wealth of knowledge about what it takes to create a successful startup comes from a decade researching 10,000 founders (including Evan Williams (Twitter) and Tim Westergren (Pandora). He became the #1 Amazon bestseller in Management and has been in the Strategy bestseller list for half a decade because of his groundbreaking analysis on the decisions faced by a startup’s founding team, early hires, and investors.
This video was recorded at a Founders Floor Startup Event in San Jose, California. Our CEO, Matt Day, hosted this Expert Talk with Noam Wasserman. The transcript has been lightly edited for easier reading.
I want to get a pulse here. After the third round of financing, I looked at this percentage, and I found it hard to believe. What percentage of the CEOs have been replaced, do you think, after the third round of financing?
75%? I think, according to you, Noam, it was about 52%. After the first round, a quarter were replaced. Then after the third round, about more than half. About 73% of the removals were board-initiated, so it wasn’t voluntary.
But one of the things that I found really interesting was when a CEO essentially puts in place a succession plan for themselves. I think they’re far more likely to be on the board, and they’re far more likely to have an executive position within the company.
This is really hard for the fearless leader to be giving up their proverbial baby. But what words of advice can you give to the entrepreneurs here tonight. They’re taking the rocket fuel. Their skills may be outstripped by the pace. They may have to bring in Eric Schmidt at some point to really bring in that professional CEO.
But how do you do this? When should you start thinking about it? And how do you do it in a way that isn’t going to be the end of the culture, or really disruptive to the company, when their fearless leader is put out to pasture?
Your question about what to do about it, there is – when it is possibly in the range of happening, and then there’s what you can do way before. Let me tackle the first, and then I’ll get to the other piece of it.
What are you going to do about it? You’re highlighting that data, that difference of who is pulling the trigger, and that it leads to a real difference in whether that parent of the baby is still going to be able to remain in some kind of real role with the baby.
That’s where a bunch of that self-awareness, at two levels, is a critical thing to have. At A) there’s the self-awareness about the road ahead. Where are things likely to go? What are the changes going to be in what the CEO’s challenges are? And then the self-awareness about me, my strengths, my weaknesses, and whether they match each of those next stages of it. The ability to go and think through those.
Having the map ahead, when you’re a first-time founder, or you’ve never gone that far in a venture, is one that you have to go and be able to get from being able to see, whether it’s a mentor is painting it for you, reading it in a book, or something like that. Being able to understand the road ahead, and then the self-awareness to be able to project yourself into there.
There’s two elements to be able to watch within that. There’s the can, and there’s the want. The can is the skills, the capabilities. Do I have those? The want side, what do I like to go and do? The people who get in trouble is where you have a divergence between the two of them. “What I want to go and do is something I’m not good at.” Or, vice versa, that you have the disconnect between it in the other direction, in terms of the can and the want. Where you have the two of those line up, that “What I want to do is what fits what the company needs, then I can keep going with it.” The can, because I’m able to go an execute on it.
But then, once the can isn’t there, even if I want it, that’s going to be problematic for my being able to have it come to its full potential. For my being able to play a key role within it. Then that’s where you have to go and get a little bit more of that self-awareness around it.
Watching for “This job has a lot of painful parts that I didn’t anticipate. We’ve gone beyond the technical challenges that I loved, and now there’s a lot of those other company-building pieces that are really a drain on me. I can’t do any of the technical stuff that I love because of it.” That’s where you have to have a bit of that awareness. That “Let me go and refocus on the stuff I love.”
Let me maybe go and step into what Lew ended up stepping into, the CTO role. Now the techie was able to go and be able to lead the visioning, and the product planning, and things like that. Hand off the painful parts to an experienced CEO, who the can and the want are right there for that person. That’s where it’s going to be a lot better for being able to go and have it be a smooth one.
When you go and step back, this is where I’m wishing for the first time that I had my whiteboard here. You want me to go on? This is back to the very beginning of it?
Excellent. Questions. Questions for Noam.
