Who Do You Want to Be and Towards What End?

Janis Machala, Managing Partner, Paladin Partners janism@paladinpartners.com

I recently had the experience of reading two things the same week with very different perspectives: 1) A blog post by a serial entrepreneur, Mark Maunder called “Cows VS Tigers and How to Create a Tech Business” http://markmaunder.com; and 2) A book by Dan Lyons, a writer for HBOs Silicon Valley and a former technology editor for Forbes and Newsweek, called Disrupted. His book is about his experience at Hubspot, a Boston high-flying SaaS-based marketing automation company. I lived in Boston for 10 years, worked for a different time high-flying  Silicon Valley-based company, Sun Microsystems, and have been in Seattle 24 years experiencing the ups and downs of our region as it relates to our start-up region’s culture. After reading both of these I am so grateful to be in Seattle and not Silicon Valley or Boston. Why? I believe we have more entrepreneurs who are pursuing their dream of passion (Missionaries) over wealth (Mercenaries). Yes, you want to succeed and make money for your investors and the founders but not at the expense of serving your employees, customers, and business partners. I think we roll our own way and am, for one, glad we’re not wired like Silicon Valley and Boston.

Mark wrote the following in his blog. His perspective is very worth founders’ consideration for the kind of company they are starting and growing.

Areas where Mark sees an entrepreneur and investor’s goals as not aligned:

• Entrepreneur wants to keep more equity, investor wants more equity for themselves.
• Entrepreneur wants more control in the form of board seats and less or no preferred stock with its rights. Investor wants to have levers to be able to block exits, fire CEO’s, and so on.
• Entrepreneur may not want to get acquired. Investor wants an exit with a short time horizon that is low risk and easy to implement (IPO’s are onerous).
• Entrepreneur should be doing everything to serve the customer as their target market.
• Investor wants to groom company for acquisition in many cases, so growth, being a credible threat and a beauty contest is the priority.
• Entrepreneur wants to learn how to be a CEO on the job. Investors think they already know and interfere with a very necessary learning process.

What Dan Lyons’ book left me with (some things I already believe):

• Culture is not a set of empty acronyms or lingo and a culture deck does not a culture make. Whether you like it or not, Amazon, Microsoft, and Zillow have real cultures.
• Leadership is a WE game and not an I game; there was a lot of self-aggrandizing that went on at Hubspot by the founders and C-suite.
• Diversity is NOT embraced for many startups not because they are discriminatory but because their funding tilts them towards cheap (e.g., young) labor with the promise of the stock options and a fun place to work (think candy wall, beer pong, social life at work).
• Diversity is not a 16 member management committee with 2 Indian guys, 2 white gals, and 12 white guys or an 8 member board with 1 Indian, 2 females, and 5 white males. Diversity is about diversity of thought and perspectives and not skin color or gender alone.
• Transparency is an empty word that sounds good but is rarely practiced well.
• Graduated takes on a whole new meaning: crashed and burned, laid off, fired, quit and if that isn’t a tech cult I don’t know what is.
• Our industry has made over 40 as the aging out of talent; aging out is about who’s a lifelong learner, adaptable, and resilient and not what age someone is.
• We’re headed for another bubble and correction. It won’t because of lack of IPOs but because of a lack of companies building real companies with fundamentals that the public markets can embrace.

All in all, what both of these pieces show is that founders need to be clear why they are doing what they are doing and that it does not have to be done the Silicon Valley way. Let’s look at what works for the founders and its employees and customers versus what works for the funders and those who are just financial engineers not caring much about building for the long haul.