2024-11-19 20:59:22
This is a follow-up to one of our most popular posts, which contained practical advice on executive presence. As a refresher, I define executive presence as a set of behaviors that will influence others to fully listen to what you say – because they respect you, view you as reliable, and otherwise think that listening to you is important for the company’s success.
It can be somewhat circular, but one of the best ways to build executive presence is for other executives to obviously care about what you have to say. This time, we’re going to dive into the behaviors that earn respect from other executives – the traits that help make them allies, and that prevent them from resenting you or taking you for granted.
People respect strength. At the end of the day we’re all just mammals trying to map every organization we’re a part of onto a primate dominance hierarchy. And since it’s generally not acceptable to club your coworkers over the head or bare your canines at them, the measure of strength that most teams revert to is expertise.
To have strong executive presence, you need to have skills, knowledge, or capabilities that are beyond everyone else along at least one dimension. What is the one thing that you know how to do, or that you know everything about, where nobody else is remotely close to your level? It doesn’t have to be something huge, but it has to matter. There must be a domain where you are the king or queen.
Some signs that you have the right level of expertise:
Executives who are losing their grip consistently demonstrate what I call uncontrolled lateness – tardiness or lack of follow-through due to a systemic breakdown of control. Uncontrolled lateness manifests in two main ways.
The first is being significantly late to appointments without notifying others: No email or Slack message saying “hey I’m running late,” or worse, no response when others ask where you are. This is often accompanied by showing up to meetings looking disheveled or frazzled, or being unable to rapidly shift gears into the next conversation. (Note: significantly late means more than 2-3 minutes – longer than a generous margin of error on a mechanical watch)
The other is missing deadlines for the most important one-third of your TODO list. Most executives literally have more demands on their time than there are hours in the day, so for better or worse they’re going to drop stuff – I’m not talking about being late to approve an expense report. But the top ⅓ of items on an exec’s plate are usually really important, and things that only they can do. It’s a red flag when these items start to meaningfully slip.
The typical executive schedule is absolute fucking chaos. In my experience this is not widely known, and is the source of much resentment from people who are less busy (“Why doesn’t our CEO remember that important detail we told him on Monday?” “Well, it’s been 3 days and he’s had 32 meetings in between that conversation and now…”). Most humans are not adapted to the sort of schedule that the modern hyper-connected workplace imposes on them, but effective executives find ways to keep all of the important balls in the air.
Uncontrolled lateness erodes executive presence. It makes you less reliable in the moment, and more importantly it’s usually an early symptom of other latent issues which indicate operational dysfunction:
If you’re late in an uncontrolled way, I may not know exactly what you messed up, but I know you messed up something.
Being an executive can be great. Your manager is the CEO or some other leader with a very distributed focus – they probably don’t (and can’t) follow your day-to-day very closely. You have the power to promote and fire; even the boldest people on your team are wary. Outside of your team, people generally don’t want to get on your bad side. You can get away with a lot.
As a result, many executives are able to set up a life of leisure. They start the day late. They delegate a lot, so their day mainly consists of commenting and approving. They never handle follow-ups – they have people for that. They simply preside over meetings and chime in with a few specific wishes that others scramble to heed. Most critically, they can remove themselves from taking any initiative; their role is to hire and judge, but not to actually instigate anything. Typically this sort of person only responds fast to their own manager or someone more senior than them.
You might think people don’t notice. They do. If your title starts with VP or anything more senior, you should assume that people are observing you regularly. The hardest working people on your team will notice, and will begin to resent – over time they may quit and your team quality will erode.
Worse still – competent leaders know to lead by example, and know that poor work ethic is contagious. As a result, other executives won’t trust you, even if your laziness has no effect on them. They literally won’t want their teams to be around you, because they’re worried that your bad attitude will infect them. They will find every way to block your career to quarantine the bad precedent that you’re setting.
The solution? Hit the following minimal standard for how hard you should work: You should be above the 75th percentile of your team in terms of hours worked, or work at least ~45 hours per week (whichever is higher). You should also be reasonably available outside of working hours – roughly defined as being reachable for anything very important within 12 hours regardless of weekends or vacation (this roughly just means that you don’t ignore texts and phone calls). Your team will notice, and it will help. And honestly – you owe it to them.
There is something fundamental about taking things too literally that makes you a poor executive.
