Building Long Term Companies

I was catching up on a bunch of reading on the web from last week and came across a post by Lars Dalgaard titled Thoughts on Building Weatherproof CompaniesI don’t know Lars, but know of him as the founder/CEO of SuccessFactors and now a partner at A16Z, and was curious after recently reading a Forbes article about Zenefits a few weeks ago titled ‘A Lot Of Things Went Wrong’: Lars Dalgaard On Zenefits Scandal.

Any CEO I’ve ever worked with has heard me say “build the company and make decisions as though you’ll be running it forever” many times. While forever is a very long time and so far the idea of running a company forever hasn’t happened, it’s a great frame of reference for a CEO to operate from. So, I found myself nodding at a bunch of things Lars wrote in his post and I encourage you to read it.

Following are a few of the headlines of the points that resonated with me along with my quick thoughts.

Successful companies are bought, not sold: This cliche is said 100x per day by VCs. And it happens to be true. Build something great and important and opportunities to be bought, whether you want to pursue them or not, will come to you.

Develop a perpetual, aggressively help-seeking mindset: A simpler way to say this is “learn quickly, do it continuously, and surround yourself with people you can learn from.” There’s a subtext about sublimating your ego and fears, which appears in several other parts of the post and is a characteristic of everyone I know who is a learning machine.

Invest in a coachMany of the CEOs (and founders, and execs) we work with have coaches. We strongly recommend them. My partners and I have used Nancy Raulston since we started Foundry Group and my extremely close friend Jerry Colonna is someone I describe as “the best startup CEO coach on the planet.” I have a running coach, even though all I do is run marathons, and not competitively. I’ve never understood why people who are trying to be excellent at something don’t recognize the value of a coach.

Build a real board of directors … and use itI’ve long been an advocate of building a real board early in the life of your company. Lars talks about adding non-VC directors early and I strongly agree. I’ve seen too many boards that are just gradual expansions of the number of VCs around the board table with each successive round of financing. While the CEO works for the board, a great board effectively works for the CEO also, doing whatever it can (as individuals and collectively) to help the CEO be successful with one fundamental governance role – that of insuring that if the CEO is not being effective, the board can take action to change this, which often, but not always, means replacing the CEO. If you want to go deeper on this, I’ve written a book on it called Startup Boards: Getting the Most Out of Your Board of Directors.

Kill the monsters of the mind, while preserving your spiritWhile a provocative title, I’m not sure your goal should be to kill the monsters of the mind. In my post titled Something New Is Fucked Up In My World Every DayI tell a short version of the Buddhist saint Milarepa’s story Eat Me If You WishComing to terms with the monsters (or demons) is much more powerful (and efficient) than killing them, since it often makes them simply disappear.

Don’t lie to yourselfI remind you of the great John Galt quote “Nobody stays here by faking reality in any manner whatever.” If you ever stay in my guest condo in Boulder, you’ll see a painting by my mother with this quote incorporated into it hanging on the wall.

It’s Sunday – if you are reading this, take some time to read Thoughts on Building Weatherproof Companies and ponder it in the background, instead of burning brain cells on whatever political crap is discussed on the internets today. Lars, thanks for taking the time to write it.

  • Jake Schrader

    Thanks for this post, and the link to Lars’ article as well. As I read them, I thought of the graphic from Crossing the Chasm. It seems to me that as in that image, there’s a big jump that companies that go on to be successful need to navigate very early on in their existence. For start ups that are either pre-revenue, or just beginning to sell product, many of the ideas here seem like great ideas, but are hard for me to imagine fitting in to the daily schedule. At what point can a company really have a Board and ask them to come to meetings, even if they’re online on a regular basis. What are those board members compensated with? Can you talk a little about prioritizing when it’s just 3 founders and two add’l coders sitting in a room trying to build the airplane, sell the tickets, and avoid crashing on takeoff as well? It feels like on one hand we’re too early to be thinking about the big ideas in your post, but on the other, we’d be fools not to make them the tools we navigate by.

    Thanks, as always

    • Recognize that Lars is talking much more about scaling up than starting up. I expect there will be a lot more written in the next few years about scaling up (see some of Reid Hoffman and friends starting work on Blitzscaling – http://www.inc.com/tess-townsend/reid-hoffman-three-stages-of-blitzscaling.html ).

      At your stage, pick and choose what is actionable. Defining culture, having a coach, and having at least one non-founder board member who you are accountable to can be extremely helpful. And don’t fake reality …

  • The don’t fake reality is so important. I was had a board member come up to me after we did a merger and the new CEO was spinning the numbers. He told me you can lie to whoever you want (“press, customer’s, or your mother for all I care” were his exact words) but you can never lie to yourself. It really stuck with me.

    Lying is a cooperative act great Ted Talk: https://www.ted.com/talks/pamela_meyer_how_to_spot_a_liar

    I’m going to put this another way: No internal spin.

    I am not enough of a choirboy to say you are not going to spin to the press or even customers and suppliers. If you don’t everybody else will and you will lose.

    But the real slippery slope is internal spin. A telltale sign is a beautiful internal Powerpoint rosily depicting a tough situation.

    You are never going to address that tough situation or figure out how to exploit an opportunity that you overlooked if you are spinning. It starts at the top. So many people think it is their job to spin things.

    • Jake Schrader

      Thank you both for your replies. Sounds like not tolerating bullshitting one another about our trouble spots and opportunities is a good place to start.

  • Daniel Farrell

    How early is too early for a coach or board in a company?

    • I don’t think it’s ever too early. We hired a coach within months of starting Foundry Group.

  • RBC

    I agree with your comment about coaches. Although, suggest it would also help some companies to have ‘Elders’ in the company – rather than just a team of youngsters. There is important knowledge to be passed between generations, which came through brightly in this outstanding long-form article in the NYT about humans navigating between islands in the Pacific thousands of years ago, and the tradition that continues today. I’m sure you will enjoy the read…

    http://www.nytimes.com/2016/03/20/magazine/the-secrets-of-the-wave-pilots.html

    • Yup – and mentors can play this role effectively.

  • Kevin

    Agreed with most aspects of this, especially the “Don’t lie to yourself”, or it could be titled, “Don’t drink too much of the Kool-Aid”. The difficulty I have had in finding a good coach is that most of them have packed schedules. In the immortal words of Chief Dan George in the Outlaw Josey Wales, “We shall endeavor to persevere.”

  • Great post Brad!

  • Scott Thomas

    Was at SFSF from 2009 to 2014, Lars is a fantastic leader who knows how to create the right culture with the right values. Highly recommend working at one of his companies if anyone gets a chance – it will be a formative experience.

  • Scott Thomas

    There are also two great Standord case studies on SFSF, one focuses on the first year of SFSF (highly recommend any entrepreneur read this one), the other focuses on SFSF through the IPO and is a great primer on the business case of the cloud ecosystem and its key drivers (recommended for anyone who wants to understand the Cloud business model at a more granular level than just “put everything on a host’s server, save on IT costs”).