The Great CEO within – Summary

Source: https://docs.google.com/document/d/1ZJZbv4J6FZ8Dnb0JuMhJxTnwl-dwqx5xl0s65DE3wO8/preview#heading=h.pdmqf3646hgt

Chapter 1 Getting Started

  • Deeply understand real customers and problems, solve the problem
  • Disciplined Entrepreneurship by Bill Aulet

Chapter 2 The Team

  • Have a co-founder, avoid burnout.
  • No more than 6 until product market fit ($1mm in recurring revenue).
  • Morale, Communication and Organization, Efficiency.
  • The first product should always be viewed as prototype. For feedback only.
  • Startups don’t usually fail because they grow too late, usually because too early
  • Scale to market share – Marketing, Sales, Customer Success, DevOps, Engineering, Product, non-tech (Recruiting, Training, HR, Finance, Legal, Office)
  • Meeting overhead. 25 people system works for 25,000.

Part II Individual Habits

Chapter 3 Getting Things Done (GTD)

  • Process every item in inbox. if <2 minutes, do it immediately, else place it in following list: Next Actions, Waiting For, Someday/Maybe, Agenda, Projects, Review, Goals

Chapter 4 Inbox Zero

  • Email, text, Slack, CRMs, other tools. Inbox Zero everyday. Check twice daily.

Chapter 5 Top Goal

  • Schedule two hours each day to work on Top Goal only, every single work day. Period. No emails, text, calls and messages.
  • Do the important things first.
  • Start from 30 minutes, increment to 2 hours.

Chapter 6 On Time and Present

  • Critical to be on time
  • Be present, composed, prepared, focused.

Chapter 7 When you say it twice, write it down

  • twice -> yet again, write it down, say, wiki.

Chapter 8 Gratitude

  • Confirmation bias. Ask “what is wrong/right here?”
  • Fun, feeling good. Compliments work
  • I am grateful for ___. Doesn’t have to be hard or painful.

Chapter 9 Appreciation

  • Outward extension of gratitude. Let them know.
  • Recipient feel better, connected, appreciative, view recipient more positively.
  • One hour each week for follow-ups and outreach.

Part III Group Habits

Chapter 10 Writing vs Talking

  • Require that anyone who wants to discuss an issue write it up, along with the desired solution, ahead of time
  • extraordinary thorough analysis vs draft (invite comments and questions), write out responses prior to the meeting.
  • the extra effort by one person creates a net savings in time and energy across the whole group.
  • Do no allow people to bring up issues that they have not already written up.
  • Require all participants read and comment on each other’s updates and issues.

Chapter 11 Decision Making (Getting Buy-in)

  • invest emotionally in that decision.
  • make people feel they are part of the decision, their input contributes to the final outcome.
  • 1. manager makes the decision, announces it to the team, and answer questions. (Pro: little time. Con: little buy in. No collective knowledge and experience)
  • 2. manager creates a straw man, shares it with the team, invites team to give feedback, facilitates group discussions, determines final answer. ( Pro: more buy-in. Some benefit of collective wisdom. Con: more time)
  • 3. manager invites team to a meeting where dilemma is discussed from scratch with no straw man. Manager and team equally share ideas. Final decision is determined by consensus if possible. (Pro: most buy-in, collective wisdom. Con: takes the most time)

Chapter 12 Loudest Voice in the Room

  • Elicit people’s truest thoughts
  • People assume that as CEO you have more information than they do, perspective probably more correct.
  • not to “tip your hand” beforehand, have people write down their vote and/or thoughts prior to sharing your perspective.

Chapter 13 Impeccable Agreements and Consequences

  • cause of inefficiency – sloppy agreements. => spreading virus of unproductiveness and decreasing morale. Antidote: Impeccable Agreements 1) Precisely defined. 2) Fully agreed to by all relevant people.
  • Precise – successful follow-through can be judged by third party
  • Must be consequences for breaking agreements.
  • Apologies not required, commitment must be committed to.

Chapter 14 Transparency

  • Share all relevant information, both negative and positive. => great comfort, use their brilliance and talents to adapt.
  • Excluding 1) Compensation. 2) Performance reviews.=> heated debates, relative comparisons, shame => big distractions.
  • Unless entire company trained in radical transparency.