Over the years, I’ve observed that junior team members are significantly more likely to take things too literally, especially when compared to senior leaders:
Taking things too literally erodes your executive presence for several reasons:
As an executive you are being paid to question the orders you were given, and you’re being paid to consider a wide range of possible explanations for anything you observe. Executives don’t take things too literally, and if you take things too literally you look like you’re not a leader.
To be fully respected, you can’t let people take you for granted. And a fast way to get taken for granted is to make it seem like you have absolutely no life outside of work.
Being taken for granted gives people around you license to very subtly throw you under the bus: We don’t need to promote them this cycle, they’re really loyal. We don’t need to get their opinion on this org change, even if they dislike it they’ll never quit. What else are they going to do? All (competent) execs technically have career options elsewhere, but if it seems like the company is your whole life, you’re opening the door to being taken for granted.
Don’t let this happen to you. Let people know that you have other options emotionally. You’ve got kids; you love vintage motorcycles; you’re traveling the world spearfishing. It’s a terrible thing, but people discount the value of those who give them unconditional love. Your greatest power is your ability to care about something else.
2024-11-10 20:59:22
Sometimes when people give notice that they are quitting they start acting differently:
In any case, changing behavior once you’ve given notice always makes you look bad. Even if you are being nicer, or happier, or trying to be helpful - large changes in behavior make everyone think you were lying to them throughout your time, that you were not being authentic.
Inauthentic behavior is one of the most off-putting things you can do for your reputation. People can forgive mistakes and character flaws, but if they feel like they don’t know who you really are, they will resent you. Something in our pre-modern-era DNA is hardwired to despise sneakiness and false pretenses more than unapologetically bad behavior.
Once you give notice, just be normal. Do your job. Have a final happy hour. Move on with your life. The industry is small, and people remember their last impression of you even more powerfully than their first. You want to make sure that the last impression you leave is something like “they were a great teammate for years, they were still a great teammate at the moment the door closed behind them, and maybe we’ll be teammates again in the future.”
2024-11-03 20:59:22
Setting strategy at a SaaS company has many pitfalls. As a software product, there are innumerable directions that you can steer your roadmap or your go-to-market (GTM). With the whole world arrayed in front of them, I often see companies make terrible strategic decisions because they don’t ask basic questions to orient themselves before moving forward:
To set an effective strategy, you need to orient yourself in regards to your company’s strategic landscape – where the opportunities lie, where there are gotchas in your market, how the dynamics are likely to evolve. Here are the questions that I try to make sure I’m always able to answer before setting SaaS product or business strategy.
Are your customers under budget pressure, or are they able to spend aggressively (like sales, engineering, and marketing teams during boom times)? Are you selling your customers their second Ferrari, or their first 2004 Honda Civic?
Rich and poor customers couldn’t be more different. Rich customers are usually experienced at buying software, know exactly what they can pay, and care about lofty goals like future-proofing their business, having a high degree of customizability, and gaining an edge on their competition. Poor customers are in survival mode, and typically favor speed to deliver modest value. They’re often under pressure to consolidate products to reduce total spend.
More importantly, if your buyer is a big spender, you’ll often face significant competition. But it’s often worse if your buyer is broke – you’ll either need to dominate your market entirely or find greener pastures, which usually requires a risky leap to re-establish a broader product-market fit. Many startups break themselves on the rocks of a market with destitute buyers.
Customers periodically go through different evolutions – engineering, sales, and legal are currently being disrupted by AI; marketers were heavily disrupted by the web and mobile. Changing customer dynamics are an opportunity to sell as a challenger vendor and a risk for disruption as an incumbent. Companies lose product-market fit when their buyers change, so you need to constantly stay on top of whether your ideal customer is in motion. One of the most common ways to fumble the bag on a great business is by assuming that your buyer will never change.
This is a subtle but important point. Many buyers want to consolidate their SaaS applications into a single vendor where possible – are you at risk of being consolidated out? And on the positive side, is there an opportunity for you to expand your Total Addressable Market (TAM) or beat competitors by consolidating their functionality into yourself?
Many teams like to focus on why their competitors suck – to pump up their sales teams, to gloat, or to quiet the anxious voices in their own heads. I like to think about what my competitors are awesome at. Observing your competitors’ strengths is a great way to understand strategies that resonate with your buyers, since they’ll run a different set of plays that you can observe. It’s also an important way to avoid getting flanked in the market and to track the state of the art for your industry, which will typically be defined by the top 2-5 players.
