(Draft of John's new book: Your comments are welcome)
When it comes to people, startup leaders act, they don’t linger in debate nor wallow in analysis paralysis. They get results or get new people. They set goals for people with dates and hold people accountable.
On the board of a hot startup, I watched as the first-time CEO quickly (one year) ran out of ability to manage the accelerating complexity of the organization. Chaos began, morale dropped, deals did not get done and cash burned fast.
The board waited until the pain of incompetence was clear even to the determined but overwhelmed CEO. Everyone finally agreed that the company’s ambitious first product launch had to be delayed. A layoff was going to be necessary.
One of the investors was selected to be the temporary CEO. The first-timer and co-founder stepped aside reluctantly. A month later the former CEO (still an employee and still on the board) was in full agreement that such a drastic change was necessary. He and the temporary CEO did the painful layoff and altered the company strategy.
To find the replacement CEO, the board decided to avoid using a professional recruiter, in part to save the related fee. After three months of slow recruiting, no qualified candidate could be found. After a lot of anger and shouting, the decision was made to engage the services of a world-class executive search firm. Qualified candidates began arriving within weeks. A hiring decision was made and the new CEO was on the job two months later.
The above example of a CEO replacement decision process is typical of venture backed startups. Here are tips to avoid the related traps of hanging too long onto people who just cannot deliver what the startup desperately needs:
· Plan to replace the startup CEO in the original business plan. Pick the date on the milestone timeline. Give the qualifications for the replacement candidate, including examples of real people in real companies. Repeat for all vice presidents.
· Replace people, do not compromise. You have too much to do without the added burden of carrying the load for a failed employee. When in doubt, follow your intuition. Let the underperformer go – or give them a push.
· Be bold while being wise about when you dismiss people. Anticipate sales trips to customers, deal negotiations with strategic partners and industry speaking events. Avoid dismissing high profile personnel during such important tasks and key projects. Act before the work begins.
· Never pay blackmail. When it is time to say goodbye, say goodbye. Do not think any person is vital to the company. They are not and never will be. Remember that includes you. Either you deliver or you go. If you doubt this, ask the serial entrepreneurs, they have been there.
· Hire the Dream Team. Work to hire only the best. Find the A class people. Get them to find their friends. Birds of a feather flock together and so on. Don’t give up. It is the most important thing you can do to ensure your success and the company’s.