Fired Up By a Flybridge Family Reunion

crashfirebase-photo

Last week there was an interesting piece of news in the tech world when Firebase/Google acquired the Fabric product line and team from Twitter. Over 20+ years in the venture industry and hundreds of companies, this was a first for me: two companies we had invested in merged post their respective acquisitions by larger players. While it was unusual, nothing could make me happier than to see Crashlytics, which was acquired by Twitter in 2013, and Firebase, which was acquired by Google in 2014, join forces and continue the missions they held from their founding, and our original seed investments, of improving the lives and effectiveness of mobile developers. Huge congrats to Andrew, James, Jeff and Wayne and many thanks to both Twitter and Google for their support of both companies and allowing them to deliver on their common goals.

Rewind the clock to 2011. At the time my core investment focus was on developer-driven cloud platforms and an insight that companies that went to market with products that delighted developers could achieve significant adoption and break down many of the barriers seen by companies that focused on more traditional enterprise sales models. Within this broader theme (that also led to our investments in companies such as MongoDB, Stormpath and Apiary), it was clear at that time that the mobile developer was the new rock-star and thought leader and that most new application development spend was for mobile apps. But while mobile developers were leading the way, it was still too hard and technically challenging to quickly and easily get high quality apps into the market. Over the next year, this thesis led us to make seed investments behind two phenomenal teams. Both companies started out focused on very different markets – Crashlytics on crash reporting and Firebase on a platform to allow developers to easily build serverless back-end platforms. But both had a common goal of creating innovative technologies to help developers create amazing apps.

It’s always interesting to look back on your investment successes to see what if any common traits they shared. For Firebase and Crashlytics, there were many:

  • Founded by young, passionate entrepreneurs[i] who had strong technology backgrounds, startup experience and an innate understanding of their target customer who were
  • Creating platforms that addressed large and expanding markets with a
  • Special “developer first” approach to working with the developer community that led to rapid adoption of their platforms which led them to
  • Blow away their seed round metrics within less than a year and in turn raise Series A Rounds led by their initial investors and ultimately to being
  • Acquired by leading technology companies less than a year after Series A rounds and these
  • Acquirers provided significant incremental resources, let the teams run independently and continue to innovate under their own brands post the acquisitions

I could not be more proud of both of these teams. With millions of apps and hundreds of thousands of developers now using their technologies, what each has built is exceptional and I am 100% sure, will only get better as they join forces.

[i] It should also be noted in this time of anti-immigrant sentiment that in each company one of founders was born outside the US

Post Election Advice

img_0404Flybridge held our CEO UnSummit earlier today for all the leaders of our portfolio companies.  It was a fabulous day and full of energy, and we will be posting more on some of the many insights these phenomenal leaders had about their companies and best practices.

But today is about a more timely issue, namely the election.  It was obviously the elephant in the room at the CEO UnSummit and I spoke to that directly in my introductory remarks. I have pasted in below what I said in the event it is of interest more broadly.

My intro remarks certainly took a different turn early Wednesday morning around 3am, so before we talk further about today I thought I would take a few moments to talk about the elephant in the room, especially as many of you have asked for thoughts on what the election means for all of us.

While I am no means a political expert, I have lived through many cycles in my 22 years as a venture capitalist and have a few thoughts on managing a company through uncertain times. The first and most important observation is not to panic. If you were excited about your market opportunity and the strategy you and your team are executing on Monday, you should be excited about it today. The big technology and macro market shifts that drive the markets we are all participating in tend to meaningfully outweigh any increases or decreases in GDP, fluctuations in currency markets or what party controls what branch of government. Remember, this is a long game we are all playing and that short or even medium term periods of uncertainty generally don’t have a lot of impact on the likelihood of success or failure. That said, periods of uncertainty do have an impact on short term results, as customers who may be ready to invest with you may find it equally easy to put that decision off for a quarter or two until the dust settles. Thus, I would encourage you to, on the margin, be cautious and conservative with your incremental spending decisions. Further, short term fear and uncertainty can have a real impact on the capital markets, and while we did not see the large drop in the S&P it looked like we might see late Tuesday night, I would guess that the fund raising markets for each of your companies will be more challenging than not in the coming 6-12 months, so if you have an opportunity to raise money now, take it but don’t spend it, and if you need to raise money in that window, think about ways to defer, or at least minimize, that need.