Chapter 15 Conflict Resolution

  • Repeat what is said (summarized, of course)
  • People stop repeating once repeated after (summarized)
  • to resolve conflict, need to get each person to state their deepest, darkest thoughts, and then prove that each has heard what the other has said
  • Step 1: Get Person A (the person with less power in the relationship) to state their deepest darkest thoughts about Person B. (Supply thoughts, be dramatic, if you were in their shoes, A will guide you. each time, go further, until A has stated their raw, unvarnished thoughts around anger toward person B)
  • Steer them back to statements of facts if they become judgemental.
  • Step 2: Get Person B to confirm that they have head what Person A has said.
  • ask B to repeat, summarize the key points, until person A answers “I feel heard”
  • Step 3: Switch roles
  • Step 4: Walk down the line of emotions
  • a moment of deep understanding. Fear, sadness, joy, excitement.
  • respect for each other, even if they still do not agree with the others’ positions.
  • Step 5: ah ha moment of understanding, seal it with a physical connection, a hug, a handshake, a high-5
  • Step 6: co-create a plan so that misunderstanding and acrimony do not enter the relationship again.
  • Step 7: Write down the verbally agreed upon plan.
  • Next actions, a responsible person and due date.
  • check-in time for all to view and ensured actions have been completed.

Chapter 16 Conscious Leadership

  • more interested in learning than being right
  • recognizing when fear, anger, sadness have gripped our though processes.
  • shifting back to a state of curiosity where we are receptive to all ideas and creativity, even if they contradict our own.
  • It is in a state of playful curiosity that truly elegant solutions are achieved.
  • The Drama Triangle
  • –  We believe that we know the right answer, and try to convince others to see our point of view. (not able to see other perspective, no full information)
  • – We never truly share our deepest, darkest thoughts and feelings for fear of offending others. (others do not appreciate our perspective, because we haven’t fully shared it)
  • create an environment where ideas can flow freely.
  • hero: “I temporarily solve the situation by ___”
  • victim: “I am negatively affected by this in the following ways: ___”
  •                “I am powerless to permanently solve this situation because: ___”
  • villain: “I blame <name> for creating this situation by doing <action>”
  • continue the cycle until no one left to blame => brainstorming solutions.
  • easy to come up with elegant and complete solutions once all of the “worst” information is on the table, and nothing remains hidden.
  • highly recommend using a knowledgeable outsider to facilitate the meeting, at least for the first time. keep the team on script. or will be messy.
  • Empathy
  • key to success. consider their interests in your decisions.
  • Joy Vs Fear
  • they realize fear was their primary motivator, once fear is gone, their life improves, business suffers.
  • Be motivated by joy. Best of all worlds. Business thrive, life amazing.

Chapter 17 Customer Obsession

  • Not making a product – Solving a customer problem.
  • Continually live the customer problem. Sit with the customer, ask, observe, regular and constant basis.
  • Focus should permeate every part of the company, sales to engineering (especially, insist engineers regularly join customer support and sales calls).
  • Sales – customer centric mindset. Only you know how feasible each solution is.
  • listen to customers’ pain, they will trust you to decide which solution best erase that pain.  Build trust.

Chapter 18 Culture

  • Unspoken set of rules.
  • Values
  • principles, basis of culture as a guide to hiring and firing.
  • Fun
  • If people have fun, they spend more time, energy and awareness at the company. => better problem-solving and collaboration => stronger company, more value. Events, hangouts(outside of work), invites (don’t require)
  • Hours
  • Key metric is output, not hours. Inspire and motivate.
  • create and track goals, habits, agreements, KPIs openly and receive and provide feedback, and fun. => motivated to work hard. (sense of direction. contributing)
  • Lead by example.
  • Meals
  • particularly positive benefit. bond organically and with a wide range of people, extends hours. > simple pre-tax calculus
  • Interact, no electronics at the meal table.
  • Politics
  • = “lobbying to gain personal benefit”, = poison for a company.
  • have a written policy about as many situations as possible, particularly around compensations, raises, and promotions.

