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.