Let’s say your goal is to be the king, and being the rich isn’t a big concern. In a practical way, in order to avoid mistakes and future regrets, I think one part of it is, as a founder, to be educated. And you know what the hell you are doing. Would you recommend to talk to some attorneys, or legal firms, and tell them what are your priorities, and then have them advise you? Is that the best way to?
In general, founder is the loneliest job in the world. There’s no peer support, if you’re going forward with … In a lot of ways, you have a bunch of people, if you’ve gone and built the board, or stuff like that, you’ve got a bunch of people above you. If you’ve built the team, you’ve got a bunch of people below you. You’re at the middle of that hourglass, all alone, and going and grappling with those things. Especially if you’re a solo founder, that you don’t have anyone to go to.
You have to go and build that peer support network. One of the things we start with, in my center, within Founder Central, we, I do a bunch of Founder Boot Camps to educate founders about a whole bunch of these pitfalls along the way. And said, “We want to go and have a solution to your being alone when you’re grappling with things going forward.”
We went and created Founder Forums, to be able to go and bring six to eight of them together on a monthly basis, to go and have that advice, go and have those outside eyes, to be able to go and bring the peer outside knowledge of being able to go and help each other in that realm. When you’re going and looking at what’s the checklist, where am I missing things? The peers might be able to give it to you. Sometimes they don’t have the knowledge of the road ahead, if they’re first-timers within that. Then you might have to go to professionals, or to your advisors. Build your own personal board of advisors, if you don’t have an official board.
Go to them. Take a look at the missing pieces of my checklist, and now how can advisors fit into that? Who is someone who knows this domain? You can go and check that. By my having, “Let me treat you to lunch once a month. Let me go and have ways in which I can go and drink in your,” whatever’s going to be attractive to them, to go and spend some time with you, go and very actively take the unchecked boxes, and have that drive who is the missing pieces that I have to go and use to build my board, or bring to my peer group? Other ways that you’re going to be able to, as a solo founder, be able to get that outside experience for you.
Hi. Thank you. If I want to purchase one or both of your books for a number of my clients who are founders, CEOs, startups, should it be both? Should it be the first? Should it be the second?
If they are purely founders, and they want to have this roadmap, and be able to reflect on a bunch of the things that Roger’s been talking about that founders go and face, just go with the first one. If it’s people who, they can benefit from learning lessons from founders for a bunch of other walks of life, or even founders who want to be able to have that inform the other things that they’re doing in life. Shifting gears at any of the inflection points, or going and crafting a much more solid relationship at home. Being able to go and have a bunch of those lessons, then that’s where the second book fits in there.
One of the key things that I had realized is that, in a lot of ways, these human issues, the reasons we can go and learn lessons from founders, it’s not to say that every founder is infallible when it comes to his, far from that.
But when it comes to these human issues, founders are facing them very often in a very intense situation. To the extent that they have to go and can’t bandaid over them. Can’t just go and find quick solutions, and it’ll last until a year from now, when they face the next one of these.
They have to go and find some real solutions that often tend to be counterintuitive. A bunch of the things that we’ve talked about, where it’s the opposite of what the gut would tell you, and things like that. Those types of things, where we can see, “What are the best practices that they have honed?” That’s where we can then go and be able to learn it for the human issues that we face outside of founding.
For the people who it’s the outside of founding that they can learn from founders, that’s where Life Is a Startup is meant for them. But if they’re purely founders, and they just want to know, at the startup, how they can go and do it better, then it’s from the first one.
Actually, we had a question over here.
Congratulations. Great presentation and discussion. Quick questions, do you think there is little science or little academia behind startups, behind founders? Because what we say, “Okay, Larry Page did this.” We have a feeling that, this presentation here, that there’s a lot of hard science. That maybe it doesn’t come out in the magazines as it should be.
We’re never going to be able to fully arm founders for everything they’re going to be able to go and face. That doesn’t mean that we should go and try to arm them with as much as we have been able to learn about where they are likely to go and heighten the risk, rather than heightening the potential of their ventures. The last 20 years worth of our being able to study these things have enabled us to take several things off the list, that we can go and arm people with.