Part IV – Infrastructure

Chapter 19 Company Folder system and Wiki

  • wiki for documents, on-boarding process.

Chapter 20 Goal-Tracking Tools

  • Commit to a systematic goal tracking system to maintain focus and prevent clutter.
  • Individual: Keep it simple. Evernote or Omnifocus.
  • Group: Asana, Trello, Betterworks, 15Five, Lattice.
  • Never assign someone an action without them agreeing to it verbally or in writing.
  • Separate tool for tracking individual actions. Group tracking tools more overhead.

Chapter 21 Areas of Responsibility (AORs)

  • “Tragedy of the commons”. Shared responsibility doesn’t get done well, or at all.
  • Group tasks into categories, and assign each category to one – and only one – person.
  • AOR list – compancy directory, ensure no function falls through the cracks.

Chapter 22 No single point of failure

  • write down all processes. firm-wide wiki.
  • cross-train a second person for each role. have a backup.

Chapter 23 Key Performance Indicators (KPIs)

  • You can only manage what you can measure. – KPIs
  • Finance – Monthly cash burn; cash in the bank
  • Sales – Monthly Recurring Revenue (MRR)
  • Engineering – Percentage of tickets closed
  • Recruiting – Percentage of offers accepted.
  • Track them religiously, make them available company wide, daily.
  • Track counter-metrics to provide context.

Part V – Collaboration

  • Objectives and Key Results.
  • 1. Setting vision and goals for the company, each department, each individual (quarterly)
  • 2. Communicating that vision and those goals to every team member.
  • 3. Tracking and reporting progress towards those goals (weekly)
  • 4. Elicit feedback from all team members on what is right, (much more importantly) not right, ought to be changed.
  • Hire a COO to implement and run the system.
  • Hire a x-CEO to come in as “1 day a week CEO” to implement this system. 6-8 weeks. run yourself for 2 weeks, run it yourself going forward.
  • System > individual superstars. (GS warriors>Cleveland, Facebook>twitter)

Chapter 24 Meetings

  • Quarterly goals, weekly team, weekly one-on-one, company-wide, office hours.
  • Overhead – 20% of standard work week.
  • Submit issues, updates and feedback in writing prior to the meeting. Massively increases information flow, allows for consensus to be reached.
  • Weekly Team Meeting
  • – accomplishments, simple yes/no.
  • -department updates.
  • -issues, solutions.
  • -goals
  • -feedback to team leader and other members.
  • Weekly One-On-One Meetings
  • Goals — Successes, setbacks, measures
  • Updates — KPIs
  • Issues — Tools needed
  • Feedback — what did you like, propose change
  • Manager, elicit negative feedback about your or company’s actions. resolve the issues
  • If there is a serious issue to discuss, job dissatisfaction, then use your Office Hours to fully address the issue.
  • Merge team and one-on-one if team is small, be careful about giving negative feedback in a group setting.
  • Recommend moving to a culture of radical transparency. Timing saving.
  • Radical transparency requires explicit buy-in from every team member, and training how to do it effectively.
  • Company-Wide Meeting
  • Contrarian Office Hour
  • anyone can come introduce an issue
  • Calendar Cadence
  • Makers (engineers) need long stretches of uninterrupted time to be productive, whereas managers are most effective when meeting. Compromise to schedule days when no meetings are allowed.
  • 1 day internal, 1 day external, 3 days no meetings.
  • Conduct phone interviews, lower number of in-person interviews.
  • Meeting Leads
  • Ruthless, stick to the timeline. or resentment.

Chapter 25 Feedback

  • Receiving – frequent, transparent feedback is critical for building a strong culture and a thriving business. Instrumental for building trust => communication.
  • Critical feedback should be cherished. open up the the door to negative feedback, then your team will feel comfortable. (<- scary to criticize someone who has power over you)
  • In the dark about company’s problems.
  • Gossip => operations grind to a halt.
  • best talent leave.
  • Ask for it (cherished), listen to it (don’t interrupt), act on it (louder than words).
  • Giving (in person > video > audio, watch reaction, mollify anger)
  • DO NOT use 1-way communication method (email, text, voicemail) to give feedback, unless it is 100% positive.
  • Ask for permission.
  • State the trigger behavior or event.
  • State feelings (hard).
  • Strive for an agreement on a new way to behave or interact.
  • Painful at first. Noticeably happier and more productive.