Many competitors have fundamental weaknesses that can be exploited. Examples include:
Are your competitors going to need funding soon, or are they flush with cash? What was their last valuation – could they hit that valuation today? Have they had layoffs or are they hiring?
Companies that are dying tend to get desperate: They drop prices, they throw in free services, they lie about their competitors (you). Cornered animals are dangerous, but you can take advantage of their weakness. Beat a weakening competitor for 2-3 more quarters and their team might quit, allowing you to remove them from the picture and reclaim focus.
It’s also worth mentioning that a strong company with a valuation that is way too high can be just as weak as a middling company whose valuation is right-sized. That company that raised at a $1.5b valuation with $10m of revenue is very unlikely to attract strong talent if growth slows, which means that if you can further slow their growth you can throw them into a tailspin.
Understanding the state of your competition helps you understand how your market will unfold. Don’t step off the neck of a weakening competitor until they’re no longer a threat, and beware of competitors whose fortunes are rising.
In the long run, companies who are partners often evolve to become frenemies. The best partner usually has a directly adjacent related capability to yours, and these adjacencies (i.e., your business) are the most tempting directions to expand their own product offerings. Be careful about how you position yourself versus your partners; assume that they truly are agnostic whether you win or lose and are eyeing your market share. And if you find a partner who doesn’t want to compete with you (and whom you don’t want to compete with), make them your ally forever.
Investing in a weak partner is incredibly wasteful – you put in real time and effort, and then your partner is acquired or weakens and can’t support their side of the deal. You need to hitch your wagon to strong companions. Some partners, particularly successful systems of record with large revenue bases, will tend to become the central nexus points through which influence and power will flow.
A challenge: Weak companies have a strong incentive to seem like they’re very strong to prospective partners, because suckering in a better company into a business relationship is a reasonable last-ditch effort to succeed. You need to look at the team, market, and product to try to assess how strong a partner really is. Put on your best growth VC hat when you’re analyzing where to place your partnership chips.
Are you great at engineering? Is your system architecture highly differentiated in some way? The better and faster that you can build, the more ambitious you can be with your product strategy. Out-executing the competition in a straight-line development race is a great way to win, if you can do it, and it can overcome go-to-market (GTM) weakness.
Are you great at sales? Great at marketing? Is your CEO an incredible public speaker, or are they famous or notable in some way (this could be something as subtle as having a compelling life story or being extremely good looking)? The stronger your ability to execute at GTM, the more you can win with a reliable-but-not-necessarily-differentiated product.
What do you rely on to actually deliver value? What type of people are essential to your business, and at what level – do you have ready access to the talent level that you need? Are you entirely dependent upon another platform as a vendor or partner? Is your vendor landscape changing – are your costs going to plummet in the coming years, or conversely, are they going to skyrocket?
For a SaaS business, your supply chain starts with your people – mainly engineering and sales as the most important teams in a SaaS business. It also includes key factors like cloud services and SaaS vendors. You should always lean into unique supply chain advantages – for example, if you have the world’s best AI talent, or a sweetheart deal for cheap infrastructure, you should leverage them to the maximum possible extent.
It’s vital to know how your team actually operates, and how things get done at your company. Do you mainly do things that the CEO wants? Does the CEO have little control, with a decentralized command-and-control structure? What will it actually take to get something done? Do you have a culture of perfectionists or do you like to blast out MVPs? Do you identify and give up on failing ideas quickly, or are you doggedly persistent? Knowing how your company actually operates is essential for any broad strategic calls. And keep in mind that your company will tend to become a more extreme version of itself in high-pressure times or when under duress.
This final question is essential, as there are often strategies that just won’t work because you don’t have the cultural DNA to execute on them. You can’t run a strategy that requires tons of exploration with a highly centralized culture. If your plan is to build a perfect UI, you’re unlikely to achieve usability nirvana if this is the first time you’ve ever attempted perfectionism. Knowing the type of strategy that you can actually execute on is the final filter for knowing what sort of plans to put into practice.