More difficult, and I am treading on more tenuous and potentially emotionally charged ground now – but I will do so as there are certain values we hold strongly as a firm – is what this election says about our society and what we can collectively do as both company leaders and leaders in our community on a go forward basis. A few thoughts come to mind on this front. First, is to remember we live in a fabulous country and our political system has been remarkably resilient over 200+ years and we should respect the democratic process even if we may disagree with the outcome of this particular election. Second, is to take the high road and focus on what we can all do moving forward. If the divisive rhetoric of the campaign, with its anti-immigrant, misogynistic and racist overtones made you sick to your stomach, let’s address that in ways we can control and actively seek to model a culture of inclusivity in our companies and create opportunities for people who were born outside this country, people of color, women, different sexual orientation and generally embrace diversity in all of its forms. It will not only set an example for others in our communities, it will make for stronger companies. Finally, it became clear with the surprising nature of this election that those of us in the tech community living in our coastal bubbles, have potentially lost touch with the impact that the rapid pace of change has had on the American workforce, so I would encourage all of you to think about ways we can improve our communities and our country, not only by building great companies, as entrepreneurs are indeed the engine of economic growth in this country, but also by thinking creatively about whether there are ways to hire team members outside our mainstream cities, or to get involved in educational opportunities for those less fortunate, or to think how our innovative approaches to business can be channeled to address issues with a social objective in addition to a profit objective. And with that, I will get off my soapbox.

Listen Up!

I spent a lot of time over the holidays catching up with my family and friends. It seems forever ago, but as I reflect on how enjoyable as it was, and it was enjoyable, I was struck by how few people in the world would be considered “good” listeners. This led me to reflect on how many of founders I meet who are so busy being in in “pitch mode” when speaking with investors, customers, or potential employees, that they forget to listen actively.

Before relating this back to the start-up world, what are the common habits of bad listeners?  

  • Talking about themselves… excessively. Most people are too busy talking about themselves that they are incapable of taking a genuine interest in someone else. This leads to elongated, agonizing monologues that removes the opportunity for any genuine exchange of ideas.
  • Relating what you say back to their life.  Also known as “one-uppers,” these people immediately interrupt what you’re saying to somehow relate it back to themselves, implying that they have a better or more interesting experience with the subject at hand. While their experiences may indeed be more interesting, as they do this they are constantly thinking ways they could chime in with a personal anecdote rather than actually processing what the other person is saying.
  • Changing the subject. If someone changes the subject while you’re talking, they either have no idea what you’re talking about, or simply have no interest in what you’re saying. In both case scenarios, the person is not listening actively. This also makes the person seem careless, and unable to connect emotionally or cognitively with another human being.
  • Saying “yeah” or “uh-huh” to hurry you along. A nod or yeah can be a helpful social cue to say you are listening, but when over used it is a clear sign that the person is not absorbing any of the information you’re sharing. Along with the other bad listening habits, rushing someone along when they’re speaking hinders their willingness to listen to you when you speak. Bad listeners wait impatiently for their turn to speak, and still expect undivided attention.

With that said, it isn’t easy to be a good listener. Research says we talk at 130 wpm, listen at 400 wpm, and think at 1000 wpm. So even if there is genuine interest in what one is saying, it’s extremely easy for the mind to wander.

Active listening takes effort, patience, and understanding. In this Wall Street Journal article, Graham D. Bodie, a communications professor at LSU, states that “active listening starts with the real desire to help another person think through their feelings. Don’t try to fix the problem right out of the gate, and don’t rush things.”  It all starts with being genuinely curious about what the other person has to say and asking open-ended questions, but having good body language, maintaining eye contact and giving well-timed verbal cues also helps signify that you are engaged in a conversation and gives the speaker encouragement to continue confidently.

So… why is this important in regards to founders?