Chapter 26 Organizational Structure

  • To scale, CEO, Head of Product, Engineering, Sales/Marketing, Customer Success, Operations (HR, Finance, Legal and Office)

Part VI Processes

  • dealing with outside world – investors, recruits, and customers
  • processes – fundraising, recruiting and sales, only differs in content of exchange.
  • Fundraising – selling equity and debt for capital.
  • Recruiting – selling employment opportunity for time and effort.
  • Sales – selling solution for money.
  • build trusting relationships with decision-makers.

Chapter 27 Fundraising

  • Pick a partner, not a firm
  • add value, good to work with.
  • Introductions, use the Triangulation Method
  • Find 3 to 5 people in your network to recommend. Stack them within a week.
  • Traditional Method (Pitch and investment firm with your story.) and the Relationship Method. (build a trusting, friendly relationship before discussing what your company does, emotionally driven)
  • Build trust and like (ask them about themselves, genuine curiosity about their lives, prove that you are listening, and remember, appreciate them). Create a bond -> willing investor.
  • Try the relationship method to see if it is more effective than the traditional approach.

Strengthening the Relationship

  • 3 to 5 rounds of contact will solidify the relationship.
  • make it a practice to regularly go through your contact list and send out messages of appreciation. => massive goodwill.

Sell Yourself, not your company

  • gain investors for life – follow through every pivot, company.
  • Credit (others), Hard Work, Vulnerability (most difficult), Duty (noble motive), Gratitude (proud and thankful)

Timing

  • Inflection points include
  • hiring a capable engineering team
  • first 3 paying customers
  • exceed $1M in annual recurring revenue (product market fit)
  • hiring a capable sales team
  • exceed $5M in ARR
  • Hiring senior managers for all departments.

Simple Agreements for Future Equity (SAFEs) vs. Priced Equity

  • SAFE (convertible note, legal fee 10,000) used when priced equity (total > $2M, preferably $5M, institutional investors) rounds not possible (legal fee $100,000)
  • When you start your company, you would raise your initial money of $2-5M in a SAFE.
  • When you hit product-market fit, you raise an additional $2-10M in a Series A priced round and the SAFE converts into this round.
  • You then immediately open up a second SAFE, and leave it open until you have raised another $5-10M.
  • Once you hit $5M in annual recurring revenue, you raise a Series B priced round of an additional $5-20M and the second SAFE converts into this round.
  • You then open a third SAFE. And so on.

Voting Shares

  • Retain control, prior to having equity investors.

FF Shares

  • Founder Friendly. Prior to equity investors. Pay themselves low salaries, but get enough liquidity to not worry about long term commitment

Carta (formerly eShares)

  • Carta or just spreadsheet.

409a

  • determine the correct exercise price of any options that you issue.

Option Pool

  • 10-20% unallocated option pool AFTER the equity investment. 40% dilution. Just be aware.

Chapter 28 Recruiting

  • Efficiency is key. Spend as little time as possible with candidates you don’t hire (quick evaluation)
  • Spend as much time as possible with the candidates you want to hire (building a relationship, onboarding/training)
  • Before Recruiting
  • 90 day roadmap. Goals for onboarding. Brings excitement.
  • Build a Relationship
  • Use the same fundraising techniques.
  • Compensation
  • Cash Equity Mix.
  • 1. Discover the market compensation for the position (role and seniority)
  • 2. Discover the amount of cash that the new team member would need to live comfortably (housing, food, transportation, child expense)
  • No need to match market, not in cash as the larger companies, but lesser cash, plus equity to bridge the difference.
  • Making the Offer
  • Let the candidate state their requirements.
  • Pre-agree in full detail. The response will be resoundingly positive.
  • Make it ceremonial, fun and memorable.
  • Onboarding
  • Give onboarding even more attention, time and energy. Focus your energy there.
  • checklist to be fully effective. assign a buddy.
  • Firing
  • Morale-killer, financial drain cannot afford.
  • Create a written PIP (Performance Improvement Plan) that states objective milestones and dates over a 7, 30, 60 and 90 day period.
  • Meet weekly to check progress against the written milestones.
  • At 30 days, missing one milestone, let him go, same for 60, 90 days.
  • If do fire, put yourself in their shoes, it is a devastating event emotionally. A real setback financially.
  • Help the person find their next job, and quickly. Give them a severance package. 1 month minimum, realistically 2 – 3 months.
  • Question yourself “what can I do to make sure this doesn’t happen again?”

