Wendy Lea is the chief executive officer of Get Satisfaction.
Over the span of my professional life — which includes serving as founder, CEO, investor, advisor, and board member — I’ve noticed three fundamental mistakes founders and CEOs (including myself!) often make.
These mistakes can keep a company from meeting its growth objectives, distract from the main business focus, and even lead to a mediocre team being hired, any of which can kill a company in the long term.
The good news is that veterans like myself have learned this over the course of many years and are willing to share what we have learned about avoiding these mistakes, which can easily prevent companies from realizing their full business potential.
Fixating on the grand vision
Too often, founders get so wound up and obsessed with the grand vision that they forget to build a tactical foundation that can be strategically scaled at each phase of the business. Without the proper foundation, the grand vision cannot be realized within funding and timing milestones.
Based on market dynamics and internal capabilities, successful CEOs and founders have to determine growth strategies that are specific to that particular stage of their business. The strategies have to be supported by agreed upon tactics and delivered by the collective team. Keeping the grand vision top-of-mind is critical as you’re ensuring the collective team is executing on strategies and tactics to ensure measurable progress for a particular phase of the business. Balancing the grand vision and tactical execution within funding and timing milestones is tricky.
I’m constantly asking myself, “What do I need to achieve in this phase of the business to get me to where I need to be next week, next month, or next year?”
It’s vital to constantly be aware of two things: time and money. If you have $5 million in the bank, for example, how much time does that buy you and what do you need to achieve with that $5 million to successfully secure your next round and move to the next phase of the company.
Getting distracted by money
It’s important to keep your focus on the product, not the valuation or the exit strategy. These are two common mistakes founders often make, especially when egos are involved. The reality is that your company’s valuation only matters in the end and if you’re solely focused on valuations and exit strategies, you’re probably not focused on what actually matters: building demonstrable value by uniquely solving problems for specific customers within chosen market segments.
When it does come time to think about valuation, founders need to ask themselves, “Can my company really live up to the proposed valuation at the stage that it is currently in?”
An important lesson I’ve learned working on both sides of the table (as an investor and as the CEO of a company) is that you should only take what you need to achieve that next big step. Be strategic as you’re raising capital, making sure you know how you would deploy the capital to make progress against the agreed upon valuation.
Focusing on what really matters early on — not valuations or exit strategies — has paid off for me. In February 1999, OnTarget bought several consultancies, including The Sales Consultancy, the company I co-founded. OnTarget was attracted to our company because of our brand, talent, IP, and shared global client roster. Our consultancy was a $10 million business at the time; OnTarget was three times our size. We could have worried about our valuation or the fact that we weren’t getting any cash up front. Instead, we were jazzed about the opportunity to join OnTarget to deliver more value to our customers — the largest high-tech B2B companies in the world — as well as to distribute the innovation we had developed.
Less than a year after the roll-up, Siebel Systems acquired OnTarget. There were many drivers for the acquisition, but Siebel Systems was really impressed with the team, the depth and breadth of the product portfolio, and saw a clear path to scale the company through their own sales channel. As a customer-financed (rather than venture-backed) company, our focus from day one was on providing value to our customers, not on our valuation or exit. That paid off in the end.
Hiring a “good enough for now” team
Startups and tech companies are notorious for their fast-paced nature; this “done is better than perfect” mentality drives much of the startup culture in Silicon Valley. But when it comes to hiring, done is most definitely not better than perfect. Yes, we will always have much more work to do than we have the resources for, but the solution is never to hire just to accumulate more hands on deck. Hiring the wrong people isn’t just a wash; it’s actually a drain on the rest of your team and oftentimes negatively affects your company’s culture.
I learned this from my mentor Burton Goldfield, the CEO of TriNet. I remember a meeting I had with him where we discussed the next level of growth for Get Satisfaction in terms of the team and the business in general. He told me the most important thing to for him in growing TriNet was recruiting and hiring the right executive team. In addition to his CEO responsibilities, Burton also led Marketing for TriNet for more than 18 months because he couldn’t find the right marketing leader replacement. He reminded me that he could have hired someone that was good enough, but he waited until he found the perfect replacement.
It was painful in the short term, but it was the right decision for the company in the long term. Under Burton’s leadership, TriNet has experienced strong growth. He attributes that growth to the strength, chemistry and alignment of his executive team.
When building up your core team, ask yourself, “What skills do I need at my disposal to let me as the CEO or founder achieve both the strategic steps necessary to propel me forward, but also the larger, fundamental steps needed to ultimately achieve our grand vision?”
Founders and CEOs sometimes forget that at the end of the day, your team is your greatest asset. If you build an effective and loyal core team, they will stick with you throughout the company’s life.