In so many pitches I receive, the meeting starts with a conversation, but then out come the slides and the founder moves into “pitch mode” and the listening and exchange of ideas stops.  No matter how well honed a pitch it is, this represents a lost opportunity as I believe how founders listen and take in feedback is a meaningful indicator of whether or not their company will succeed. Point 5 in this article is right on.  People who are naturally curious see conversations as learning opportunities.  And founders who are naturally curious are going to be more successful.  Too many founders are not open to criticism and potential change, which could help them shape and sharpen their idea, and many resist open-ended questions and conversations as they feel they won’t like the answers or that they can’t control the conversation.  [As a side note, I also see the reverse where founders take everything a potential investor says as gospel and they agree with everything.  This is even worse.]

Active listening, and the genuine conversation it begets, on the other hand is is not only a sign of respect, but a sign of intellect and it shows you are a learning machine with an ability to accept and consider input and be open-minded, all of which demonstrates strength, not weakness or vulnerability.  Further, particularly for early stage companies in a fund raising setting, a genuine conversation builds relationships and deepens a connection, which is ultimately the basis upon which many investment decisions are made.  The converse also applies.  A potential investor who is not a good listener will be a terrible board member and advisor as they will never have taken the time to truly understand the issues you are facing and even if they do, they will be too busy promoting their world view for their advice to be meaningful.

Outside of the investor setting, good listening skills are even more important when recruiting or speaking with potential customers.  If you take an active interest in a potential employee and listen carefully you will come away with a much better sense for how they think, what is important to them and whether they will culturally fit your company.  With customers, if you immediately go into pitch mode you lose a valuable opportunity to let the customer articulate their issues, priorities, and organizational processes (including how they buy) and miss, as a result, valuable opportunities to shape and modify your approach to best fit their needs.  

If founders took a step back and listened more often, it would benefit them greatly, not only as the founder of a company, but as a person as well.  Listening actively will help all of us build our relationships, our businesses, and our knowledge. It would also make for a more enjoyable holiday break.

Leading high performers

In my #ifiwereafounder tweets, I had a few comments related to hiring high performers and team building, not only for finding a co-founder, but also more generally.  What I did not cover, as the CEO of one of my portfolio companies recently so correctly pointed out, is what it takes to manage and lead a team of high performers.  This post will attempt to shed some light on this topic.

Developing, managing, retaining and leading high performing team members, whether they are right out of school or seasoned executives, is obviously critical to the success of any start-up venture.  But these folks, by the nature of their intelligence, curiosity and drive, can also at times be a handful to manage.  They also know they are great and have plenty of other opportunities, so keeping them engaged, focused and happy is important.

In my experience, and from observing many successful CEOs over the years, the following are critical points to focus on in leading a team of high performers:

  1. Create a sense of ownership and identity by connecting what they are working on with with the broader goals of the organization.  This is critical across the board, but with A players there is a constant need to feel like their ample skills are being applied to issues that move the needle for the company.  Sometime this is obvious (i.e. closing a key account from a sales perspective), but when it is not, make sure you have clearly articulated short and long terms goals and connect the dots for people.
  2. Ensure the goals are expressed in terms of ambition, not just dollars.  As you connect the specific activities and tasks to broader goals, ensure these goals have meaning beyond just numbers.  Yes, growing revenues, hitting budget and creating shareholder value are important, but high performers are motivated by feeling like they are part of something truly important that will create an impact on the world.
  3. Delegate and provide autonomy, but take an active interest in what they are doing.  With a clear linkage between their team's focus and broader goals, strong leaders know that the best approach is to step out of the way and let their high performers execute fairly autonomously. That said, this should not be translated into a perception that you don't care about how they are doing what they are doing as high performers will be proud of the approach they have taken. If you take the time to understand this, they will reward you with further creativity.  
  4. Find the right scope for their activities with a balance between stretching them, but not stretching them so much they feel like they are set up to fail.  In a resource constrained early-stage company this is hard, as there is a tendency to keep putting more and more onto the plate of your high performers.  This is great, but know their limitations, listen carefully to when they feel like they are getting stuck and intervene before this becomes demoralizing.  
  5. Look for opportunities to let them stretch their wings outside of their core domain.  If you have a high performer in a specific domain, seek out opportunities to get them exposure to other parts of the organization.  This helps align their interests with that of the company more broadly, allows them to keep learning and facilitates cross functional cooperation across your team.  Special projects, critical sales situations or thorny customer service issues can often be good situations to involve others in developing creative solutions.
  6. Recognize success and achievement.  This is perhaps obvious, but as one of my CEOs observed, high performers all have a little diva in them.  Acknowledge this diva publicly and privately, but also in a demandingly honestly way as false praise for easy accomplishments is seen through pretty quickly.  
  7. Take pride in their development.  Our best CEOs view their job as grooming the next generation of leaders, and they revel in the success when people step up.  If seeing these unexpected accomplishments and this growth and development does not get you jazzed, it maybe you are not in the right role.
  8. Take an active interest in their life outside of work. Early stage companies can be all consuming and it is easy to lose sight of the fact that your high performers will have a life outside of the office.  Recognize this, know what is important to them and understand if there are extenuating circumstances outside of work that may impact their abilities inside work. 