Chapter 29 Sales

  • Build trust; identify customer’s specific pain; sell results, not features.
  • Be explicit about not talking about your company.
  • Ask for a very limited amount of time, so that the burden is low.
  • invite them to a purely social event.
  • Customer Development
  • 1. know what the customer is looking for, present your solution in those terms.
  • 2. the customer know that your proposed solution is tailored.
  • 3. weed out customers that aren’t a good fit for your product and save time to focus on those who are.
  • goals, challenges, solutions to obstacles.
  • Guide the conversation towards the specific pain you are solving.
  • Ask open-ended questions.
  • Sell results, not features
  • only care about business results. Focus on the why, not how.
  • DocuSign, enabling virtual signatures, changed their pitch to “… in under half the time that they currently take”.
  • Integrity & The Dangers of Overselling
  • Do not oversell. Ethically wrong. Be honest about what you can and cannot do.
  • Reputation.
  • Development team.  stress as result of overselling.
  • Culture, of overselling is hard to go back.
  • Overselling is a form of laziness, instead, take time to build trust.
  • Building a sales team & pipeline
  • only when initial version of product market fit. renewing contracts.
  • You have figured out what you are selling and who you are selling to.
  • grow onboarding process, customer support.
  • Structure of a sales team
  • Qualifiers (Sales Development reps). Generating leads -> Closers. (Outbound, Inbound Reps)
  • Closers (Account Executives)
  • Farmers (Customer Success) tending to existing customers, renew, increase spend. Qualifiers and farmers first.
  • Common misconceptions
  • overlooking integrity and culture fit. (not heartless mercenaries)
  • not investing in traning
  • must hire senior AEs with a track record.
  • Solo contributor (AE) vs. manager (VP Sales)
  • Lead generation
  • Seeds (word of mouth). Pro: close fast, high win rates, best customers: Cons: really hard to proactively grow them.
  • Nets (marketing). Pro: scalable and cost effective. Cons: serious costs and time maintaining this channel.
  • Spears (outbound reps): email or linkedin mining. Hyper targeted. “quality over quantity”. Pro: predictable, immediate results. Cons: requires full time rep and not profitable if average annual deal size < $10,000.
  • Qualifying leads & handoff
  • A qualified lead is one which
  • feels the pain point that your product is solving.
  • has the desire to solve that pain point.
  • has the power to purchase your product.
  • AEs mark the lead as “Qualified” in the CRM, not the qualifier.
  • KPI
  • Average deal size, new revenue per month, average sales cycle length, number of SQLs per month, cost per lead, CAC (customer acquisition cost), Churn rate.
  • Remember to create counter-metrics as well.