We don’t go and send a chemist into the lab, and say to that person, “Just mix chemicals, and you’ll figure out along the way what is the best way to go and do these things.” They’ve learned certain things about how to go, and have them avoid certain parts that they can then go, and be freed up to not worry about those blowing up on them, so that they can be a lot more creative in their experimentation.
Same things here. If we can go and take a lot of this knowledge about how to go and do these things better, you won’t have that on your worry list. You’ll be able to go and be freed up to go and handle the things we can’t go and prepare them for.
Along the way, also, so for instance, with all of these difficult conversations that we’ve been talking about, with all of these being able to look at the pitfalls and plan around them, those are muscles that we have to go and build. Difficult conversation muscles. The ability to go and take failure and not recoil from it. The ability to go and take negative feedback and be able to see it as a blessing, rather than a curse, and things like that. Those are muscles that we have to go and build.
If we can go and do that in these arenas that we’ve learned how to go and train you how to do that, you’ll be much better suited of taking those muscles and applying them to other problems, that we can’t even anticipate right now, to be able to go and exercise those muscles when it’s really going to count. That’s why, let’s take the best cut at educating people.
There’s a lot of a feeling founders, you have to dive in, you have to go and make mistakes. Making mistakes and failing is painful. We’re never going to be able to help you avoid all of it. Let’s go and take some of it off the table, and then how you go and deal with it will be much more productive for the things that we can’t go and prepare you for.
The one thing I will just say, that over the thousands of startups that I’ve worked with, one of the things I always try and say is “Don’t be a slave to convention.” I think that very often, I see people really not looking at their own startup, and saying, “What’s appropriate for my company?”
You’ve got all the data. You’ve got the statistics, and “Every company does this, therefore I have to do this.” It’s really hard to really look inside your own company and say, “What is appropriate for our team? For our company?” But its something I absolutely think you should do. Yeah.
Let’s say you get some co-founder. Let’s say you give them 40% or something. Then later on, you hate it, and you’re like, “Why?” Not only that, there’s maybe an investor that wants 30%. Do you have to convince him that, “I need you to give up 30% of your share, too?”
No, this is one of those really tough things. Let’s splay it out, especially with the human issues. There are mistakes you’re going to make that you can hit the undo key on. Ones that you can go and reverse, it’s not that costly to go into it. There are other ones where hitting the undo key is going to be really costly. Those are the ones that you have to focus on the most at the beginning of the road. “How Can I go and understand which are the ones that are going to be the stickiest, that are going to be the toughest to go and undo?”
That equity split that you just talked about is one of those. Where you need to have a lot more of the foresight, you have to be going and structuring it to begin with. Otherwise, you will end up having a movie written about you going and raking your co-founder over the coals as you try to grow and grab back the 30% that he got.
It fits right into that what we were talking about before, with the static split, and not understanding the perils around that. That is hard to undo. We’ve talked about a whole bunch of things. Give someone a CEO title, and they get in love with it, it’s going to be very hard to go and undo that.
Several other things, this is also back to the Life Is a Startup piece of it. What are the things in life where I’m going to go and hit the undo key, and it’s going to be really hard to go undo it? Think a lot harder about those. Date those options a lot more before you go forward with it.
Your mother-in-law wants to come and move across the country to go and be living in your basement. You’re going to go move her out of where she is right now, move her in to where you are. That’s a very different thing to go and hit the undo key on when you see that she actually thinks you’re not parenting your kids well, and she’s there daily to go and counter that, and there’s loads of tensions there.
Compared to “Let’s go and date this a little bit. Mom, let’s keep your apartment there. Let’s have you come and visit us for two weeks, instead of the usual one week. Let’s go and ramp up on that.” A lot easier to hit the undo key if you have gone and waded into the waters, rather than took a dive into it, and got rid of the beach.
There’s all sorts of ways in which you have to go and separate those out, in life and in founding. Whether you’re going and doing it as equity splits, or dramatic life inflection points, you have to go and be able to see that this is going to be an undoable thing that I should go and weigh it in a little bit better into it.
I apologize, but Noam is flying on the red-eye back to Boston. I really, I want to thank you, Noam.
No, thank you for organizing. Thank you, Michael, for helping with it. Thank you, everyone, for coming!
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