I am sure I have missed some points, so let me know what works well for you!  I would also like to give a special thanks to several CEOs of Flybridge portfolio companies who provided invaluable advice on this post.  They are the real rock stars, and I would like to publicly acknowledge their inner divas.

On Being Scared Shitless

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Of all my #ifiwereafounder tweets, this comment resonated with the most people.  Profanity aside, as that always sells, this is because I acknowledged what every founder feels and almost never publicly admits: the day to day building of a company from scratch is scary.  These fears range from those that are inwardly focused (I am doing things every day I have no experience doing), team focused (how on earth did I become responsible for the livelihood and development of all these people), customer focused (we are at risk of screwing up our largest account), market based (will enough people buy what we are selling or if there are, will our large competitor react quickly enough to crush us ) to financial concerns (we run out of money in 8 weeks and I have no idea where the next slug of cash is coming from).  

The path through these fears is the second part of the tweet: be action-oriented around things you can control.  Don't fret about things outside of your control.  For example from the list above, what you do today has very little to do with whether your large competitor decides to try to crush you.  Every cycle you spend on things you can not impact distracts and bogs you down.  Instead, focus relentlessly on what you can do to keep pushing forward every day.  Break down big scary tasks down into manageable and achievable chunks.  Celebrate small successes and develop a culture of getting shit done.  Figure out quick data driven approaches to research your concerns and react accordingly.  Recognize you don't and can't know everything and reach out for input on your path forward from your team or advisors when you are outside of your comfort zone.  If you are confronted with a WFIO moment, read Scott Weiss's excellent post on leading from the front, getting the best brains around the table and realizing it is never as bad as it seems.  Speed, desire and unique insights are why start-ups win.

In a subsequent tweet I said "I would have one person to share my deepest fears and worries with" and this too is critical.  Generally I am a fan of leaders that are more open with their team than not, but I also recognize you can not share everything broadly.  But internalizing all these fears is also counter-productive and will lead to even more sleepless nights, and there are enough as it is.  So have someone you can be completely honest with as talking through your concerns, issues and worries makes them easier to address and overcome.  Ideally this person is your co-founder, but could also be a key mentor, other CEOs in a group you regularly meet with, your significant other or, heaven forbid, an investor you trust.  If you can find that unique combination of 100% supportive married with honest objectivity you will have found the right mix.

Finally, if the reactions I had to the tweet are any indication, recognize you are not alone.  This in and of itself is helpful.

Getting the Co-Founder Decision Right

In my recent list of #ifiwereafounder tweets, I started with the assertion that "I would aggressively seek out one, but no more than one, co-founder to complement my deficiencies".  This generated a number of questions from founders about the ideal composition of a founding team.  This post will expand on what I was thinking with the original tweet in a way that can not be captured in 140 characters.  

At face value, the first question is why have a co-founder, and if you do, why only one?  First, it is worth recognizing that founders form the soul of any start-up.  It is their conviction, passion and unrelenting desire to succeed that powers the company forward and through all the tough spots.  It is hard to hire this skill set, so starting a company with a co-founder means that this does not rest solely on the shoulders of one person.  Further, start-ups are all about developing hypothesis, testing these assumptions and moving forward in an unrelenting manner.  This is more effective if you have someone to run these ideas by in a high-bandwidth manner and to parallel process on tasks, especially in the early days.  Finally, no one founder has all the requisite skills to execute on their vision and bringing in a co-founder that complements areas of relative weakness and potential blind-spots results in a far stronger team operating right out of the gates.