Chapter 30 Marketing

  • Defined as understanding the problems of customers. (Strategic Marketing)
  • Solutions offered in the marketplace (Competitive Analysis) -> Choosing Target Beachhead
  • Create a solution that more effectively the the problem (Product Management) -> Product Market Fit
  • Letting customers know that your solution exists (Tactical Marketing) -> Growing Sales.
  • Strategic Marketing (Segment, Target, Promote)
  • disrupt a massive legacy market.
  • greatest risk of a startup is not moving too slowly in dominating the entire marketplace, but rather they spread their scarce resources too thin and ended up securing few or no customers at all.
  • Needs to be 10x better than legacy solutions to switch.
  • Focus, find lowest hanging fruit. Get a few customers. Then upwards.
  • Disciplined Entrepreneurship
  • Segment the market into customer types
  • Target one of these segments
  • Promote awareness (find where the eyeballs are)
  • Who would benefit, who would pay for access.
  • low cost of acquiring, lifetime value high, total addressable customers is large.
  • for each segment
  • – what is the estimated cost of acquiring a customer from this market (CAC) (F500 > SMBs, offline > online)
  • – how do customer pay, lifetime value (LTV)
  • – TAM (Total Addressable Market) of this segment
  • – Aligned with your values? Similar to hiring an employee.
  • ideal market LTV > CAC, TAM -> $10 – $100M in ARR.
  • Primary market research.
  • Gain context, uncover regular problems.
  • Encourage flow of ideas, not pre-existing idea.
  • Document market research.
  • Stay away from largest TAM for a while.
  • Pitfalls
  • 1. sell to everyone that comes through the door.
  • 2. Be blinded by TAM without considering CAC, LTV. “China Syndrome”
  • 3. Customize your product for every individual customer. Engineers stretched thin, growth rate slow.
  • Target
  • Customer buying unit.
  • User Persona
  • User Life Cycle/User Journey
  • Promote
  • “fake it until you make it”
  • All of your promote decisions should be based on your Segment and Target analysis. Customer focus is key.
  • Tie marketing spend back to quantitative results. ROI.
  • Industry conferences, influencer marketing.

Competitive Analysis

  • Your competitors have a lot to teach you. Respect and learn.
  • Use their product. Note down everything that they do better than you and add those things to your product roadmap.
  • Talk to their customers. same as above.
  • Understand their pricing model.

Product Market Fit

  • Customers will vote with their wallet.
  • Business has budget set aside to test new products, until full long-term contract.
  • Go not go beyond 6 until PM fit.

PR

  • Don’t hire a PR agency.
  • Think like the journalist.
  • Get 3 articles in a week
  • PR hack reply.io
  • contribute to relevant publications.

Advertising

  • PR on a paid basis. Discover where your target customer eyeballs are.

Part VII Departments

Chapter 31 Executive

  • Hire chief of staff, smart, organized, machine-like, non-technical person.
  • At least 2 years out of college, trained at top tier consulting firm or investment bank.
  • Take tasks off the CEO’s next action list. (except her zone of genius)
  • transition to COO.

Product

  • Product manager most important. Most unicorns started by technical founders where at least one has the ability to play the role of PM.
  • has social skills, technical enough to know what can (not) be done.
  • Technical knowledge is very helpful, not  a deal breaker (especially if good relationship with the technical lead)
  • 1. get to know actual customers
  • 2. lead the product meeting, bring together engineering, sales and marketing to determine feature list. high value low cost > high value high cost > low value low cost > low value high cost.
  • 3. map out wire frames and specifications. Engineering has a visual and functional picture of what they need to build. Specific only the end point.
  • Product must have final authority in the discussion and feature prioritization. Report to CEO. (if for some strange reason, not possible, report to sales and marketing)
  • Complete the End User Profile, show in writing how this feature will solve a significant problem for the customer.

Engineering

  • A good engineer is often not a good engineering manager.
  • Architect, Project Manager and Individual Contributor.
  • Management is a rare skill, learned by observing others who do it well.  It’s worth it.
  • Coordination challenges -> net drag on productivity.
  • Use tracking tool, JIRA or a light weight tool.

Sales, Marketing, outlined in the Process section

People, Human Resources

  • learn the HR laws (not recommended) or outsource.
  • 1. Online broker zenefits
  • 2. Use a PEO (e.g. Sequoia One), until company reaches 100-150 people in size. (Far better pricing on benefits (insurance), PEO is also expert in compliance)
  • Start with PEO when benefit is highest, the beginning.

Finance

  • Track revenue, expense, asset, liability. Quickbooks Online.
  • Like legal, best done onsite.
  • A outsourced CFO. (1 day per month) accounting + CFO.

Legal

  • Negotiating and documenting investments.
  • Establish hiring and firing procedures.
  • Negotiating and signing customer contracts. (NDA and commercial)
  • Visa
  • Find specialist boutiques and solo practitioner.

 

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