One final thought. In my experience, something like 75% of strategy is just sticking to a simple plan: Keeping the team reasonably focused, pushing the plan monotonically forward, and not operating like some kind of foraging rodent that’s distracted by shiny objects. If you can set an impactful plan and hold to it for a few years (e.g. “win this market that we already play in”), from what I’ve seen you are way ahead of the game.
2024-09-15 20:59:22
AI is awesome - it can help people build things faster than ever before.
On the other hand, it’s also convincing some CTOs that they can build versions of their SaaS tools internally, saving money and avoiding the pesky problems that come with having to deal with anything outside of their fiefdom.
This is crazy.
Whether this approach is a power grab, hubris, or something else, it’s almost never a good idea. As a rule, you should only be replacing your SaaS products with internal tools if you’re FAANG-sized or if you can replace the tools with a spreadsheet.
Let’s talk about why.
Meet CTO Bob. Bob is an AI believer. He saw someone use Replit to launch a full website in 4 hours.
He also has a terrible case of Not-Built-Here Syndrome.
He also doesn’t invest the time to properly integrate or use his SaaS tools and then regularly complains about them not working.
Nice to meet you Bob.
Well, Bob asked his team to cut costs and his engineers said it would take 18 months to implement something that might reduce their storage footprint.
Bob doesn’t want to wait 18 months. Bob wants to save money now. Bob wants to replace all of his SaaS tools with internal tools. Bob talked to his C level peers, and they said what they do with these tools, and he can totally find someone to replicate that with AI super fast.
How hard can it be? Half these SaaS tools are just glorified fucking forms!
So Bob gets permission to rebuild a tool internally. He gets 2 engineers and a mountain of AI tools to start the project.
Right off the bat, Bob is dedicating about $400,000 of headcount to replace $200,000 of SaaS tooling. But let’s not confuse Bob with these details. The headcount is already budgeted for and he doesn’t think of it that way. It’ll pay off in the long run.
OK so we’re gonna get some engineers who are interested in focusing on greenfield development. But we can’t have our best engineers do this, because these are just lame tools. So Bob gets 2 mid engineers to build this project.
Alright well we need a database, we need hosting, we need authentication, we need some business logic. The AI tools probably help with all of that right?
Maybe, Bob, maybe.
Say you get through that, now you have to rebuild a mature piece of software from scratch.
Well, your team only does a few things with these tools, and only uses a few features, so let’s just build them.
OK, well we’ve built a shitty version of a CRM, done and dusted. And it only took about 6 months!
Uh oh Bob, it turns out there’s some bugs and some missing features. Just asking your internal partners to kind of vibe-check what they do wasn’t really great product management. More to be done!
Alright, 9 months in, v2 is done! Here you go suckers, money saved!
Dammit Bob, the thing just broke at 2am and our EU team relies on it! You need a 24/7 on-call for this tool. Well, this is awkward because we only have two people. Are they on 24/7 work every other week? Or do we ask another team to support the on-call. Ehh just get these 2 people to go on-call and we’ll figure it out later!
OK we have 24/7 on-call of two very nervous engineers who wonder when they’ll get more help, but we’re ready!
Bob, it broke again in the middle of the night and it turns out your 2 mid engineers couldn’t fix the Postgres issue that was happening. These AI tools helped us build something but they’re not expert debuggers! Gah!
OK, we have now declared that any long running incident on these tools has to bring in people from other teams. That won’t be a morale issue at all!
Ok we’re 12 months in but feeling good about this.
Fuck. Bob, one of the engineers just quit. They don’t like being on a non-core product team. This last performance round you told them that their problem space wasn’t complex enough to ever get to staff engineer because it was just a dumb SaaS tool that AI mostly built.
Hurry Bob, replace them with some other sucker!
OK, we’re 15 months in and hired a new person on our mini SaaS product team. The old SaaS product just released a great new feature and your internal users want it plus 5 other things that their product already has.
You told them it’s going to take 6 months. Fuck Bob! If we had the old tool we’d have it now. You said you’d have parity!
But wait, there’s more! The 200 engineers at the SaaS company also have AI tools. Turns out you don’t have a monopoly on talent and technology. They’re building super fast now! Bob! What! The! Fuck!
But wait, there’s more! That SaaS company is finding more efficiencies. They just cut their unit pricing. Our 2-person team has no idea how to leverage the new AWS server types to get these savings. Buying off the shelf would now be cheaper!