So if these statements are true, wouldn't more co-founders be better than fewer?  In my experience, unless the founding team has all worked together before, the answer is no. The worked together comment is a big caveat as our founding teams with more than 2 co-founders that have worked together before are performing quite well, in large part because the issues discussed below are less applicable for teams that have learned over the years how to work together.  I believe there are three reasons for two co-founders being the magic number.  First, if you think of all the requisite characteristics of a co-founder – a shared vision, complementary personalities, similar work ethics, aligned goals – it is incredibly hard to find the right co-founder.  Looking for a third or fourth such person exponentially increases the time and difficulty of this task as you not only need to find additional people that fit you, they also need to fit each other.  More often that not this results in making compromises and sub-optimal choices.  Second, while having one co-founder results in faster and better execution as two people can be incredibly aligned and efficient, more than two cooks in the kitchen tends to slow decision making down as consensus is sought and the trade-off of perhaps better decisions by having a third or fourth opinion does not compensate for all the advantages start-ups get by executing faster than incumbents or their competitors.  (A related note is that some critical decisions really do require multiple viewpoints and differing perspectives and this can be an ideal role for your outside advisors and supporters).  A final point is economics: founding equity is incredibly valuable and if you are dividing the initial pie by 3 or 4 and the incremental 3rd or 4th co-founder is higher risk and likely to slow things down, you own less of a less productive and potentially more contentious company.  Not a good trade.

So what makes for a great co-founding team? Noted above are the first critical points: a shared vision, complementary personalities, similar work ethics, and aligned goals.  In particular, alignment on vision and goals is critical as they are the hardest to reconcile and most likely to lead to major blow-ups.  To find the best fit on the personality front, it helps to understand your own biases, strengths and weaknesses and to find a co-founder to fill in those gaps.  If you are extremely intuitive and high concept, find a co-founder that is analytical and more considered in their actions.  If you are naturally wildly optimistic and a throw caution to the wind type, find a co-founder who considers what can go wrong and how to plan accordingly.  These personality differences, while at times likely to infuriate, will result in better decisions but as you will spend more time with a co-founder than anyone else in your life, make darn sure you enjoy each other's company.  Last, from a functional skills perspective, our best co-founding teams of two tend to have one co-founder who is awesome on product and technology vision and the other who is always thinking about market opportunity, positioning, growth and how to best bring the product vision to the market.  In today's parlance a Product person and a Growth Hacker.  If you look at successful companies across the tech landscape, this pattern emerges over and over again.  

Good luck in finding the right partner with whom to launch your company.  Don't rush to the altar and take the time to get the decision right and it will pay of down the road.

If I were a Founder

Inspired by a tweet stream of consciousness by Danielle Morrill, the Founder of Mattermark, on what she would do if she was a VC, a jotted down a few notes on what I would do if I was a founder.  These first went out as tweets on @chazard, but here is the full list in one place:

  • I would aggressively seek out one, but no more than one, co-founder to complement my deficiencies #ifIwereafounder
  • My early hires would be people right on the fine line between crazy good and crazy crazy #ifiwereafounder
  • I would meet with or speak with more than 100 potential customers in my first 30 days #ifiwereafounder
  • We would design a product experience to surprise and delight customers in unexpected ways #ifiwereafounder cc:@wayne @jeffseibert
  • I would be scared shitless almost every day, but would translate this into being action-oriented around things in our control #ifiwereafounder
  • I would have one person to share my deepest fears and worries with #ifiwereafounder 
  • We would focus on driving adoption before driving revenue #ifiwereafounder
  • I would avoid strategies that rely on other companies or organizations for our success, at least for the first couple of years #ifiwereafounder
  • Our company colors would be a little unusual #ifiwereafounder
  • I would have Friday afternoon happy hours and use them to celebrate successes #ifiwereafounder
  • We would have regular internal hackathons to spur creativity #ifiwereafounder
  • A recruiter would be one of my first hires after raising a Series A #ifiwereafounder
  • I would track 3 key metrics daily and 5 on a weekly basis #ifiwereafounder
  • I would have a vision for world domination, but very achievable first steps #ifiwereafounder
  • I would be wildly optimistic, but not delusional #ifiwereafounder
  • I would take extra time to simplify and shorten key messages #ifiwereafounder
  • I would be able to give my own demos #ifiwereafounder
  • Our company name would not have capital letters in any place other than the first letter #ifiwereafounder 
  • Creating shareholder value would be a by product of building something great, not a primary goal #ifiwereafounder
  • I would seek advice when outside my depth and not feel like I need to know everything #ifiwereafounder
  • If my board pushed back on critical decisions, I would tell them they are at risk of "breaking the bronco" #ifiwereafounder cc:@bijan
  • Bad news would travel as fast as good news and it would be accompanied by a plan to fix, or at least a plan to get to a plan #ifiwereafounder
  • If I disagree with my Board's advice, I would drive the differences to ground rather than pocket vetoing their suggestions #ifiwereafounder
  • i would never let any one person in the company become irreplaceable #ifiwereafounder
  • i would force my board to provide me feedback on my performance and seek out advice on how my role should change as the company grows #ifiwereafounder
  • If a room of smart people don't understand my business, i would consider revising the message instead of assuming they just don't get it #ifiwereafounder
  • I would understand my competitors deeply, but not obsessively.  I would obsess about customers.  #ifiwereafounder
  • i would read Reed Hasting's piece on culture and leadership, but not much else in this category #ifiwereafounder

Based on Retweets, Favorites and offline feedback, the comments that resonated most with people were being scared shitless; seeking advice; obsessing about customers, not competitors; having a few key metrics to track; and dominating the world, one step at a time.

I also added a few more to the list, and have included these below:

  • The person I share all my fears with would ideally be my co-founder #ifiwereafounder
  • I would start my company in an area with big macro trends in my favor.  Always easier to sail with the wind at your back #ifiwereafounder
  • I would recognize that no amount of marketing $ spend from our start-up is going to make our market develop significantly more quickly than it wants #ifiwereafounder 
  • My board would have no more than 5 members #ifiwereafounder
  • We would have weekly staff meetings, but they would be short #ifiwereafounder
  • If I was based outside of CA, i would open an office there as quickly as possible with as senior a person to run it as possible #ifiwereafounder 
  • My California office would be the only exception to my rule of having everyone in a single location #ifiwereafounder
  • The response to the first inbound M&A offer would always be NO #ifiwereafounder
  • I would compensate my team more than fairly and accept all resignations from anyone who threatens to quit because they are not paid enough #ifiwereafounder
  • All my financial projections would be conservative, but I would never say that as no one would believe me #ifiwereafounder
  • I would recognize that the first equity I sell is the most expensive equity and I would plan accordingly #ifiwereafounder
  • I would stay up late trying to close the deal and wake up early to figure out how to deliver #ifiwereafounder

  •  

    I would infuse design excellence into everything we do, but struggle to find excellent design talent like everyone else #ifiwereafounder

  • I would drive an '07 Toyota Prius but lust after a '14 Tesla #ifiwereafounder #truestatementevenasaVC

  •  

    Our office would have a branded corn hole game #ifiwereafounder

  • I would not wait for a prospective investor to follow up with me. Otherwise would worry they think I am not a closer #ifiwereafounder
  • After seed round, I would communicate with investors monthly on metrics, accomplishments, forward plans & how they can help #ifiwereafounder
  • If I was building a SaaS business, I would know my Magic Number better than my phone number #ifiwereafounder cc: @joshjames

  •  

    As a smallish private company, I would not count on M&A to fill in product gaps.  Too many variables outside of my control #ifiwereafounder

  • I would publish a rolling 6 month product road map for my customers #ifiwereafounder
  • Annually, I would do a facilitated offsite entirely focused on our management team's ability to communicate and work together #ifiwereafounder

  •  

    I would have at least one quant jock on my team #ifiwereafounder

  • I would hire people who have a proven ability to communicate well in writing #ifiwereafounder
  • i would not let my urgency to fill open positions on our team lead me to lower the bar on quality #ifiwereafounder
  • If I unexpectedly got my ass kicked on an issue in a Board meeting, I would digest for 24 hours and come back to them with a response and plan #ifiwereafounder
  • I may fail, but I would never quit #ifiwereafounder

Let me know what I missed!