It turns out, underneath it all, spending $400k to replace a $200k tool didn’t make a lot of sense for the business. This was just a long line of problems that Bob had. Bob just got a new CTO job and his LinkedIn says he successfully replaced a bunch of SaaS products with internal tools.
What happens next is slow death.
Your internal product can’t keep up with the SaaS product.
Every new feature request takes months (when those tools already have them)
You continue to struggle to staff a B team. These are teams to nowhere. They’ll never justify a major investment and lots of promotions, but now they’re a critical part of your stack.
You continue to have major outages and annoy other teams that have to support that team.
You sow friction with other departments because you’re providing a bad product and it’s causing issues. Ouch!
It turns out that writing greenfield demos of simple business logic (something AI is good at) and doing full scale product development are two very different things.
It turns out that engineers and PMs cost a lot of money, even more than SaaS products.
It turns out that developing deep expertise in an area lets SaaS products build effectively and thoughtfully.
It turns out that having lots of customers lets SaaS products build for what you need and what you might need eventually - a product for multiple stages of maturity.
So listen, CTOs, if AI is so fucking great, use it to make your product so good that you have enough money to buy the best SaaS products out there. You wouldn’t try to replace your laptop with an in-house laptop built by AI tools. You wouldn’t rebuild your own IDE in house.
Stop trying to rebuild your SaaS products.
A related thing that’s happening right now is people trying to save 40% on their SaaS bills by moving to cheaper, worse alternatives.
This is also pretty dumb.
Your CEO says every department has to save $100,000. So instead of reworking the usage of best-in-class tools to avoid overages, or firing Tim who is a long-standing low performer, you start a 12 month procurement cycle to get a cheaper version of a SaaS tool. After spending 1000 hours evaluating, testing, migrating, and onboarding to a new tool, you now are stuck with a crappy tool.
But hey, you can tell your CEO you saved money right, so it’s not your head on the chopping block? Nevermind that you spent more than $100,000 in salary-hours doing the migration. Nevermind that while you were busy replacing great with shit your competitors were building new functionality.
This would be like if a CTO decided to move their entire department to worse computers, because they found out most people almost never use all of their CPU. If you find yourself saying “but wait, maybe that’s actually a good idea”, please remind me not to invest in your company.
Tech teams shitting on SaaS products is not new. Since the beginning of time, it’s been major recreation for some tech teams to dunk on every SaaS tool out there, lamenting how such garbage products have such successful businesses. Then they try to in-house stuff to empire build. Then things fall apart and they blame everything but themselves.
People making short-sighted tooling decisions is also not new.
Neither of these are new, AI and high interest rates are the just great catalysts for giving in to our worst instincts. And we know that’s happening in other areas as well.
2024-08-18 20:59:22
Startups are hard, and winning is often determined by your ability to solve really hard problems and gain an edge in the market. Hard problems come in many forms, however, and require different approaches. Here’s a framework for how I think about bucketing challenges into different categories, each with its own set of considerations.
Some problems are like harvesting strawberries. For the uninitiated, strawberries are harvested one-by-one, by hand – a process so laborious that farmers have had to invent hilarious devices like this one to reduce back strain while the strawberries are being picked.
Farming equipment or bondage device – who can say?
Harvesting problems have straightforward solutions and no shortcuts: You just get a big basket and pick every damn strawberry in the field. You solve these problems with pure perseverance, slogging away for weeks, months, or years until they are done.
Examples in tech include all sorts of problems where the payoff of each incremental unit of progress is small, the required effort is very well established, and the risk of outright failure is virtually nil:
When the stars align and harvesting is going to provide significant value, harvesting problems are often the best places to apply effort, because they can be solved with pure perseverance. This means that they are highly tractable – although it can take months or years, you just need to show up.
Some problems are like fishing. You know that there are fish out there in the ocean, but you don’t know exactly where. If a great fisherman knows where the hungriest fish are and how to set their lines just right, they might catch everything that they need in a few hours. Fishing problems can sometimes be solved shockingly fast by motivated teams with a bit of luck.
If you get unlucky and the fish aren’t biting however, you might catch very little. Even great teams sometimes don’t catch anything or catch it very slowly. But in the long run, you should expect some amount of return – after all, there definitely are fish, and they definitely do live in the ocean.
Examples include most problems where you’re trying to do something new or different, but in the same general area as what your business does already:
Fishing problems are some of the hardest problems to solve, because they require skill and have an element of unpredictability. They also have more opportunities to differentiate, because you can be a much better fisherman than someone else (it’s hard to be an order of magnitude better at harvesting strawberries), and market experience matters (you know where the fish are).
As a result, being really good at handling fishing problems is often the foundation of how companies win. You get really good at adding new revenue lines; really good at making your products amazing; really good at figuring out where your market is going and how your product-market fit will need to evolve.
Some problems are like panning for gold – going out to a river or stream where there might be gold, getting your pan out, and seeing if you can find traces of the shiny stuff in the sediment. If you find gold, you can become generationally successful – think of the massive moats created by Google Search or the AirBnB network.
But unlike fishing, panning for gold often returns absolutely nothing, no matter how skilled or determined you are. If you are trying to pan for gold in the wrong place, it’s just not going to happen no matter how skilled or determined you are.
Examples of panning for gold include any leap forward that will reshape your business, but carries very high risk of being completely unviable:
This framework leads to a few different strategic implications.
Sometimes the payoff for harvesting is very high, and you really want to lean in when that happens. Recall that the problem with harvesting is that the payoff is typically marginal, but the upside is almost guaranteed with perseverance. Harvesting problems can seem trivial but are actually a gift as they’re a road to success that doesn’t involve randomness.
Harvesting problems are generally less sexy than fishing or panning for gold, but they’re no less important. In many cases, due to its near-guaranteed marginal value, great execution at harvesting is the fuel that lets a business extend its lead. It’s essential for leadership to show that there is honor and value in harvesting:
Fishing problems are very important because they’re one of your best chances to differentiate by having a stronger and more agile team – which are exactly the advantages that startups have over incumbents. Send five teams to figure out how to meaningfully level up your product; if enough of them succeed you’ll gain a major edge. But fishing requires strong leadership:
Fishing problems also require a lot of skill – fishing is hard. If you have a super talented team, you can tell them “go find us some fish” and they’ll succeed. This is basically how most great startups hit their stride in the early days – with independent teams doing anything they can to come back with full nets. The best companies are often really great at fishing.
Fishing and harvesting can look similar because they can both involve a lot of slogging to get to success. But while harvesting requires top-down control to make sure that people keep harvesting, every catch is exciting and motivation is typically easier to find. Fishing also requires distributed control so that the most skilled anglers can get out on the ocean without someone looking over their shoulder the whole time – as a result, teams in fishing mode require a much more bottoms-up leadership model.
You should basically never rely on panning for gold. Any plan that looks like “we’re going to go to that river and pull out all the gold” is fundamentally flawed – the translation of your plan is roughly “I’m going to code until a magical genie makes me rich.” The plan often requires a leap of faith that’s near insurmountable.
This sort of magical thinking gets startups into trouble all the time. Teams get captivated by ideas that seem compelling because they’re compelling if they work, and excitement causes them to flip the causation in their head: “If we can launch this new novel product, we’ll have a stranglehold on the market” becomes “we have to build this new product because it’ll give us a stranglehold on the market.” This causes them to embark on risky quests, because their zeal to have a goldmine overcomes their ability to comprehend reality.
A common place where this occurs is expansion into marketplace-oriented business models like an app marketplace or data clearinghouse. If you only look at the upsides, marketplace businesses look really compelling – viral, high margin, deep moats. What this ignores is that it’s just really hard to capture the serendipity that a marketplace requires – do both sides actually care about what you’re offering? Most consumer products rely on finding gold in the water as well, and there’s a reason that there are very few successful repeat founders in consumer, and hundreds of successful repeat founders in B2B.
But what does work is finding gold in the river (often because you were being really innovative solving some other problem), and immediately posting up with armed guards and starting an industrial mining operation. But you need to find the gold before you start mining, not the other way around. Some companies get very confused by this strategically – they see other startups mining gold, and don’t realize that they found the gold way before they set up the mine.
And that brings us full circle back to harvesting – once you’ve found the gold (typically a highly differentiated product offering), the best way to set up your mining operation is by doing a ton of harvesting. Build every compliance feature. Integrate with every SSO provider. Make every settings page beautiful and perfect. Don’t give anyone an excuse to use another product. That’s how you get the gold.
